Market Plus with Arlan Suderman

Market Plus with Arlan Suderman

Clip: Season 48 Episode 4845 | 13m 55sVideo has Closed Captions | CC

Arlan Suderman discusses the commodity markets in a special web-only feature.

Aired 06/23/2023

Market Plus with Arlan Suderman Clip: Season 48 Episode 4845 | 13m 55sVideo has Closed Captions | CC

Arlan Suderman discusses the commodity markets in a special web-only feature.

Arlan Suderman discusses the commodity markets in a special web-only feature.

Aired 06/23/2023

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About This ClipTranscriptYou Might Also LikeMarket Plus with Arlan Suderman Clip: Season 48 Episode 4845 | 13m 55sVideo has Closed Captions | CC

Arlan Suderman discusses the commodity markets in a special web-only feature.

Aired 06/23/2023

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Market Plus with Arlan Suderman S48 Ep4845

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Welcome in to the Friday, June 23, 2023 installment of the Mark Plus joining us now, Arlan Suder Segment two teased a lot, our ow We flew through some things I really wanted to cover, some g

weather related things.

We have a whole lot of people in this green belt that are very about a number of things.

I don't want to make jokes about I do want to help people with the very first question, and then we're going to kind of and kind of like how my mind wor sometimes.

Justin in Michigan asked us via How do you approach marketing when you don't know how much you sell?

Yeah, and Michigan is one of tho that's really hurting bad, especially in the western part of the state, and it's been quit And so there you have to get a l more creative.

Certainly crop insurance provide know, the say the put option, so And there's something to that.

It's not totally true, but it do provide you some downside protec There are other things that you with some of the over-the-counte that are out there.

Talk with your grain supplier, see if they carry those.

And that's an option as well to try to lock in some prices an use some flexible tools that are out there.

If you don't want to do put options yourself.

Obviously there's some minimum l of production you think you migh and then above that, use some of these other tools.

Okay.

So that's the overall generic co you can give.

Yeah, but let's start talking about some of these crazy factor before I get into Bradley's question from Nebraska.

We had some major political thin in this country that I think wer because of the holiday and the t not being open and it was dry.

We had the US Secretary of State go to China and meet with the Pr this end of the week and make a shot about Taiwan.

Then we have the India Prime Min coming to the United States for an official state visit.

So you have those two geopolitic going.

When I ask you this question, Br Nebraska wants to know China is importing more soybeans from Brazil than they are crushi The assumption is they're storin Brazilian beans to use in the fa

when they normally import Americ Has the market and USDA factored in this loss i No, they haven't.

And that's been one of the thing that I've been trying to shout a so to speak.

If you look at the data for May, because we're not through June y basically they crushed about eig a half million metric tons of so So the crush pace is picking up.

So about 2.16 million metric tons per week.

Now that's building soy milk sup because demand isn't that high.

So they're building soybean meal inventories.

They're not extremely high yet, but they're moving in that direc They took in about 12 million me So there's about three and a half million metric tons.

Extra soybeans stick away in the Okay.

They're expected to basically do June, July and August based on the loadings out of Bra that are on their way to China.

And so that'll give them a dozen plus million metric tons of soybeans and surplus when we get to September one.

The new marketing year, when the start taking soybeans from us, they'll still take soybeans from but not as many.

And if you look at what they hav on the books yet for this year o marketing year, they have about less than 3 million bushels, one cargo of soybeans on the boo for taking shipment.

Yet this year, if you look at ne soybeans on the books right now, it's about 2 million metric about 73 million bushels.

That's just a fraction of what t normally have on the books by no considering last year they took 30 million metric tons from us.

It's going to be quite a bit sma in this coming year, it looks li And I don't think USDA's factore that in for soybeans or for corn All right.

I'm sitting here at home.

Do I need to be watching Brazil more given off what you just sai Oh, it's a combination because they're both part of the BRIC coalition now and they've got those agreements But China is

going to be the maj so to speak, relationship with China right now are at an all time low with the Chinese Communist Party from the years, the 70 plus years that they've been in with the

United States.

Those tensions are high.

They're trying to diversify away from the United States.

Why do business with someone you don't trust, so And so there and then you look a being a BRIC nation member who is increasing production rather rapidly.

And so that gives China the opportunity to diversify.

China's also been successful at moving their soy meal inclusion and rations from 17 and a half percent down to now.

13 and a half percent even dippe and a half percent one point thi That means a lot less soy meal consumption.

If you look at the population trends in China, there are now n the world's most populous nation populations in decline.

I really believe Chinese soybean demand has hit a is flattened, has hit plateaued unless they come up with new use And so Brazil's grabbing that market share at a and faster pace because of

their of production and their cheap cu Is the “R ” of BRIC still a factor in this discussion?

Well, yeah it is the “R ” would b and it's a significant factor be you know we think here in the United States, we think, the whole world has sanctions on and China is their only friend.

But really the countries that do sanctions on Russia, that have n a stand against Russia, have 80% of the world's population in the And that's who Russia and China are going after to

befriend.

Now, you mentioned are meeting with India's prime minister.

That was a very strategic even t US said it had nothing to do wit it had everything to do with Chi because India is the “I ” in BRIC and India and China have long been battling on their

borders.

That's been a lot of tension between those two, but China has been trying to move closer t So the United States now trying to restrengthen ties with And it's also been building other

coalitions in the Asia Pacific region that is a threat China sees that as a direct thre now, and it's meant to send a message to China to try to change its behavior.

Well, let's get back to domestic now, since we've covered the glo and we're still talking drought.

Derek in Iowa, are we in store for another run the grain market like the summer And I do want you to add to the what you just talked about with these other countries was that as big of a

factor in ‘ No, it was in Brazil was producing about 55 mi I think 55 million metric tons of less corn back then.

And certainly I'm trying to remember the soybean n I think it is about 40 million m less soybeans back then in 2012.

So they've been increasing produ very rapidly.

And so demand was far different Now, in comparing this year, 201 from a weather standpoint, the factors are totally differen other than the fact that both we transition years in 2012, it was

a very slow developing El This is almost a record, fast developing El Nino.

And so what all the weather mode that's going to bring rain to the Midwest by the second week of July.

It hasn't happened for a couple of reasons.

One is we've had a high pressure stuck up in the Hudson Bay that just can't get moved out of because the upper level winds have been slow.

They're starting to speed up now And the other factor related to that is the is the one would say the Bermuda high necessary to pump moisture up in the Midwe to encounter the subtropical jet

that's building now from the sou has been out of place, sometimes nonexistent, sometimes up by Eur It's just not been in position.

And I haven't found a forecaster who didn't expect that to happen you know, to move into place and to pump that moisture up in second week or so, a June sta The people making I haven't foun

weatherman saying this is like 2 I found a lot of people on Twitt who are weather trained saying i it may be dry like 2012, but without the heat of 2012.

And that's one of the big differ from 2012.

You could argue that's what bought us another ten days Absolutely.

In June.

All right.

We need to get to wheat.

Robert in South Dakota on Twitte wants to know why does the wheat take so long to react to large scale bad news And why does it seem farmers are constantly being threatened with the reason

There's plenty to import.

Should national security be a fa And wouldn't a strategic reserve be a smart thing for us?

You know, US Wheat Associates are really angered by the wheat that was imported in the United and milling wheat from Germany and Poland, and it's a direct product of two One, the drought in

the plains that really hurt this year's winter hard road, winter wheat crop, devasta on that side of the crop, very small crop, and the other being the Ukraine which limited exports through

th So it flooded Eastern Europe.

So the prices in Europe are real and suddenly the prices in Easte Europe are so low and our prices elevated so high because of the we could afford to import wheat into the United States and

even up into mills in the interi could afford it.

The arbitrage worked for them.

And so it may anger us farmers t that's happening, but mills are simply taking adva of the economics in it and it pencils out and it works.

May not like it, but they're trying to run a busi and trying to operate their busi profitably.

And U.S. prices are so high relative to those abnormally cheap Eastern European prices that it We open with weather.

Let's close with weather.

Let's go to Phil in Ontario.

Does the drought end when it rai As it is, the old saying is we take the stairs up and the eleva How overshadowed is the June 30 report, if this weather market c Weather will be king and

therefore the crop ratings.

That certainly will be true.

And I've said many times the markets the escalator up and the elevato But I would say in today's world what we've seen with the algo co a day trading algo computers that trade momentum,

we're taking the elevator both w The escalator, I think, is broke They're taking the elevator.

And that makes it very frustrati for producers and for end users As we contemplate forecasts.

You mentioned on the program, if we miss the rain, things will Okay, let's put the weatherman h You're not a trained meteorologi Say it does rain.

How far do we go down and how qu is it that elevator shaft down?

Well, first of all, I want to say two things.

With the advent of the algo comp and then a few years ago when we increased position limit we said at the time it's going to read increased volatility and that's exactly what it's doi So the

market will it goes too h when it's going up and it goes too low when it's go And so I can almost assure you i to low relative to fundamentals when that time comes.

Now, from a yield standpoint, it'll take more than one rain.

Subsoils are dry, so it'll take repeated rains thi It's not going to be so much about the amount of rain, but the timeliness of the rains.

That's what's going to be the st that determines final yield, par if we can continue to avoid the as expected with this El Nino su It's the timeliness of the rains and that's going to vary

from one part of the Midwest, the other, and nationally.

How does that all fit together?

But timing as the rains on matte are where a final yield comes in Well, as you mentioned, the second phase of the corn pla pollination, that's always usual when we have that discussion of

whether, oh, my corn didn't p Last thing.

Sorry.

And one more thing and then we'l I apologize.

The beans sitting shorter and being able to withstand some of this dry conditions, I think you kind of mentioned about some 2012 comparisons and 1992 comparisons.

Can the beans catch up since they've been kind of sitti for a little while and dry condi Yeah.

The former agronomist in me would say, don't worry about the because you know, it's healthy, distrusts them early on That helps boost the yield later They can always come back.

But when I look back at the data and the condition index scores that we have currently with this and I looked at other years going back to 1986 when USDA started issuing the ra we had 1992

above trend yield for soybeans.

We had one year, I believe it was with trend yiel and we had five years with below trend yields.

Soybeans had a more difficult ti coming back than corn did.

That really surprised me.

What doesn't surprise me as I'm always learning something Arlan, thank you so much.

Good to.

See Thank you, Paul.

All right.

That's Alan Suderman.

Next week we are going to explor shipping routes through the Grea and we'll have the commodity market analysis from Jeff French Thank you so much for joining us and have a great week.

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