Episode Transcript
[00:00:00] Speaker A: All right, there goes the timer. This week's cup of coffee sponsored by upl. Check out Wave, a very strong option. It's a bio stimulant, easy to use, consistency when it comes to performance and its ability to help plants manage stress and improve nitrogen use efficiency. Talk to your local retail or UPL rep for more information. All right, before we get to Allison here, we've got futures moves this morning. Canola up about seven and a half dollars a ton.750 on the July contract.
We've got soybeans up six cents at 12:19. You want to watch that soybean market. I think we have a high around 12 and a quarter, maybe a bit better than that from the last few weeks. Bean oil currently trading at 74.55. That's down a couple cents a pound here over the last week or so. Spring week currently up 12 cents. Kind of rocking and rolling here. 739 on the December.
Watch that high of 750.
We are approaching that. Kansas City wheat up 17 cents at 7:14 on the September contract.
The recent high coming in there at seven and a quarter. Corn's up four cents as well at 479 on the July contract. We have a short term or nearby high of 485, so keep an eye on that. The Canadian dollars at 7,301. West Texas currently trading at 1001 1/2 dollars a barrel, up 350 a barrel here this morning. Of course, you guys are busy planting crops out there, so we got a pile of great questions that did come in from science perspective.
We'll get Allison's take here in just a second. We do have a USDA WASDE report coming out at 10am Mountain, 11am Central wheat quality tour that kicked off yesterday. So what does that mean? What are we seeing there? We've got winter wheat coming in 28%. Good to excellent surprise. The trade, they were not expecting that. They wanted 32% on that winter wheat crop in the US and I read somewhere it's the worst in 30 years for this week. So we'll see if that's if there's any accuracy to that. Trump and Xi are going to meet later this week, so that's all over the headlines for you. Canadian Weekly. Canola exports were a crop marketing high. I got that from RBC. Over 315,000 tonnes. So some good demand for Canadian canola. Lentil exports also hit a market year high, according to Chuck Penner from Left Field Commodities. And if I say lentils in this YouTube episode for, for some reason if I say lentils or fertilizer it just, it pops. I have no idea why not a lot of lentil information out there. So there you go. Last couple things.
More war stuff between, you know, if I say Iran, US war, no deal. Internet cables, I think you get the gist there. And then lastly here, prairie seeding delays. I know that you know, some of you, including my own farm, are currently sitting on the sidelines waiting to go, but you want to look at that first week of June, you know your percent planted that first week of June. If we're going to see any type of market strength due to delayed planting, which we don't expect and we don't see often, you want to see what that cutoff is going into that first week of June. That's where things can get a little bit wild. So let's go, let's get Alison here.
Alison, can you hear me? Am I coming through?
Good morning, Good morning, Good morning. I appreciate you being on the show. You were on the what the Futures podcast not long ago, but appreciate you jumping on here and sending or giving us some of your insights heading into this USDA report. Before we talk through that though, I want to ask about your farm clients. So at the, at the Money Farm you're working with growers from all over the place. Can you give us just a little bit of insight? You know, how, how is planting going? Are there any changes happening to the, the crop plan? You know, right. At the rate in the critical time here of planted crops. How's it going out there with your client base?
[00:04:05] Speaker B: Yeah, well I'm based in northern Minnesota. I'm really close to the border with North Dakota is where I'm located and a lot of my area and further north really started to hit planting, you know, in solid progress here just week and a lot in our area are fortunate enough. A lot of bookings for fertilizer seed and things were done this last fall or earlier. So I haven't really heard too much about any switch ups and crop rotations here specifically.
[00:04:34] Speaker A: Yep.
[00:04:34] Speaker B: And so that hasn't really been a conversation over the past couple months. And I think the same thing is kind of true from what I've gathered just through the I states as well, a lot of them stick to their rotation. So a lot of the inputs will were booked ahead of time if not even put on fertilizer in the fall. So you know, in those type of situations I haven't heard a lot of switching up, but I think there is some growing Dryness concerns, probably more so.
[00:04:58] Speaker A: And we'll get to those maps in just a second as well. And from a prairie perspective, for myself, I've just seen a few guys switch out of oats, take the oats out of the. Because the oat price up here has just been brutal. So they're taking some oats out, maybe putting in a bit more barley or wheat, depending on the situation. So do you have farmers like in the winter wheat area like that, like boots on the ground, anyone that can let us know, like, is this crop just better than what they're saying or is this reality? It's just a bad year for the US Winter wheat crop, correct?
[00:05:29] Speaker B: Well, yes, we have producers in Nebraska, Kansas. I also have some producers out in Washington, Oregon, in that area, too. And everybody is dealing with some dry conditions. And so I've, I've actually, you know, from the producer standpoint, the crop is short and it is starting to head. I mean, even the USDA came out with their, you know, 60 some percent of it's already headed, which is pretty crazy for this time of year. So I think there's obviously going to be some, some issues there with yield, but also quality, too. If they do start getting some rains coming through, we could see quality also getting hit.
Yeah, I also talked to a custom harvester here recently and he normally starts heading down south, starts in Texas here pretty soon, and then works his way north. And he actually took a trip down there a couple weeks ago and he couldn't get anybody to book any harvesting south of South Dakota.
So I don't know if they're, if they're waiting to see if it's still going to be tillable, if they're going to work it up and do something different or what the thought process is, or they're just going to wait it out and see what the crop actually looks like and then start booking. But as far as early stuff, you know, there wasn't a lot of optimism about the crop even coming off the field. So I think there's going to be some working through. And in the next couple of weeks, when harvest typically does start, my guess is it's going to start maybe even a little bit earlier. And that's what the market's really going to pay attention to is what this harvest progress or what these yields actually do look like.
[00:07:01] Speaker A: And Texas has been getting a fair amount of moisture lately if I think we'll see the drought map in a second. But isn't there a bullseye there where it's really improved with all the moisture so correct. Not what you want on a wheat crop that's just ready to shop. So will farms, if the moisture looks like it's coming and it's better, will they consider putting in like a soybean instead? Like, is that a real conversation?
[00:07:24] Speaker B: Sorghum is another one that, that'll enter the rotation too. And even further to the east, you know, there'll be some cotton or something like that that could go in the ground as well. So there's a few different options for them. We'll be finding out a lot more, I'm sure here in the next couple of weeks.
[00:07:39] Speaker A: Awesome. I did pull up the drought map because we did get a question from Colin that came in and just was asking for us to compare the drought map of 21 in 2022. So before we hit the live button here, we checked out a few different maps and the one that even though it may not look exact right at this moment, we, we went through a bunch of years and it was like 2012. That kind of stood out with, with similarities. I, am I, am I missing anything? Do you want me to pull up 21 and 22 on the side? They're quite a bit different than what we're experiencing today.
[00:08:12] Speaker B: You can. But 2012 I think has the most similarities is where the, the areas are that are popping up with drought. So you're seeing some here. Even in my area, Minnesota, starting to get a little bit of drought. But mainly the big concern is that when we do see big droughts come across, you know, through the I states and affect a lot of the US and they typically start in the Southeast as a comparison to 2012, it's there and this year is honestly a bit more severe. But also you can see in the Southwest as well where that drought is. So for comparable, you know, for this time of year, this is probably the most similar we looked like you said at those other years. And they're definitely in different areas. Whether that's in the top northwest or you know, they were in congregating in different areas.
There you go.
[00:08:59] Speaker A: This is 2021, which North Dakota is very dry for this week in 2021, folks watching 2026 is on the left hand side and so quite a bit different. And then 2022, again, things evolve and change throughout the year, but as it sits right now quite a bit different. 2022 now on the right, like you definitely have a bit more, I guess Montana maybe looks similar, but you don't have that south southeast drought in 2022.
[00:09:31] Speaker B: No, you don't.
[00:09:31] Speaker A: It's the West. Yeah, well.
[00:09:33] Speaker B: And even just over the last couple of weeks, we've seen the drought, you know, get deeper across the US and even starting to get in through some of the ice states. You can kind of see it's spreading into South Dakota, into parts of Iowa. And in fact, I have a branch office in Iowa and he would do anything for a tenth of an inch of rain right now. He, we were just talking about that.
He said there's a thick cement crust actually on a lot of the stuff that's in the ground already there, so they could really use a drink of water. So without that, and to be honest with you, there isn't a lot of rain in the forecast. There's maybe a chance this coming weekend. So if the pattern stays the same, I have a feeling in a couple weeks we could be talking drought and just given this map scenario, we could be talking a lot of comparisons to 2012. I know I'm getting you all bulled up on what, what we can see for this year, but the potential there at this early, you know, it can't be ruled out. I mean, obviously it just comes down to what kind of rains we get in June. And you, you talked about that too. So.
Yeah, I think we're just going to be talking a lot of guessing games and of course it's just another risk. Right. And that's what markets like to price in is, is risk and uncertainty. And at this time of the year, it's pretty big.
[00:10:51] Speaker A: Yeah, yeah, exactly. And again, long range forecast, you know, who knows? Long, long, you know, long range. But it's interesting, the next, at least to the end of June is really interesting when it comes to maybe a dry pattern.
All right, let's, let's switch gears now off of the weather. I had a question come in. This is a holdover from last week, but when it comes to hedging crop, the question is how far out can you go? If you're looking to hedge and make some type of trade, like realistically, how far could you go? Could you go out a couple of years or what's kind of normal for volume and maybe it's different for different crops.
[00:11:27] Speaker B: Correct. Well, even a lot of end users will allow you to go out a year. A lot of elevators, especially in my area, they'll go out another year, but they'll charge you. So it'll be, you know, anywhere from 10 to 20 cents to go out to the next marketing year. This early.
Yeah, but you can also do it on the board, I have a few producers who prefer to do it that way. So then they can also pick, you know, pick their location later. So you can certainly go out to 2027, new crop, you can even go out to 2028, but the volume is extremely thin. I mean, we start getting those new crop contracts three, four years before, before the year of that crop. So in theory you can go out there, but the volume is so thin. And so if you have some targets that you want and if we're going into, you know, a two year cycle here where we could have some, you know, good prices, I'd recommend just putting some targets out there because you never know what'll get hit. So have some working orders in would be my best guess. If you're looking for, you know, a true hedge and using a futures position, that's, that's what I would recommend. But of course it's marginal, you know, that kind of going into it.
It's a marginal position because you are, you're holding it a long time. So it could tie up some money. But you know, if you're happy, you know, with those levels, I think it's a great place to start.
[00:12:47] Speaker A: Awesome. Good stuff. Now if we get a little bit more dialed in here, I did get a question come in about if I'm too nervous to sell physical new crop feed barley, but I want to protect against downside, you know, what options do I have? Is a corn put a decent strategy. And then he wrote Love Bill at the end of the email. So, you know, love you too, Bill. Thank you for the question.
Now he asks if there's an act of God clause available, which I'll bring up in a second. But I don't know, Allison, if like they're both feed grains, we have, you know, we have Feedlot Alley in southern Alberta, so we have that strong export feed programs as well. I don't know, do you have any feed barley in your area and any thoughts around that?
[00:13:30] Speaker B: I don't specifically have a lot of feed barley. I don't have a lot of clients who grow it, to be honest with you. So I'm probably not the best in that specific market. But I will tell you, I have a lot of spring wheat growers and on the Minneapolis exchange, I cannot trade options in office anymore.
So what I've been doing is doing cross hedges with corn or Chicago wheat. So I've had typically wheat goes where corn goes and you know, there's no real true barley market to follow either.
So in all reality I'd have no problem using corn as a hedge. It's not perfect, but cross hedges never are. But at least it gives you something to go off of. I'd probably stick to something that has some volume. So whether that's corn, Chicago wheat, that might be some decent cross hedging strategies there.
[00:14:18] Speaker A: So I'm looking at this put option on corn. Do I have to commit to the July or the September and like own this thing for that amount of time or is there other, other, I was gonna say options available, but yeah, yep,
[00:14:30] Speaker B: there, there is actually. And you know, even with all the news like you were saying here this week, we got a bunch of just data events that are hitting the market.
So even you can do it really short term too. You know, just to protect for getting through this week, I've been doing some weekly options.
So those trade off the futures contract, but they expire Friday.
So.
So you could put some short term protection on you like the price, I mean obviously we're up this morning. You like the price today at least protected on some crops you're looking to sell. And then Friday you can decide, you know, if it's in the money, take the money and run or it can turn into a futures position. So if you have the put, obviously you take the short side. If you had a call, you'd be long the market. So those are available on a weekly basis. The same concept is also done on a monthly basis for monthly options. So you could, you could do a, you could do it just by the month too. So you're not committed to necessarily going out that far. And actually the same can be done for new crop. So especially for corn and beans you can do short dated new crop options. So they would trade off the December corn or the November beans, but they would expire earlier.
So you're not spending all the money for all that time.
So you could do a July short dated new crop, you know, soybean auction and it at least cut some of your time value off the original cost. So those are some good strategies that we've been using, especially with the rally here. You know, if weather turns around and stuff looks different in June, those July options aren't a bad, aren't a bad strategy. We should know more by the end of June.
[00:16:14] Speaker A: Yeah, 100%. And that premium that you, that you pay, there's so much time that can be wrapped up in that.
[00:16:19] Speaker B: So that's a, especially if you're going all the way out to next December or March and you know, it dwindles pretty quick. So if you, if you want a cost effective option, looking at those short dated weeklies, monthlies are sometimes a better fit.
[00:16:34] Speaker A: Yeah. Awesome. We got a Brian wrote. Great guest, Ryan. Thanks, Allison.
[00:16:38] Speaker B: So there's a little bit of love
[00:16:39] Speaker A: coming from Brian and Chad. Chad hopes to start, start seeding here, start planting sometime today. So he's getting going up in the peace country. So good luck, Chad. Have a good start out there. All right. I wanted to. Oh, Bill, one last.
Since he had sent all the love into the show, the act of God clause on a feed barley contract. I did see some of these in Saskatchewan here last week or the week before.
I can't remember if it was, if it was Ray Glenn or Stonex. I believe it was Stonex.
But over there there was up to 25 bushels an acre of act of God. The other thing too is if you are going to sell barley and you want to look at a buyout, you know, some type of buyout protection, the call option on corn could be something to consider as well. So if you are going to physically commit some of those bushels. All right, so thanks for that one, Bill. All right, Allison, Pete writes in and he's probably underground right now. He works down in a mine. So he said, let me know what she says and get back to me. But have I missed the wheat rally?
He grows spring wheat, northeast Saskatchewan. Kicking myself this week.
Did I miss it? What's your thoughts around the wheat market?
[00:17:48] Speaker B: You know, wheat, wheat is wheat market, to be honest with you. But we've seen a lot of markets go to extremes here just in the last year. You know, it's not necessarily in grains, but we've seen some soft commodities, even hard commodities. Gold, silver. And wheat's another one that can definitely go to extremes.
You know, when we were dealing with wheat rallying a couple years ago, it can go a dollar or more very fast. So yes, we've rallied a dollar off those, you know, early year December lows. A buck is a buck. It's a great move. Can it go higher at this point in the year? It's hard to say whether that'll happen or not. But you know, there's a lot of risk here in the market. Markets love risk. Wheat likes risk. We also have inflation stuff going on. So I think we could continue to run. To be honest with you. I really like the outlook. The funds are behind it. There's, there's a lot of things moving in wheat right now where I could see it go to an extreme. Again,
[00:18:52] Speaker A: I'm on your Side as well. So, you know, sometimes I try to take the opposite side, but I feel pretty good about wheat at this time as well. In the winter wheat ish situation needs to get worked out yet there's some unknowns there and I also am looking at dryness. Is it going to creep into the spring wheat area? Right. Like I.
It looks like it could. So yeah.
[00:19:12] Speaker B: And that's on top of already looking at smaller acreage.
[00:19:15] Speaker A: Yep.
[00:19:16] Speaker B: Here this year.
[00:19:16] Speaker A: Yeah. And here too. Yeah.
[00:19:18] Speaker B: Yeah. At this point, I don't think there's going to be a switch up and there's going to be more weak going in the ground. So even though we're looking at some profitable levels right now, I just, I don't see more coming in. So looking at it from a tighter perspective, yeah, I, I'd say there's definitely some opportunity there.
[00:19:35] Speaker A: So the timer's gone off, but I want one more quick one since we have you. I know what the 20 minutes just flies by.
The WASDE report, USDA WASDE is coming out in, in a few hours. We don't need, we don't need all the trade guesses, all that stuff. But what are you looking for in this report? Like what are you. When the report drops, what is the first couple numbers you're trying to find?
[00:19:55] Speaker B: Well, the big one that's coming out is this is our first look at new crop. So 26, 27 crop. So we've been looking at old crop, but now we finally get our first look or first estimates on supply and demand for the new crop. So that's really what the market's going to focus on.
Not expecting any huge surprises. It's probably still going to see some trend line yields. But what do they do with demand? Demand's been stronger this year I think than what they've, you know, been saying to us. So if old crop stocks do get tighter, we could be looking at some much tighter balance sheets for next year for at least starting the year. So that would be supportive. USD likes to kick the can down the road. So we'll see what, we'll see what it brings. But honestly, I think a lot of the focus is going to be on what that initial new crop is going to look like.
[00:20:39] Speaker A: Okay, sounds great. Is there any like, is there any surprises? Like it's hard to guess the surprise, but you know, anything that, that you could feel is a, is a shocker that people are like, oh, that wasn't really expecting that.
[00:20:53] Speaker B: Sure. So a few different things just going through the crops like on corn We've had phenomenal excess exports and the USDA has really kind of failed to acknowledge that this past year. And they're running strong. So eventually they're going to have to make some changes or the market's going to continue to do it for them. And I think that's part of what we're seeing is this strong demand in corn that's giving us a good floor. So some surprises there. What if, if that actually does move and we see ending stocks well below 2 billion bushels, that would be awesome. On the soybean side, they've been doing a lot of flip flopping of demand. Exports have been going to crush. But of course we have China, like you said, happening this week. So my guess is they might kick the can down the road there too. But any increase in demand would be awesome to see there. They've been really kind of sitting on their hands on moving ending stocks around. And then for wheat, it'd be good to see them start to, you know, look at this year's production and what that's going to be like.
And there too, we've had very good demand, we've had strong exports. So I think there is some, some play there on, on what it's actually going to start to look like.
[00:21:59] Speaker A: I hope to see that number change. That's the one where I sit here and say, maybe, maybe the information's happening too fast and it's just going to be a little delayed. So we're not going to see that decline quite yet. But we'll see.
[00:22:12] Speaker B: To be honest, in this environment, with the markets the way they are and with the funds where they're sitting, we don't necessarily need a bullish report. All we need is something that's not as bearish as the market anticipates. And I think that'll give us some decent support.
Not a dump.
[00:22:26] Speaker A: Not a dump. Don't give. Yeah, don't give. Reasons for a big fund exit here.
[00:22:32] Speaker B: Yeah, yeah, yeah. Correct.
[00:22:35] Speaker A: All right. All right, Allison. That's fantastic stuff, folks. Just for insights this week, you know, just your crop marketing plan. I know you're busy putting a crop in, but it's also very, very important, critical, crucial, all the big words here for your crop marketing plan. So please get dialed in on your strategy, on your execution. Keep it top of mind. While you have a million other things going on, we're just going to put this one on the very top as well. So don't forget about crop marketing over the next few weeks. Now, this week's cup of Coffee is 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 by contacting your local retail or UPL rep. I'm out of coffee. That's it for this week. Thank you, Allison, for joining the show.
[00:23:21] Speaker B: Thanks for having me.
[00:23:22] Speaker A: I'll see you guys all on Friday. On what the futures. And I have no idea who my guest is this week. I still need to get one lined up, so thank you so much.
