Episode Transcript
[00:00:00] Speaker A: As of recording here, there's a slight delay, but I will refresh because of the importance of our market moves. Is Canola trading higher to start your Tuesday? Yes, it is currently trading up four bucks at 7:30 on the May contract. Bean oil trading higher as well. 66 and a half cents there. Soybeans up 7 cents at 1203. Wheat markets a little shy. Spring wheat was down 7 cents last I checked at 638 KC. Wheat was down half a penny. Corn down 3 and a half cents and Canadian dollar trading at 73.69. Let me go backstage here and let me snag.
Brian.
Brian from icl, buddy. How's it, how's it going today?
[00:00:47] Speaker B: Good, good. It's a little calmer today than it was the last couple of days.
[00:00:51] Speaker A: Yeah. Correct me if I'm wrong. Did we gap? Did some markets gap higher Sunday night and then gap lower Monday night? Am I completely out to lunch there on canola or wheat? A lot of that.
[00:01:03] Speaker B: A lot of markets did gap higher on Sunday night after.
Yeah, you know, as the big war premiums were getting priced in, we did see them fade the gap during that day session as we saw some significant change from the highs.
Not all them finished in loss position, but significant amount of volatility for sure.
[00:01:23] Speaker A: Well, 24 hours there, that's for sure. So before we get into some of the questions here and even before we get to grain market headlines, I'm just curious, Brian, in your network, did you see any interesting targets trigger Sunday night? Was there anything that popped across your screen that you were like, oh wow, interesting.
I didn't prep you for that one. But no worries, it's a live show. Just want to double check.
[00:01:50] Speaker B: Yeah, we did have some clients that did get targets hit in that overnight. In that overnight session. And that's some of that was, you know, profit taking on, on some long positions, whether those be, you know, broker or synthetic long positions. But there was some of that going on. You know, it's a good thing to have target prices in sometimes because that is an opportunity to get some, some fill when the market does crazy things and you don't necessarily have time to react or if it happens in the overnights and you can't physically pick up the phone to react to it. So we did see, not a lot, but we did see some executions get done there.
[00:02:30] Speaker A: Yeah, yeah, I saw a little bump in old crop yellow peas that kind of surprised me, I guess I can't remember the number though off the top of my head, but that surprised me there's some wheat targets that triggered know north of 8 bucks that not a great basis on them. And we're going to talk a bunch of basis here today with these questions coming in. But yeah, you know the having those targets in on Sunday night, we'll see how that plays out the rest of the year. But likely a good one to have. Now headlines this morning.
I've got some, I don't know, I don't want to call them boring but you know, Brazil harvest behind the five year average by like, I don't know, it was 10% lower than last year at this time for soybean harvest. I don't know if anybody really cares but there's that the U.S. you know, the western side of the grain belt a little dry, you know, drought concerns. There was some rains on the eastern side but some drought concerns in some of that winter wheat area.
And then of course, you know, the big one here is that Trump's comments late yesterday afternoon just kind of cooled down this, this energy market. Am I missing anything from headlines that's that come, that's come across your screen today?
[00:03:46] Speaker B: No, I think you're, I think you're bang on the harvest. The harvest delays in South America are part of the, part of the issue or part of the reason why we're seeing some interest in that.
There's also been, you know, weather dryness in some areas and you know, too much rain in other areas that is causing, you know, analysts and things to, to reduce their, their production estimates which some of that may be coming out in today's USDA WASDE report.
[00:04:19] Speaker A: Right.
[00:04:19] Speaker B: So that's, you know. Yeah, I think the, the, the global unrest here is kind of overshadowing the fact that there is a USDA report today. And not that there's a whole lot of volatility expected as a result of the report, but there's, there definitely is one out today and it might be interesting. Surprises are never predicted, right?
[00:04:39] Speaker A: Yep, Yep.
There is one today like that. That is the crazy thing. There is a WASDE report in a few hours.
[00:04:46] Speaker B: Yep.
[00:04:46] Speaker A: I think I caught this. Maybe this was on yesterday's update or maybe it was the, the day prior, the business day prior. But yeah, I made a mention. I think this was you. It's been consuming a lot of content lately, Brian, about markets, but some something about technicals maybe being put off to the side a little bit right now with all the craziness going on with headlines. Was that from you on the technicals? Yeah, yeah.
[00:05:12] Speaker B: I mean don't get me wrong, I. I'm a technical trader at times, but there are periods of time where. Where technical analysis, you know, kind of fails you to some degree. And those times are often in, you know, big unrest, times like this. Or if you remember back when the invasion of Ukraine took place and markets took off, that was another example of when you couldn't really use technicals to make decisions or to make good decisions. We're seeing a little bit of that now as well, and it'll ebb and flow. Like, if today is a little bit calmer in the markets, you might see more emphasis put on support and resistance levels. But, yeah, you're right. Sometimes you got to throw out, you know, throw out the old strategies and bring in some new ones and, you know, with the understanding that they.
Those strategies may return at any point.
[00:06:05] Speaker A: Yeah, yeah. Have you, like, can you look back at your career because you've been doing this for a couple of years, Brian. Can you look back at your career and reference a timeline or a timeframe that was similar to this or had the same feeling of what is going on right now in these markets, or is this a new one for you?
[00:06:24] Speaker B: No, I mean, again, you know, the war in Ukraine was one example where markets were really volatile.
You know, there's a couple of drought years as well. You know, even remembering back to 2017, which was interesting because the drought there was primarily in the northern plains. So that affected our spring wheat market quite considerably. There's all kinds of, you know, I don't know if you call them black swan events anymore, because they seem to be.
They seem to be more prominent than usual. And then, of course, there's the big. The big one in 2020 when.
When Covid hit and nobody knew exactly how to position themselves either.
[00:07:04] Speaker A: Yeah, yeah, it seems.
Yeah, it seems like they don't spread themselves out as far. I think back, like, definitely for me, that when Russia annexed Crimea, I remember a lot about that, when markets obviously didn't react like they are now, but it's given me some. Some.
I don't know if nostalgia is the right word to say there, but, yeah, going back to. To some of those moments back and I think 2014. What was that? 2014.
[00:07:32] Speaker B: Yeah, I think it was 2014. Yeah.
[00:07:34] Speaker A: Anyway, I'm going to ask you a bit of a loaded question, then we'll get into.
Into the questions coming in here from. From growers. But how. How are you tackling these markets? Are you, like, you're always calm, cool and collected? All right. At least from the outside I don't know, maybe you're like a duck, you know, the feet are just giving her under the water. But you're calm, cool and collected.
Are you, are you thinking more defense, defensive strategies or are you thinking let's chase the juice a little bit here, let's get after it?
Or is it as complicated as. It's a combination.
[00:08:11] Speaker B: Definitely is a combination.
I do feel, as you were mentioning the years I've had in this market, nothing really surprises me anymore. So I don't lose sleep over how the market's trading and you can't really control it anyway. So there's that. We did take a lot of action yesterday in a lot of different markets.
It's a lot about planning and discipline, I think.
And it's not that we taking action and getting some stuff on the books or sold for even for the 20, 26 crop into new crop. It's not that we're, you know, bearish necessarily. It's just that we are disciplined. We want to take advantage of pricing when it is advantageous. We also know that there are avenues which with you can change or re enter or you know, take advantage of the market movements as well. We did take profits on some stuff this, this week as well and added some protection. So it's a little bit of, it's a little bit of everything. But yeah, we recognize that the risk, risk on either side is higher right now. So.
So putting yourself into a safer situation is, is a good idea.
[00:09:21] Speaker A: Yep. Yeah, you bet. No, I like that answer.
It's. Yeah. When you, when the toolbox is wide open, it's not just one decision anymore. Right. It's your.
There's always something to do. And so you always have a strategy that you can be looking at. All right, let's get into some of these questions here, Brian, for this week.
Now this comes from everybody. Everybody. I don't know how this happened, but every farmer in Western Canada submitted this question.
Why did wheat futures climb and my net price in some cases got worse or barely climbed. What is going on in this wheat market?
[00:09:57] Speaker B: It's rare in big rallies that buyers will give you the full value of the rally.
[00:10:04] Speaker A: What
[00:10:08] Speaker B: I do, track PDQ pricing like the aggregated or averaged bids. I do see that cash prices in general are rising as a result of this rally. Basis has been fading hard as a result, even though from what I could tell, the average bids are moving higher. So sure, if, if the bids are staying the same, farmers may want to look at other buyers because there, there might be some opportunity Using other buyers. But overall, that's, that's a pretty common practice. Some of it has to do with, you know, let the futures do the work is what we call it is like if, if there's targets that farmers want to sell at and you don't have to increase your basis in order to hit them because the futures are working for you, then that works out for the buyers. And yeah, that's a pretty common practice, I think. Generally though, what's interesting in weak basis is if you just do the calculations on basis, all other things being equal, basis should be rising when futures rise because of the foreign exchange component. Right. So when you're doing the foreign exchange transaction off of a higher futures value, it generally means higher basis value. This environment too carries a significant amount of risk in it. Obviously there's large swings in the market. So even if you're talking to your grain buyer and you're taking two or three minutes of their time to talk through and get your, you know, get your grain sold, there is the possibility of a large market movement even in that short amount of time. So I think that there is some element of risk, risk coverage in this environment too.
[00:11:37] Speaker A: Yeah, fair enough. I. One girl I was chatting with yesterday is CPS old crop. CPS basis went from a buck 95 to 80 cents last week in this move. And so some frustration coming across on, on some of that old crop cps.
Now, Ryan, to add to this great name, Ryan, by the way, but he says Cargill, Crush and Clevette has a, has a 52. So a 52 under basis for September, minus 40 for November. Should a guy lock in these basis levels and will they. Or will. Yeah, pardon me, will they get worse as Canola moves higher?
[00:12:12] Speaker B: We would probably be recommending that you not lock in basis for new crop. Yet I do think that you generally see some of the best new crop bids as you move towards the summer when they're looking to fill those positions.
I wouldn't wait though until closer to harvest, right, because then the, the sales get filled up and things like that. So you want to take advantage of it before the end of this 2020, you know, 2025 crop year, let's say, to get new crop booked, there is some opportunity to get bases done. March generally is not a good time to lock in bases, but June, July can be for new crop.
But having said that, again, playing devil's advocate here. If minus 40 and 718 or whatever dollar futures make sense, and that is a profitable situation, which I'm assuming it Is for most guys layering off some of that.
If your first sale is your worst sale, that's great.
So if it makes sense as far as cash goes. Yeah, definitely, definitely do it. But our bias is that there's some opportunity. But of course, you know, we've been wrong before.
[00:13:20] Speaker A: Well, so what I, what I would say here is that there's and like everything we do marketing wise like there the factors like normally you will get basis improvement here sometime in the spring and if you have a dry spring or some concerns then that basis can get a know quite a bit sweet. Like it can get pretty good. But I would say for this year we also have you know, forward contracting is back in western Canada. Like people are selling new crop canola and not the big crushers. Not, not Clevette specifically. I can't speak for that. You, you guys could go ask the question out there. But I know some of the small crushers like they are putting out like hey, you know, we are very well booked. And so with more acres this year and higher carryover, more production potentially that's the wild card. If production looks good off the bat and has a good summer, then yeah basis gains are going to be tough to get. But if we have some dryness or something happens, basis will. Will get better. Crush margins are phenomenal as well, Brian. Right. There's room for that basis to get better if they really want it to. But I don't know if those, what those gains will. Will look like.
Um, yeah, I expect worse basis than normal.
But I think I got from the line company, I got like a minus 80 basis for fall offered for our farm yesterday. And I was like come on guys, like let's.
[00:14:46] Speaker B: Yeah, keep in mind too that there's probably, you know, there's a million tons of full capacity which probably means 800,000 tons annually of, of actual crush capacity coming online.
It should be before the end of or before harvest for sure.
[00:15:00] Speaker A: Right.
[00:15:01] Speaker B: The, the Regina plants. So I think Saskatchewan specifically and even some of the call it western Manitoba, eastern Alberta bids may get a little more attractive as they try to attract some, some canola into that system as well. So you know. Yeah, don't discount that our crush capacity is going up as well.
[00:15:21] Speaker A: Yeah, good point. So just one more here on canola. I'm going to kind of tie in Brad and Jordan's together a little bit because the, the one theme here is you know, rallying canola prices. Do you see more acres going into canola?
Jordan says more than last year or more than predicted. With the latest stats can and Brad says how many more acres will go in the ground if cereals and pulse prices don't follow suit. So what do you see with the Canola acre in Western Canada for 2026.
[00:15:52] Speaker B: Yes, that's getting reported 218 I think for, for this coming year.
I think there's a lot of analysts that were expecting 22 plus up to, you know, 22 four.
I, I wasn't in the camp of that thought as much as 22 for. I think rotations mean a lot more now than than they used to. You know, a lot of seed purchasing is also done in fall, so a lot of that planning is already done.
It does pencil out like Canola does pencil out really, really well. Yeah, probably better than the other commodities, but you know, we already saw large decreases in, you know, peas and lentils and, and things like that. Large but large increases are a pretty big increase in Durham. So or sorry, barley. I think the, you know, the balance there might be a couple hundred thousand tons to play with here. But you know, above stats cans, I wouldn't expect above 22 on.
Yeah. As a result of stats cans number which would be a big increase, you know, 22 would be about 400,000 acres more than last year.
[00:17:00] Speaker A: Yeah, I am seeing, you know, some farms on some of the Pulse acres. They're debating taking some of those Pulse acres and, and putting Canola there a little bit. But I'm talking about a half section or something like nothing big, but also the, the future plan as well. And, and they're hesitant. They're hesitant to be like, why do I chase it now? You know, November of 2027, canola traded at 7:40.
You know, I've got a good Canola opportunity for next year as well.
And so I think that started to come into play. Do you have anything else on wheat that you want to talk about?
We talked about basis and stuff off the hop, but is there anything else in wheat? I don't have another wheat question. I'm just curious.
[00:17:46] Speaker B: I mean the volatility in the last couple of days has, has been interesting. We do feel that wheat has come out of a saucer bottom and we do want to watch the drought situation in the US Pretty closely as the winter wheat, you know, moves into the growing season. You know, the first crop condition ratings are coming out early April and you know, it. It still looks relatively dry. I think some of the wheat weakness that's coming in right now is because of some rains that were forecast this week. But yeah, I Think we want to keep close eye on that situation.
[00:18:17] Speaker A: Yep. Yeah. Awesome. All right, now here's one. This has been a theme in the last couple of weeks, but this comes in from Lee and he says when forward pricing grain sales with everyone talking about a certain percentage sold, how does one do that when we, we don't know our yields?
The experts say know your cost per acre and break evens, but again, I don't know my yields. This has come up twice in the last couple of weeks, like from a percent sold perspective and a yield. Brian, you know, you're working with a bunch of farmers across the prairies, a bunch of advisors out there. Like, is there a rule of thumb or something that you get started with when you say sell 5%?
[00:18:59] Speaker B: Yeah, I mean, starting with average is probably the way to go. I recognize that, you know, some areas of the prairies have very, you know, an average might be, you know, 40 bushels an acre on canola, but it's either 30 or it's 50. Right. Like because the average is 40 doesn't necessarily mean they get 40, but starting there is probably a good, a good way to do it. When you are making sales and moving up your sold percentage, you may want to look at, you know, not necessarily just doing flat price, flat price sales and using, you know, some kind of option or like some kind of contract that gives you some optionality so that you aren't at, at the same amount of risk. So you know, starting at average and, and then doing what's comfortable is, would be my advice.
[00:19:50] Speaker A: All right, sounds good. Now, I did get a question that came in here from Tim on, on the chat about barley. What's going on with barley, Any rally in its future. And this actually came up yesterday in a conversation I had as well.
What are you seeing in the barley? You said higher acres for barley, but price wise, what the heck's going on?
[00:20:10] Speaker B: We have been seeing good demand for barley, so it is having an effect on pricing. We've seen really good exports recently. There were some really last couple weeks there were some very excellent export numbers. So that's definitely helping. The feed numbers are getting a little bit better too as the corn price rises. We're seeing some correlation there as well. Again, barley kind of came off a bit of a saucer bott. So I do think like with some of the big yields for, particularly for old crop, there might be some pricing opportunities here which would make very good profitable sense. New crop. Yeah, it will be interesting. You know, there's a, you know, 250ish thousand more acres of barley coming in. But you know we think the yield is going to come way down, particularly if it comes kind of back down towards, towards average. So our barley S and D actually isn't as tight as or as loose as one would think given the amount of acre increase. So I do think there's opportunity. I don't think you have to, you know, flash sales stuff but, but yeah, it's you know, starting, starting a barley marketing for next year, you know, isn't, isn't bad if you can get some decent feed prices.
[00:21:20] Speaker A: Yeah, I've seen malt malt over six bucks now, so that's up 30 cents in this example. And, and feed barley led the charge. We were excited about feed barley before anything else and so it's kind of holding steady. So yeah, I, I'd say have a few targets out there go do a little bit of fishing here and see what, what might trigger, you know, 15, 20 cents above. All right, Brian. Really appreciate you being on the show this week folks for just some rapid insights here. I would say from my perspective, you know, protecting a floor, learning about strategies that help you protect the floor.
Leave your upside exposed on some of these markets but protect that. Worst case scenario, if you want to spend some time and energy and the cold weather this weekend, look at those strategies. And then don't forget about the fall of 2027. I know it's a long ways out. I know you can't really get stuff done with everybody, but there is a window there to get at least get some consideration on for next year's crop marketing plan.
In my Crop Marketing and the Crop Marketing Made Cool book that we give out at the conference.
April is when we set our seeding plans for the next year, which people think that's crazy but that's what we do.
So yeah, big thanks this week Brian for jumping on the show. Big thanks to Egg i3 for sponsoring the cup of Coffee show for the month, month of March. Here you use precision tech in the field.
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I am out of coffee again. Thank you Brian from Ireland, Como lafoy. That's it for this week folks. I'll see you Friday on what the Futures.
