Market to Market | Market Plus with Mark Gold | Season 49 | Episode 4901

Welcome in to the Friday, August 18, 2023 installment of MarketPlus We continue with dot, dot, dot Mark Gold.

You got more dots and dashes to go here.

You know, I never learn Morse code, but I wish I had.

I’m going to send you questions in Morse code.

I would fail to.

You mentioned something during the broadcast that I wanted to circle back to, and we have a question.

We’ll get to it in a minute.

I had a couple farmers say to me at the fair, Oh, I haven’t priced anything from last year yet.

I still have it in the bin or I haven’t priced anything for this year yet.

But so many people have been bailed out by, I call them fourth quarter rallies.

We’ve had incredible runs the last few years.

So that sets up Phil in Ontario’s question a little bit.

The grain price narrative has grown increasingly bearish, especially with improved crop ratings.

Will this change based on the time left in the crop year or will harvest lows make these prices look good now so did all these people missed the boat?

Well, they’ve certainly missed a couple of the boats We’ve had some good rallies that they had an opportunity to sell.

We’ve talked about it many times.

What we hear in Chicago is that a lot of farmers have gone for these DP delayed pricing contracts.

Well, has that worked for you this year, guys?

You know, I think it’s the real bane of American farmers.

Why you would give up ownership of the grain and not have it priced is beyond me.

But farmers seem to like it.

Certainly there’s one or two commercials that push it and there’s a reason they do.

It takes the steam out of a bull market because now they’ve got the grain dont have to pay for it.

And it’s detrimental, in my opinion, for the American farmer.

But if you haven’t done anything, maybe this heat market in the next week will give you a good opportunity to sell something.

But there’s a lot of grain around the world.

You look at Russia, that crop seems to be getting bigger and bigger.

Ukraine’s getting grain out.

So despite all the problems that we’re seeing, prices can move lower.

I would take advantage of this wheat rally if we get it by late next week.

Longer term, I look at some of the other problems that we’re seeing in the world, what’s happening in India with their weather flooding up north, monsoon in the south.

I don’t think they’ve ever seen that.

Spain, Italy, all getting hit with bad droughts.

Argentina looks like they’re headed into a drought.

Australia, it’s a little bit too early to know, but I think there’s a lot of problems potentially in this world and I think we have shifted the climate a little bit and I don’t want to be bearish.

$5 corn.

I don’t want to be bearish $13 beans But what I you know, as usual, what I keep a cheap put underneath it in case I’m wrong, I would because if things don’t happen, if we get rains next week or the week after when we’re not expecting it and maybe it’s not as hot and dry, we could certainly make new lows without any trouble.

However, a September rain at this point after at the end of that growing cycle.

I mean, our friend Matt Bennett, who’s downstate from you in Illinois, had said he was going to do an early harvest and that was well before.

There’s a lot of people who were already going to combine in early September in areas that don’t normally do it.

Then, yeah, they got the corn in early and they got the beans in early, so maybe there will be more of that out.

But make no mistake about it, in places like Kansas, Nebraska, Arkansas, Missouri, southern Iowa, even parts of Wisconsin, now this heat is going to be a problem and, you know, maybe you get it in before you can.

But how many guys are going to harvest corn and beans in August?

Not very many people Doesn’t happen.

And I want to have a weather question.

I got to go out of order a little bit.

Sorry, folks.

Ken in Saskatchewan wants to know what is the effect of the above normal temps during South America’s weather?

You talked about everywhere else, but you didn’t.

You mentioned Argentina, but what about Brazil and Argentina and the impact?

Well, if Argentina has another drought and we saw what it did to their crops last year, if Brazil gets caught this year and everybody is looking at the world and saying, you know what, grains can’t rally because Brazil is going to go another big crop of corn and beans and you know, it’s not going anywhere.

Well, you know what?

If Brazil doesn’t have the great crop, what if they get hit with the drought and it’s a severe drought down there?

We don’t know that yet.

But would I rather be buying beans or corn and see the drought hit, you know, three months from now and own it now rather than at some higher prices three months from now?

I probably would.

So considering we’re basically at our lows in here.

So, you know, like I said, I’m not bearish here.

So you’re not in a panic sell for anything, you know?

No, absolutely not.

On any of wheat, corner beans.

None of them.

I think we’ve gotten them cheap enough.

And I think there’s enough problems around the world of people get hungry.

What scares me and probably why I want to take advantage of this rally in the next week or ten days is we have the budget coming up and I don’t see any compromise there between the Republicans and the Democrats.

And that could put a real wrench into the works here for grain.

If we you know, they can’t settle this thing and there’s default out here, it’s not good.

And my honest suggestion, you know, for the Republicans and Democrats that are here in Iowa, sit down and get something done because you’re going to hurt this country beyond repair if you do it.

So that’s something.

Looking forward to it.

You got to be a little worried about.

Mark Gold at the Des Moines Register Soapbox right here.

Way to go.

Let’s go back to cattle here for a minute.

This is Kennedy Farms in Oklahoma, and they’re asking the cattle markets seem to be in a sideways trend.

Do we continue to see this play out the rest of the year and into the first quarter next year?

Well, the catalog feed numbers and the numbers moving out, you know, through December look pretty tight, which is why we’ve got, you know, the premium and the bad months out here.

I think there are going to be less cattle out here.

The question is, what happens to demand as as box beef moves higher, we’re going to cut demand.

The best was for that.

The meat guys out there is that the consumption of these substitute meat products is starting to tank.

I think that’s good news for the American rancher out here.

So I think demand will stay pretty strong.

I think we’ve overcome the hump of these alternative meats.

And with the numbers, keep moving lower, this heat isn’t going to help anything.

So, you know, long term, I think you got to be bullish.

But again, as I mentioned in the broadcast, it’s hard to see the box beef staying strong.

The fat cattle price is not moving and even moving lower.

That’s got to tell you, you got to be a little cautious out here.

We’ll see how the market reacts to the cattle on feed numbers.

All right.

Let’s go economic a little bit a little wider here.

This is a pencil question.

Mitch and Hall, Iowa wants to know, Mark, with steeper interest rates versus the last several years, do you expect storing corn to pencil out over the upcoming marketing year?

I don’t and I don’t know if you’ve been watching me a long time out here.

You know, I don’t like storing grain in general, but the answer is, look at your cost to carry.

Does that pencil out?

In a most cases, it’s not going to pencil out.

Why you wouldn’t sell the grain, put that money in the bank at five and a half, 6% and do something with it rather than sitting on the grain, most likely unprotected.

It’s just something I wouldn’t do.

I think you’ve got to be looking at the whole economic situation.

Take advantage of the high interest rates and prepare yourself and don’t get caught putting the grain in the bin, hoping for higher prices in the springtime.

It’s generally a losing game.

Hope and pray is not a strategy that we hope.

And pray isn’t in our marketing book.

All right.

Last question also from Mitch in Hull, Iowa.

And this once again, economic but global, what does a potential slowdown in the Chinese economy mean for producers in the U.S. when it comes to marketing strategies?

You can pick any commodity you want.

We’ve talked about China a little bit here.

China’s economy has slowed down.

No question about it.

Is that going to be a drag on U.S. commodity prices?

Maybe, but maybe not.

Chinese, I think, want pork.

I think they want beef, grain, corn, beans.

As I’ve said a thousand times and I’ll continue to said there’s nothing more bullish for the American farmer than a communist with a hungry communist with a dollar in his pocket.

The Chinese have the money to buy whatever they need.

And you know, if their economy has slowed, yeah, but they’re not going to let their people starve because they know it’s a road to disaster if they do.

So in my opinion, you know, the talk will be, oh, the Chinese economy is slowing down.

It’s not good for the grains.

And da da da, maybe the funds or so, but I wouldn’t sell it on that news.

Any other news you want to share?

I think we’ve covered it pretty good.

We appreciate your time, Mark.

Thanks for having me.

Good to see you.

Mark Gold, everybody.

Thank you to Mark.

And next week, we are going to look at incentivizing farmers to protect a natural resource.

And we’ll bring in Dan Huber.

He’ll sit down and we’ll have market analysis segment with him.

Thank you for watching this MarketPlus.

We’ll see you next week here on the program.

Bye bye.