Episode Transcript
[00:00:00] Speaker A: This week's cup of coffee sponsored by upl. Of course. I'm in the UPL studio each and every week. Check out Wave. It's a bio stimulant product. It's easy to use, consistent in its performance and has the ability to help plants manage stress and improve nitrogen use efficiency. Talk to your local retail or UPL rep for more information. And speaking of nitrogen use efficiency, I was on the buddy seat yesterday with, with one of my. My farm buddies in. In toll Field. Why did not uan that 2800 was. Was 800. Pardon me, $850 a ton. I kind of disconnected from that the last couple of weeks.
I had no idea that it had gone that high. Or maybe I did know and I just blanked crossed it out. I'm not sure. But that's. That's pretty darn wild. All right. Okay. Futures moves this morning. Canola up 880 a ton after a big sell off. An independent sell off yesterday following crude oil. Lower of course was Monday but it's rebounding here. Up 880 a ton at 7:55 on the November. I like hedges in the 7. I wrote 765 but honestly 760 or above. I like hedges in that spot. So another five bucks a ton will get me excited there. Soybeans giving back about a nickel here to kick off the week at 1175. We've got bean oil down just slightly at 7380. Spring wheat looking to rally here a little bit up 2 1/3 cents at 7:30. Of course the high not long ago it's around 765. So that's a December contract there. Kansas City wheat's currently at 7:10 so that's up about a penny here as well. I'll have to ask Quentin if wheat is starting to look like a potential buy here or not. I got maybe a bit of luck. Did sell some wheat right off the high there. What was that last week or so? Wondering if there's a chance here to maybe reown some bushels until production is more known here, at least on our farm. We'll see. What else do we have here? Corn down a penny and a half here at 484. I've got the Canadian dollar slightly lower at 72.45.
And West Texas down about two and a half dollars a barrel here in that $94 range.
All right, a couple of I guess what I'd call them notables for me today. Just on, on grain prices here again. I don't know if anyone out there gets super excited about seeing feed barley in the 550 at a 575 level, you know, in the more northern parts of the prairies for off the combine. But it's back to the high of what it was. So I. It's notable, right? We gotta, we have to bring it up. Also there's that act of God contract on feed barley, 30 bushels per acre. And that was from Rae Glenn. And so if you're a bit nervous about that first 30 bushels there has been an act of God of course, lower price point on it, but available for those interested. And then I've got malt coming in in the mid sixes again. I don't think anyone's getting super excited. Holding its own and, and starting to. It was quiet. Starting to rally or climb a little bit and holding in there. So just a couple notables on the barley side Now Oats also waking up here just a little bit. Old crop oats. I've got a bunch of $4 plus in in Alberta and Manitoba. Even some sneaky $4 stuff as well. So what I mean by that is just little opportunities popping up here and there. Bing bang popping up and seeing that four handle again which is pretty exciting for oat growers out there. And then new crop Manitoba and Alberta. That 435 to 440 price point. Saskatchewan still coming in probably about 25 cents off those prices give or take. But oats just slowly making a move here again. I don't think it's going to light your pants on fire with excitement, but there you go.
All right, what else do I have here? I wrote down some diesel prices from the other day at a buck 35 on the nearby months or nearby this week or so and then as low as a buck 20 for later on this summer. I did ask for a fuel quote this morning. I haven't seen it come in quite yet but I thought maybe with lower crude there could be another drop but nothing as of hitting the start button here.
[00:04:06] Speaker B: Alrighty.
[00:04:07] Speaker A: From a headlines perspective, war stuff going on. The US has ramped up strikes against Iran. Or maybe it was is is it was the Israelis that ramped up those strikes. I'm not sure but definitely comments from both sides that the war got a little bit more intense here over the last 24 hours. Grains and oil seeds not really reacting to war stuff at this time. You can look at Russia had one of its largest strikes on Ukraine this past weekend as well. And again grains and oil seeds not really responding to any war stuff. So the war stuff got ramped up over the last 24 hours here. Grains and oil, seeds a little bit quiet weather continues to, to make the, the headlines here as well.
We've got a super El Nino or El Nino starting to do, I don't know, maybe it's a bit early to say damage, but concern impacting Southeast Asia as well as Australia. I promised you guys a guest from Australia a few weeks ago and we are working on that. They're busy planting crops as well. So I was like, okay, it's all right, man. Like we, we don't have to get into it. Right, right away. When you have a moment, let's get you on camera and talk about what's going on in Australia. So we'll, we'll have that on the agenda here in short order. I think, you know, for another headline here, I would call this the most important week for seeding. Across the prairies, Manitoba, Alberta, Saskatchewan, we had a lot of farms start, including our own, you know, May 19th, 20th, 21st, 22nd, 23rd. Like that was the start date for a lot of farms in the northern parts of the prairies. Maybe that's my bias kind of creeping in here. But this is a very important window because, you know, a major rain or precipitation event this week at some point would just push, you know, you know, more acres into June planting. I'm not concerned with what I see. I'm, I'm not concerned about, you know, when farms are going to finish planting. Like, I, I know it's going to be later, but I was also chatting with a few folks that have the data from the last 20 or 30 years. Just because you plant late, it doesn't translate to like a major yield reduction, knock on wood. It's not necessarily that event, but it's what happens later on in the summer. Now there is an ideal seeding window. I'm not an agronomist. There are days that are prime and that you want to get the job done. But I also remember driving the last week of June in 38 degree weather, 40 degree weather a couple years ago, and just watching these canola crops fail. It's a thing, it's part of it, but it's not the whole story. I hope that we can dive into that a bit deeper in the next few weeks. But still, nonetheless, a very important window here to get planting done. You know, our farm, we're sitting here today, you know, we need 10, 10 good days, nine days, something like that, you know, are projecting to wrap up around June 3rd. Is it later than Norma? Yes, about a week for us. We'll see though, you know, when we get there. And then again, any rain event, if we got an inch or two of rain for some reason, it would push us way back into mid June then. And that's where I get more concerned. All right, for this week, US Weather trends drier for the Corn Belt. Dry weather is a good thing when you're planting a crop. All right. And then lastly, and Quinton might have some perspective on this, but Canadian exports for wheat and canola continue to be very strong and ahead of the five year average. Canola doing a great job here of catching up to some degree. So we'll bring in Q from jgl. Q, how's it going this morning?
[00:07:42] Speaker B: Pretty good. How are you?
[00:07:44] Speaker A: I'm doing pretty good. We got Trenton's asking where's a good place to market oats located in Bonneville, Alberta. Trenton, I'm gonna send you. First phone call I would make would be pnh, PNH in, in Viking, Alberta. I would phone those folks and see what they tell you. And then of course bungay in. Well, any bungay location would be my second phone call. But I would start with those two. Trenton. And we'll go from there. All right, Quentin, you speak to a lot of farmers here across the prairies. What is the temperature out there? I'm not talking about the weather, but what is on their minds right now?
[00:08:18] Speaker B: Yeah, I would say it was last week a lot of conversations about just, you know, how are you doing with how you're feeling? A lot of guys were a little bit nervous. I wouldn't say that it was a panic or anything like that. Just a little like, ah, I'm a little uneasy. I wish I was giving her, I think this week since maybe like Thursday onward, something like that.
I think a lot of guys were really getting after it, just the vibe on how I was getting from the phones and obviously just kind of look at the weather. So I think there's, I think this will be kind of a catch up week. I'm curious to see what they say Thursday and that in the SAS report. But yeah, a little bit of nerves, but I would say nothing crazy.
Yeah.
[00:08:58] Speaker A: Is.
Is crop marketing like top of mind in, in the conversations as well, or is it more like putting my head down and getting this, getting the job done here?
[00:09:09] Speaker B: Yeah, no, it's definitely not top of mind. No, most of the conversations are just how's it going?
How we do? Like, yeah, how Are you feeling. And not a lot of like, what's a foot worth right now?
[00:09:22] Speaker A: So yeah, yeah, that's a little further down the, down the list of things to do. All right, fair enough. Do you think it should be like, do you think crop marketing right now, the end of May, like, should it be top of mind or, or do you sit here with the setup of, of how our, you know, our wheat markets look in our Canola markets and you feel okay? You know, I don't know if piece is the right way to say it, but just kind of okay with the way markets are kind of trading these days.
[00:09:46] Speaker B: Yeah, like, let's leave out the big, you know, you got to get this crop in the ground part, which is super important. But if, yeah, if a man had infinite energy, you know, tackling this kind of seasonal time frame right now to kind of come into a, you know, it's, it's already passed. Like, where are we? What's going to happen with Canola over the next little bit? And wheat's coming up right away too, right? Yeah, I think it's important. I think if you're feeling pretty good about your situation and you'd like to do more, but you don't want to commit to a physical contract, you want to look at it right now. It's an important time frame. It's, it's the seasonal, seasonal high generally.
[00:10:20] Speaker A: So yes, yeah, you guys send out to your clients a nice little info package every, every week. And in there you've got export data, you've got charts in there, you've got seeding progress was in there this week and seasonal charts as well. Like those seasonal charts, they kind of, you know, the warning bells kind of go off when you look at it and you're like, what's this drop? Like what happens here? What's going on? And they all kind of, you know, come in, play here soon. Like. Yeah, I don't know if you have any thoughts or comments around seasonals on top of that, but yeah, it's good
[00:10:55] Speaker B: you brought it up. Like, I don't have thoughts as to the wise and stuff, but just to beat the drum, I mean what we post is a 15 year average and yeah, like that it was May 9th, I think it was May 10th. That was the, the high and you know, we've done fine. Fine. It's not promised that on that date it's going to drop, but it's just something to be, you know, quite, quite on. Yeah, I think keep top of mind. Beat the drum on it right Now I guess while all the, all these fellas are, they're getting after it, you know. Yeah, yeah. Think about it. Think about it today and what you want to do.
[00:11:28] Speaker A: Yeah, I want to switch to talking about spring wheat specifically, but I've had a couple guests on the last few weeks and I know spring wheat was always tough to trade options. Like it was always a challenge with low, low volume. But they're saying that they're not able to trade them at all anymore. Like there's just nothing there for liquidity. Is that the same, like, same kind of thought out of you at JGL Capital or you.
[00:11:55] Speaker B: Yeah, yeah. I haven't seen a springly option traded since like I come across because I see everyone's trades go through in our whole team and I don't think I've seen one trade since it moved to Miami. They're just not, not liquid enough. So yeah, it's unfortunate. And that is the case. There's. There's alternatives folks can use, they can use Chicago or Kansas option. You just want to be quite aware of all the risks that come with that because now you're trading an inter. Commodity spread and it's not quite the same. It's not perfect. You want to be aware of the spread. Things like that. Like I was doing a little bit of Kansas puts throughout the start of the year and. But now I'm not even doing that because the employer. They're so expensive. I'm quite expensive with all this. The implied volatility is high on those. So kind of just left it. If someone wants to do anything, then probably just try to do futures only is where my head's at.
[00:12:49] Speaker A: Yeah, it's. It, it's kind of taking the fun out of, of like strategizing around, around wheat. Like I, I probably favor more than anything right now would be like the courage calls where you're like, you know, you sell some physical and you're seeding wheat on May 26 and a little bit concerned. So you take some upside, upside potential in, in the KC wheat. Maybe it's not, it's not the same, but it's kind of the best we have. And other than that, I'm struggling with how to make, you know, hedging wheat kind of fun or, or cool. I guess I should stick with.
Yeah.
[00:13:25] Speaker B: Yeah. The one interesting part I'd say with wheat right now is like just how the bait, like the basis is so unattractive.
Yep. Yeah. Yeah. So you know, just being aware, having some awareness there and what the futures only can look like. And if you do futures only what that can look like if we come back into just like some sort of average reversion mean reversion on the basis get to a normal, you know, more of a normal range.
And what that, what that ending cash number looks like. Yeah, it looks okay if that happens.
[00:13:55] Speaker A: I've been do it spending a fair amount of time on that the last couple of weeks. And I even did some math for listeners on the show the other day. There's like one grain company with a bit more transparency around the wheat basis being Patterson. But yeah, there was just in like day to day there was a 50 cent per bushel spread on the same month. The same quality, the same everything between competing elevators like within 15, 20 minutes of each other. And then I could find some extremes like I could find extremes of like a buck a bushel out there where, where you could figure out how to gain that extra buck. So, so yeah, I like the futures only I know people are like, well if I've got my futures locked in, then I'm, I'm putting a, taking a chance here on, on this basis. But some of my favorite contracts, some of the highlight reel of best moves I've, I've ever made is separating those decisions out. Sometimes it's the opposite where you take that basis and leave futures. But yeah, like it, it honestly it's just one of those things that it isn't that complicated and can yield some very significant results.
[00:15:00] Speaker B: So yeah, yeah, it's, it's. You have to isolate the two. Yeah.
[00:15:05] Speaker A: Do you have any like hedging strategy from this year that you're, you're quite happy with right now from a performance perspective? Because I, I joke that you know, in a, in a rallying market, my hedge account is just brutal, right. Just getting beat up. Not that I'm saying they're bad, but you know, it, it just gets beat up when market's rally. But is there anything that stands out for you?
[00:15:27] Speaker B: I'm gonna kind of have a trick answer to this one, but.
And some of those folks that I've done a collar with this year, unfortunate I suppose, but it's just doing a put earlier in the year when, when things were lower and we rallied. Right. Did a put obviously that has not that, that trade. If you did that in January, February, that, that you're down big on it, right. November puts. But yeah, like you've lost what, you know, let's just pretend it's top 20. You know, you spent $30, you know, you've lost maybe 20, 30, 20 to 25 worth of that right now.
But what have we. What's the, what's the gain look like since then? Like 120 plus, like a hundred and, you know, $40 or something. Yeah.
[00:16:13] Speaker A: Keith was calling it in the lunchbox crew, you know, in, in the week of Christmas. It was, yeah, like 610 or 620 and we're 750 now. Right. Something like that.
[00:16:23] Speaker B: So, so just when you do a put only and you just be careful about taking away upside, situations like that, like you still have that, you know, low probability of payout asset and you've. And you, you did hedge and you've reaped the reward of not getting in the way of upside.
So just. Yeah, I, I like how that's gone. And I'm not. Oh, shucks. But when I'm making the phone calls again to say, hey, how are we feeling right now? But you know, that last one, that didn't work out very well. But it's only this amount versus we would have sold a call. We'd be upset.
[00:17:01] Speaker A: And you, you could say, well, instead of doing the put, I, I sold, you know, a deferred month. I went and sold to the, the grain elevator at that price, like, you know, at 700. Well, that's where you feel upset and some of the stress of that. But you didn't do that. You have an asset that has time to it yet you can sell it at 7-5760. Get out of your put if you want to get some of that money back. Like, you're definitely further ahead.
[00:17:29] Speaker B: Yeah.
[00:17:30] Speaker A: All right. Anything that you're watching here over the next month or so. We talk seasonals, we've talked planting. I know you guys are really dialed in on weather as well. I don't know if you're seeing something different from a weather perspective that's notable, but any, anything that, that you're looking at here over the next month that we should be paying attention to.
[00:17:49] Speaker B: Question, I think, you know, I'm thinking about last year and how important, you know, it was dry, dry, dry, dry, dry. And then once that weather hit that, that ended up being sort of the mid June, right? Yep.
[00:18:00] Speaker A: So just.
[00:18:01] Speaker B: Yeah, it'll be. It's weather now, I suppose, for sure. How things going in Australia this El Nino? Let's, you know, top of discussion. It's definitely a weather market now. Lots of phone calls, seeing how folks are doing. This is one of those times where because there's such a good community and you, you can talk to enough folks, you can actually figure out what's happening with the Canadian crop pretty quickly.
Yeah. So it's, it's getting into that mode. It's, it's our, it's our time of the year, you know, versus when it's when we're just sitting in the winter doing nothing. It's the demand sides of the year. And I don't know exactly how that it's, it's hard for me to pick the phone and get a chokehold on that one. So. Sure, yeah.
[00:18:43] Speaker A: Yep, fair enough. We've got a lot of, a lot of, A lot of weather ahead of us here. And, and like I talked about earlier, the war stuff's not doing anything at this time. Like, from what I can tell, it's not really doing much to, to move grains and oilseeds. We are in silly season. We are in weather, you know, wacky weather season here and, and then even like to under, you know, to, to support this. All in the, in the background is that doesn't matter if it's corn in the U.S. canadian wheat, even Canadian canola. Now, like, the demand is just quite strong here underneath all of this. Like, it, it's not that it isn't anymore. Like, it's quite strong. So that's a little support in the background as well.
[00:19:26] Speaker B: Yeah, numbers have been really good. Numbers are really good on export and crush.
[00:19:30] Speaker A: All right, folks. Well, we did have the beeper go off, so I'll just end kind of with a few things here. I, you know, what keeps me up at night at this time of year is that, you know, markets tend to find some type of peak if it's, it could be an April, May or June, July. Like there's a window here where we find a peak. And I always want to make sure that I've got my sales and hedges in place, that I'm in a spot where I'm feeling really, really, really good about my, my coverage. What I mean by that is you don't have to go to 100% or whatever. Every farm is different, but that you've bought yourself time.
So I want to feel when this market does its, its seasonal pullback or it finds its reasons to drop or whatever it is, I want to feel really, really good that I bought myself time because markets go up and down. So I want to make sure that I've got my, my business done. I feel good about my exposure. I feel good about my hedges. Regardless of what the market does moving forward, if it is going to pull back.
I've got time to be patient. I know when money's coming in. I know when I'm delivering and I've got that done. So I'm just looking to buy time. I'm looking to feel really, really good in the next few weeks here if the market decides that it wants to pull back in a big way. All right, folks, that's what I've got for insights this week. This week's cup of coffee was brought to you by upl. Teleron is a brand new fungicide that can be used on your cereals, pulses and oil seeds. Find out more information by contacting your local retail or UPL rep. I'm out of coffee. That's it for this week. Thank you, Q, for joining us today. And I'll see you guys all on Friday. On what the futures I've got, Chuck Penner. We're going to cover green peas, Durham lentils, basically all the specialty crops. We're going to hammer those out on Friday's episode. All right, guys, see you later.
