Transcript

Welcome to AgSmarter the dairy feed, a new podcast from the Ever.Ag team. Each week we bring you clear, timely insight across dairy, grain, and feed markets focused on what’s moving, why it matters, and what it means for your operation.

I’m Jim Matthews reporting from Chicago. joined today as always by the one and only Kathleen Wolfley. It is 1:15 Chicago time on Tuesday, March 31st. Kathleen, what’s happening in Western or upstate New York?

Well, Jim, I’m working in a lawnmower repair shop as usual, which is my office dour. And I can tell you that things are getting really busy. I can hear lots of lawnmowers with blades getting sharpened, wheel being changed. It is a sure sign of spring here in Western New York.

Wow, that’s nice. And duour, that sounds French.

Yeah, it is. We sell very special lawnmowers. It’s the Scog ones.

Yeah.

No, no, no. Uh, no John Deere anymore. No John Deers. Yeah, just Jeear.

Yeah. Lots to chat about today, especially on the grain side of things. You had a big report out of USDA this afternoon. Tell me what you learned.

Yeah, Kathleen, we did have a big report this morning. It came out at 11:00 Chicago time. This is our annual perspective planting or planting intentions report. We’ve been referencing this over the past few episodes now that we’ve been recording this show and a lot of it’s been talking about, hey, you know, we had the conflict in Iran. What does it mean for fertilizer around the globe? What might this mean for actual planning intentions? with the one caveat that surveys for this report went out and were probably received either before the conflict really ramped up or maybe just as it was really starting to ramp up.

But that being said, at least as of survey filing and the USDA putting this report together, we had a little bit of a surprise, I’d say, in terms of what the USDA gave us versus market expectations. Reviewing the corn planting specifically, we did come out at 95.4, let’s say, rounding up versus million acres. That was above the market consensus by a decent chunk by about a million acres and it’s also up about 1.5 million acres, 1.4 million acres from the egg outlook forum which was forecasted back in February.

So is this an outright, you know, bearish report because it’s larger than market estimates? Not necessarily. I’d say folks might feel a little surprised that it did come out a little higher than expectation just because of the current situation with the fertilizer discussion and but again like we had noted Kathleen I think it was too early to make that call in terms of this conflict in terms of domestic pricing really increasing on our inputs.

So certain decisions have naturally been made already. I think we’ve already seen certain parts of the United States already planting depending on weather and where they sit in these southern areas, but we’ve starting to hear the reports that even as far north as southern Illinois, we’re starting to get folks already out there planting before the end of March. So, we’ll see how those reports start to ramp up here in the next couple weeks because once we get into mid late April here, we will be in the thick of it. So, it’s going to be super interesting.

Something that we don’t necessarily keep on the front burners, but maybe on the back burners when these reports come out are the quarterly stocks report. So, the market always asks about planting. How much corn are we going to plant? Well, how about how much corn did we have on or off farm as of March 1st? That quarterly stocks report.

We came in at least ahead of last year. here. I’d say mostly within market consensus in terms of where corn sat, but versus last year it was about a billion bushels higher than where we sat a year ago, March 1st.

So trying to then digest this thing when we looked at the way markets reacted, corn is largely sitting at unchanged. Now we’re about 3 minutes from the close on Tuesday as we record. We have December corn is just a smidgen higher, threequarters of a cent higher as we record. You have May up about two cents.

So I think corn is still trying to figure this thing out and especially as wheat is still trading about 10 to 15 cents higher towards the close here. That’s going to naturally elevate the corn market a little bit. But I think going into this, if you were super bullish corn, this was not the report you were hoping to see. What do you think about that, Kathleen?

million-dollar question for you. We’re hearing a lot of noise out of the Middle East on what happens next. We’ve seen crude oil prices here this week climb above 100 bucks a barrel, though it looks like it’s losing a little bit of traction here this afternoon.

What’s your take on all this? I mean, do you think that the grain markets are at risk in any which way given some of that energy noise?

Yeah, I think Kathleen, that’s going to be the really interesting element as we run into actual planting now. So, it’s nice to get this report. What does USDA think in terms of its surveys and projected planning intentions, but then we’re really going to get into this thing, like I said, in the next two to three weeks will really start to be in the heart of planting season, especially through the Mississippi Delta and then getting up into the central parts of the Midwest.

Question on everyone’s mind again, fertilizer. We keep beating up this conversation but just looking at potential updates even today. And again, we’re recording on Tuesday afternoon. Grain markets have just closed.

There have been some inklings of headlines and we’re not going to try and, you know, focus on those here on this show, but there at least been some notes today that we’ve heard from various news outlets that maybe, you know, both sides are at least interested in some serious discussions on a ceasefire or coming up with an arrangement on the streets of Hormuz. Not going to verify here on this show what is accurate or not, but as we record at 1:20 Chicago time on Tuesday, the energy markets have at least somewhat pulled back a little bit.

So yes, crude has been over that $100 per barrel mark, especially that nearby May contract. We have pulled it towards 100 on May. We are now down two to three bucks a barrel across the other deferred month. So like June forward and especially as you get into like Q4 crude oil deliveries, we’re down closer to three $3.5. So that’s a 4% pullback.

So it feels like something’s brewing out there. I’ I’d hate to try and decide what exactly that is because things can change day-to-day. But as we circle back to this report, what does it mean for our dairy farmers out there?

When I say that it feels like this report should be maybe feeling a little bit more bearish than what the markets were playing out as we went into the close, I think this Middle Eastern conflict is ultimately going to be the deciding factor over the next month of if the Midwest can have decent planting weather and we are indeed going to plant this many corn acres or 95 plus million acres of corn.

It’s going to be this conflict settling that ultimately gives you a chance to really pull prices back. So, how does that play out? Nobody knows.

I’d also note that today it’s the last trading day of the month of the quarter. Tomorrow will be April Fool’s Day. Enter that new quarter, that new month. It’s going to be really interesting to see how money flow is impacted in commodities overall because it feels like we’ve seen managed money pile into those net longs when it comes to our agricultural commodities. Naturally, they’ve been long energy because of this conflict.

So, we’ll see how that impacts things if they decide to derisk or maybe start to trim some of those net longs, bring prices down a bit.

And just a note for that dairy farmer, we’re focusing on corn on this report, but we did touch on beans a little bit with some folks we’re speaking to earlier. That bean report also not incredibly bullish outright just reading it on paper. We are going to plant forecasted a good 3.5 million acres more than we did last year, but those estimates were slightly lower. Excuse me. the actual number came out slightly lower than estimates.

So, the market traded that a bit today, but again, the grand scheme of things, we’re still planting more beans than we did yearon year. It feels like we’ve got a decent balance sheet when it comes to our soybean markets and then relevant to our dairy farmer. protein pricing stays, let’s just say, steady after this report, but it’s been nice to see that meal market pull back from what has been near, you know, 330 bucks per ton down into the 310s, 315s.

And even though beans popped today, meal didn’t do a whole lot with it. So nice to see at least the inputs to an extent staying stagnant here as we record Tuesday afternoon.

So Jim, if if you don’t mind, let’s shift gears, talk dairy real briefly, and I don’t have really big updates to share in the dairy markets. We continue to see cheese prices holding in the low$160 range. Butter prices are sitting sub 180. Powder continues to be very strong, creeping up toward that $2 per pound mark on the CME.

But the thing that I want to call out from a producer perspective is it’s worth a look at managing some risk here putting together some floors um using DRP or utilizing other tools um because we’re looking at $178 class 3 values and as we look at the class 4 market $20 prices on on the board.

So as you consider the opportunities to manage some risk I think this is a good time to be at look to be looking at those opportunities here. So, I’m not going to go into a ton of detail on what’s going on in the dairy markets, um, given that this there’s more interesting things to talk about with the grains here today, but it was certainly always worth having a conversation with your broker agent about managing some risk, whether it’s on the feed side or the dairy side or both.

Yeah, that’s exactly right, Kathleen. Great point. And speaking of having those conversations, should we hear from Jake Kingsley and words from Witchaw? Yeah, let’s do it.

Hey everyone, here’s your quick update from a busy week in the feed and grain world. Geopolitics continue to drive a lot of the volatility. With Trump and G scheduled to meet in May and negotiators reporting progress on the Iran conflict, markets are reacting without really committing to a clear trend.

Crude is holding near $100 a barrel, keeping both input and transportation costs elevated. Even with those higher production costs, corn just had its lowest close in nearly two weeks. Strong South American crop conditions, expectations for a large US acreage, and no changes to the ethanol program are all weighing on prices, and we may finally be starting to see fundamentals reassert themselves.

The EPA also increased renewable fuel blending volumes for the next 2 years. That’s neutral for corn, slightly supportive for soybeans thanks to the renewable diesel demand. But with no decisions yet on 45Z carbon credits or subsidies, there’s still nothing new to spark major growth in the sector.

Crush margins remain solid though, so processors are likely to stay at high run rates and continue to produce plenty of feed by products.

I’ve spent the last week helping buyers secure forage as drought pressures the wheat crop in the plains and early heat across the Midwest starts firming up hay and fiber prices. Take a moment to review your soy hole, cotton seed, and hay needs through September and get coverage in place if you haven’t already.

Well, Jim, that’s going to do it for the episode. If you found today’s episode helpful, be sure to like and subscribe and share it with a colleague or a friend or two who could use some market clarity right now. We’ll see you next time on AgSmarter the Dairy Feed.