Ep. 34 Takeaways from the Agricultural Outlook Forum, Tariffs on Agricultural Commodities, and Pre-Harvest Marketing

00;00;14;22 – 00;00;18;11
Dr. Ryan Loy
Oh, it could be better. It’d be better.

00;00;18;13 – 00;00;20;16
Dr. Ryan Loy
I mean, better.

00;00;20;18 – 00;00;38;13
Riley Smith
Mine’s started out great. We did some crappy catching, and then we did some prescribed burns. We burned off about 70 acres and, found one of my giant deer sheds in the barn. While doing it. All right.

00;00;38;15 – 00;00;39;18
Dr. Hunter Biram
Pretty cool.

00;00;39;21 – 00;00;42;02
Riley Smith
It was cool. I got a picture of it. I’ll show you all later.

00;00;42;02 – 00;00;45;05
Dr. Ryan Loy
But, you know, that he made it through the end of the year, at least.

00;00;45;07 – 00;01;10;18
Riley Smith
Well, he, dropped his antlers right there at the first half of January. He dropped one. He was in the food part at 6:50 pm and had one side. And the next day, at 6:55 pm, he was in there and he had dropped the other shots and I had looked for the set. I knew that he was at least one of the horns was between our boundary, our property line, and that food plot, and I looked for him 3 or 4 separate times, couldn’t find.

00;01;10;19 – 00;01;36;01
Riley Smith
And we were burning the other day and I was checking my fire lines, and I was actually walking through the middle of it and underneath the pine tree there it laid like somebody had placed it there, just shiny as it could be. And it was. He was, he was one I would have killed last year or shot and, for our listeners, if you don’t know what I’m talking about, okay, I’m talking about a deer antler.

00;01;36;04 – 00;02;00;13
Riley Smith
Is a deer. But he, he definitely was impressive for an eight point. And I’m hoping that he’ll grow again this year. And if he does, I think the one that I did end up getting at the end of the year in November, I think he was still bigger than the deer shed that I found. But he, he has the year here.

00;02;00;21 – 00;02;02;00
Dr. Ryan Loy
He got some really good deer this year.

00;02;02;02 – 00;02;19;05
Riley Smith
We had a lot of mature deer, I was very tickled. There’s a lot of five and a half, six and a half year old deer taking off the place. And in the surrounding farms. So it was a great year for everyone. Ducks on the other that didn’t get that didn’t get real good till about the last two weeks season, which is pretty typical.

00;02;19;05 – 00;02;20;04
Riley Smith
So

00;02;20;06 – 00;02;22;12
Dr. Ryan Loy
that’s on par for what it’s been. Right?

00;02;22;14 – 00;02;38;15
Riley Smith
Oh yeah. About the third week. What was it the second week of February when we got that big? We got the free or got the rain and then the snow. That big rain we got. Oh, there were so many places you couldn’t fit. Another duck look like cockroaches just everywhere.

00;02;38;16 – 00;02;42;13
Dr. Ryan Loy
A good problem to have this.

00;02;42;16 – 00;02;51;15
Riley Smith
I guess. So it was after season. That was a bad part. But anyway, y’all guys ready to get cranking? I think so.

00;02;51;16 – 00;02;53;06
Dr. Hunter Biram
Ready as I’ll ever be Riley

00;02;53;07 – 00;02;53;28
Scott Stiles

00;02;53;28 – 00;03;17;08
Riley Smith
All right. Well good morning. Good morning. Welcome to another episode of Morning Coffee and AG Markets with your host, Riley Smith. And today, boys and girls, we’re having a roundtable discussion. We have Mr Scott Stiles, who hails from Greenfield, office at the University of Arkansas Rice Research Center,

00;03;17;11 – 00;03;18;19
Dr. Hunter Biram
Research and Extension.

00;03;19;00 – 00;03;19;29
Dr. Hunter Biram
Research and Extension.

00;03;20;02 – 00;03;46;14
Riley Smith
Research and extension, we got Dr. Hunter Biram, who is, approximately 30ft from my office, and his office, and then we’ve got Dr. Ryan Loy, who is approximately 60ft from me in his office. So we, all had to jump on the zoom here and, our studio booth. We would have done that, but, they’re doing UADA today.

00;03;46;16 – 00;04;01;14
Riley Smith
If y’all don’t if you haven’t seen that or know what that is, go look it up on Google. And that’d be another good outlet for our listeners to, chime in on. But besides that, today we’re talking about the AG Outlook Forum. Is that correct?

00;04;01;16 – 00;04;05;18
Dr. Hunter Biram
Yep. That’s what that’s what I’ve got planned, at least.

00;04;05;21 – 00;04;26;22
Riley Smith
I guess what we got planned. Not not terrific news, but, we’re going to let our three experts, will be the the back catch on this one. And, let these three experts fill everybody in on what’s going on in the world of AG. So whoever wants to start, y’all just take it and run with it.

00;04;26;24 – 00;04;33;28
Dr. Hunter Biram
Yeah. Really? Appreciate the baseball analogy. I am very excited for baseball season to be to be upon us.

00;04;34;01 – 00;04;35;07
Riley Smith
Oh. Me too.

00;04;35;09 – 00;04;44;14
Dr. Hunter Biram
I’m ready for baseball, and, I’m I’m I’m a big Texas Rangers fan. I’m not sure how much I should, shout that, but I am a big Texas Rangers fan and have been for a long time.

00;04;44;14 – 00;04;50;29
Dr. Hunter Biram
Not just because they won the World Series two years ago. People I have been a fan for well over gosh my gosh, 15 years now.

00;04;51;01 – 00;05;06;20
Riley Smith
Okay quick quick quick quick quick note Just because you brought up sports. And I got to say this real quick. So I took my buddy the other day to the gym two days ago or whatever. We’re in there working out. He come up to my buddy, come up to me. He said, dude do you know who that was?

00;05;06;23 – 00;05;28;09
Riley Smith
Like somebody extremely famous was in there. I’m like looking around like, no, well, who was it? He said, dude Treylon Burks just walk by us? I’m like that. I said, you talking about Treylon like like wide receiver at Arkansas and then played for the Titans. He said yes. He’s wearing a Tennessee Titans shirt. He said I swear it’s him.

00;05;28;11 – 00;05;30;25
Riley Smith
So we walked to him there. Sure enough Treylon

00;05;30;25 – 00;05;31;28
Dr. Hunter Biram
what was doing in Beebe?

00;05;32;01 – 00;05;33;22
Riley Smith
No he was in Searcy.

00;05;33;23 – 00;05;36;17
Dr. Hunter Biram
Thirsty now still. What’s he doing in Searcy?

00;05;36;24 – 00;05;49;14
Riley Smith
I think his fiances from there because my cousin and them and had been around him and kind of the same friend group, but yeah, yeah, probably the best wider best wide receiver to ever come out of University of Arkansas.

00;05;49;17 – 00;05;50;02
Dr. Hunter Biram
How about that.

00;05;50;02 – 00;05;51;15
Riley Smith
He was in our gym.

00;05;51;18 – 00;06;19;26
Dr. Hunter Biram
That’s crazy. But, yeah. Onto onto the business and, not great business. Last week I was, I guess fortunate enough would be the word to to actually go to the AG Outlook forum and, get to engage with, USDA staff and, other, consultants and, folks that are in the ag industry. And, I’ll just start off by saying it was a pretty somber tone, for for many reasons, which we’re not going into great detail, but it was a pretty somber tone.

00;06;19;26 – 00;06;42;22
Dr. Hunter Biram
But, part of that somberness actually was because of these markets. And, you know, AG outlook forum not a ton of surprises. I would say there’s probably one that we’ll talk about in a moment that I saw as a surprise. But, you know, overall, you know, corn, I’ll just start with acreage. I think, that’s what we’ll talk about in the newsletter, at least, is corn acres projected up 3.4 million.

00;06;42;25 – 00;07;08;16
Dr. Hunter Biram
So looking at, around 94 million acres of, corn and soybeans down 3.1 million, down from that, 86.1 million, number 24, 25 wheat acreage, up about a million acres and a cotton acres about is down by about a million. And then, rice, acreage is, overall projected to be down. I think the long grain numbers are going to be up by maybe a 10th of a million.

00;07;08;18 – 00;07;32;06
Dr. Hunter Biram
But overall, between long, medium and short. We’re seeing acreage, decline. And so, you know, to me, one of the surprises was that even though there was this massive decline in soybean acres, that soybean price, still is going to decline, by, by about $0.10. And that seasonal average price last year from USDA was 1010.

00;07;32;08 – 00;07;50;27
Dr. Hunter Biram
And the current projected price is about, $10. And so I thought that was kind of interesting. Scott, I know that that’s something that you had highlighted as well, when we’re having our chat about those numbers coming out. I thought that was, pretty interesting.

00;07;50;29 – 00;08;34;10
Scott Stiles
We talked about, the parallels of their price outlook with signing up for Arc and PLC and making those decisions and, one thing I would note is the reference price for corn for the 25 crop is for 26. And compare that with USDA was out price outlook for corn at 4.20. So with the higher you know, with the significant increase in acres, you know, their, their outlook is, you know, for corn, average corn price to be down about $0.15 from, from the 24 crop.

00;08;34;10 – 00;08;47;25
Scott Stiles
So, but in a roundabout way, I was just saying the 420 would get you into a price level that would trigger policy for for corn. So something to think about as you’re making those decisions.

00;08;47;27 – 00;09;12;08
Dr. Hunter Biram
Yeah, that’s that’s important. And on that note, Scott, if I’m, unless I’m mistaken, you know, that long grain rice reference price is $14 100 white. And the 2526 outlook price for long grain. So if you were to separate out the long grain versus medium short grain is actually 1350 for longer. Yeah. And so it looks like rice is going to is likely to trigger and PLC this year.

00;09;12;08 – 00;09;28;09
Dr. Hunter Biram
So I know that I’ve been suggesting p.l.c.. I mean that that almost just seems like common knowledge anymore. If you’re going to, choose between Arca plc, for the rise since certainly going to be plc. Yep. Yeah.

00;09;28;11 – 00;09;38;10
Scott Stiles
PLC for cotton and rice, peanuts. Those have been three that have been solidly I mean almost 100%. The base is going into PLC for those three crops.

00;09;38;12 – 00;10;04;07
Dr. Hunter Biram
Yep, yep. Yeah. And you know and you know back to that soybean price falling. You know what what USDA citing is is our South American neighbors, down there, with Brazil and, higher, higher stocks and, Scott and you have any, any thoughts or any updates on, crop progress in Brazil? How are things looking there?

00;10;04;09 – 00;10;34;00
Scott Stiles
Oh, I think it’s still, on track. I mean, it’s the the had a slow start and harvest and alot gross of it, but I think the weather started to cooperate there. And so harvest is moving along at and you know, I had an average base and, the yields are good. Last reports that I heard, you know, the average, for most of the most amount of gross, the region was 61, 62 bushels.

00;10;34;00 – 00;10;58;11
Scott Stiles
So good yields and, still on track for a record crop that’s around. I, I think around 6.2 billion, bushels. So big, record crop, I expect it still. And, there. So but, anyway, no, I mean, no major concerns at this point there, weather wise.

00;10;58;14 – 00;11;16;03
Dr. Hunter Biram
And that seems to be the case. It seems like each year that we, you know, the more that we study Brazil and what’s going on there that, I mean, I can’t tell you how many times we said, well, it looks it looks awfully dry, but they must have some magic soil because it just seems like one rain away.

00;11;16;03 – 00;11;33;01
Dr. Hunter Biram
It’s not that much. And they’re just right back on track. So I always found that to be concerning and that farmers are like, Hunter I don’t know, like, are they even tell us the truth and all that. And I was like, hey, I’m just going off of what the International Drought Monitor tells me. And, I mean, it it seems to be the case most of the time.

00;11;33;01 – 00;11;41;22
Dr. Hunter Biram
I mean, when when they get that right rain. I mean, when was that last wet year? Was that three years ago? They had that exceptionally wet year?

00;11;41;25 – 00;11;55;04
Scott Stiles
Well, the southern end of the country was really had the flooding last year. Okay. Had but I mean, I was just kind of in the extreme southern end of the country.

00;11;55;07 – 00;12;08;11
Dr. Hunter Biram
Yeah. I thought there was another instance, like where they had a big, a big drop in their production. I thought, I thought that was in the 20, maybe 21, 22, marketing year,

00;12;08;13 – 00;12;16;17
Riley Smith
Hunter I think 2021 was that year. I think we had a big Hurricane that year that damaged a lot of crops.

00;12;16;20 – 00;12;18;23
Dr. Hunter Biram
So are are you talking still?

00;12;18;25 – 00;12;24;00
Riley Smith
It’s all the way up. Yeah, I was that. Sorry. Wrong place.

00;12;24;03 – 00;12;54;26
Dr. Hunter Biram
Yeah, man. Brazil. A big deal in in soybeans and and cotton has, you know, as we’ve seen. And so, it looks like, you know, moving into cotton, then. That’s a good segue way. You know, it looks like Brazil is going to be the number one, exporter, in the 25, 26 crop year. And, you know, Scott, as I know that you’ve highlighted in your, in your, in your tables and in the, in, in, in the work that, that, that we’ve done this year and sharing information to farmers.

00;12;54;26 – 00;13;10;12
Dr. Hunter Biram
I mean, that title was taken for the first time ever in 24, in, in 24 or 25. And, and how many years of data did we look at? I mean, it’s pretty much since the beginning of, of the data series. The US has dominated in terms of exports.

00;13;10;15 – 00;13;33;14
Scott Stiles
That’s right. Until last year. And, that’s the one Brazil moved moved ahead of the US and the in the 23 marketing year. So, I think that, I don’t know that, you know, that will be the case again for the 24 market in years. Well, so anyway, there’s more competition for us,

00;13;33;16 – 00;13;34;24
Dr. Hunter Biram
continued competition.

00;13;34;24 – 00;13;43;08
Dr. Hunter Biram
And, you know, the in the mills and mill use over time has just continued to decline until you. Yeah, it’s.

00;13;43;10 – 00;14;03;10
Scott Stiles
Yeah. The mill use it. That’s or like 1.7 million for the current market a year. And that’s I don’t have records going back that far, but USDA says that’s the lowest since the 1880s and U.S mill use. So markets known. Yeah. Yeah.

00;14;03;13 – 00;14;22;10
Dr. Ryan Loy
Some of the stocks to use that we have that’s got to be, you know a near record right. I know it’s down from last year. So last year it was higher. But 33%. That’s got to be it’s got to be up there. I get the data in front of me. It’s got to be up there. As far as how much, stocks we have left over.

00;14;22;12 – 00;14;46;06
Scott Stiles
Yeah, I’d say we no doubt, but it’s just a reflection of just, you know, it’s it’s the with the exports at 11 million, it’s it’s, the heavy stocks to use is just a, a reflection, not just, you know, the competition from Brazil, but Australia has got water and, and they’ve got about 5.5 million bales to, to export to.

00;14;46;06 – 00;15;02;15
Scott Stiles
So that’s another, another reason why, you know, there’s just, you know, while our exports are struggling is that you got good quality, cotton. From Australia and Brazil. Right.

00;15;02;17 – 00;15;19;17
Dr. Ryan Loy
It’s good to know. I think that’s a great segue into, you know, we’re talking about competitiveness. Yeah, with Brazil and how we’re going to fit into the global trade this year. And one of the things that happened yesterday, in fact, I was getting ready to head to a production meeting yesterday. And I came in here just a little bit ahead of time.

00;15;19;19 – 00;15;46;24
Dr. Ryan Loy
And, retaliatory tariffs from China got announced, this time focusing on actual agricultural commodities. So earlier this year, China did announce tariffs but was not focused on agricultural commodities. And yesterday, the Chinese Communist Party, they announced new tariffs in response to the United States levying an additional 20% on all Chinese imports. So that’s across the board, on Chinese imports to the US.

00;15;46;25 – 00;16;32;10
Dr. Ryan Loy
Now it’s got a additional 20% tariff on top of that. And in response, China said, okay, we’re going to target US agricultural commodities now. And so they’re starting with a 10% levy on soybeans, sorghum, pork, beef, aquatic products and fruits and vegetables, and a 15% levy on chicken, wheat, corn and cotton. And so, you know, talking about the competitiveness of all that and essentially what that means is that China is going to basically further shift towards Brazil, you know, if it’s going to be a cheaper option for them and a way for them to continue to build that relationship with Brazil and not have to deal with tariffs coming from, you know,

00;16;32;10 – 00;16;54;15
Dr. Ryan Loy
and not have to deal with tariffs going into us or, the US supplying it and paying that tariff. Now they renounced those tariffs yesterday on March 4th at the time of this recording was yesterday. But it’s on March 4th however. And those tariffs coming into China from the U.S. on those agricultural commodities is not slated until March 10th.

00;16;54;17 – 00;17;13;29
Dr. Ryan Loy
And I read this morning as well that if there if the commodities are currently in transit to China as of right now and they arrive after March 10th, they won’t be subject to the tariffs. But it’s everything that’s basically going to leave the poor in the U.S after March 10th is going to be the one that’s really subjected to it.

00;17;14;02 – 00;17;30;25
Dr. Ryan Loy
Now March 10th is the day is kind of the day for that to go, live. However, both the US and China have kind of both said, look, we’re willing to come to the negotiating table. We don’t want a trade war. But China also said we don’t want a trade war, but they’re willing to have it if they need to.

00;17;30;25 – 00;17;50;00
Dr. Ryan Loy
So, you know, unless a, an agreement, you know, unless we can hash out a deal with them before then. March 10th, something to keep an eye on. And since the 2018 trade war, you know, China has been really steadily diversifying its commodity supplies, just like what y’all have been talking about today and thinking about cotton and our exports being down.

00;17;50;02 – 00;18;14;03
Dr. Ryan Loy
And they’re trying to become those closer trading partners with Brazil, which is a, you know, much different discussion. And they’ve really taken over the US’s chart as China’s largest, commodity supplier. So this, this newly sparked trade war, at the very least, if it does have legs and does become an all out trade war has the potential to really further force Chinese import demand to other countries away from the U.S.

00;18;14;06 – 00;18;24;03
Dr. Ryan Loy
So it’ll be interesting to see how it plays out. Any thoughts on that, gentlemen?

00;18;24;06 – 00;18;51;01
Dr. Hunter Biram
I’m, concerned to say the least. Yeah, I really am concerned. And, I know that the message that’s been thrown around is that there’s going to be short term, short term losses and, long term gains. And, you know, I’m not entirely sure on that. I mean, just from strictly I mean, what we’ve seen here in recent history, as you said, Ryan, I mean, China has, said, you know, what?

00;18;51;01 – 00;19;13;27
Dr. Hunter Biram
We’re going to we’re going to invest in Brazil and we’re going to work with Brazil. They are willing to work with us. And very clearly, I mean, that has had an impact on our markets. And, very clearly it has impacted our competitiveness. I mean, just if you just look at even, when when did Brazil overtake the US as the leading exporter?

00;19;13;29 – 00;19;16;01
Dr. Hunter Biram
Scott, do you know that you’re off the top of your head?

00;19;16;07 – 00;19;25;12
Scott Stiles
It’s seven. So, 7 or 8 years ago. Yeah.

00;19;25;15 – 00;19;26;25
Scott Stiles
Which we might. Yeah, yeah.

00;19;26;26 – 00;19;47;21
Dr. Hunter Biram
Look, which would make sense, right? At least that would be around the time of now. 2018. Yeah. Which would make sense. I mean, we talk about the short versus the long term. And again, we’re just focusing on the export market. And you know we’re not getting into the domestic market here, but just the export market. There’s very clearly been some impact there.

00;19;47;24 – 00;20;06;06
Dr. Hunter Biram
In that if it was, you know, seven years ago, we had the trade war started, seven years ago, Brazil overtook the US as the leading exporter. And so that’s, you know, in terms of short term, I don’t know, I guess it’s all relative, right? But, you know, seven years to me does not really seem like it’s all that short term.

00;20;06;06 – 00;20;27;23
Dr. Hunter Biram
And it’s not just going to be 7 or 8 years, it’s going to continue. I mean, as Brazil continues to, increase in acres harvested as Brazil continues to, make those investments in the, infrastructure to get the actual commodity to the port. I think we’re going to just continue to see, their dominance.

00;20;27;26 – 00;20;45;20
Dr. Ryan Loy
And I think people honor and they you one of the questions I get is, will this have the same impact as 2018 trade war? And I think very simply, and I would I would love to have a discussion on this is very simple. Is no, it won’t. But I don’t say that from a perspective of it’s a good thing.

00;20;45;20 – 00;21;05;20
Dr. Ryan Loy
I say that from we don’t. China doesn’t rely on us like they did in 2018. We’ve lost that market share and so will it have the same magnitude of an impact overall? Most likely not. But just because of the actual amount that’s being traded now versus what it was in 2018.

00;21;05;22 – 00;21;07;19
Riley Smith
So yeah.

00;21;07;22 – 00;21;19;05
Dr. Ryan Loy
Something to something to keep on the radar. And just another thing to add to the already tight margins and price squeeze and uncertainty that we have in the agricultural, economy right now.

00;21;19;08 – 00;21;25;03
Dr. Hunter Biram
Yeah, absolutely. Scott, any comments on that?

00;21;25;05 – 00;22;09;05
Scott Stiles
You know, I think soybeans is going to be the most impacted. You know, China still our number one export market for soybeans. So you know, it’s uneven impacts across the commodities. But soybeans will be the most impacted. It’s probably a non factor for rice and you know, and we haven’t exported much corn to China this year and in past years we have, but this year and just very little, the U.S fortunately has, had really strong corn exports to, a number of countries outside of China.

00;22;09;05 – 00;22;36;21
Scott Stiles
So, but, you know, maybe there’s maybe there’s minimal impact on corn. And then cotton, you know, China’s dominance and, and, and as a customer for U.S. cotton has slipped to, in past years, they’ve been, the top export market for U.S. cotton, but this year, they’re, fourth, largest. So, you know, we still need you.

00;22;36;24 – 00;23;01;15
Scott Stiles
I mean, China is the largest textile industry in the world. It’d be great to, you know, continue to have a strong trade relationship with them, but, but, I mean, like I said, it’s just the uneven impacts, but soybeans certainly going to take to take the brunt of the hit. In this, now no doubt.

00;23;01;18 – 00;23;30;25
Scott Stiles
Now, you know, this trade war and the winter in this trade war, I think, is Brazil. And as you mentioned, it’s it’s China’s, you know, strength in this trade ties with Brazil over, you know, following the the previous trade war. And, that’s, that’s the reality of it is, Brazil continues to expand production and, and, and sell, you know, sell more product, to China.

00;23;30;27 – 00;23;46;16
Dr. Ryan Loy
I think that’s a great point. You bring up, Scott, is that no matter really how this plays out, neither country that’s really involved in the actual war is going to be the winner. It’s going to be the it’s going to be Brazil. That’s a great point. Hey, I’m sorry, I don’t yeah.

00;23;46;17 – 00;24;13;12
Dr. Hunter Biram
Another note that I want to make on cotton is in cotton in China and in particular is just the projected year over year change in, upland cotton sales to China supposed to be down, 81% from 23, 24. You know, looking at, you know, point not even not even a million bales, about 6 or 63,000 bales of sales to China in 24, 25 versus in the year before.

00;24;13;12 – 00;24;38;29
Dr. Hunter Biram
It was 3.5 million bales. Of course, you know what’s really impacting that? Correct me if I’m wrong here. Scott is going to be that stocks to use in China. It’s almost like it’s 100% like they’re pretty much using whatever they have on hand. So I mean, there’s not even really a market for anybody, in China just because they’re able to for all their domestic consumption, they’re, they’re able to use what they have on hand.

00;24;39;01 – 00;25;05;04
Scott Stiles
Yeah. Yeah. I mean, they really just don’t need, need to import much cotton. I mean, was the stocks to use that 100%? I mean it’s like effectively have a it as of July 31st, they’ll have a year’s worth of consumption and in storage. So, it’s just not any pressure, you know, for them to import, and they’re coming off, you know, a really large crop.

00;25;05;06 – 00;25;08;17
Scott Stiles
So it’s just, you know, they don’t need to import as much.

00;25;08;19 – 00;25;30;23
Dr. Hunter Biram
Yeah. Right. So, yeah, I think, yeah. The one key takeaway from all this discussion on tariffs is that there will be differential impacts, with this with, you know, being the probably the hardest hit because I think we account for 54% of our export sales. Related. Last year and soybeans. And so definitely gonna take a hit a hit there.

00;25;30;23 – 00;25;51;06
Dr. Hunter Biram
So shifting gears there, maybe we move into a little bit of, pre harvest marketing and, you know, talk through talk to the strategy that at least I’ve been advising, folks and, have a little bit of a discussion on the importance of, of pre harvest marketing. And as we lead into that harvest window, you know, what do you do?

00;25;51;13 – 00;26;12;04
Dr. Hunter Biram
What do you do with your grain? I mean, this is just such an uncertain time. And, I mean, we need risk management now more than ever. The crop insurance price guarantees aren’t great. I think some folks enabled a lot to, to leverage the eco. But, I mean, even with eco, I mean, when you have low prices, you have low prices.

00;26;12;04 – 00;26;33;05
Dr. Hunter Biram
I mean, if it’s. And I thought if 95% of 95% of low is still low, right, or 80% of low is still low. And so that’s, that’s kind of the rub here. So it’s all about, you know, to me it’s I think, you know, looking at break even in Arkansas because we just don’t we just don’t have the yields that would be in other places.

00;26;33;08 – 00;26;58;28
Dr. Hunter Biram
And, so try and try our best to make that break even point. So as you’ll see in the newsletter, actually, I’ve set up, potential price targets as we just look at seasonality and this is expectation. So I’m not guaranteeing that these prices are going to be that that they will happen. It’s just this is expectation. And you know, normally what we see is the prices tend to increase up until about that June acreage report.

00;26;59;00 – 00;27;14;20
Dr. Hunter Biram
And you know, what’s been cited in the literature at least is a weather risk premium, which means that we we that the market becomes more confident and what the level of production looks like, once we get to that June acreage. So because there are a few reports that happen prior to that. Right. So I got look for is going to be one of those.

00;27;14;22 – 00;27;43;03
Dr. Hunter Biram
And there’s gonna be an outlook there, march prospective plantings, which we’ll do another episode on that at the end of the month. And then there’s a few. It was the reports between March prospective plantings in June acreage. And then once we get to June acreage that’s you know, you see some big price action there. I know that, I can if it was last year or the year before, but there was just a huge shift because there were more corn acres than we thought, and there were less soybean acres than we thought.

00;27;43;03 – 00;28;04;04
Dr. Hunter Biram
So we saw some big price action happen there. And so, some big opportunities to, to make some to make some price first management choices there too. But generally we see the month over month changes leading up into June, as increases. And so, you know, in the newsletter again, there will be a table that shows what those expected prices would be, and these would be expected cash prices.

00;28;04;04 – 00;28;32;15
Dr. Hunter Biram
So we’ve already accounted for expected basis. Here. And so I think for us we put in 27 basis negative basis soybeans, about 30 cent negative basis corn about 20% negative basis. And cotton’s almost essentially no basis. Right close to about sand or half sand. So we would counter for that. And so, you know, just looking at, you know, soybeans, for instance, not encouraging, you know, I’m looking at a pre harvest average of ten, 26.

00;28;32;18 – 00;28;51;05
Dr. Hunter Biram
So that price you know, I’m, I’m saying here again based on expectation should go to about 1045 there in June. And so leading up to that it’d be March May 1989 and April 1029, May 1039, on June 1045. And and at that point, the prices are going to be about as good as they’re going to be, most likely, depending on what happens in June.

00;28;51;05 – 00;29;13;03
Dr. Hunter Biram
Acreage. And so again, this is this is a this is an expectation. You know corn now similar pattern. You know for 31 in March casual April 4th 51. May 4th 53rd June 455. Rice looking at 597 up until May 607 until June. And then typically we we do see a dip until we rebound in August.

00;29;13;03 – 00;29;31;19
Dr. Hunter Biram
And so looking more like a 637 in August with the season average for rise of six. So a pre harvest average of 604. You know cotton pretty much going to stay around that 6869 cent. Cash is is what we’re projecting for now. So again everyone markets a little bit differently. One of their cooperatives Horizon Cotton.

00;29;31;19 – 00;29;51;26
Dr. Hunter Biram
And so other people put their their production in the pool and, and do the marketing pool, and that’s fine. But if you don’t, these price targets are here to help afford contracting corn, soybeans a little bit different. I know that soybeans, at least with rice, then you can put that in the pool. But, you know, if you do sell the, say, a cjb, there on the river, you know, I think it’s important to go ahead and start processing grain.

00;29;51;26 – 00;30;17;01
Dr. Hunter Biram
And when you do that, you know, go ahead and price ten, 10 to 20% more than me. So now we’re we’re sitting here at March, and, I started giving this talk in January. And so I said in January, go ahead and rush ten the February price ten, March price ten, and book, you know, book at least half, half of your production, you know, up until that June acreage report or up until that August window for rice, for instance.

00;30;17;04 – 00;30;37;02
Dr. Hunter Biram
And then after that, you know, we’ll we’ll we’ll see what happens with the markets and adjust accordingly. And maybe we’ll need to do some post-harvest marketing if you have grain storage. And so really the focus of just what I want to highlight now is just the imports, that price seasonality and that we expect prices will generally increase up until that, up until that June, June acreage mature.

00;30;37;02 – 00;30;57;17
Dr. Hunter Biram
And so, so I got pretty average prices in here. And so based on that, I’ve taken our expected cost from the Iowa crop enterprise budgets and incorporated a just a flat $200 an acre cash rent. It’ll vary everyone. It’s it’s different. It could be 150, 200, 250. It could be any 20 crop share. So 525 crop share.

00;30;57;17 – 00;31;22;06
Dr. Hunter Biram
And so if you’re unhappy with that that’s fine. I would recommend going to Arkansas Crop Profit Loss Calculator which there’ll be a link in the newsletter to that to check out what would be more, more suitable for your operation. But just based on that $200 an acre cash rent. I mean, you’re looking at breakeven yields for rice and, 198 bushels per acre soybeans, 69 bushels an acre, corn to 20 farm and convert 700 1,700 pounds per acre.

00;31;22;06 – 00;31;46;13
Dr. Hunter Biram
So some pretty monstrous breakeven yields. And so that that’s again, that’s that’s taking advantage of marketing. And so, you know, at this point, I’ll go ahead, just open up the floor if there are any comments. I mean, just in terms of seasonality or sky, maybe in your experience as you have studied markets and just talking about, you know, likelihoods of these price targets even happening?

00;31;46;15 – 00;32;23;03
Scott Stiles
Yeah. You know, the seasonality for, corn and soybeans is very similar with, price P, probably eight years out of ten or see a price peak, mid-June. But there’s, you know, there’s two years and normally what would carry the market higher would be, you know, some weather challenges and some drought. And, and portions of the Corn Belt, which is a is a concern, today, for the Western Corn Belt.

00;32;23;03 – 00;32;47;01
Scott Stiles
So it’s something to keep an eye on. And, and, as you mentioned, Hunter, you know, it’s it’s a good strategy to have a majority of the crop marketed by mid-June. But, you know, keep a, you know, keep an eye on, particularly this year on the Western Corn Belt. Well, well, they’re drought, you know, be resolved.

00;32;47;03 – 00;33;12;29
Scott Stiles
As we get into the growing season, that’s just, you know, something to, you know, pay attention to and, if you look at the Drought Monitor maps, I think at this point, about 45% of the U.S. corn production areas in drought today. And, so that’s something that, you know, it may continue to lift prices a little bit further than in, into the growing season than normal.

00;33;13;01 – 00;33;52;10
Scott Stiles
But if we if, you know, if we do have not, you know, decent or favorable growing season weather, we do need to have a majority of the crop, particularly on corn. So about mid-June, soybeans are just something we have to watch if we really get a shift and lose, 3 million acres of soybeans. That market may, you know, may continue to have some strength, but, anyway, it’s a lot of a lot of variables there, but, but normally, you know, by mid-year, we need to we need to have bulk of our crop.

00;33;52;10 – 00;33;54;22
Scott Stiles
So we’ll.

00;33;54;25 – 00;34;16;09
Dr. Hunter Biram
Yeah. You know, I’m really curious to see what happens with soybeans this year. You know, going into these meetings, I was I was I was a big bear, big time bear on it. And I’m not saying that I’m a bull now, but I mean, I think I’m, I think I’m more of a bear cub than than mama bear, you know, just because of this acreage swap and, I mean, yeah, tariffs are going to play into this a lot.

00;34;16;09 – 00;34;36;12
Dr. Hunter Biram
But the interesting thing, you know, Tim, there’s a guy from, the there’s a guy from Co Bank who he has a really nice, that’s really good job on LinkedIn of showing us some interesting insights on these markets. And one thing he put on there was of a, and the I think it was the monthly exports run.

00;34;36;12 – 00;34;54;19
Dr. Hunter Biram
Correct me if I’m wrong. I think it’s the the monthly export change over the past 12 months and just how, actually we are exporting more than Brazil even in this harvest window. But, it’s mostly because of the, What? Because of, residue on the crop.

00;34;54;19 – 00;35;14;16
Dr. Ryan Loy
Right. I was like, post harvest residue. I think that they put like. And as far as I understood it, from what I could tell was that China sided and sent me back shipments from Brazil because it had post-harvest, you know, like in the storage, they put pesticides on it or it got contaminated in some way. So they sent it back.

00;35;14;16 – 00;35;33;01
Dr. Ryan Loy
And, I think that that assuming that we know tariffs, I think that that would have been that’s a nice little spot for us to kind of recapture some market share, even for a small window when Brazil goes back and fixes that issue. But with the tariffs now they can also just get it from Argentina if they really need it.

00;35;33;03 – 00;35;44;21
Dr. Ryan Loy
But I think the important part to is, is that thinking about like what Scott said about, you know, just China really need that, you know, are they do they need to import much this year? Who knows.

00;35;44;24 – 00;35;56;00
Dr. Hunter Biram
For sure. Go up there and all the comments will go in. Just wrap this up. Yeah. Riley, I’m going to turn it back over to you and let you wrap it up. Take us home.

00;35;56;02 – 00;36;19;21
Riley Smith
And an it’s good. Well, I think overall today was a, great discussion. Great meet. glad you guys were had the time and availability to jump on here and give us an update on what’s going on in the world of ag and the ag outlook. Not necessarily information we’re looking for, but it is an information nonetheless. So everybody needs to know what to plan for ahead of time.

00;36;19;21 – 00;36;30;09
Riley Smith
So glad you guys. You’re staying on top of this. If y’all don’t have any more comments. I think we’re going to call it a day.

00;36;30;12 – 00;36;31;02
Dr. Ryan Loy
Sounds perfect.

00;36;31;02 – 00;36;32;18
Dr. Hunter Biram
Well, thanks for having us.

00;36;32;21 – 00;37;00;15
Riley Smith
Yeah. Appreciate y’all. So everybody stay tuned for more Market report. Thanks. All right guys back with your Market Report May 25 corn current price is at $4.56 per bushel a month agos price was at $5.05 per bushel. That’s down $0.49. Year agos price was at $4.29 per bushel. That’s up $0.27. May 25 Rice current price is at $13.34 cwt.

00;37;00;15 – 00;37;27;22
Riley Smith
A month agos price was at $13.69 per cwt. That’s down $0.35 and a year agos was at $17.93 per cwt. That’s down $4.59. May 25 soybeans current price is at $10.12 per bushel month agos price is at $10.72 per bushel. That’s down $0.60. And a year agos price is at $11.48 per bushel. That’s down $1. And $0.36. July 25 wheat.

00;37;27;22 – 00;37;57;07
Riley Smith
Current price is at $5.62 per bushel. A month agos price was at $5.97 per bushel. That’s up there. Excuse me. That’s down $0.35. Year agos price were at $5.43 per bushel. That’s up $0.19. May 25 Cotton current prices at $0.64 per pound, month agos price was at 0.67 per pound. That’s down $0.04. And a year agos price was at $0.95 per pound. That’s down $0.32 and your weekly U.S average peanuts current price is at $504 per ton month.

00;37;57;07 – 00;38;23;02
Riley Smith
agos price was at $518 per ton. That’s down $14 and year agos price was at $528 per ton. That’s down $24. And that’s your weekly commodity futures. This week. Your input prices. This week you Urea is at $542 per ton, ammonium nitrate at $542 per ton, ammonium sulfates at $539.50 per ton. DAP is at $744 per ton, triple Super phosphates at $620 per ton.

00;38;23;02 – 00;38;48;01
Riley Smith
Potash is at $440 per ton. AG lime is at $50 per ton, and pellet lime is $237.50 per ton. This week. And diesel prices this week. Off road diesel is $2.59 per gallon. Highway diesel is $3.31 per gallon and your Mississippi River level and Memphis, Tennessee this week current level is at 18.5ft and a year ago was at 8.8 8.89ft.

00;38;48;06 – 00;38;58;23
Riley Smith
I want to thank you all again for joining in on another episode of Morning Coffee and AG Markets. We hope you enjoyed it and enjoyed your morning coffee this morning as you tuned into another episode. So until next week, we’ll catch y’all.

00;38;58;23 – 00;39;00;14
Riley Smith
On the flip flop. Bye bye now!