Episode Transcript
[00:00:00] Speaker A: I have to ask you right off the hop and you might cringe at this question, but canola oil, canola oil processors crush plants in Western Canada. Should they be concerned? Do you think they're concerned?
[00:00:12] Speaker B: Concerned for all of the above reasons and then potentially a few more. We're only a few weeks into the presidency and it feels that this has been eight years over the course of the past two, three weeks.
[00:00:26] Speaker A: Hey folks, welcome to the what the Futures podcast, your quick guide to better farming decisions.
All right, folks, welcome into this episode here of course recorded each and every week in the UPL studio. Like I said, the last number of weeks. We're getting down to the nitty gritty here. February 15th is the deadline for Grower Rewards program. Sign up for that. That is the deadline over at upl. All right, Susan Stroud, I'm we're going to get to Susan in just a second here. But please folks, do me a favor. If you're enjoying the podcast each and every week, like it YouTube. Subscribe to it on YouTube. Like it. Wherever you get your podcast, give us some ratings, some comments. It all helps drive the show forward and of course, share it with your farming friends, your farming neighbors. Hey, get them hooked on podcast. There's a lot of great content out there, including the what the Future show. So thanks for joining me once again this week. Let's get into it here with Susan. What do tariffs, policy changes and canola markets mean for farmers in 2025? Today we're joined by Susan Stroud and expert Ed culture analyst, keynote speaker and the driving force behind no bull egg.com with years of experience working with major industry players and delivering actionable insights, Susan is here to break down how these sweeping changes might impact Western Canada's canola industry, farmers, livelihoods and the global market. Susan isn't just about theory, she's about solutions. Whether it's understanding the ripple effects of potential U.S. tariffs or navigating the evolving biofuel policies, she brings a wealth of knowledge and a no nonsense approach that every farmer and ag professional needs to hear. So our tariffs just talk. Are they a ticking time bomb for Canadian canola? And more importantly, what steps should farmers take to protect their bottom line and turn uncertainty into opportunity? Let's dive in.
So Susan, welcome to the what the Futures podcast. I appreciate your time. I know you've been extremely busy here the last couple of weeks, but it's Friday. How's the week ending for you?
[00:02:31] Speaker B: Like most weekends, I will be right here at my desk.
[00:02:35] Speaker A: Yeah, you do put out some great content over the weekend. So there you go. I have to ask you right off the hop about what's playing out here with potential tariffs. 45Z. We'll get into that a little bit later on, but canola oil, Canola oil processors crush plants in western Canada. Should they be concerned?
[00:02:53] Speaker B: We've had the largest changes in biofuels policy here in the United States since the inception of the renewable fuel standard 20 years ago. So this is taken place in just the past few weeks. These tremendous changes, plus we've had a complete about face and administration. And this is not even necessarily that we went from this super green administration to Donald Trump, who is definitely his own man and you know, in the past has been obviously favoring big oil more so than biofuels. Not even about that, but it's just that we're in this kind of unhinged period where, where all government programs are falling under intense scrutiny and rightfully so. But it's crazy concerning for what the future of these programs looks like. And then also you throw in the fact that we, you know, for once we have a president that's actually doing what he said he was going to do. So that's nice and refreshing. But it's terrifying at the same time because, you know, he said that he was going to dive right into trade negotiations and we're only a few weeks into the presidency and it, it feels that this has been eight years over the course of the past two, three weeks. So just incredibly challenging times.
[00:04:12] Speaker A: We're going to come back to that because there's a lot to dive into there. But I'm going to lighten the mood here now and switch gears on you because you made me chuckle this week when you said that you were going to stockpile eggs after the holidays. Strategically, you know, stock up on eggs. And I laugh because, you know, I, I buy eggs every, like every week. You know, the thought of stockpiling, it happens at Thanksgiving, it happens at Christmas. But I never thought about it from a, you know, buying the low of the, the egg market. But it hasn't turned out for you. What's going on with eggs in your neighbor?
[00:04:47] Speaker B: Normally it's, normally it's long and wrong, but this time I'm short and really wrong. So the egg market in the United States, I mean, perhaps it's this way and other parts of the world too, but egg market in the U.S. generally, when there's not wild anomaly like what we're seeing right now, you see the market kind of by the point, you get to October or into November, you start to see the egg market increase, prices are increasing, but it's because demand is increasing as you go into holiday baking season, that kind of thing. So normally once you get past the holidays, then you see prices drop and then it's followed by a ramp up as you get into Easter, for obvious reasons. So I'm thinking, you know, ahead of the holidays, prices are high because we see still have, you know, we have holiday demand and then we also have this bird flu outbreak that's causing a supply shortage. And I'm like, no, I'm going, I'm totally going hand to mouth here and boy, talk about stick my foot in my mouth with, you know, wholesale prices. I think Bloomberg reported the other day, we're up north of $7 a dozen as the USDA is reporting wholesale prices, which is just insane.
[00:05:56] Speaker A: Yeah, I did a little, I did a little price checking for you here for Canadian eggs. So a dozen, just large eggs, nothing fancy about them, is about four bucks a Canadian. So a little bit, a little bit cheaper up north here. And then I don't know about you, but all my neighbors have chickens as well. Like it's like this thing. I don't know if it's like this everywhere, but in western Canada where it's a exciting hobby and they're giving away eggs like crazy. My neighbor Rachel, she'd bring a dozen eggs over here instantly. She's got eggs for days. But I, Yeah, I thought that was kind of a funny one. And here's my, one of my eggs munchers here showing up. Oh, hi, Finn joining the show. He likes this. I think this is episode three for you. Hey buddy. Yeah, episode three for Finn. But yeah, that's wild. So on the bird flu side, once upon a time I really got stung on my crop marketing plan because I did not give enough weight to the bird flu situation and the demand for feed there is, is there any cause for concern on what's happening with bird.
[00:06:56] Speaker B: Yeah, so bigger picture. So right now, the largest portion of outbreaks, they're happening in laying hen flocks. So this is why egg prices are going crazy. It really, it creates more of a kind of a localized problem because the way that the US layer industry is you have very large commercial farms, so they're referred to as complexes. And so you might have 1 million or 2 million birds located in one, you know, within one complex. And the issue is that it, it's not that you have 2 million birds that just die, it's because of their infected. It's because you have one house within that complex or one building that it's detected and therefore you have to depopulate everything. So the bigger, the bigger issue, it's very localized. So they're, you know, a lane and ration or whatnot. You're talking about 60, 70, 70 plus percent corn. So they're going through a lot of corn for laying hens. And so if you're, and they're, they're clearly consuming meal too. But it's a much bigger deal at the local level because suddenly if you have all of this demand for corn because they're, you know, they're going through several thousands of tons of feet a day. Well, if suddenly that goes away because they have to depopulate and then they have a prolonged period where it's sitting empty because you have to wait X amount of days and you know, all that. So it'd be a lot different I think for market on the side. Maybe if it was a huge outbreak on the broiler side. His broilers are consuming 50%, represent 50% of all soybean meal consumption here in the United States.
[00:08:39] Speaker A: Okay.
[00:08:40] Speaker B: So it would be a big, it would be a much bigger deal. But there are a variety of factors. The reasons that broilers are not impacted nearly as much as laying hens biggest driver though is because you have huge complexes with several million birds impacted at one time.
[00:08:55] Speaker A: Sure. I appreciate your, your comments on that. And I guess is there if we look at the trend, I don't know if you have this in front of you or not, but are infections, are they on the rise? Are they starting to slow down? Are, I guess where there's, there's a.
[00:09:11] Speaker B: Tremendous amount of outbreaks that have just happened here within the past five, six weeks, hitting a lot of these larger laying operations. And I think we've had something like 20 million birds depopulated since January 1st, just in layers. So it's a really big, it's a big deal. The problem is that unlike a broiler chicken that has, you know, a six or seven week lifespan and it's taken into a house as a chick or as a, you know, a day old chick, when you're talking about laying hens, they have about 17 weeks or so before they get to the point that they're able to start laying. And so it's a totally different bird. I'd almost call it a completely different animal because of the way that biologically the way that the bird develops, the timeline and everything else. So because of those differences it just sets the industry back and it's going to take quite a lot longer for us to return to some level of normal.
[00:10:08] Speaker A: Okay, so let's. I'm going to jump now Susan, into your. Just maybe a bit of your, your background and yeah your passion and what you got on. On the gold right now.
[00:10:18] Speaker B: So I started out at a country elevator way long ago. I ended up enjoying the grain aspect of it. And so I spent several years with ADM in the St. Louis area. They have two large facilities along the Mississippi River. So taking truck and rail in and then loading out on barge.
Then I went to Consolidated Grain and Barge in the same area doing the same thing. When I was a cgb. They thankfully were willing to embrace the fact that I kind of have this never ending desire to learn more. I'd always done email updates to my producer customers, you know, customers I was assigned to at the elevator, just to kind of keep them all on the same page. Especially because river markets are very dynamic. You can see a lot of changes really quickly, especially driven by changes in river conditions, barge freight, that kind of thing. And so, so it kind of started and my distribution list it KE growing to the point where it had more company employees on it than it did actual producers. Eventually they rolled it out. It was called Straight Talk with Susan every Friday. They rolled it out on a company wide basis. And so I was sending an update every Friday to all customers company wide.
And so at the point that I got out of, it's been about almost five years ago I got out of the cash grain world. But I wanted to keep writing and I did and eventually I turned it into a paid subscription service. So it's a newsletter subscription service. A few years ago. I'd always wanted it to be a revenue generator. No one likes to spend a lot of hours every week doing something for free. It was a good exercise for me because it helped. I'm forcing myself to learn the things that are moving markets and then just kind of give myself a breadth of knowledge that I wouldn't have otherwise been exposed to necessarily. So when the Mississippi we had our first go round with really, really bad low water conditions in the fall of 22, I turned it into a paid service then. That was kind of my opportunity. And you know, since then I took a very early interest in the expansion of US soybean processing or crushing capacity expansion here in the US and tying that back into California's low carbon fuel standard. It's actually Arnold Schwarzenegger, believe it or not, is the reason that Soybean oil now has added value or new. You know, we're trading at substantially higher levels than we had in the past. And it's because of Arnold and his moves when he was California's governor. And you know, it had a tremendous impact then on of course, Canada and the Canola markets as well.
So, you know, my background is very export centric because of working along the river for so long. And so it's really weird that I'm in like this crushing or processing capacity and then talking about biofuels a lot and then now by default talking about policy. But it's kind of this is the road or the path that I'm forced down because no one's going to buy your, your newsletter subscription service unless you're kind of on the leading edge of what's happening. Yeah. So and then from there, as you kind of mentioned earlier, I've been all over the place. I do a lot of speaking engagements now, which.
[00:13:46] Speaker A: Yeah, you're busy.
[00:13:48] Speaker B: It's fun because it's definitely exposure to a lot of different groups, a lot of different parts of the industry that, that I really never thought, you know, otherwise I wouldn' have interaction with at all.
[00:14:00] Speaker A: So you were, you were speaking on a tour, I want to say maybe South Dakota or maybe it's North Dakota, but late last year, I think it may be November, and, and I said, hey, I was, I was like, oh, if Susan's willing to go to North Dakota or South Dakota, I wonder if she'll come up to the Canadian prairies. And by golly gee, we, we got you on the, on the agenda for later this year. So that's awesome.
[00:14:24] Speaker B: Yeah. If Susan is silly enough to fly to the Dakotas in the dead of winter, surely she' a little further.
[00:14:31] Speaker A: Just a little bit. Yep, just a little bit. Awesome folks. So if you're listening, it's no bull egg. That is the name of the service. I guess the writing that Susan does is.
[00:14:42] Speaker B: No, no bullag.com that just there that sums it up.
[00:14:47] Speaker A: Okay, let's get back into now. You know this canola oil crush question that I asked you off the top. You mentioned meal a few times already in our conversation here, but is this a big deal for prairie farmers as well? How the change in policies and my follow up question would be, you know, with the guidance that we received a couple of weeks ago on 45z now with the new administration, do you just toss all this stuff out and we start from scratch or how do you view that?
[00:15:16] Speaker B: So it's so complicated I like to say the government giveth and the government taketh because we have legislated ourselves into this position. And so it just, it means there's so much more in the line now due to policy than there ever has been for. So talking about going from. And we don't even need to worry, let's just not even worry about 40A the blending tax credit that went away into the year. Let's just talk about 45Z and where we're at right now. So the most important thing to know is that 45Z, it's simply a proposal, it's not a final rule. Right now we're in the middle of a comment period, a few month comment period. And we don't know what the. Because this is, is part of the Inflation Reduction act. And Trump has been very vocal and in fact he's paused some payments that are affiliated with the Inflation Reduction Act. So we have to keep in mind that none of this is a final rule. We don't know what this looks like a few months down the road, six months down the road, who knows? But it is the most recent thing that we've received from the government as far as guidance goes. And so that's what the industry is left to use for the time being because we, we don't know anything else. So there were a few really big things that came out of 45Z. So the first of those being that imported used, or I should say fuels made from imported used cooking oil, biomass based diesels, your road transportation, those fuels will no longer qualify for 45Z tax credits. So, you know, that's a big win if you consider like soybean oil or canola oil, you know, ooh, this is great because this takes out, this is less feedstock competition. The other kicker is that canola oil oil was also excluded. It wasn't that it was imported canola oil, it was nothing like that. It's that it has a CI score, carbon intensity score that is too high. It's above the threshold for that finished fuel to qualify for the 45Z tax credits. So when you look at canola oil, which in at 2024 averaged about, I think it's 12% of all feedstocks that we use. And feedstock just means what did we use to make the biodiesel and renewable diesel out of? So canola oil, about 12%. And then you have used cooking oil, which has been close to 20%. It's ran about 20% for a long time. So you combine the two of those and you're talking about like nearly one third, effectively one third of the feedstock pool. So it's no longer commanding a subsidy. Now it doesn't mean that you still couldn't make these fuel out of it. You know, it could be that you still see some canola oil working into the west coast and getting some sort of smaller credit or maybe even no credit, but going back into like low carbon fuel standard, you know, some program like that. But it's a major shock to the system because it's, it's like, where's this coming from? Or you know, we have, we don't have enough domestic feedstocks to fill the void. The other biggest change is that with 45Z, there's no longer that $1 blending credit for imported renewable biodiesel. So that also nearly one in every five gallons of biomass based diesel supplies here in the US has been imported and it's been because of that long standing lending tax credit. So that went away too. So that also kind of creates a huge unknown. The other big piece of it obviously for Canada is the tariff situation or potential tariffs. So yeah, you know, veg oils are highly interchangeable. So soybean oil, canola oil, not only mean we're using a record amounts of them for in biofuel production now, but we've always used them in various food applications. Most of the, you know, even barely processed products on grocery store shelves contain some sort of vegetable oil. So vegetable oil serves a million different purposes. And aside from the stuff that's bottled on the shelf as pure canola oil or vegetable oils, predominantly soybean oil, that kind of thing, and a lot of process, the oils are all interchangeable. So you know, for me looking at. Okay, what just happened with 45Z, well, canola oil doesn't command a credit or a subsidy anymore. So maybe we see more canola come into the US and be used in food and feed applications. Obviously not nearly. And then we'll see more soybean oil moving into biofuel applications. But when you consider now the potentially we have a tariff situation, then that throws a whole nother range. Yeah, yeah, well, because when tariffs are put on products, contrary to the way that Donald Trump says that other countries are paying tariffs. Yeah, you know, it's the importer, so it's the whatever company here in the US that's buying that canola oil that's stuck paying 25% more for it. So what happens is, you know, first you get that like lack of demand shock in Canada plus that product that the tariff was placed on it has to reprice itself lower to try to become competitive to the point where you still see flows into the US and in this instance.
[00:20:33] Speaker A: I don't know if you have an answer to this one, but the CI score for Canola, is there a way that we can improve that to qualify? Or maybe you don't have that answer, but that's something that I wrote down here.
[00:20:43] Speaker B: So I spoke with, with Chris, the head of Canadian Oilseed Processors Association. I spoke with him last week and I can assure you that they're, they're looking at every, you know, every possible way that you could get to the point where Canola is able to have a CI score that's low enough that it would qualify or work in.
[00:21:03] Speaker A: Okay.
[00:21:04] Speaker B: So I think things are a little murky still on the like the climate smart ag piece of it because Canola oil CI score really it didn't miss the mark by much. So maybe some, there are probably some smaller adjustments, but I can't give you a definitive answer.
[00:21:21] Speaker A: Sure.
[00:21:21] Speaker B: On that though.
[00:21:22] Speaker A: No, I appreciate that context. You know, we've seen across the prairies like a brand new crush facility in Regina, Saskatchewan, just, you know, they're buying for, for the fall now. Like it's just going to get started here. It's a big new Cargill facility we've seen in Yorkton. There's a few crushers there. We've seen, you know, significant expansion in those ones. We've had proposed other crushers. Those plans have kind of fallen apart now lately there's been significant investment here to fill this US market. So I know you, you have a, there was a bunch of interesting graphics here in, in your writing here the last couple of weeks. Can you give us an idea on, on how much canola oil is moving into the US right now?
[00:22:03] Speaker B: Yeah, the US imports, I think the numbers about this tells you how many things I attempt to cover. And I can't remember the specifics, but the US imports about 80% of its canola oil supplies and 99% of that's coming from Canada. So that's a big deal. And I'm glad that you mentioned we've had this crush capacity expansion on the bean side and some on the, we have swing plants that can process sun and a little canola too. But yeah, Canada's had the same type of expansion as you mentioned. So, you know, it's not only because you have changing domestic policies as well. Extreme legislative policies tend to start in Europe and then California likes to copy them and then they spread up the west coast and they end up in Canada next. So that's kind of the.
[00:22:50] Speaker A: That's the flow. Yep, yep.
[00:22:52] Speaker B: Yeah, that's the flow. It doesn't matter. It doesn't matter what it is. It's, you know, as soon as California does it here in the US and then it's like, oh, boy, causing problems for the rest of us. But yeah, that's the bad thing is that, you know, within Canada, you've responded to not only what's happening with US programs, but then you're building out your own low carbon fuel initiatives as well. And that means you're pulling out increased crush capacity that now has left everyone scratching their heads and wondering, you know, where in the world do you go from here? I do think it's kind of interesting. It's amazing how much Argentine soybean oil Canada imports. Like it's.
[00:23:32] Speaker A: Oh, really? Oh, yeah.
[00:23:34] Speaker B: You would benefit a lot, I think, from having a, having a podcast with my friend Will at Carbon Acumen. He's based in California, but he is the most well versed guy I know and all things biofuels and especially when it comes to various programs.
[00:23:52] Speaker A: All right, follow up episode here. I got that written down. Okay, cool. Well, maybe not cool, but, you know.
[00:23:58] Speaker B: I guess I say that to bring it back to the point that when, if you're bringing in a tremendous amount of soybean oil from Argentina and again, these oils are, you know, oils are interchangeable. And so if you're able to, there's a potential there that you're going to see just more domestic demand for canola oil. I mean, maybe this is wishful thinking on my part. Please out some of those cheap Argentine imports. Or it's the bad word being cheap. So, you know, it's only if it's. Yeah, only if it's cost effective. So.
[00:24:31] Speaker A: Makes sense. Yeah. Financially. Okay. We haven't talked about meal yet. Obviously the canola oil or the canola seed is not quite 50 50, but pretty close for oil and meal. We move a lot of meal into the US Anything kind of standing out on the meal side?
[00:24:48] Speaker B: Yeah, that's. I mean, that's been the. So US Dairy farmers have been benefiting from increased Canadian canola crush where we're importing record amounts of canola meal and we're using the US as the largest canola meal importer in the world on a percentage basis. Dairy. I looked it up earlier today, so. And we're importing like three times more than we're actually producing here in the U.S. it's very similar to the oil situation. Dairy uses about 42% of the all canola meal in the U.S. a beef cattle followed by that at 39%. Broilers use some horses and then a little bit to hogs. But that, that sums it up. So canola meal usage as much, I mean it's only a fraction of what soybean meal usage is here in the United States. But still again it's an important thing and we have these dynamics as it is with all feed ingredients. You know, things are interchangeable just like on the oil side. So potential for a lot of changes ahead or changing rations maybe especially as we keep crushing and right now meal a bean meal in the US that's our limiting factor when we look at bean crush, especially with soybean oil's potential to see more demand due to these changes.
[00:26:06] Speaker A: With 45Z I was, I was thinking about, you know, you're coming out in December to speak and I was thinking, well I have all the action here is in January, February, like there's so much going on but I think when we get to December it's going to be 12, 12 months of learnings that you're going to be talking about as well. There's lots of unknowns in front of.
[00:26:25] Speaker B: Us and I don't, I can't speak. I think we also have to remember how important the trade between the US and Canada and the US and Mexico is. A lot of it. We have to think about how important rail is, you know, how much of this moves by rail where we share borders and we have all of this rail infrastructure. So, so I don't know. I mean my crystal ball has never been this blurry or foggy. But just looking at the bigger picture and longer term, I mean hopefully whatever things could potentially be put in place don't last forever.
[00:27:00] Speaker A: Yeah, I like I view, you know, the tariff situation as somewhat more like short term. I don't know if what short term would be defined in days, weeks or years, but hopefully a little bit more short term. But then the policy side and all the changes there, that's, that does not move quickly. So once something is set like that, I don't know that, that, that takes a while. So that one gives me a little bit more anxiety more than anything because as you travel north across the prairies, the further north you go, the higher the percentage of a canola acre on a farm. I would say not exactly like that, but you know, and I live just outside of Edmonton, Alberta. Canola acre on a farm would be 40 to 50% of what they're planting would be canola. And, and it's been the crop that you plant that pays the bills. You know, you plant wheat because you enjoy it and you enjoy losing. Well, you don't enjoy losing money, but who enjoys wheat?
[00:27:57] Speaker B: I've never heard anyone say I enjoy.
[00:27:59] Speaker A: Wheat, you know, in the crop mix in my region specifically. And I'd say as you travel north again, a day harvesting wheat on the farm is just generally a really, just a good harvest day. You've got efficiencies. Usually it's pretty smooth going, but you're losing money like you are losing money. But I bug my, my dad, my brother all the time. You know, I know you guys really love doing it because you're not making money going across that dirt. But going back to the canola acre here, you know, 20 million acres of canola, this is the crop that we often look at to say, hey, this one's going to pay the bills. And it's the one that has so many questions around it right now. It's, it's major concern for me.
[00:28:44] Speaker B: Well, and we haven't even hit on the whole seed oil thing. We're making America healthy again. I think though, the thing that Canadian canola has going for it is canola has long been looked at as the seed oil that's more heart healthy. So there's so many unknowns right now in the world of oil seeds between policy, tariffs and a movement to make things healthy or. Yeah, healthy. There's a lot of things I could say about that that we don't need to get into today.
[00:29:13] Speaker A: All right, all right. So we've talked about tariffs, we've talked about policy, talked about all the unknowns, a lot of the unknowns out there. You also, though, you spend a great deal of time and energy, you know, giving farmers perspective on their crop marketing decisions. And you know, some of your messaging out there had a nice soybean rally. You've been talking about, about taking advantage of some of these opportunities. Where do you see price direction on soybeans? I don't know if you want to attempt bean oil. Oh man.
[00:29:44] Speaker B: Why would you ask me that?
[00:29:46] Speaker A: Oh, why not?
[00:29:47] Speaker B: I'm going to pull up my quotes just so I can consistent have a little. Yeah, so when you're, when kind of back to when you mentioned your, your own conference event and like, oh, what do you talk about? I mean it's nearly 12 months down the road and things. This is why I frequently use the most of My talks, it's change is the only constant, but it doesn't have to be a threat. That is what I go with because you know, it's constantly like here comes this barrage of changes and unknowns. It can be, you know, and not even talking about weather, but just these, these political factors and the way that we've seen other countries come on. And a lot of it is, you know, we have these programs here in the U.S. for instance, where like with biofuels now we have nearly 40% of US corn demand and it's been like this for the past 15 plus years goes into ethanol. And now we have 50% of US soybean oil demand goes into biofuels and it's become a soybean oil instead of this, I don't want to say discarded, but it's the byproduct that had no value that it was. You're always getting choked on because it, you had no place to go with it because we've traditionally crushed for meal. Suddenly it's like, wow, this is a driver in the bean market.
[00:31:06] Speaker A: Yeah.
[00:31:07] Speaker B: But yeah, the scariest thing is we, we get into these trade negotiations or one. I think it's the pace that we're, that we see these things play out. We're literally seeing the leaders of, you know, the most important nations in the world duking it out on social media with the back and forth. Your legacy media outlets, they're so far, they're days behind. It's kind of like that whole situation developed with Columbia a few Sundays ago. It was back and forth. Colombia ended up caving twice and we're done with it and we've moved on. And kind of the same way we saw Mexico's president come out, I guess it was Monday this week and Monday.
[00:31:48] Speaker A: Yep.
[00:31:48] Speaker B: These long statements about trade and everything else and it's just we're in such a different time. So with that being said, markets react very quickly and Canada and Mexico, that's one thing. But when Trump starts taking on the giant of China, which we've watched that play out before, I'm very just given my background is in merchandising, I'm typically very conservative because it doesn't, it doesn't pay if you're in an origination position, it typically doesn't pay to be super bullish. You can't give the. Not only because clearly you're wanting to buy the bushels, but the other piece of that and the more important piece is giving producers this constant sense of false hope. That's a lose Lose for everyone. Your job is to help producers better manage risk and kind of lose their desire to be a price predictor and try to get them to pivot into being more of a risk manager. So with that being said, I can remember when China first came out and announced retaliatory tariffs that included U.S. soybeans the first week of April of, of 2018. I mean it's like four in the morning and beans are down 60 cents. And no one likes that feeling. You know, we've had those feelings again. And it's not that markets don't catch themselves and then find some, you know, some sort of level of normal, but those are the things you have to keep in mind when you're, when you're talking about trade because these are situations that none of us have any control over. And so you have to go back and look, well, okay, beans rally. Let's just say for instance, beans have, of beans have rallied a dollar in the past six weeks time, four weeks time. What makes sense here? Should I take some risk off the table? Yeah, probably looking at the bigger bean situation. We're not running out of beans. We won't be running out of beans for a while. The corn situation, fundamentally speaking, it's much different. We have very tight stocks among major world exporters and because of production issues in Ukraine, the Black Sea had drought issues this past year in combination with smaller stocks in our South American, Brazil and Argentina. And now some potential weather concerns. I mean that's a lot of markets been focused on what's going on in Argentina with their corn crop. Also potential delays in Brazil's second corn crop planting. And so that's why we have corn that's found its way back near five bucks. The bear in me wants to say these are good levels. You know, it's because one of these days we are going to realize that it's not a total disaster in South America and we have plenty of bushels and so on and so forth. The other side of it is that if we start to see China, even though it doesn't necessarily make sense from a dollar perspective, China has their, I don't remember, third, fourth record corn crop in a row. They have lower domestic prices. They don't dollar wise, it doesn't necessarily make sense that they would be purchasing large amounts of U.S. corn. I guess with that being said, would the market get pretty excited if we saw in and make some sort of purchases that are related to fulfilling a trade agreement? Yeah, because the US has whittled ourselves down to a much Skinnier position than we were just a few months ago. And that stands to make a big difference on the bean side. I mean, again, we're swimming in beans.
[00:35:12] Speaker A: Yeah.
[00:35:12] Speaker B: Do we see them come in and make purchases that they're obligated to make? I don't know.
So to answer your question, I have absolutely no idea. Good.
[00:35:22] Speaker A: All right, so I wanted to throw out here as well. China's investigating, you know, this anti dumping situation. They have this 300% tariff, a potential 300% tariff hanging over our heads here in Canada. This investigation is ongoing that we were dumping this cheap canola in China. I haven't heard any updates on it, but you know, we talked everything about US policy and changes and tariffs. China's in the mix here as well. They could, they could cause some significant pain for us. 70, 75% of our exports last year, seed exports went to China, I believe.
[00:35:58] Speaker B: Yeah. And I think the funniest thing about like China and anti dumping, I mean, if there's any country that would maybe be the epitome of dumping, it's probably China at this. At the same time, you know, they're the, the largest, they import what, 40 plus percent of all of the world's commodities into one nation. And then you have Canada being a tremendous canola producer. So China is such a, such a pain because they're so big, you know, you can't live with them, you can't live without them. Yeah, yeah. So it's just everything with them is positioning, rhetoric, even going back and looking at kind of the things that happen with China, scooping it and buying. They, they made these phase one or whatever agreements with the US like for US corn way back when. And then it wasn't until we were at $3 prices where they had a tremendous financial incentive to import it, that suddenly they started importing copious amounts of US corn. So they're an opportunist nation, or I should say the ccp. And it's unfortunate because when you become so reliant on their business, it's market al.
They are the ones that have the upper hand. US sorghum producers are kind of left reeling in a similar position right now. It's not that there's some sort of anti dumping investigation, but it's that it's not advantageous for them to come in and buy us sorghum. And so therefore we're. The US market is absolutely flooded with it because we have nowhere to go. Our normal customer is not interested. And so, so yeah, that's a market that that ebbs and flows a lot with extremes.
[00:37:48] Speaker A: So we, you know, China is our largest, you know, we export the largest amount of seed to China. So we develop a domestic crush program. We get these crushers going, we see a tremendous amount of growth, we try to find alternative markets. And then stuff like what we're experiencing in 2025 happens when we, our other home for canola oil and meal decides to make some changes.
[00:38:11] Speaker B: This is why I feel like I will always have a job because a lot of times when I'm doing presentations, I just like to walk through these changes and these various things that were catalysts that just set off a domino effect. And it's so complicated because everything is interconnected and related and we're dealing with it here in the US and you're dealing with it to just the same way in Canada. Yeah, Policy and trade.
[00:38:40] Speaker A: We like to, on the show, we like to, to, you know, air towards the side of positivity and you know, excitement. You know, if there's, is there anything that stands out right now on the oilseed side that you could look at with optimism? I'm sure there's something.
[00:38:55] Speaker B: Yeah. At the end of the day, the world is making a large effort to go green in a variety of different ways. So most of that as we know for the purpose of ag or grain and oil seeds, we look at that from the biofuel perspective. Bigger picture, huge amount of SAF demand, so sustainable aviation fuel. Here in the US we're so focused on it with the corn ethanol piece because we're struggling to find a way to get corn ethanol in the alcohol to jet for sustainable aviation fuel demand. But you can also make sustainable aviation fuel. And actually this is kind of the main way that we're making it worldwide now you can make it out of a lipid. So these same feedstocks that we're making biomass based diesels out of weigh waste oils. You know, look at Europe, they're a big user of rape oil.
So these things like Europe has EU, has a 2% SAF mandate, China's actually moving into more SAF production. So I think that these things longer term, I know in the big picture, for instance like California, they're trying to put limits or they're. We get a few years down the road, there's some limits in place on crop based feedstocks. But at the end of the day we can't meet these green initiatives or goals without crop based biofuels. And so for that reason, I mean, I'm just kind of bullish vegetable oils overall. So we're in a difficult period. But we don't have enough waste feedstocks in the world to get us to the point where our, you know, governments have said we're going to have this percent blend or our goal's this or whatever else. So I think that ag will play a very important part in that going forward. But like it with anything else, we have growing pains and there are ebbs and flows. And right now, right now we're feeling a little bit of pain and a lot of uncertainty. But longer term, I think that there's a tremendous opportunity and I think ag is going to play a big role in these climate initiatives going forward.
[00:40:57] Speaker A: Well, that's a perfect way to end our discussion on a positive note. So, Susan, I appreciate you coming on the show. I really like your writing style. I've been a subscriber to Noble Ag here for a few months now. Fantastic graphics, folks. Check out Susan's work. NobleAg.com is the website anywhere else farms can track you down. Where do you hang out on the social media site?
[00:41:21] Speaker B: I hang out a lot on X, formerly Twitter. It's susanobol.
[00:41:27] Speaker A: Awesome. Thank you so much for your time, Susan. I look forward to seeing you in Moose Jaw later this year. But hey, if we get some big changes to policy, I'd love to have you back on the show.
[00:41:34] Speaker B: Okay, sounds great. Thank you.
[00:41:37] Speaker A: All right, folks, thanks again for joining me. The what the Futures podcast, Susan, you know, I can't wait to get her back on the show throughout 2025 because, you know, there are certain topics where I feel a little bit out of my depth. And Susan, like the biofuel policy topic and all the changes is certainly one that I definitely want to be a bit more of a. I'll have a bit more knowledge around by the time we get to to this year. By the time I meet Susan in Moose for the Crop Marketing Made Cool conference, I want to have a much better handle on it. So fantastic guest. Definitely got me out of my comfort zone just a little bit. Thanks again for tuning in, folks. Share this episode with a friend, colleague, farmers in Western Canada, do your thing. Share it with the folks around you. I appreciate it. That's it for this episode. My name is Ryan Damot.
