Transcript

00;00;00;22 – 00;00;26;19
Unknown
Future trading involves risk and is not suitable for all investors. Content provided in this segment is meant for educational purposes and is not a solicitation to buy or sell commodities. Hello and welcome to another edition of the Grain Feed. Brought to you by Ever AG this week the news feed for all things green and all things feed. Each week we bring you updates on the markets with unique perspectives from amazing team of analysts with the intention of helping dairy and livestock producers manage their risk.

00;00;26;20 – 00;00;56;01
Unknown
I’m your host, Jim Matthews, reporting from the Chicago office. On a yet another snowy December day. And then it’s just going to get pretty stinking cold. It’s just going to get pretty stinking cold this weekend and like, justifiably complaining cold like subzero cold. And, because I’m foolish enough to attend bears games regardless of temperature, we’ll be really testing.

00;00;56;01 – 00;01;27;05
Unknown
We’ll be testing. The will power here on Sunday should be pretty interesting. Perhaps, though, where it’s a little bit warmer. Joining me today, from Wichita, Kansas, our director of feed foundations, Mr. Jay Kingsley. And then from way down south in Atlanta, Illinois, director of buyer relations. Mr.. World no doubt prey third team. How are we today doing pretty good.

00;01;27;07 – 00;01;47;00
Unknown
Doing great here. We’ve managed to, dodge a lot of those snow squalls that were coming back out today. Yeah, they kind of they go north of Uvalde, way down south. Yeah, that’s a good point. So they just just north of us. Glad to hear you missed it. And then, Jake, in the land of hard red winter wheat.

00;01;47;01 – 00;02;15;03
Unknown
How are things down in Wichita? Pretty good. Really. Little bit warmer here. I think we’re going to get cold. Not quite as cold as you. Sure. My son wakes up every morning disappointed that it has not snowed. But he’s only three, so we’re going to let him suffer for a while in this moment. Well, and, the hard red winter wheat crop down here is looking pretty good because they got that stuff in the ground, it got established, and then we got like an inch or two of rain on most of it.

00;02;15;03 – 00;02;40;28
Unknown
So it’s looking pretty good at this little nice little start of the dormant window. Okay. And so Jake, and just for the viewers and listeners out there, you are working with some egg crop nerds out there. Because we got into a borderline fight. We got a little bit of brawl earlier before we started recording over Chicago soft red winner wheat versus Kansas City Soft or hard Red Winter wheat.

00;02;40;28 – 00;03;01;19
Unknown
Excuse me. So got a little bit of a a battle, but let’s just say we’re all one big happy Wheat family. Jake, can you just touch on this for another moment here? So we plant our winter wheat crop in the fall, correct? That’s correct. Comes out of the ground and then enters a period of dormancy. Is that accurate?

00;03;01;26 – 00;03;27;01
Unknown
That is also correct. And then Mother Nature, in its own way, at times or not, will help protect that dormant crop by covering it with some snow to avoid, you know, winter issues such as like winter kill, for instance. Well, right when we get so stinking cold it kills off some of that dormant crop. But it’s good to have that nice white blanket down over it, doesn’t it?

00;03;27;04 – 00;03;48;06
Unknown
It does help. Yep. We haven’t gotten that cold yet, but if we’re going to get down into the single digits for an extended period of time, it’ll certainly help to have a little blanket of snow on it. Okay. Excellent. Okay. And then, Jake, you you did note that folks are willing to pay a premium for that Kansas hard red winter wheat.

00;03;48;06 – 00;04;21;16
Unknown
Why is that, Jake? Well, we’ve now moved on from agronomy 101 to Plant Science 101 maybe, I don’t know, but, hard red wheat has, variable amount of protein in it. And that’s typically what you’re paying for your Chicago soft wheat is a little lower protein value. So. Gotcha. So folks are paying up for that higher protein content here for that hard red winter wheat as opposed to the soft red winter.

00;04;21;16 – 00;04;46;16
Unknown
You find in the central Midwest eastern belt, if you will, versus down in the Plains a lot of years. They are. Yep. If the market’s calling for it, there’s some days when it’s at parity but typically where the better product. Yeah okay. Excellent. Well hey for those tuning in if you did not know enough about wheat, I hope after today you learned a bit and you know a little bit more.

00;04;46;16 – 00;05;12;06
Unknown
And you know, it’s really fun conversation to have around your holiday dinner. Share with some friends and family some trivia. Test their wheat. That’s their wheat knowledge. So think about that as you’re heading into the holidays. We do have a lot to run through today because we had a big report yesterday here from the USDA. We are back, knock on wood, on a monthly cadence for that was the report.

00;05;12;08 – 00;05;41;04
Unknown
But first we’re going to switch things up today. Michael, if you could please kindly timestamp the broadcast Jake. Hard read Kansas City week. Kingsley is going to give us the market rundown today because it’s almost 130 Chicago time Wednesday. Markets have closed. Jake. Where did we close it today? At the board. So the Kansas City Wheat contract, closed at five 23.75 for March.

00;05;41;07 – 00;06;07;21
Unknown
The soft wheat out of Chicago finished the day at five 29.25. So actually a little bit of a premium there in the futures market. But I’m a basis guy and that’s what really counts. Amen, brother. I’ll be doing the corn and being and meal settlements today Jake. Right on. So everything here is March 26th contracts. Corn closed out at 444.

00;06;07;21 – 00;06;43;18
Unknown
Flat. Soybeans finished out at 1101 and a half March meal down to 306. Even soy oil at 5161, up a couple cents on the day, and then crude oil at 5818 and feeder cattle at three 3282. Okay, there you go. Hey, man, that’s an efficient rundown right there. We covered wheat right off the bat. Then, of course, our other feed products then dive into some livestock and energy markets.

00;06;43;21 – 00;07;09;06
Unknown
I think it’s really important to hit on each of these because for one, we had the Wasa report yesterday. We had the, federal Reserve announced just before we started recording today that we are going to cut interest rates, by another 25 basis points. So largely as expected by the market, I think futures were projecting a 90% chance of a, 25 basis point cut in the fed funds target.

00;07;09;06 – 00;07;43;10
Unknown
So interesting to see how that might impact the macro markets. But focusing on our grain and oilseed markets here today we had that was the report come out yesterday. I would say I don’t want to say it’s a nothing burger because ultimately markets have reacted somewhat digesting this thing a day later. Right. In terms of how both corn, I think behaved versus how it initially reacted after the report, but then beans as well, you know, the soybean balance sheet, you could argue in the US, we literally did nothing.

00;07;43;13 – 00;08;09;16
Unknown
Corn. We raised exports while touching virtually nothing else. So Vera, what is your take after digesting? Why is you for a little more than most? We’ll call it 26 hours or so. What are your thoughts? Yeah, I think the market, had a little bit of anticipation in seeing this report based on, you know, it just kind of felt like this was the first real last we were going to receive after the government reopened.

00;08;09;16 – 00;08;30;10
Unknown
Obviously, we did get a report back in November. However, the government, had only been at their desks for about a week or so. If I remember correctly, before they released that information. So they’ve had plenty of time to kind of, put the numbers together to release, the new information for us here in December.

00;08;30;12 – 00;08;54;26
Unknown
And yeah, I think if, you’re a corn bull, you’ve got to be a little bit disappointed that production was not touched whatsoever. Yields stayed the same as we saw in, November. And you know, obviously they did raise export demand by another 125 million bushels. That was kind of well expected to see, you know, anywhere of a bump from 75 to 125.

00;08;54;26 – 00;09;30;24
Unknown
I mean, as of the first week of November, you know, total commitments of corn exports have continued to be very, very strong. You know, where about 200 million bushels ahead of schedule, as a matter of fact, back then, you know, looking forward, I do think, one of the things that caught my eye on this, was the report was some of the changes that we saw, actually, to the 2024 corn balance sheet that kind of went behind the radar because that balance sheet is all but, closed out as of September 1st.

00;09;30;26 – 00;09;58;02
Unknown
But they did lower feed in residual yet again by a small amount on, on last year’s, demand sheet. And that remains a massive question for this 2526 crop year. How in the world are we going to get to 6.1 billion bushels of demand for feed in residual? I think that’s a question that this USDA still has to find some answers for.

00;09;58;05 – 00;10;39;00
Unknown
However, you know, it does feel like there’s some sort of premium built into this thing and a lot of pressure coming into this January report to see what happens to to the production side. Yeah. And I think you noted that we have been watching the corn export pace very closely. And you specifically overall, I mean, you send out a report, virtually every Thursday after we get weekly export sales and then Monday’s export inspections, to kind of give the team internally a sense of how we are doing versus our historical pace, but also versus what the USDA is projecting, in terms of total sales and exports for each marketing year.

00;10;39;03 – 00;11;06;05
Unknown
And as someone who would, for the sake of our dairy and livestock farmers, right. Those feeding grain, feeding corn, there is a hope that we continue to stay under some pressure here, in the corn market. But I think for those row crop farmers that are growing and producing and selling corn, right. We’re looking for a reason to run this market a bit higher or try and keep it a bit elevated.

00;11;06;08 – 00;11;30;24
Unknown
This export story is helping do this right. We’re not we’re not taking off to the moon. We’re not running March corn to $5. If anything, we continue to find some resistance. I think at 450 on the March contract. But it is hard to ignore the export pace that we’ve seen in this corn market. And we’ve talked a lot about, you know, the impressive pace to Mexico.

00;11;30;24 – 00;11;52;13
Unknown
We’ve talked about Korea, we’ve talked about Japan. But yeah, it is remain very strong. I mean are we potentially setting or are we on pace for an export record here at this point if things trended in this direction for the marketing year? Yeah, yeah. It appears so for corn especially. I mean obviously soybeans is not not nearly the case.

00;11;52;13 – 00;12;20;18
Unknown
We’re we’re incredibly behind the pace needed to even meet current expectations on soybeans. So a lot of concern there. But yeah, I think you’re exactly right. Ultimately, there is a level of support that is within this market that you probably would not tend to see with a 2 billion bushel earnings, stock number. And it’s it’s being built by the strength and exports.

00;12;20;18 – 00;12;43;01
Unknown
Right? I mean, I think the market’s very cognizant, in believing that, hey, if we drive this corn price too low, we could end up sending a lot more corn out of this country than maybe we’re willing to do. Yeah. And I think the watching especially like our our ending stocks, it’s holding at 2 billion bushels, like you said for corn.

00;12;43;05 – 00;13;05;19
Unknown
We’re flirting with it. Right. Like at this one. We’re we’re just over it. But that’s a it’s a very psychological number. But even if you were to break 2 billion and get to 1.9, I mean, it’s still a very, you could argue a very large balance sheet. We have plenty of corn here. But I think as you look at our, you know, stocks to use ratio, right?

00;13;05;19 – 00;13;29;18
Unknown
I mean I’d say it’s it’s fairly steady. It’s up a bit versus last year. I think it’s up a bit. Maybe it’s highest level I want to say since the 2019 crop year, we can go back and edit this out in case I’m wrong on that. But it’s one of the higher stocks use ratios of the last six, let’s say 5 or 6 years.

00;13;29;20 – 00;13;51;07
Unknown
And like you said though, and yet we’re just holding some support here. Where are we taking off to the upside. No. But you know, for those feeding corn, we would love to see a pullback and have a chance at $4 again, especially if you’re going to have a 2 billion bushel balance sheet and the highest stocks use ratio you’ve had in 5 or 6 years.

00;13;51;12 – 00;14;16;18
Unknown
But man, that export pace remains really hot. So really interesting to watch there. And then just as you said, not the case for beans. And it’s tough to not beat up this storyline. But we just have to continue to point out this whole deal that we had with China and their supposed commitments to buy beans from the United States.

00;14;16;20 – 00;14;47;14
Unknown
It’s still and we’re recording on December 10th. It’s just not panning out the way that I think folks initially thought. We do not have up to speed CFTC data yet in terms of the commitment of traders. So we don’t know exactly where the funds are positioned on beans. But overall, you’d have to imagine that funds got pretty long or net long, this being market, when they ran nearby beans, under the assumption that that China would indeed fulfill this commitment.

00;14;47;16 – 00;15;12;10
Unknown
And really, since then it has been a pretty decent descent lower as we move through, you know, the end of November and into December. Jan beans breaking 11th March, beans just right at 11. Now, it’s been a big move and I think part of is like, bro, we haven’t. We’re just not seeing this export market live up to what we had thought.

00;15;12;10 – 00;15;41;21
Unknown
And at some point you’d think the USDA is going to cut exports further. Do you think that would potentially happen on the January zero? Yeah, I do, I think it was probably well deserved on this report. To be perfectly honest, I was surprised that they left it at 290 million or 290 million bushels of ending stocks. But the reality is, is, you know, this soybean market got way too far over its skis right there.

00;15;41;27 – 00;16;09;09
Unknown
In my opinion, there was no good reason to trade 1170 futures on this January contract. And here we are, $0.80 from there, about two weeks after the high. And the reality is, is even if China comes in and does buy that 12 million metric tons, we’ve got to be careful not to overprice ourselves and, and basically, not find any other export business, from other global buyers of soybeans.

00;16;09;16 – 00;16;36;18
Unknown
Yeah, yeah, it’s going to be a really interesting stretch. And I just wonder if for this December wise, the report, the USDA thought it was just too soon to show too many cards at this point and just, you know, say, hey, we’re not going to see the pace that that we claim that we were going to see. Maybe they just wanted to give this another shot, because there is continued dialog from Secretary’s percent on the Treasury side.

00;16;36;18 – 00;16;59;17
Unknown
Rawlins on the AG side, you know, even the president himself continues to bring this up here and there. But I think we also saw that aid package released or at least announced, you know, first half of this week that 12 billion, you know, I think we could get into a lengthy debate on what exactly that covers. And if it is substantial enough to benefit our farmers, we’ll save that for another day.

00;16;59;17 – 00;17;24;13
Unknown
But I think even acknowledging that they’re going to release this $12 billion in aid, you know, a lot of that presumably is going to be for soybean growers. There’s potentially a sense of we’re recognizing we’re not going to hit nearly I mean, extensive export pace as we have in the past. So it’s going to be super interesting, I guess, between now January.

00;17;24;15 – 00;17;44;18
Unknown
Do you how do you see this market behaving? Corn or beans? You know, corn I think is probably pretty rangebound. I think the, trade wants to see what happens on this. Was the report in January with production, you know, on the soybean market. I think we’ve got a really good shot at going in fill, filling that gap from the end of October.

00;17;44;21 – 00;18;06;13
Unknown
That would take January being somewhere in the range of 1060. Okay. Yeah. And just to think of what a drop that is from the highs we saw and the reason we gapped right was because of the announcement and assumptions that we were going to then fulfill, this rejuvenated export program right between us and China. And so you saw those markets really take off.

00;18;06;15 – 00;18;39;20
Unknown
And it has been a swift move back now over the last, let’s say, six plus weeks when we created those gaps. So thank you very much for those insights there Jake. We’ve got a couple minutes here to chat some cash markets. You know as we come out of this was you report. You noted that Neal talk about another market that achieved some pretty decent eyes on some of this anxiety and anticipation within the soy complex, within the export program for beans, you know, still maintaining a pretty solid export program for meal.

00;18;39;22 – 00;19;04;23
Unknown
But I think we also then saw, you know, we are doing a pretty decent job of continuing to crush beans to produce meal. A lot of it, and prices have largely come down significantly, at least at the board on soybean meal futures. So what are you seeing in cash protein now over the last week or so, but especially maybe since that was the report.

00;19;04;25 – 00;19;28;05
Unknown
Yeah. So we’re starting to revisit some price per ton values that are attractive enough to go out and do some more, significant buying, long term buying. If you feel you need to and you’re, you’re comfortable with those values versus what you can produce on, on milk, basis has been attractive across most of the country for many months now.

00;19;28;07 – 00;19;59;15
Unknown
Futures had that rally. They’ve come back down. People are taking advantage of that or starting to cash in on some of the hedges and plays that they made when the rally was peaking out and collecting a little bit of, premium from the market from those moves. I think what we really have to study there is what’s going to happen to all of this soy oil that’s really driving this opportunity for us to buy inexpensive feed.

00;19;59;18 – 00;20;22;07
Unknown
And the questions still remain, what will be the final blending volumes that the government mandates? We were expecting that early in the month of December. We haven’t seen it yet. That timeline could have changed because that December deadline was kind of given ahead of the government shutdown. So maybe that’s completely shifted now. We really haven’t heard any new word on that.

00;20;22;09 – 00;21;05;03
Unknown
And then you also have questions about finalizing some of the verbiage around these carbon credits and, and the incentives to produce vegetable oil and renewable diesel and sustainable aviation fuel and all of those things. There was initially an expectation that we were going to see a more limited incentive program for foreign products. So potentially Canadian canola oil, palm oil out of Southeast Asia, cooking oil coming out of China, all are receiving the same full benefit of soy oil.

00;21;05;10 – 00;21;28;22
Unknown
And the question is, if and when do we reduce the subsidies that those products catch and make it more competitive for us produced soy and other veg oils? And if you can do that, then these crushers have a lot more confidence in the margin profile. They’re crush facilities and they’re more ready to turn loose of this meal.

00;21;28;25 – 00;21;56;12
Unknown
But again, right now, prices are relatively attractive. And the last we had heard is potentially they were going to extend those full credit values to the foreign products for as much as another two years. And yet the market’s been pretty steady through that. So I think if you get some kind of confirmation that there is going to be change in favor of the US soy oil producer, maybe we see another big break lower and that would be the opportunity to clean up.

00;21;56;15 – 00;22;22;28
Unknown
Yeah. And I think the trying to find out when we would get some clarity I think even from the EPA. Right. I mean that proves to be somewhat difficult, especially as we came out of the government shutdown. And then, you know, I think just even understanding from, you know, different elements of Congress here, if we’re going to get any permanent changes in legislation, regarding, you know, green energy, renewable fuels.

00;22;23;00 – 00;22;45;06
Unknown
So there are different some different angles here that we need to watch. I think the nearest term, right, the front burners, if you will, as opposed to back, is going to be with the EPA decides and gives us and some of those mandates. So that’s going to be really interesting. And like you said, Jake, I mean, that’s a I mean, meal kind of gets pulled in different directions here lately.

00;22;45;06 – 00;23;03;22
Unknown
I think a lot of it has been what we’ve seen in soybeans. But yeah, we need to pay very close attention to its fellow byproducts, soybean oil, to see how that is going to behave. And, Jake, on that note, as we move into 2026, I think we’ll wrap up for today. We will still have another recording next week.

00;23;03;22 – 00;23;24;06
Unknown
So you’re not done with us yet here in the year of 2025. But in the meantime, it’s been a wild episode. We’re going to give Michael another shot. So I think he’s got some work to do in terms of people calling timeouts, helping out with kids and dogs in the background. Big shout out for his edits in advance, but also to Jake and Burl.

00;23;24;06 – 00;23;39;16
Unknown
Really good to have both you guys here, thanks to the Rag Insights Crew for their support. Thank you to the viewers for watching the Grain Feed contact information is on the screen. We greatly appreciate your feed back. That’s all for today. We’ll see you next time on the Grain Feed.