Episode Transcript
[00:00:00] Speaker A: Foreign.
Futures moves this morning. Everybody. Let's maybe do our stretches here. It's going to be an exciting day. We've got spring wheat trying to find a reason to climb here up around, I don't know, we'll call it $0.04 on the December contract right around 670.
Kansas wheat doing a little bit better up 12.
So trying to build off of some momentum here. Maybe finding a little temporary bottom in this market after a vicious, vicious sell off across all of the wheats here the last couple of weeks. We've got canola just down 240 a ton here. 774 it is trying to do a little bit of a relief rally I'll call it, but there we go. Bean oil is finding some strength up just north or just above 75 cents a pound now.
Corn up 3 and about a half cents as well. So that's good. You can see cereals trying to find some momentum here. Soybeans down around $0.03 at 1112. The Canadian dollar trading at 71.76.
So a little bit of weakness there. Crude also weaker here, down $3 a barrel around 88. This week's cup of coffee sponsored by Land for Rent, built for farmers who want to grow.
I can check that out at land for rent.com all right. For headlines here this morning. You know what the funny thing is? My headlines are the exact same as last week. It's US Crop conditions, US Weather improving, war premium. You know what's happening with the war? Is that premium coming in or out? Anyways, all kind of the similar things happening. I would say prairie weather certainly a bit more on the radar right now and for kind of the wrong reasons. Right. Excessive moisture, big rain events, especially in Manitoba, portions of Manitoba and, and eastern Saskatchewan, southeast Saskatchewan. Actually chatted with, with Farmer yesterday, Blaine, the US Storm chaser folks, they were basically accumulating around his farm. They were gathering around his farm. He, he went out there and he's like hey, I'm just wondering like I know why you're here, but what's the, what's the playbook? What's, what's going to happen? And they said well all our research points that this tornado is going to land right here at some point tonight. And he was like oh, all right. It didn't feel very good, didn't feel very good at all to have that conversation. Luckily it did move away from his farm and but unfortunately did cause I don't know if, I don't know if there's a confirmed tornado. I think there was but some damage to other folks. So we hope you're safe out there and dodging these, these storms, you know. Is prairie moisture, is it going to play a big part in our markets here? Well, we'll bring Nathan in just a second actually, why don't we do it right now?
So Nathan, how's it going buddy? How's your morning?
[00:03:08] Speaker B: Good morning.
It's a beautiful day here in west central Saskatchewan and the sprayers are rolling so it's a darn good day.
[00:03:15] Speaker A: Awesome, buddy. I got to see the sunrise this morning as well. So it was a big start to the day and looks like it'll be a nice one for many. Where do you want to start here, Nathan? Of course I want to talk about the little black book, but is there anything kind of jumping off the page markets wise for you right now? Is there anything that you sit there and say, man that is really, really important or something that you're paying close attention to?
[00:03:41] Speaker B: I think it's same as everybody in western Canada right now. It's. It's this canola market. I mean I, I talked earlier on the show and basically since Christmas I've been bearish the canola market and it just has been the little engine that could, that kept on climbing and of course at some point you got to pivot and change your thinking a little bit. And I really thought once we hit that $800 level that this was the time for a new era breakout and we've slipped back down again. So just watching this 20 day moving average and seeing how, how is this going to react, I mean obviously a lot of us can look in our backyards and see that there's some acres that aren't planted and you know, this whopper canola crop that everybody was anticipating, there's you know, a little bit of doubt there. But being we're pretty, pretty resilient, we're going to get the crop in either way. It's just. Is that record crop still on the books for this fall or not?
[00:04:35] Speaker A: Yeah, I, maybe I've been just naive to it or I think I'm a glass half full type guy. But the conversation around the excessive moisture and the damage, potential damage to a canola crop, it surprised me. I thought canola was a little bit more resilient than that. But I did see some farms want to reduce yield and reduce yield based on flooded out acres. I could understand that. But yeah, I thought that crop was, I don't know, a bit more resilient than what I was kind of hearing this Canola market, I'm calling this, or what I anticipate, you know, maybe a little bit of a relief rally here. I went over some charts last night for the Lunchbox Crew and just kind of reviewed, you know, what a relief rally is and what it could look like. Are you, are you leaning a bit more bullish than that? Because a relief rally would basically be. You hit a high, you sell off, and then you get that little, know that little bump up in those days after you kind of. Or weeks after sometimes that little bump.
Do you think there's more to this, Nathan? Like, yeah, I'll leave it at that.
[00:05:41] Speaker B: So I. 100% where you're coming from as the producer, obviously. I hope that. What worries me about this relief rally is this trend lines up very, very well with our seasonal trends. You can lay this over the last 10 years and I know you have.
And, and that scares me because that, that 802 could very well be the top. And I got really lucky and made some sales up there. I'm happy with that. But obviously I'd like to see 850.
[00:06:08] Speaker A: Yeah, yeah. If we all. We all would. 100%.
So David asked about Susan Stroud's comments. I'll just clarify this for David if he's watching the show today or catches it later. But essentially, Susan had been the only person that I knew that was bullish Canola from, well, maybe late December to now. Like, she was the only one who was really standing out there saying, I think this thing's just got a whole new path ahead of it now with some biofuel policy changes. She was quite excited about Canola. But then she also said, it's $800.
You know, you got to sell some. And at 800 bucks, like, you have to do something here. She's not calling the high, the long term high per se in that interview and in that discussion, but certainly has been excited about Canola for a number of months now and a big fan of pulling the trigger on some in that $800 level. So, Nathan, canola hits 800 bucks.
And I swear that everybody I talked to, it felt like someone had just run over their dog that day or the day before. Maybe we'll say, like, it gets emotional out there. I'm French, I'm very emotional. But you know, like, what, what do you think was going on with that?
[00:07:33] Speaker B: And you know what? I had, you know, guys and neighbors and friends and phone and me and yeah, they're like, well, what do we do now? Well, what do you think? You do that's profitable on everybody's farm. Make a sale, like take the emotions out of it.
I mean, I can't talk to one person. I couldn't talk to one person on December 19th that would have told me maybe Susan would be different, but that we were going to see 800 November futures like make a sale. I don't make one, sell one load. So when you haul that load off the combine, you're just grinning ear to ear or you're smiling because you sold the rest of your canola at 875. Who knows?
[00:08:12] Speaker A: Yeah, yeah, it's a good thing. It's a good thing. And it stings.
And even, you know, after Friday's show, I got some messages about. I said, you know, confirmed that we sold $14 canola on our farm as well. They said, yo, thanks for sharing that. Because it just feels like we all got kicked in the shin here. And now the market's at where it's at. The important thing though is not to freeze up at that moment. And you may have hit your comfort level at a lower price on physical sales. But there's other things that you can do. Some things that are a little bit, you know, maybe easier to. To accomplish. You don't have to have a trading account. You could talk to AG I3 and look at forward protect, which is a green contract insurance. You could do stuff through the elevators. But it's spending that energy, are taking that, taking that energy and putting it into, hey, I'm going to go figure this out for my farm. I'm going to go figure out how I can sell $800 canola and sleep at night and reward this thing well.
[00:09:17] Speaker B: And I guess I should preload this.
[00:09:19] Speaker A: Go ahead.
[00:09:20] Speaker B: I just told you that I sold canola at 802, but I also sold canola at 668. I was making canola sales because at $14, I was like, this is profitable on my farm. I want to get some on the books.
And typically with my first sale, and even in my book, I don't cover that first sale with anything. That's just a raw dog. 668 futures only sale gets me movement. I know it's profitable, but that doesn't take away from the fact that I'm still happy to sell at 800.
So I don't want anybody out there to think that I'm timing the top of the market. Cause my futures account will say otherwise.
[00:10:01] Speaker A: If you are, man, we'll just start writing checks and sending them your way so you can Help us out. So. But yeah, I appreciate that.
Yeah.
So when you look at, at some of the strategies you've implemented over the years. Nathan, we had a question come in from Jordan just about resources, you know, books. Like where would you steer someone that's just kind of getting into, into hedging or getting into some risk management here, like maybe where did you start and what kind of stood out for resources for you?
[00:10:32] Speaker B: Well, I mean, truthfully, I, I started out with you back in whatever a decade ago and started asking questions and
[00:10:42] Speaker A: then I realized you're just aging us.
[00:10:44] Speaker B: Yeah, no kidding.
And then I started, I was like, I'm gonna see if there's any online resources. And I paid for a couple of courses, none of which I would recommend.
And then I started reading books and I found I wasn't retaining. I really didn't feel like I caught any ground until I jumped on with the brokers that I have selfless plug for rbc. They do a lot of really good training and seminars and one on one stuff after the market closes. So I think that's probably where 80% of my knowledge came from. And once you have that really good base, you can start building your own strategies and coming up with the things that you really like to do. One of my favorite things to do specifically with the Canola market is I will make a sale, usually futures only, but we can leave basis out for now. And then what I like to do is I like to wait for a pullback, 20, $30 and then I'll buy an out of the money call at my sale point. So I'll save a little bit of money on that and I'll buy that. Well, if, if you take a look at the November Canola chart, that wasn't a real effective strategy this year because the pullbacks were simply never big enough. So even the things that I've developed, you gotta be willing to tweak them and change them. And so you need a pretty good understanding. But to Jordan's question, I'd reach out to your broker. I don't know if others do the same, but I know RBC has a really good bank of learning presentations.
[00:12:11] Speaker A: Yeah, you bet. That's a good point. Because they have those, you know, in the can and ready to go. If you want to learn a certain strategy, they'll send that to you. Right. And get that in your hands. And also, you know, maybe this is a little bit cliche, but. And it doesn't work for everybody. But I read a lot of books. I was put to Sleep from a lot of these books. There's a couple of beauties out there in Jordan. I'll send you one that's really, really good.
And I do this every day and I still was falling asleep but learning by doing, you know, just go, going and doing small trades and just seeing how it, it plays out. I had a farmer execute a strategy last week for the first time and we just did a couple loads, we just did a couple of loads and my message to them was I want you to experience this, the emotions, I want you to see the, the, the statement come through. I want you to see how the market reacts and how it influences you moving forward. And so Jordan just, just kind of practicing on some smaller volumes and, and taking notes on what's worked well and what hasn't. Now I wanted to talk here just about wheat marketing and the kind of, the frustration that continues to be felt. Of course, John DePape was on the show last week and we, we kind of, you know, talked about wheat and, and separating out futures and basis.
And just once again here, you know, across the prairies you see the spring wheat market just go on a huge run and basis just gets weak and widens as that futures rally is happening.
And now you've got a large pullback in futures and what's happening with basis, it's just getting better and better and better. And so it's been frustrating for some folks because even with a tight window of June, July to maybe get rid of your old crop, it might feel like you don't have enough time to execute the strategy. But you do. Especially when elevators have trained us the last number of years. Wait for the special, wait for the premium and, and improve their basis to fill those cars. Anyways, folks continuing to separate out those decisions, it's still, you know, very, very important.
And, and then you see something like the Canadian dollar dropping off here right now as well that trickles in to a better wheat basis in many scenarios. I want to just put it out there. If you do have old crop wheat to sell, like my father in law informed me over the weekend about his unsold wheat, which I did not realize he had, there's some negotiation that can happen right now. You can go and negotiate a little bit better price and better than even the posted special. You can go in and flex a little bit because farmers are busy right now. Nobody really has the time to make these phone calls and get these deals done. But there is a little bit of wiggle room right now if you need to sell old Crop wheat. Any comments in regards to how you market wheat?
Yeah, Spring wheat specifically?
[00:15:38] Speaker B: Well, I mean, obviously I keep a close eye on the futures and really watch my local basis because you can see that swing get really bad for us farmers at times.
Wheat's a hard one just because it's so big. There's so much of it.
When you see that good futures price, you usually got to jump on it and then you're kind of at the mercy of your local elevator. One thing I did want to highlight, everybody's worried about this pullback specifically in Canola and wheat. But pay attention to what your basis does during these pullbacks. And if you have that futures position on, there sometimes is a really good opportunity to lock the basis on those contracts before you get too close to delivery and you kind of end up getting screwed.
[00:16:15] Speaker A: Yeah, I think this is the rare time where you can, you can snag a little bit of a premium with old crop just because of how people are, are busy. So we talked about diesel prices a little bit last week and this week, and I just got a, a note came in as recording here and just wondering, you know, what the heck did you do to find this lower diesel price? So to wrap up the show here, I'm just going to, to bring it up. We had Laura Lee from Fuel Nexus on the show a couple weeks ago, and she explains it a lot better than I do. So you can go and check, check it out on the episode. But essentially you can make a fuel plan.
So what that means is that if you know that you need some, some diesel in August and you know that you're going to need some in November and maybe, maybe you'll need some, you know, next spring, whatever it is, they will quote you prices all the way through. All right.
And often there's a discount that follows.
All right, so with the Lunchbox Crew, which is my spin on crop marketing, we now have in our channel, we have a fuel channel and we have a direct link to Fuel Nexus. But last Monday, not this past one, the one before there was a dip in diesel prices and we started to, you know, get an idea on, on, you know, what, what they were looking like for fall and later on. And some of those quotes came in under 90 cents, under 88 cents, especially if you want a little bit further out into November or further. And some of that was delivered all the way up into like Spirit River, Alberta, up in Bonanza. Right. And so just some really great savings. And then the cool thing we did with the Lunchbox Crew is that we qualified for a volume discount because we ended up booking some loads. And our farm, you know, one load of fuel on our farm last week compared to Today, we saved 20 grand on one load.
Now do that. Loads coming in early August. Do I know what fuel price is going to be at that time? No.
But if it comes in lower than the price I booked, which I also picked my favorite company that we, that we wanted from. So we wanted some SO products. So we were specific on that. If it comes in lower than what I booked it at, I get the lower price. If it comes in above, then I get the price that I paid.
And so for us, like we're talking about north of $0.40 a liter here now compared to today's number, and we're talking about 20 grand of savings. So fuel nexus is where I would direct you to have those conversations. It was a busy week of diesel diesel purchasing last week. So I'll keep you guys in the loop on how that plays out.
All right, folks, just rapid insights I like. You know, trying to market some wheat right now. I'd be hyper focused on feed barley. If you're a feed barley grower in the prairies, I'd be hyper focused on locking some of that in because that market is changing and evolving. You've got lower corn. The export programs for, for prairie barley here seem to have settled down. That market is changing right now. So. So stay on top of that. And then on the canola one, if you can the past, park it. Park it as best you can. Focus on today. Focus on what lies right in front of you. Straight ahead.
And figure out how to market your canola at these elevated levels and still sleep at night. Put your energy into that. There are many strategies you can consider with no bio consequences. You can do it. You can do it at these levels. You can go past your comfort zone, your traditional comfort zone and still sleep at night. All right? It's very important that we do that. In my research, the canola market does find a reason to drop in June quite often. Then there's that little July rally as well. I'm not saying this is the be all end all, but in this little window, often we score the highs.
All right, folks, well, that's it for this week.
This week's cup of coffee is brought to you by Land for Rent. Find new acres, manage every lease in one place. Skip the paperwork headache. They take care of all that land for rent.com transforming how farmland is rented.
I'm basically out of coffee here. That's it. For this week. Thank you, Nathan, for being on the show.
I've got a great one lined up for what the Futures on Friday. We've got Trent Clarenbach and we also have Tyler Uramchuk from Vegas joining me to talk about the playoffs. NHL playoffs.
All right, folks, see you later.
