Episode Transcript
[00:00:00] Speaker A: This week's cup of coffee sponsored by upl. Check out Wave. It's a strong option. It's easy to use, consistent in its performance and the ability to help plants manage stress and improve nitrogen use efficiency. Talk to your local retail or UPL rep for more info. Markets are higher this morning. Canola is up 1080 a ton here at 7:60 on the November contract.
We've got soybeans trading higher as well after some huge gains yesterday.
Still up 3 1/2 cents this morning at 12:16.
Wheat markets also higher. We've got KC wheat up 7 cents. Of course the Kansas City crop or the Kansas crop, pardon me, got a little bit worse yesterday. Spring wheat's currently up $0.08 as well. The December contract trading at 750, which is if you want to look at a chart and go back, 750 is a very historic number. It's a very important number that you want to keep an eye on. Corn down half a penny here at 4.76 off the July. And then I had to put oats in the mix today. I don't usually don't highlight the oat market, but July's trading at 379. And you know the saying goes oats no. And oats are trading at a one year high here this morning. So West Texas down half 50 cents a barrel and the Canadian dollar at 72.75. All right, I'm going to just drift over to the chat. There we go. Am I back? Yep. We got, has your family been able to get any seating done? We'll talk about that before we do, we'll just get to some of the questions here, some of the themes for today's show and just a couple of quick headlines.
Now, of course we got Josh on the show here from Stone. And so we're going to talk fertilizer here. And Matthew is asking for Foss for 2027. It seems like supply is already setting up to be an issue. So Josh, I'll get back to you in a second on that one. We have do the seasonal trends follow each year?
Do you think wheat could be different in 2026?
So that references charts that were passed around last week all across social media highlighting that Casey wheat finds its high at this time of year. And then lastly here for questions, will planting delays in Western Canada cause our markets to rally? All right. And when you look at planting or seeding conditions, if you're in the Prairies as of May 12, so this information is a week old, but Manitoba was 13% planted that's against a five year average of 23%.
Saskatchewan 16 verse 28% pardon me, Alberta 20% versus 31. Now since that, since those numbers have come out, seven days have passed. We had a good start of planting last week. And then May long provided some snow and some moisture for farms that really didn't want to see it. And if you did get it in the southern parts of the prairies, you're, you're, you're thankful for it. But in the areas where farms haven't started or have done very little, it was not great to see. Okay, and then also just switching gears to the US now. US corn 76% planted versus the five year average of 70.
US beans 67% planted versus 53. And spring wheat 73% planted versus 66. Of course winter wheat came in 27%. Good to excellent. Some reference years came out Yesterday, folks referencing 1996 as being a similar type situation and also 2014.
And I just want to highlight in those years I didn't look to see what happened to the crop after that. But in 1996, KC wheat peaked April 26 and again on May 9. And in 2014 it peaked May 6 and again on May 9. So I guess May 9 an important day for, for farm selling winter wheat. It is 71% headed versus the average there, 58%.
So that's what's going on in the U.S.
in Russia we've got some slow wheat planting as well. All eyes are on, on the spring crop there. Siberia specifically facing similar conditions to northeast Saskatchewan. I guess you, if you're in Siberia or northeast Saskatchewan, you're going through some of the same pain right now. Lastly here, China and the US had a meeting last week. Trump was in China and we did see a report over the weekend that egg product demand. China's pledging to buy a $17 billion more on top of the October commitment. So some demand there for eggs had all the markets higher on Monday. Of course we were on holiday here in Canada or whatever you want to call the May long weekend.
And here we go. We're back at it today.
Josh Linville, how's your coffee this morning, buddy?
[00:04:35] Speaker B: Not strong enough.
Where week 12 plus of the street being shut down and I need to start adding something to my coffee. I think at this point it, it's gone for way too long. There's been too much stuff going on and like the questions, I mean are already asking.
We're beyond talking about 2026. This is such a big deal. We're talking 2027 now.
[00:04:56] Speaker A: Yeah, it is. Like, I know myself personally, I won't speak for, for other folks, but are we getting a little desensitized to, to the war now in the Middle east, the Strait of Hormuz, or. Or is that just me?
[00:05:09] Speaker B: Yeah, no, I think. Absolutely.
I think that the fertilizer market's a weird one. Right? We've got a tremendous amount of problem. It's not just the strait. Right. You've got China not exporting. You've got the Russia, Ukraine, war. Nobody talks about that anymore. European production rates of nitrogen are still low. All these problems around the world, but the fertilizer market's kind of shrugging the shoulders and saying, yeah, but what's happened lately?
So we've normalized this entire event.
You're just seeing a lot of inactivity, a lot of quietness out there.
[00:05:37] Speaker A: Yeah. Okay, well, I Want to Talk 2026 a little bit here before we turn our attention to 2027. I've got farms I work with in the Lunchbox Crew spread across the prairie provinces. Okay. And so I asked them yesterday, I said, you know, Josh is going to be on, on the show, but what are you guys seeing? Like, has anyone been stopped or had any shortage, Product shortage this spring? And. And 100%.
So over 50 farms responded. 100% have not faced a shortage. And also we want to welcome Moose to the Launchbox crew. He joined over the weekend. So thank you, Moose. But 100% have not faced a shortage. Is it because of the. Well, we have a, a delay in planting in the north. The south guys have been going for a long time already. Like, is that, is that why there's no shortage, Josh, or were we just well covered?
[00:06:24] Speaker B: We're well covered. And this is actually something we started talking about. We really want to grins the grain now when something's monumental as what's happened in fertilizer started happening, you started seeing a lot more talking heads enter the space. You start to see a lot more experts that we've never heard of before.
And how do you build a following?
You don't do it with a sunny, happy go lucky stories. It's doom and gloom and oh, we're going to starve and stuff like that. Now listen, some of the same points that they've made. I've sat there at the very beginning days and said, listen, this is stuff we need to watch for.
But as things started to work out, we started looking and said, North America is in good shape. Now. You look at the major products, right? Potash you guys are the biggest producer, the biggest exporter in the world. North America was fine for potash phosphate. While global phosphate markets are incredibly tight, we're self sufficient. North America produces enough to meet our own demand. Not to mention the high prices. We're going to kill demand.
And hydrous uan, we produce most of what we need. Urea was the one that really got me nervous. But when we looked at the numbers, we kept coming back to saying we only need about 5.1 million tons of imports for the US that builds into North America S and D. We only need 5.1 million ton.
We brought in 1.4 million tons in March alone.
Once we hit that month and we saw what was coming for April and May, we said, we're fine. And of course you had the typical, oh no, you're, you don't know what you're saying. You don't know what you're talking about. Yeah, it's like, I understand where you're coming from, but the numbers don't lie. We're okay now. Does that mean there might not be some pockets out there like you guys are doing good? There might be some pockets where like, hey, it was tight. It took a little bit longer for it to arrive. It was very expensive. Those things happen normally, but as a whole, you're okay.
[00:08:11] Speaker A: Yeah, I think for the prairies here. If the window finally opens up and we need it, our farm's 1.4% seeded right now. We are a full two weeks behind.
So we need it. It might be this weekend or early next week where we run into that little, that little crunch. But even in my backyard, our retail was taking liquid phos and moving it to southern Saskatchewan. They're like, these guys aren't going to, these guys aren't going for at least another week to 10 days. They took the product, moved it down there and they're, they'll refill it right away for us, I would assume. But yeah, fingers crossed. Okay, so, so this year we're okay now we, we are hearing the Australian farmers, there's, you know, a widely circulated report or article about the Aussies planting way less wheat this year, fertilizer shortage being a real thing. Is this kind of the start to, to the, the mess, if I could say, or the potential mess that could be brewing here. Is this where we need to start looking to say, okay, there could be some, some consequences here down the road?
[00:09:13] Speaker B: I think the Australia one. I think that story is a piece that's been taken out of context.
Everybody's looking at Australia and say, oh, he's down. And, oh, there's problems there. You know, it's the price of fertilizer, it's the lack of fertilizer, it's drought conditions.
They're dry. In the farmers down there, they put on their phosphate. Their phosphate application period is typically like March, April, May, and then after that one wraps up, they move into urea. And the phosphate they're going to put on because they don't use it, same as us, they're going to sit there and just say, okay, it's there for next year. We're ready to go. But then nitrogen, it doesn't do that for them. So if it's not raining and there's no hope of raising a crop, they just don't buy it. So, yeah, you've seen imports into there that have been very, very low versus their normal rates.
We don't think it has anything to do with the price or availability.
We think it has a lot more to do with just the weather conditions.
In fact, I mean, you'd go out there right now, I'd say you could still find vessels of urea in the world market if you really wanted to buy them.
[00:10:12] Speaker A: All right, fair enough. And you know, speaking of talking heads, if you want to, you know, fertilizer being the one thing, but now the weather, the super El Nino, the lack of. Of calories are going to be available in the world next year. Like, that is the big, big talking head message up there now.
[00:10:31] Speaker B: So crazy is I've heard people argue both sides, that they're like, oh, there's a super El Nino or whatever coming. Like, okay, what does that mean? One group says, oh, it means so much rain. The other side says, oh, it's going to be drowned. I'm like, okay, can we just. We don't know what it means.
[00:10:45] Speaker A: I got the perfect one. I got in the same, the same context, the same message was it's going to be very, very wet. And like mon, atmospheric river events over here, but then over here is going to be super, super dry. So I'm like, okay, yeah, maybe we'll find balance somewhere in the middle. Yeah. Okay. Is there anything like. Maybe. The one question I have here is, what is the current state of the fertilizer market? Like, you know, drawing a line in the sand here the third week of May.
Is there a weight in a. You know, just to just kind of drill this into one statement or one word or one comment of the state of the market today.
[00:11:26] Speaker B: Global supplies are still tight.
The fertilizer is still dangerous, but we've gotten through this period.
And what I mean is again, you go back through all these things that are going on around the world, right? The straight is still closed. It's been closed for 12 plus weeks. That is a major event. And just because we've normalized it does not mean it's not major. The Russia, Ukraine war, the European production, the lack of Chinese exports, we are still in a situation that we have never ever seen before from a true supply shortage.
But the fortunate thing is because we've kind of gotten past that timeframe of the calendar, we finally got time back on our hands. The summer is typically a very, very slow time around the world. That's why you typically see your lowest nitrogen prices, phosphate and things like that during the summer. Nobody around the world wants it.
Well, I still think that your manufacturers will be able to hold higher prices because they're going to be able to sit there and say all those same reasons and that's the justification for my high price. And they will be fully, fully justified. The farmers go look at the price and say, you must be out of your mind. Have you seen grain prices lately? It doesn't support anything close to this. So I'm not going to do anything. And that farmer retailer is going to be fully justified. So we're just going to go into this massive stalemate I think here, and I think we're already in it. I think it's gonna continue well into the summer months until something breaks loose. And frankly speaking with both sides being so, so firm in their point of view and beliefs and their facts, frankly, why either side need a break anytime soon.
[00:12:58] Speaker A: Yeah, you don't have to, right. You can wait and wait and wait. Wait this out. Now there's some headlines out there, some articles coming out about manufacturers kind of slowing down or shutting down or costs getting too high like idlings. Is that, is that real? Is that a legitimate concern that we need to add to the list for phosphate is.
[00:13:21] Speaker B: And the reason being obviously the biggest input cost for phosphate production is phosphate rock. Right. You've got to have the phosphate rock to produce it. But your two biggest variable rates products for inputs. It's anhydrous and sulfur. Well, straight over moves, three of the world's 10 largest exporters are sitting behind the straight of hormuz. Russia is normally number one and Ukraine took that out.
So the global anhydrous market is insanely high priced because supplies are so tight. And again, I don't know this, I'm not a sulfur Guy, I've heard other people say this, and Google told me this, but according to all that, half the world's tradable sulfur supply comes from the Strait of Hormuz.
So that has caused both of those input prices to absolutely balloon and cause a situation where supplies are tight. And that's a justification for why the phosphate price is so high. People are like, oh, this is ridiculous. They're making money hand over fist. Go look at Mosaic. Look at their quarterly earnings.
They just took another bloodbath. It's because the cost is so obscenely high to produce the tons. And that's the unfortunate truth of it. It's not just them. It's going to be, you know, Saudi Arabia's obviously stuck behind the Strait and they're trying to trickle tons out through the west, but it's a much slower process. Morocco, Russia is dealing with the same input situation. So you look at the phosphate market, it's just very hard to see why prices would fall without the straight reopening and a massive correction across the world.
[00:14:42] Speaker A: Okay, so is there any reasons, any catalysts that could come in that you see to cause this correction to the downside or cause something to. How do we change this? Because, like, if you think about it, if you, if you can't manufacture, make this stuff and, and make money at it, and the people that you're trying to sell it to aren't making any money either. And certainly at these higher, you know, prices, like, what's, what's gonna, what's gonna happen? Like, what, what, what. What do we need to happen here to change this around a bit?
[00:15:14] Speaker B: You need, you need to be watching China and the straight of Hormuz ridiculously closely. And the reason I say that China, before we even get to 2026, this has nothing to do with the Middle east situation. This was something that was put in place in 25.
China said, we are not exporting phosphate and urea, but phosphate until August of 2026.
Guys, that's your normal global leading exporter.
So maybe they come back sooner. Maybe they make a decision that, hey, our own demand has been lower, our supplies are good, production's running. Well, whatever the reason is, if they start exporting again, would you get your biggest supplier back? That makes a difference. And the other one is trade Hormuz. You reopen it, it's going to be a bloodbath in the markets because every long position is going to say, get me out of this, and every buyer in the world is going to run for the hills and say, I don't want anything to do with this. Let them bleed.
And that's going to be on anhydrous, that's going to be on sulfur, that's going to be on phosphate. It's going to be widespread. It's going to be a multifaceted situation that just bangs a gong and says phosphate needs to drop. Phosphate needs to drop. It doesn't solve the supply situation we have created, but it can help pricing. So those are your two biggest points, personally speaking.
[00:16:22] Speaker A: So again, you go back to sitting on your hands as a farmer. Retail.
[00:16:26] Speaker B: Right. All right. The thing is that's not to sit there and say there won't be problems later on. It's something you've got to watch. Yeah. When you look at where the price is and you look at all the grain values out there, I mean like when I look at potash pricing, I can go to my dad and tell him, hey, Dad, I think you need to lock this stuff for fall application. The problem is he won't do that without doing the phosphate as well. And I don't have the same confidence to say go ahead and buy your phosphate for this fall to plant the 2027 crop. I just don't have the confidence. I think there's too many, too many routes to go back to lower prices, not historically normal prices. Right. We're not going back to $300 or anything crazy like that. It can certainly come off the highs.
[00:17:04] Speaker A: All right, so there's been some announcements and we're down to the last few minutes here, but there's been some announcements out of the White House in regards to fertilizer.
Any, any meat on the bone over there, Anything legit coming out of Washington to help with supply or production or whatever those headlines were?
[00:17:20] Speaker B: Unfortunately, no. I've been pretty frustrated with a lot of the stuff that's been said. A lot of the conversations who they've had those conversations with. One of the things Secretary Rollins had said is that, oh, we think that, you know, back of napkin math, nitrogen production can be up. Was it 30%, potash up 100% and phosphate over 200%. Well, I think the nitrogen side, I think what she is doing is she's pointing to projects that are already in the pipeline and a lot of those pipeline or those projects are tied around green energy with the idea that hydro tons are going to go internationally. They're going to go to like vessel fuel and different things like that. Places where they will pay premium for green backed production.
It's not really something. It actually Builds new demand. So it doesn't really help the S and D phosphate. Truthfully, I think that was a typo on the teleprompter and she didn't know, and so she just went with it. I don't see an avenue where we're building our phosphate production by 200%. I just.
That one was the biggest head scratcher. We all kind of sat in the office, we're like, where does she get that number? I truly think it was supposed to be 20%, because if you look again at Florida production, how low it is, if they get back to normal, you can pick up 20, 30% pretty easily.
[00:18:29] Speaker A: Okay.
[00:18:29] Speaker B: And potash. Yeah, we're building. I guess we're going to support a few potash mines here in the US I don't really see the need for it. Potash prices have been very solid.
Fortunately, when it comes down to it, if we can just stay on good terms with you guys, we're okay.
[00:18:43] Speaker A: Man, what a. What a pickle we're in. What. What a situation. Like, Josh, I don't. You're going to be busy for your entire career, man. Like, this is just not slowing down anytime soon. So I want it to be slow.
[00:18:55] Speaker B: I want to be boring. I want to come on all these. And I want to tell everybody, guys, fertilizer is dirt cheap and your grain prices are sky high and farmers are killing it. I just don't know when that day is going to happen.
[00:19:06] Speaker A: We did talk before hitting the record button that, you know, it has been slow lately, but that's a good thing because slow means less bad, right? Yeah.
[00:19:14] Speaker B: At this point, you take the slow days because it means nothing worse has happened.
[00:19:18] Speaker A: Yeah, 100%. Well, Josh, we certainly appreciate you coming in and giving us the latest here, folks, before we wrap up, when it comes to some of these other questions that came in. Seasonal trends, planting delays, you know, causing markets to rally. I'm just going to wrap that into one thing. When, you know, markets rally when you have the most unknowns when you're growing a crop. And so we often find our peak in our markets in this May, June timeframe, sometimes July, depending on what the weather does, we can find our peaks because we don't know. We don't know what's going to happen.
So is. Is, you know, planting delays in Western Canada, is that bullish? The markets? Not really on its own, but the weather certainly comes into play. Again, we just have the most unknowns. So everyone, right now, there's a lot of hesitation from prairie farmers on pricing grain and I understand why there's the hesitation, especially if you're delayed in planting. But you should be just mathing this out, writing down some numbers and figuring out how you can secure this current financial snapshot. All right. How can you secure this? This isn't about hesitating right now. It's about figuring out how to safely lock in these margins, leave yourself open for upside, minimize, reduce, eliminate a buyout risk. You can do that. All right. You should be playing financial defense right now at these elevated or slightly higher prices than what we were thinking. Well, this week's cup of coffee is brought to you by upl. Telluron is a brand new fungicide that can be used on your cereals, pulses and oil seeds. Find out more by contacting your local retail or UPL rep. I'm out of coffee. That's it for this week. Thank you, Josh for joining the show and I'll see everybody Friday on what the futures take care.
[00:21:06] Speaker B: Of.
