Market Plus with Ted Seifried

Market to Market | Extra
Apr 12, 2024 | 12 min

Ted Seifried discusses the commodity markets in a special web-only feature.


Brooke Kohlsdorf: Welcome to the Friday, April 12, 2024 installment of Market Plus. And joining us now for more is Ted Seifried. Hi again. Hi again. Okay, so we've got some more things to talk about. You discussed a lot in our main segment, but one of our viewers is wondering on Twitter, sorry, X how much of a rally will we see with a wet ECB spring? I had to ask you what ECB meant.

Ted Seifried: Yes. Eastern corn belt and you know, okay, so it's been wet, right? This is the time of year where we're always going to find something that bugs us a little bit. Right. Ten, 12 days ago, we were worried about being much too dry in the Western Corn Belt or even the Central Corn Belt and then we got a whole bunch of rain and now it's, oh, what about planning delays on the eastern side of the Corn Belt? And that is, you know, certainly possible. I think the extended forecast looks like there's enough windows in there for planting. I think we'll see longer. I've been quoted on saying that you trust the longer term forecasts for about as far as you can throw them, and that is certainly the case. They can change very dramatically. But it's really early to get too concerned about planting delays. And I do think that we're going to have our opportunities. Go back to like 2019. That's the last major major planning delay, sort of catastrophe that we had. Wow. You know, that forecast at this time looks much different than the current one does. So, yeah, it's possible. I mean, it'd be nice to have a reason to kind of spark the market, the corn market, to go higher. The problem is, is that we've been running into the 50 day moving average. Time after time after time after time again since May, really, or early March. And we've just not been able to extend beyond it or even really close above it, aside from the one day on the report day. So it's just it's technically speaking, we're just running into a brick wall. And on Thursday, after the report looked like we were rolling over to the downside. Now we got a reprieve on Friday because of the risk of uncertainty short covering that we saw. Now, whether that continues on Monday or not is a good question. If we can do that, If we can, we have another seven or $0.08 Monday, Tuesday, next week. I think that opens the door for a technica move that would be spurred along by concerns about planting delays and things like that. If we can't find strength early on in the week, though, that's going to be a problem. I  just don't think we have the forecast right now to support any major concerns about planting.

Brooke Kohlsdorf: Okay. All right. Next question. Is there any chance of a planting delay bump before Mother's Day? Sure.

Ted Seifried: Yeah, sure. Absolutely. I mean, again, I, I want to say that it's too early and that if we get a planning delay bump, that's going to happen, you know, later on after Mother's Day. But it doesn't mean it can't happen. You know, again, anytime you have, you know, a large speculative short position in a market, it doesn't really take a whole lot to breach some of these technical resistance levels and to get these guys covering shorts and then to blame it on something like, hey, oh planting delays. Right? So it's certainly possible. I don't see it currently. I think if we were going to have this this springtime rally, we really should or needed to get a solid close above that 50 day moving average already for the fact that we just can't do it. You keep knocking on a door, it just won't open. That's a problem. But again, let's see what happens early next week. We have another factor in the market with this uncertainty of about the Middle East and uncertainty cause the short covering. And so we've got another shot at it. But again, it needs to happen. The clock is ticking if we can't get that soon. You have a chart that looks like it really wants to roll over and go test the lows again.

Brooke Kohlsdorf: Okay. All right. What crop will need to be the leader to drive funds out of their short positions?

Ted Seifried: Okay, so this is where I have. This is where I wish I had the corn hat, because personally, I think the corn fundamentals are more friendly than soybean fundamentals. You've got a soybean balance sheet that is getting bigger. Soybean carryover, that's getting bigger, you have a corn carryover. That's getting smaller. The problem is, is that it's not getting small enough to really cause any big excitement about going higher. Now, there are things that can happen for corn. Again, planting delays, right? Loss of acreage in corn, Right. We already have less acreage than what we were originally expecting. Is that because of cotton? You know, we lost we lost six point three, 6.4 million acres of principal acres across all crops.Why? You know, I don't know. We we talk about strip malls and subdivisions, not 6.4 million acres worth. But prices are lower across the board. Costs are high, energy costs are high, interest rates are high, land values are high. So it's expensive to be planting anything. And so that's why I think that acreage numbers down. The thing about that is that we've had a lot of opportunities for field work both in the fall and in the spring, even in February for that matter. I have a hunch that some of those acres are going to come back, you know, But again, that's kind of weather dependent. Weather dependent. If we have planting delays, maybe they don't. I just don't think there's a whole lot of downside on acreage unless it's a 2019 type scenario. And at the moment, I think it's too early to get worried about that. And I don't think the longer term forecast support it.

Brooke Kohlsdorf: Okay, let's see. The USDA report didn't offer any surprises with stocks at the higher end of trade expectations, What could send grain prices higher? That's the first part. And is it only about the weather going forward or could it be a black swan missile event in the Middle East or Ukraine, Russia, something you mentioned earlier?

Ted Seifried: Yeah, no, that's a look. We've talked about weather and planting delays and whatever. And look, we still have a growing season beyond planting to get into, right. I mean, we can have weather issues during the growing season as well. That's certainly a possibility. But okay, black swan event ok hey you know, on Friday morning or really late Thursday evening, the State Department said that they're expecting Iran to attack Israel as early as Friday. That sends uncertainty into the market. It sends a risk off climate into the market. When you have grain markets that have large speculative short positions, risk off means short covering, it means higher. That's great. Live cattle, livestock in general. It's the other way because they're long, so they're long covering, they're getting out of their long positions. So they're selling. Yes, But see, we have the scenes called by the rumor sell the fact at this point it's a rumor. It it actually happens. I think it is something where we start to fade that pretty aggressively because other than energies and I get it, you know, ethanol and biodiesel, but other than energy and specifically crude oil, I don't see war in the Middle East as being something that really spurs more demand for raw commodities. Again, outside of energy. And here in the United States, we're kind of limited to how much soybean oil or how much biodiesel we can produce because of our crushing facilities. And same thing for ethanol because of our ethanol plants, we're not going to see a massive, massive increase in demand domestically because of these things. So I think it's interesting when it causes uncertainty and it causes short covering and that can cause a rally. But if the event actually occurs, I don't think that's overwhelmingly bullish for commodities as a whole.

Brooke Kohlsdorf: Hmm. Okay. Well, we'll find out. Right. Is it going to take the next question? Is it going to take a hot, dry spell to make the corn market move higher?

Ted Seifried: I'm glad I'm glad you followed up with that question. You know, it occurs to me that we had in many areas sort of the most difficult growing season since 2000 or since 2012. Last year. Last year was a tough growing season, yet we ended up with a 177 point three national average corn yield. It's amazing. It doesn't, it makes you really wonder how sensitive we are going to be to hot and dry periods during a growing season. Because last year we had three attempts and a very significant weather rally based on hot.and dry. I mean, it didn't rain in a lot of places from April, May into about halfway through June, and we still ended up with a very decent national average cornfield. So are we immune to weather rallies? I don't think so. I certainly hope not. But man, I don't know. It might be a delayed reaction. Or I don't think the market's going to be as sensitive to weather during this growing season as it was last growing season, because, again, you know, it kind of got fooled by that a little bit. So hot and dry. That's more of a thing for South America. We have seen very recently that hot and dry does very much affect their yields, although, it's still scratching our heads on this this last soybean crop in Brazil. But Argentina last year had disasters for corn and beans. So we know that they have different soil types. That is still. There, still weather markets there. But for the United States, growing season. Man, after last year's real tough to get excited about a weather market going into this year.

Brooke Kohlsdorf: So droughts are just different and that drought monitor is still pretty red in a lot of places.

Ted Seifried: Yeah, northeastern Iowa. I hope you guys get some rain here pretty soon.

Brooke Kohlsdorf: Yeah, they need it for sure. Okay. One other question, and I wasn't sure if I was going to ask this, but I'm going to go ahead with it. It it's kind of a political one. So this week, Secretary of Agriculture Tom Vilsack said in an interview that part of the reason why China isn't buying corn and beans from the U.S. is in retaliation for some of the laws that we've created here that prevent Chinese companies from buying land here in the United States. What do you say of that?

Ted Seifried: I think those are really cool glasses. I like them.

Brooke Kohlsdorf: It's called getting old.

Ted Seifried: Yeah, but no, those are nice. Oh, you know, China does a lot of things for a lot of different reasons, but tor the most part, they make their decisions based on money, based on what makes financial sense. And, you know, with with their new trading partner, their new corn trading partner in Brazil, they have a lot of opportunities there. And also with the newer ports in Brazil, that northern arc, the deep water ports, that's a whole lot of opportunity for for Brazil and China to be good friends when it comes to corn. I do think China from an overall perspective, would prefer to do less business with the US and more business with Brazil. And that is politically motivated. I don't know if it's any one thing that's really triggered that. And whether that was specifically retaliation to, you know, not allowing Chinese entities to buy land. And no, I think they've been they've been looking tor that for they've been looking for reasons to go to go towards Brazil for a long time. But really, I mean, it's based on money. If we're cheapest, they'll still buy from us. Some of their state-owned buyers. And again that's a lot of them. They may at times be told to shy away from the US. But again, if we're cheaper, I think they'll come to us. So the fact of the matter is, is that the Brazil has been working for a long time to get the right set up in place, to do the business, to do the corn business with China. And now that they're able to do that, they very quickly become China's number one corn supplier. And that'll probably continue.

Brooke Kohlsdorf: Okay, let's have some fun. We'll end with this. When are you breaking out? The corn had again. I've seen you wear it.

Ted Seifried: Yeah, yeah, yeah. Couple times, I think. Man, I really want a reason to break out the corn hat sometimes. I do break out the corn hat just to try to encourage corn I suppose. But I want corn to show me something that I can get excited about. And then the corn hand will come out. Maybe next time. Possibly next time I'm here. I'm hoping that I'll have the corn.

Brooke Kohlsdorf: Hat back, which is probably mid-summer. I'm guessing something. Okay? Yeah. All right, well, we'll be waiting. Thank you, Ted, as always. Appreciate it.

Ted Seifried: Pleasure's mine. Thanks for having me, Brooke.

Brooke Kohlsdorf: Well, next week, livestock produce producers fret over the National AG Trade deficit. Chris Robinson shares his thoughts on the markets. Thanks for joining us and have a great week.

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