Oct 09 | Commodity Week の全文書き起こし

in the corn market now going forward is that big of a change in the yield, that big of a change in now the carryout, the ending stocks, goes against the funds’ position of heavily long in the corn market, which might allude to further long liquidation and selling here in the mid-to-upper four-dollar range. I think that’s been priced in right now as we’re having trouble finding a bottom. And again, the overall shock, the initial surprise big number today being the yield really flipped the script from where we were just even two to three weeks ago here in this corn market. So yeah, very bearish surprise in the corn here today. Todd Gleason: Okay, so what will you be thinking about as it’s related to how you get producers turned around set up for this kind of move in the middle of their harvest season and what they’ll need to do to protect their bottom lines? Logan Kimmel: Well, yeah, I think right now the time of the year usually isn’t the best anyway to be marketing, right? Harvest time, historically, isn’t the time to be doing a large bulk of your selling, usually. We did have a little early harvest rally for producers to make some sales. But right now, I think you gotta let the market cycle through here. If we do go lower on this corn or soybean market, we’d want to see hopefully some export business pick up, maybe China steps in and buys on this break. That could set us up maybe for a better outlook through the winter. But in the short term here, this isn’t an area I would be aggressively marketing at harvest time. If you can store your bushels or have made some sales, I’d say hang tight, let’s see how the market digests this here in the next week, and this could change the demand side as well. The export side, as we are dropping in price, the bushels are getting cheaper, that might lead to more business. That could be a positive longer term through the winter. Todd Gleason: So a couple of things when you look at the supply and demand sheet, there are other changes, of course, that took place. Total supply changed by 407 million bushels from last month to this month. Part of that is the beginning stocks that were carry over or carry in from the ending stocks. The other part, of course, was production, which was up 234 million this time around. USDA did also increase, because I suppose of the lower price… so they only lowered the average cash price by a dime from 480 to 470. They did increase feed and residual, ethanol, and food, seed, and industry use across the board. What did you make of the changes there? They added up to what, 125 million bushels? Logan Kimmel: Yeah, I think individually looking at each line item, yeah, they did make some adjustments. But I think when you… and you had posted on X a really nice chart that actually explains this for listeners that are on X, go to Todd’s page and look at this… but one thing that sticks out to me at the bottom of the supply and use sheet, the number that I think is the biggest surprise is going to be the ending stocks from September to now this month. From a 1.567 to a 1.849. That gap or that change came to a surprise to the market. So when you look at the balance sheet and you see the changes they made or adjusted from feed and residual to ethanol to the exports, you know, those… you can see individually where those happened, but the biggest surprise just came to that ending stocks, that final number was a wide miss or a wide change from where we were in September to this month. And with it being an increase, that’s going to result in a price drop. So, you know, if you dive into the numbers looking at what were the big changes, that was the biggest surprise to me or the surprise to the market was that ending stocks just ballooning in the wrong direction in the form of price. And then again, that probably resulted in that average farm price being cut by a dime there, which they’ll might walk down over time as well. Todd Gleason: Can you walk through maybe some of the things you’re thinking about as it’s related to soybeans and the spillover pressure that comes from corn, whether it’s just today and/or if that lasts, because the soybean supply and demand table did not change very much. Logan Kimmel: No, it did not. And that’s something to keep in mind if you’re looking at the numbers from today, take a look at the soybean chart as well, the balance sheet. And as you mentioned, if you look, the ending stocks number did not change that much. And I think what we need to keep in mind is when you have a big drop like this in the corn market on a day when we’re almost down limit, it’s going to spill into the beans. But if you dig deeper, the bean number wasn’t that bearish. And I think that might keep these soybeans supported in the upper 12s to 13 dollar range. And all things considered, they have been here through the month of September into October. They did not receive bullish news when Trump met with China, but there is two more meetings scheduled here. So I think the soybeans not getting a bearish number from the USDA today, you get some more positive talks in the right directions with China maybe upping their bean purchases. This could be supportive for the bean market, despite the corn kind of falling out of bed here. So no, I didn’t see anything overly bearish on the bean numbers today. Small changes, I think a lot of folks are finding their bean crops okay in parts of Illinois, so they’re fairly happy with the yields, but from the USDA standpoint, no surprises on the beans, no big changes there. Todd Gleason: Anything else before I let you go? Logan Kimmel: No, I think it’s… you know, we want to see how this corn market trades in the upper to mid-fours. Do the funds want to liquidate their long position completely and just continue selling to get more net neutral? That would be a burden to the corn market longer term. But as the price drops, we want to see if exports pick up. And if they do, I think that could be

supportive. And that’s a little aggravating with a report day results in a big drop like this. But again, the bright spot here, I don’t think the bean number was that bearish, keeps some optimism in the bean market at least, despite the corn really taking a toll here. Todd Gleason: Thank you, Logan. Logan Kimmel is with Roach Ag. He is in Naperville, Illinois. Now we’re joined by Ellen Dearden from Ag Review in Morton, Illinois. Hi, Ellen, thank you for taking some time on this Friday morning post-USDA report with me. Two items first: the market continues to drop since I spoke with Logan about 40 minutes ago. And I hear that you had rainfall that was not expected in the Peoria area. What took place overnight and into the morning? Ellen Dearden: We really did. It was kind of a… a started out as little sprinkles at 5:30 this morning and just kind of picked up steam till 10:30 or 11:00, and the sun is out now at noon. So we need sunshine to get over this inch of rain that we got this morning. Kind of a surprise rain, but I don’t know that everybody who’s been going pretty hard is all that disappointed that they’ve got a little time to catch their breath. Todd Gleason: Other surprise that they saw came out at 11:00 from USDA. We haven’t gone on this program directly through all of the numbers. Can you start with the supply and demand tables for me? Ellen Dearden: Right, I’d really like to start with the yield estimates because I think we need to keep these in perspective. USDA pegged the corn yield higher than what the trade was looking at, and higher than a month ago. A month ago it came in at 178.5, and USDA raised it to 181.2. Primarily because of some big increases in yield in Nebraska, South Dakota, and also in the very far eastern edge of the Corn Belt. Kind of a head-scratcher there with the trade really leaning on expecting a small decline. That left production second highest ever at 16.034 billion bushel. Last year at 17 billion bushel was the record. So we are up a percent from last month’s estimate, but still down from a year ago. On the bean side of things, USDA came out with a 53.1 bushel per acre yield. That’s really in line with what the trade was looking at 52.9, a year ago 53. So really kind of on target for holding bean yields about where they have been. Nothing exciting there. But the crop size was exciting because of higher planted and harvested acres compared to a year ago. So the crop size came in at 4.562 billion bushel, that’s a record high number. Again, looking at the state breakdowns, USDA is pretty optimistic on corn yields in Nebraska, I think being up 11 bushel from their previous estimate, but on the bean yield, the only big state changes that I saw: Illinois had a two bushel per acre bump, Kansas was two bushel per acre drop, and Ohio was a three bushel per acre jump. So beans, I’d say pretty neutral, although the market reaction was a sell-off because of corn’s big reaction to the downside. Also, in the bean side

of things, China’s soybean demand was left unchanged from September. Again, for the guys looking for a whole bunch more bean buys from China, USDA doesn’t have anything like that pegged from any source, not just from the US. Todd Gleason: So those numbers for China staying the same, yield for corn up 2.7 bushels to the acre from last month, a minor yield adjustment for soybeans, they were up what, .3 to that 53.1 as you pointed out. How do you expect soybeans to react as pressure continues on corn? Because there will be increased pressure in the basis now given the size of the crop. I don’t know that we’ve seen that much of it yet, but Iowa and Nebraska folks are still just getting a good start, I think. So there could be some pressure all in the basis. Is that the case, or will we see the futures continue to move lower as well? Ellen Dearden: Let’s talk about corn because I think we’ve got two different animals developing here. Corn basis is really going to be dependent on the flow of bushels into a particular area. Where and if bushels are needed in that area right now, basis will remain steady, otherwise, I would expect to see basis see some weakening here, even with a board lower. Oftentimes when the board is lower and farmers do not sell, we see basis improvement. Being down right now about down around 28 cents in the December corn futures, there’s not going to be a lot of willing sellers at that stage of the game. I would hearken to point out that 4.73 was a pretty good support area on Dec corn, it’ll be interesting to see if we can close there or above that. On the bean side of things, I think we will see some pressure on the basis just because the end user is… it’s all about the processor market right now. And the end user has probably been able to buy enough beans at current prices. Certainly with November bean futures down around the 12.70 range, there’s not going to be a lot of willing sellers so the basis may end up being kind of steady in here over the next week’s time. If harvest should really ramp up next week, and I think it will in Iowa and also in Nebraska, we’ll see that bean basis weaken. But I’ve talked to elevator managers in Nebraska this week that say that they’ve never not gotten beans into the elevator during the month of September, and they got their first loads of beans this week. So that’s about 10 days later than the latest that they had had before. Todd Gleason: Did you take a look at the world numbers for corn and usage, and is there anything there from China or other places that shows an increase for it? Ellen Dearden: I would say no and no. And the production, the increase in production in the US really was just carried through with not a lot of changes in demand on the world numbers. So we’ve got world corn ending stocks back up to 280.4 million metric tons. Todd Gleason: How should producers in your mind manage what took place at 11:00 this morning? Ellen Dearden: I think right now, there’s been a lot of

fund selling because funds went through this report a little bit on the long side on corn and a lot longer on beans, and I think we saw the funds jump out and that flow of money out of the market probably does scare some producers, but I think you should try to remain pretty calm and look to see some jumps in flat prices that I would be a willing seller. If I were a livestock feeder and needed to buy feed corn, I think this is the time to do that. Todd Gleason: You do? That’s an interesting point. Tells me that you really think that this market will bounce back by the time we get to November, December then? Ellen Dearden: I do. I think the last part of the year and into the first part of ’27 will be much stronger than where we are now. Todd Gleason: Anything else before I let you go? Ellen Dearden: No, I think I just want everybody to be safe. There’s just an awful lot of tired people in combines these days and crazy drivers from town wanting to go around them. Todd Gleason: Thank you much. I appreciate it, Ellen. Ellen Dearden: Thank you. Todd Gleason: Ellen Dearden, of course, is with Ag Review. She is in Morton, Illinois. Jim McCormick now joins us from agmarket.net, and he is in Barrington. Thank you much, Jim, for being here. We’ve gone through the numbers, but I know you’ve got some thoughts on this, so tell me about your view of the market as it reacted to today’s crop production and WASDE report. Jim McCormick: Well, obviously, Todd, we had a very negative reaction. At one time we were limit down, as we’re recording this we are off limit by a few cents, but there was just no doubt about it, the market got caught looking the wrong way. We know the funds were not carrying a record position, Todd, but they were carrying dang near a record position, and it looks like we’re seeing a pretty good exodus of this. Because I think in general, the trade just was not anticipating for the government to raise the yield 2.7 bushels. The early yield results we’ve been hearing in general were a little bit disappointing. So it was a little bit of a surprise to see them raise it. And then that Nebraska revision up 11, that was probably the one that really kind of sticks out like a sore thumb like, wow, that was a pretty big revision. We’ll see, as we get deeper into this harvest, Todd, if these numbers that they threw at us come to fruition. Todd Gleason: So there are two things that can happen. Things can change as we go through harvest. The other is if the funds exit all at once, it can be a sharp and quick decline, and even without a change, meaning the 11 bushel decline in Nebraska stays in place, there might be a larger bump back up than expected. I would think, given maybe how the trade or the industry, the elevator system, would react. What do you think might happen over the next week? Jim McCormick: Well, I think the near term it’s going to be probably a little bit ugly. I mean, you know, rallies are probably going to be sold by people who

are caught long. The funds, Todd, in general, they do it better than a lot of people. When the markets turn, they either turn bullish or they turn bearish, they tend not to be wishy-washy. If the markets are taking out support, my guess is we’re going to find out they did a lot of aggressive liquidation. And then you’re probably going to get some hedge pressure near term as farmers are still harvesting, depending on what number you want to look at, still a pretty big crop, okay? Now the one thing that could come into play, is it’s so bearish right now, it is very, you know, frustrating, but, you know, once these funds wash out, and we come 30 days from now, and we come into November and then potentially in January, find out, hey, maybe the government was a little bit too optimistic, and the realized yields just aren’t there, and then you start revising that yield back down again. That money that plowed in, in essence here late summer on the crops not there, got washed out, it will come back into play. Because the world numbers did get a little bit bigger, there’s no doubt about it. But the fact of the matter is, what was the two things that were really driving the money, Todd, into our markets? The first one was inflation. Energy inflation. That is still a problem, okay, and that’s not going to go away, and that’s going to continue to probably bring some money into the market. The other thing we got to remember is part of the bullishness was this super El Nino that continues to build is not supposed to hit its apex till January, maybe as late as March, which means South America and South Africa could still have some major production issues that could change the psychology around. But near term right now, there is just no doubt about it, the bull got caught today. Todd Gleason: You talked about a couple of things I want to take up in deeper respect. Price of crude oil, climbing, still climbing it’s in that $103-$104 level today, at least for the Brent. How much of an impact does that have on the marketplace? We can get into diesel fuel in just a moment, but just as it relates to corn and soybeans being energy crops, how much of an impact does this higher price for crude have, and can it carry through? I think you told me it can for the marketplace. Jim McCormick: I mean, it can. I mean, it’s not going to be everything, but the reality is if you look how much corn we are using for energy, you know, the ethanol, so it is, there is a component of it. And if this energy level, you know, crude oil prices continue to stay high prices, there will be more and more demand for revisions to maybe allowing more blending of ethanol into the fuel source. There’s a lot of people that are arguing that should be done. So that could be very positive. And then the same thing for beans. You look at it, we are using just as much if not more bean oil for biodiesel than we ever did for food. So we’re growing an energy source, not a food source. And you know, that diesel price remains high, and it should remain high, unfortunately, Todd, because even if you get this oil flowing, we have done a lot of damage, the Ukrainians have done a lot of damage to Middle East production capability, and then the Iranians have done a lot of damage to the Middle East production capability, and the Ukrainians have taken out a lot of the Russian capability to make diesel. You can’t bring that online anytime soon, so we are going to have a shortage of availability of diesel probably for a while. Maybe not as great, scarce as it is at the moment, but it’s going to take years to build back some of that infrastructure, and that should be somewhat price supportive. Because if you think about it, Todd, what drives the world? It is energy. Energy touches everything, diesel touches everything. That has got the inflation play still in people’s minds. And if you got people talking about inflation, what do they try to do to try to trade it? They tend to want to own commodities. So hopefully that will be price supportive down the line. Right now today, we are just dealing with a shock of a crop where the trade was bracing for it to get a little bit smaller, and instead it got bigger. Todd Gleason: So we now have an ending stocks of 1.849 billion bushels. That is a 10.19% stocks to use ratio… or I’m sorry, an 11.34% stocks to use ratio. It’s above the 10%, so it’s going to feel a little bearish I would think. How bearish is it? Jim McCormick: I think knee-jerk right now when you got that high, you’re going to find the mentality at this point, excluding major weather issues in South America, anything over five is probably going to be viewed overvalued based on that stocks to use projection at this point in time. Now will that potentially change? Hopefully it does. But when you’re looking at stocks to use, you know, where it’s at, 12.7… you know… or excuse me, we’re at, you know, at 11.3, down from last year’s 12.7, 11.3 though, that usually argues it’s hard to get corn over five dollars. It doesn’t mean it can’t, but that’s just kind of that magical line. Todd Gleason: I thought it was interesting when you look at USDA’s price projections that they only dropped corn by a dime to $4.70 from $4.80. That tells you either that many producers sold a great deal of corn at that $5 and above level, possibly, or that USDA has something else in mind I suppose. Jim McCormick: I… that’s a good point, Todd, I don’t know what it is. I think producers have sold a little bit more than they’ve done previously because we had such a good run up here into the beginning of fall. But I would just guess most producers have at least a half to two-thirds unpriced, just because of the economics of how we farm. So I was surprised, like you said, they didn’t drop it down as much as what they compared to the revision up of the ending stocks. So it’ll be interesting to see. Now maybe what they’re looking at in the long term is, like I said, the world stocks, they

did uptick a little bit, but there is still a massive amount of uncertainty in South America, and hopefully, you know, that demand will eventually show up, and we get these prices to come back up. And the USDA only, you know, lowering it just a little bit is a maybe an indication of what they’re thinking. Todd Gleason: Anything on soybeans that you want to make sure we understand and know about the changes there? There weren’t very many. Jim McCormick: Well, the trade was looking for an unchanged… they raised it three-tenths of a bushel to 53.1. I don’t think that was a surprise. I know the average trade guess, Todd, was unchanged, but in general, the bean yields we are hearing are coming in at or better than anticipated. In several instances, they are all-time records for farms, so I would not be shocked if as we go through the fall, to find out that bean yield actually creeps up even a little bit higher when it’s all said and done. Todd Gleason: And then I’d like to talk just as we close out this time about wheat for just a moment. USDA did not make very many changes here. Yield per acre up three-tenths of a bushel from 47.8 to 48.1 this month from last month. The average farm price down a dime at $6.30. Wheat in the United States is really a storage game for the world. It can make a difference though if it’s, especially if it’s moving on how well other prices are supported. Does that $6.30 price dampen any kinds of moves that could come in the marketplace? Jim McCormick: Well, I think right now the biggest headline you got is they cut exports by 25 million to 750. The reality is we’re just not competitive in the world markets. Um, exports I think are now, you know, are down from last year. So, you know, that’s the interesting thing, Todd. We had the price move up because of what’s going on in the Black Sea region, the lack of availability to get the wheat out of Russia, to get it out of the Ukraine, as they keep hitting each other. We still just never saw that demand coming back to us. The prices are weeping a little bit, but what’s working against us is the dollar, and that is a real problem right now, is the world’s just not buying our wheat. And that is a situation where the market now, either we’ve got to see some demand coming at it, your carryout is starting to grow, or the price has got to go down to get us more competitive. And that makes it hard, like I said, because the U.S. dollar continues to rally as, um, you know, the bond rates continue to scream higher, as it’s, you know, these higher interest rates are bringing money into the U.S. Todd Gleason: Just, uh, so that we have the numbers. Uh, last year, 908 million bushels of exports and this year’s projection is now 750. So there was a substantial drop. Any final word from you before I let you go for the day? Jim McCormick: Right now there’s no doubt about it, it was an ugly reaction to a report that definitely caught the trade. Um, flat-footed, at least the bullish trade, traders were thinking it was going to be bullish. Now’s the time to don’t panic if you’re a producer out there. Recalibrate where your break-evens are as you get deeper into harvest and find out what your yields are so you know where you need to sell it to be profitable. And let’s see what’s out there when it, when the actual yield, final yield results actually come in. It’s probably still going to be very choppy, uh, several months as we try to digest this data. Todd Gleason: Hey, thank you much. I appreciate it, Jim. Jim McCormick: Thank you. Todd Gleason: Commodity Week is a production of Illinois Public Media. It is public radio for the farming world online on demand at willag.org. That’s willag.org. Our thanks go to our panelists this week, including Jim McCormick of agmarket.net, whom you’ve just heard, Logan Kimmel of Roach Ag Marketing, and Ellen Dearden of Ag Review. I’m Todd Gleason.