Market Plus: Mark Gold

Market to Market | Extra
May 6, 2022 | 12 min

Mark Gold discusses the commodity markets in a special web-only feature.


Yeager: Welcome in to the Friday, May 6, 2022 Market Plus. Here is Mark Gold. Mark, it is Mother's Day weekend.

Gold: Happy Mother's Day to all the mothers out there.

Yeager: Exactly. That is a marching point, a checkpoint of planting for some. We had that conversation with a few of the people that have sat there over the last few weeks. We're not going to have a lot planted on Mother's Day. We're going to have a whole lot planted right after. What does that mean to the market in general?

Gold: Well, the market has been telling us the last couple of days that that window exists and we're going to get a lot of work done. Illinois is going to be 60 to 70 degrees, pushing into the 80s. Iowa is going to be 80 to 90. Iowa has got maybe one 40% chance of rain around Des Moines, that's it. So we're going to get a lot of work done. As we know we can plant 40% of the corn in a week and we're going to get it done. Nobody is better at it than the American farmer. So I think what it means is the market is telling us that right now that window is there and if the window is there, we get the crop in the ground, that is going to be the point where I think farmers are going to start to sell. But the market is going to anticipate it and if we know Monday the weather looks good we could be down another 30 or 40 cents in corn and beans.

Yeager: You could make a claim that that's why Friday dropped as hard as it did, right, that the market is anticipating and has looked at those weather reports in Chicago?

Gold: Yeah, I agree with that. And I think this COVID thing is coming back. First of all, we got it in China and that's a problem. But it's coming back here in the U.S. Somebody was telling me yesterday that 50% of all the TSA guys in the last couple of weeks have gotten COVID. It's a huge number. I talked to my family physician today, he said he's running out of supplies again. So it's telling me COVID -- I don't think it's going to be nearly as bad, I think it's going to be the common cold kind of situation, I don't think it's going to be a deadly situation like it was last time. But the fact of the matter is it's going to be on the mind of traders. The Dow Jones is sinking, I think that's part of it is COVID here and COVID in China and that just weighs on the market. So it's a lot of things.

Yeager: Let's get to some questions. There's a good one here I want to start with, it's similar to what we've been talking about. Quentin in Nebraska sent this to us. He says, I met Mark Gold in 2012 and told him I had sold the last of my old crop beans at $18.16 a bushel. He said, frame that settlement sheet, kid, because you won't have to do that again the rest of your life.

Gold: That was in 2012, right?

Yeager: 2012. He says, does he still stand by that? Or will I be able to put a photo of kid number three in that frame?

Gold: If there's not a drought this summer, that thing will hang there for a long time. Maybe his grandkids' photos will go in that frame. Without a major drought, that $18 price is gold, it really is. Even if it isn't, over the last 20 years or last 10 years since we made that comment to him, it has been there and there’s no reason to doubt it.

Yeager: All right, next question. Aaron in Ocheyedan, Iowa. You mentioned this a little bit during the show and he's saying, outside forces like the stock market and inflation fears had a huge influence this week. Do you think that we'll be back to fundamentals next week, especially if planting progress comes in low yet again? I know we've kind of talked about the planting side. Talk about the financial side of that first.

Gold: Well, if the stock market takes another dive it's going to be hard for the grains to rally. Interest rates made new lows, the bond prices made new lows, interest rates made new highs here today. If that continues to next week it's not going to help things. But in my opinion, the overriding factor next week will either be Chinese demand if it shows up versus potential plantings and if the weather is there that's going to be the story.

Yeager: We've talked a lot about U.S. weather, let's talk about some global weather and Gary in Franksville, Wisconsin's question. With weather looking like it will allow planting, what will move the markets more, U.S. planting progress or Brazil drought and India exports?

Gold: That's a good question. I still think here in the U.S. our planting numbers with the funds long 320,000 corn, 160,000 beans that is a problem and that is more so the other problems can remedy themselves down the road, but this will be a fact here in the U.S. and that's a problem. So I think that will override the world. And France, part of the reason wheat has been staying strong relative to corn and beans is the drought in France is starting to get some press. But usually by the time we hear the news and it makes mainstream it's probably about the worst it's going to be.

Yeager: That is the old adage, if it's on the front page of the New York Times or on NBC it's too late. Gotcha. All right, let's go to Phil in Dresden, Ontario. He says, new crop corn and soybeans were sinking late in the week. Was this based on the good weather planting forecast? And going into next week, will we have a Chicken Little moment, the sky is falling, the sky is falling?

Gold: Well, the fear for me working with American farmers has always been they don't want to sell anything until they get it in the ground. But before they get it in the ground the market is going to anticipate it. So is everybody going to try to hit the bricks at the same time? If they can get it in the ground they might. And that can mean sharply lower prices perhaps next week. It's a tough situation. We've been pleading with farmers over the last two months. Look, we don't know how high it's going to go but we do know a $7.50 put, today it's a $7 put, it's still a good investment. Yes, it's 20 cents more than it was when corn was at $4. But you're going to spend 20 cents more to get $3 more protection. Let's hope it goes to $10 or $12, but if it doesn't you don't want to be sitting there flat-footed if corn is on its way back under the cost of production for whatever reasons.

Yeager: The next part of Phil's question could have been, we haven't had much news, we're also looking ahead at a USDA report next week, either of those impacting the discussion?

Gold: We should have talked about that. The USDA report is certainly going to be major. This is the report that should take into those acreage changes that we saw in the March 30th report and that could alter the corn carryout significantly, perhaps the bean carryout significantly. I don't see them upping demand as much as maybe the bulls would like it to be. But certainly the numbers should, corn numbers should come down. Now, is that going to be enough relative to bigger plantings? I don't know, we'll have to see if there's any more surprises out there.

Yeager: Well, I always tell them I have an order of questions and I say what order I'm going to go, but you just brought up something. Of course, Josh, I'm going to go out of order here. Let's go to Boyce in Montpelier, North Dakota because he's factoring a little bit, it's going to be too early to show up in Thursday's report, but it will show up eventually. Will prevent plant in the Northern Plains have any significant impact on supply/demand balance sheets? I'm going to go ahead and predict that you might be surprised at how much prevent plant there is going to be in North Dakota this year.

Gold: Well, certainly North Dakota is in bad shape, Montana's not in great shape. Texas, Oklahoma, Kansas, Nebraska, we've got a lot of problems out there where prevent plant couldn't make a major problem. We see the fires in Nebraska, the fires in New Mexico, all these things they'll add in and that's why we've got to have good weather with good yields with the corn in the ground, with the beans in the ground, in order not to really draw down on stocks.

Yeager: We have the near three feet if not more of snow in North Dakota, then they get hit another week. The impact on the corn market as they continue to increase acreage, but you're dealing with such a difference even in sides of state. How does anybody take advantage of that? If you're in Nebraska, say you're on the eastern side, you're looking at the western side going, what are you talking about? How do you prepare and position yourself with all of these scenarios that you keep talking about?

Gold: You've got to look at your own local situation. The only way I know how to do it is what I've been doing for 25 years, buy the darn put, if you've got the crop you'll be glad you've got the put, if you don't have the crop you're going to lose the money and you'll catch insurance and you'll survive it. The folks in North Dakota, 50 years ago South Dakota, North Dakota weren't in the Corn Belt. I have a good friend, an old friend Carl Babler who used to say, we've now gone to the corn girdle. And it's no longer a belt, it's a girdle. And yet in states like North and South Dakota it has expanded. Historically they haven't been corn states. In the last 20 years with the genetics what they are they've been able to do it. But as this weather is so variable all around the globe, are they going to be able to continue? Are they going to look for other crops? They may have to look for more normal crops.

Yeager: It's also extending to the south too.

Gold: Absolutely, no question.

Yeager: It's not just to the north. All right, so Joel, you got your question answered there about buying puts. Let's finish with Judd here. So thank you, Chad, for your quick typing in there. Judd in Mitchell, South Dakota asked us on Facebook, is there much upside potential for the wheat market?

Gold: Certainly. You look at all the problems we've got around the world whether it's India, France, Argentina, the U.S., we've got a lot of problems with the wheat market. The problem has been demand. Nobody can afford the U.S. wheat, nobody wants it. But now with what is happening in Russia and Ukraine, the Russians are going to try to get around the sanctions and sell grain, which they're going to do, make no mistake about it. But the fact of the matter is, if the weather doesn't get better, if we don't have a good winter wheat crop here in the next couple of months, these wheat prices can go anywhere they want to go. I've always said, don't tell me how high a market can't go and don't tell me how low it can go. A market can go wherever it wants to go. So again, this is one of these years where the balance sheets are tight enough where we have to have good crops.

Yeager: And we might just get them into the ground very, very soon.

Gold: We certainly hope so for the American farmers' sake.

Yeager: All right, Mark Gold, good to see you. Thank you for the conversation and the insight.

Gold: Thank you.

Yeager: All right, that will do it for Market Plus. And next week we're going to sit here and talk about the meat processing workflow at the local locker level. Easy for me to say the first time. And Naomi Blohm will sit right over there and break down the commodity markets. Thank you for watching. Please have a great week.

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