Ep. 14 Views from the 2024 Southern Outlook Conference – Looking at Risk Management for 2025

00;00;07;11 – 00;00;10;03
Dr. Hunter Biram

00;00;10;10 – 00;00;11;13
Dr. Grant Gardner
I can’t imagine it.

00;00;11;16 – 00;00;31;04
Dr. Hunter Biram
So so so sad. But but anyway. Well, let’s go ahead and get cranked up here. I’m going to do the classic. Good morning, good morning. Welcome to another episode of, Morning Coffee and AG Markets with your, constellation host. Not Riley Smith, but Hunter Biram today.

00;00;31;06 – 00;00;47;00
Dr. Hunter Biram
I’m at, Southern Outlook conference with, Ryan Loy. We’re. And wer’re in enemy territory. We are we we’re in Knoxville, Tennessee. And, so we’re I a southern extension economics outlook meeting. And, Ryan, how many comments have been made about our shirts and slides?

00;00;47;03 – 00;00;50;20
Dr. Ryan Loy
Several. Several. Yeah. We’re deep in enemy territory here.

00;00;50;23 – 00;00;57;22
Dr. Hunter Biram
Not not a moment has gone by and someone’s like, just don’t wear those shirts. Just wear those shirts. It’s too painful. It’s too painful.

00;00;57;25 – 00;01;02;17
Dr. Ryan Loy
I think we’re just as surprised as the Tennessee fans, to be honest. Oh, even probably even more.

00;01;02;23 – 00;01;20;13
Dr. Hunter Biram
100%. You know, I did, I did a little bit of, a hedge and I went ahead and, I, I bet on Tennessee I went ahead and bet on Arkansas, too, because I was like, fluke deal, you know, fluke deal. And it paid. It definitely paid this time. So maybe it is what it is.

00;01;20;16 – 00;01;38;23
Dr. Hunter Biram
But, hey, our listeners are in for a treat because, we are at the Southern Region extension, outlook meeting. And so we have a lot of our friends and colleagues that are across Southeast region that are doing similar programing to us. And so that means that we get to hang out with, two great guys today.

00;01;38;26 – 00;01;41;17
Dr. Hunter Biram
Grant Gardner from the University of Kentucky. Grant. How’s it going, man?

00;01;41;18 – 00;01;46;13
Dr. Grant Gardner
Good. Good to be here. I’m. We’re at morning coffee talk, and we don’t have coffee.

00;01;46;15 – 00;01;47;17
Dr. Will Maples
So they might comment.

00;01;47;19 – 00;01;52;28
Dr. Hunter Biram
That’s true. And then we have Will. Mississippi State will.

00;01;53;00 – 00;01;55;23
Dr. Ryan Loy
Yep. Hunter. Good to be here, will maples.

00;01;55;26 – 00;02;14;17
Dr. Hunter Biram
Glad that you’re here. So we’re in a outlook conference, and so I think it’d be good just to kind of go around the table and all three of y’all. I’m the odd man out here because I did not do, I did not do an outlook this year. But, if you want to go around the table, talk about just brief comments on each of y’alls outlooks and, Ryan, we start with you.

00;02;14;19 – 00;02;15;02
Dr. Ryan Loy
Yeah.

00;02;15;02 – 00;02;16;10
Dr. Hunter Biram
You can talk about rice.

00;02;16;13 – 00;02;32;06
Dr. Ryan Loy
Absolutely. So, I had the blessing to give the rice outlook, yesterday, actually, which, honestly, the more I learned about the rice market, the less I understand about it. But what’s really interesting that I think that is most interesting is, why is.

00;02;32;10 – 00;02;35;28
Dr. Grant Gardner
This laughing at you? The more the more I learned about, the less I understand.

00;02;35;28 – 00;02;37;11
Dr. Hunter Biram
Yeah, that’s what.

00;02;37;11 – 00;02;55;25
Dr. Ryan Loy
I mean. That’s literally what it is. It is. And, you know, rice. Yeah. Similar to wheat, it doesn’t follow any rules that you think it would follow. You know, simple supply demand rules apparently don’t apply. But what I thought was most interesting is just how, you know, looking into the, trade for rice and how politically driven a lot of it is.

00;02;55;25 – 00;03;12;29
Dr. Ryan Loy
Now, of course, you can make that argument for a lot of the crops, but I think rice especially, you know, you look at Iraq that I brought up yesterday, you know, they got they basically were not allowed to have U.S. currency, meaning they couldn’t buy rice because they were, you know, money laundering to Iran. And now they’re allowed to buy rice again.

00;03;12;29 – 00;03;31;23
Dr. Ryan Loy
They’ve reconciled that in the last few weeks. And then you have Mexico, which has eased all their tariffs, taken away all their tariffs on imported rice. And so now we’re competing with other countries to get into Mexico as well, which may put some downward pressure on our prices. And then you have India, who now has completely, lifted their export bans.

00;03;31;23 – 00;03;36;14
Dr. Ryan Loy
And so that’s going to put a lot of, rice supply into the global market. So there’s a lot of interesting things going on there.

00;03;36;22 – 00;03;42;14
Dr. Hunter Biram
Yeah. From a returns perspective, you know, have you started looking at what that might be for 2025?

00;03;42;16 – 00;03;50;03
Dr. Ryan Loy
Not yet, but I can tell you that just based on the prices where we’re at for rice compared to other crops, it’s going to look more attractive. And then soybeans or corn.

00;03;50;04 – 00;03;54;25
Dr. Will Maples
Yeah, interesting, I know a lot of our guys in Mississippi, if they can plant rice. They’re planting it.

00;03;54;29 – 00;03;57;22
Dr. Ryan Loy
Yeah. That’s so interesting. Be third year back to back.

00;03;57;24 – 00;03;58;03
Dr. Grant Gardner
Yeah.

00;03;58;10 – 00;04;01;07
Dr. Ryan Loy
Maintain gentleman that we’ve ever seen that I really don’t know.

00;04;01;10 – 00;04;01;26
Dr. Hunter Biram
Yeah.

00;04;01;29 – 00;04;06;10
Dr. Hunter Biram
You know rice is such an input intensive crop which makes it really interesting.

00;04;06;13 – 00;04;13;06
Dr. Will Maples
Yeah. We’ve been talking to a lot of folks that are they have been planting rice in years that are gonna try to put it in the spring.

00;04;13;08 – 00;04;17;17
Dr. Hunter Biram
How about that interesting, cool. Well you want to talk about soybeans.

00;04;17;20 – 00;04;21;01
Dr. Will Maples
Yes I don’t want to go next, make Grant go.

00;04;21;04 – 00;04;23;03
Dr. Hunter Biram
Grant. You want to talk about winter wheat.

00;04;23;10 – 00;04;40;04
Dr. Grant Gardner
Yeah. I mean, you know, there’s not a whole lot of wheat in Arkansas that kind of some kind of, like rice this whole year crop. I mean, you’re gonna. It’s run on an international market. And so where we can look at corn and soybeans is the US being a large supplier, we’re just at the hands of what’s happened in other countries a lot of the time.

00;04;40;04 – 00;05;02;19
Dr. Grant Gardner
And so it doesn’t really follow traditional economic principles at times. I mean, it does to an extent. But really what I’m looking at here is you know, where our milling capacity has been the same for years. We don’t see any increases where we think about corner soybeans, you know, there’s excitement between ethanol expansion or sustainable aviation fuel. That may be a long way off, you know, but on the soybean side, there’s excitement about crush.

00;05;02;19 – 00;05;17;03
Dr. Grant Gardner
And we can add some domestic demand here in the next 5 to 10 years. On the wheat side, we’re just going to say constant. So that puts us in the hands of, you know, what’s the production in other countries and what kind of rice or what kind of wheat do they want. Because it’s going to come to that down to that protein content.

00;05;17;03 – 00;05;42;29
Dr. Grant Gardner
And so my example yesterday was, you know, if we’re in the South and we’re looking at sulfur at winter, I think really the opportunity here could be that the EU short. And so there are some countries in the EU that could turn to us for soft red winter, because they want that lower protein content. They’ve got basically France in particular makes a lot of their bread or kind of like what we would think of as tortillas but made out of wheat, not a corn tortilla.

00;05;43;02 – 00;05;56;20
Dr. Grant Gardner
And so they may turn for that soft red winter where you look at Germany and Germany is probably going to be short, too, and they may be turning to us for some hard winter, because if we’re thinking about the EU, they’re not going to turn to the Black Sea. They may turn to Ukraine, but they don’t want to turn to Russia.

00;05;56;20 – 00;06;06;01
Dr. Grant Gardner
And so I think, you know, if we look through this year, really what I’m looking forward to where we could see some bullish price movements will be does the EU supplying okay.

00;06;06;03 – 00;06;15;15
Dr. Hunter Biram
So you know this is a time for planting right. Like we are at winter wheat planting time. So I mean we just talked about rice maybe some more rice acreage do you expect maybe then we’ll see more winter wheat.

00;06;15;16 – 00;06;32;08
Dr. Grant Gardner
It I’m actually expecting less if you look at futures and account for basis right now I think you’re a double crop. Soybean wheat rotation is just going to be really tight. And so it’s going to come down to can we market that grain. And I know in Kentucky, you know, a lot of this is driven by our local mill.

00;06;32;08 – 00;06;47;23
Dr. Grant Gardner
And so those guys are still going to plant wheat because they know that that mill will basically pay basis premium for them to store. And so they’re going to make money on that wheat. They’re going to plant it anyway. But if I move to the central part of the state where you’re farther from that mill, you don’t have them driving up the basis patterns.

00;06;47;23 – 00;06;51;19
Dr. Grant Gardner
I think we’re going to see a lot of those producers turn away from wheat. Not plant any this year.

00;06;51;22 – 00;06;52;11
Dr. Hunter Biram
Interesting.

00;06;52;18 – 00;06;57;16
Dr. Will Maples
So, a few acres we have Mississippi has been way too dry to even get anything planted.

00;06;57;22 – 00;06;58;09
Dr. Hunter Biram
Yes,

00;06;58;09 – 00;07;07;06
Dr. Will Maples
throughout. No, we can’t plant more in North Mississippi and then over in North Alabama, but it’s just been so dry in a drought. They we won’t have any weed acres this year. Problem.

00;07;07;06 – 00;07;10;26
Dr. Hunter Biram
Yeah. Interesting. Cool event.

00;07;10;28 – 00;07;17;12
Dr. Will Maples
Yeah. So I got to talk about soybeans which is big in the South. Is it a big Arkansas the biggest crop.

00;07;17;12 – 00;07;19;13
Dr. Hunter Biram
Number one I think we got 3 million acres this year.

00;07;19;13 – 00;07;20;28
Dr. Grant Gardner
It’s number one in Kentucky to.

00;07;21;03 – 00;07;45;14
Dr. Will Maples
Number one in Mississippi. So kind of the biggest thing is coming in with a record soybean crop is what USDA currently is forecasting, putting some downward pressure on prices, as we’ve seen all throughout summertime. If we look in the South, that crops kind of depends on where you are. Mississippi. We’ve got a record crop coming in. Record yields, at least.

00;07;45;14 – 00;08;09;21
Dr. Will Maples
Arkansas has got record yields up in the Midwest has record yields was get further east. It’s been drier. Alabama, Georgia, the Carolinas are all looking at smaller yields a little bit tougher crop this year. But that national number is just massive this year than we. And the outlook talked a little bit about the trade side how we’re still got that competition from Brazil.

00;08;09;26 – 00;08;11;21
Dr. Will Maples
That’s the biggest driver on the demand.

00;08;11;22 – 00;08;13;20
Dr. Hunter Biram
It’s super dry there right now though right.

00;08;13;22 – 00;08;25;28
Dr. Will Maples
It’s dry. It’s they’re just getting into the early part of their soybean planting season. Last forecast I saw, it looks like some rain, somewhat forecast that they maybe later this month.

00;08;25;28 – 00;08;45;24
Dr. Grant Gardner
They got some rain yesterday in certain parts. And I think we saw a little bit of an impact yesterday on the futures market with prices dropped in the afternoon. I think Brazil is going to go into monsoon season. And so what what’s really happened is they’ve pushed that monsoon season back by 2 to 3 weeks because it looks dry.

00;08;45;27 – 00;08;49;00
Dr. Grant Gardner
They’re going to get rain eventually. It’s just when do they get rain?

00;08;49;03 – 00;09;00;06
Dr. Hunter Biram
Well will it all be at once right. I mean ideally it’s well I’d say ideally more generally when you’re going to probably get a little bit of rain at a time and not like a massive flood. Right.

00;09;00;06 – 00;09;00;20
Dr. Grant Gardner
Yeah.

00;09;00;23 – 00;09;12;12
Dr. Will Maples
They really just need something to get the ground’s so they can get crop into it. Yeah. But so currently used is a record crop project for Brazil. But it will depend on when they get it planted as well.

00;09;12;17 – 00;09;35;09
Dr. Grant Gardner
I think something else interesting on the domestic demand or supply side is, you know, we’ve got a bunch of early planted beans now. And so what’s the yield impact on that? You know, giving those beans a longer season assuming you don’t get something like a killing frost? I think that just packing yield on our bushels and especially in the Midwest, I think that’s kind of what we’re seeing is those wheels are going to have near-record yields because they’ve had that longer growing season.

00;09;35;16 – 00;09;39;15
Dr. Will Maples
Yeah, I’d say then those are things I just keep pushing those beans earlier and earlier.

00;09;39;15 – 00;09;41;25
Dr. Grant Gardner
We have people in Kentucky planting in March this year.

00;09;42;01 – 00;09;53;12
Dr. Ryan Loy
If you can believe that. I talked to a producer who, does rice and soybeans, and he was telling me that if he can help it and if he knows there’s not going to be a frost to some degree, he tries to get them in at Valentine’s Day or before.

00;09;53;14 – 00;09;54;28
Dr. Hunter Biram
Probably January. Not kidding.

00;09;54;28 – 00;09;55;12
Dr. Ryan Loy
Yeah, it’s.

00;09;55;12 – 00;09;57;01
Dr. Hunter Biram
Crazy in Arkansas.

00;09;57;03 – 00;10;02;18
Dr. Grant Gardner
Well, I don’t I mean, as long as they don’t, you know, come up and you don’t have a problem because they’re going to lay dormant in the soil and.

00;10;02;20 – 00;10;09;27
Dr. Ryan Loy
It’s a big risk. These are big. Yeah. Of course the biggest risk is if you think it’s that one last frost I mean it’s over. So it’s a high risk, high reward type of situation.

00;10;09;27 – 00;10;27;18
Dr. Grant Gardner
Some of it to that too though is if you turned a lot of these companies, they’re going to offer free replant. And so that’s all you’re going to put in is we’ve got to plant the field again. So you know you got your fuel costs your labor cost. You know you’re probably going to get lower tier genetics, but it makes that risk a lot less if you’re getting free replant.

00;10;27;18 – 00;10;29;00
Dr. Ryan Loy
It’s a very good point.

00;10;29;03 – 00;10;39;03
Dr. Hunter Biram
Yeah. So, we have talked about corn. What one of you guys want to talk about corn? I know that, you didn’t give the outlook, but, I mean, I mean, you don’t know anything about it.

00;10;39;05 – 00;10;40;27
Dr. Will Maples
I think Grant would love to.

00;10;40;29 – 00;10;55;19
Dr. Grant Gardner
Well, I mean, it’s really in the same boat as soybeans, and, you know, we’ve just got a lot of yield out there. And we came through last year and had record production year. And you would have thought that some of these acres were to curtailed. I don’t think it curtailed like people thought it was going to. We’ve still got a ton of corn acres out there.

00;10;55;21 – 00;11;15;25
Dr. Grant Gardner
I think it comes down to, you know, producers love planting corn. They want to see especially if you’re in the Midwest. They want to see those yield hit 250 at certain parts of the field. And you’re driving at an ethanol drive in Iowa. And so that’s driving a lot of it up Illinois, northern Indiana the same way. And so you’ve just got a lot of push for corn, especially in those northern states.

00;11;15;27 – 00;11;29;00
Dr. Grant Gardner
And I think some of our producers, at least I’ve talked to some in Kentucky that said, yeah, just pulling in more corn because I thought everybody’s going to plant soybeans. And I, I think that almost all of them have that same thought. Yeah, that’s what.

00;11;29;03 – 00;11;42;17
Dr. Hunter Biram
Let’s talk about the hurricanes. I know that even Kentucky was impacted by, by the hurricanes. And I know that, or some Mississippi. I know that Arkansas, I’ve gotten calls about quality in water and soybeans. Have you all heard similar issues in the y’all’s part.

00;11;42;19 – 00;12;02;18
Dr. Grant Gardner
So we’ve actually had the opposite. And the fact that we were so dry before Helene came through that we were taking discounts on our beans were too dry. And so, you know, we had no rain basically for the entire month of August. And then we finally got some rain and it was a lot of rain. I was out of power for four days.

00;12;02;18 – 00;12;14;17
Dr. Grant Gardner
We got six inches in Lexington and we got a lot of rain at once. And so I think producers are just getting back in the fields, but I’m thinking, you know, they’re not going to be able to put much moisture back in those beans. So I think we’re still going to be dry. Yeah.

00;12;14;20 – 00;12;26;13
Dr. Will Maples
Yeah. I haven’t heard anything on the soybean side from Francine that came up Francine that came up? Yeah. But you know cotton there was a little bit maybe quality issues, but.

00;12;26;14 – 00;12;29;03
Dr. Hunter Biram
It’s cotton deflating right now in Mississippi.

00;12;29;09 – 00;12;37;22
Dr. Will Maples
Some of it was whenever Francine came over and they’ve started harvesting a little bit. But overall, Impact’s probably not too great.

00;12;37;27 – 00;12;48;12
Dr. Hunter Biram
Yeah, I know that. Normally we wait till probably later part October. Actually, about right now I’ve heard that people start in the early on and that bolls starts opening up, and that’s what most at risk.

00;12;48;12 – 00;13;04;10
Dr. Ryan Loy
What’s the most I’ve heard in Arkansas considering the hurricanes? It’s just the Mississippi River is, you know, about ten feet above of what it was last year, which is which is a blessing. I would have never, you know, listen to some of our podcast two months ago. I would have never predicted that being the case. Yeah, that wasn’t Francine.

00;13;04;10 – 00;13;05;18
Dr. Ryan Loy
That was

00;13;05;20 – 00;13;05;28
Dr. Hunter Biram
Helena.

00;13;06;01 – 00;13;07;18
Dr. Ryan Loy
Helene, right? Yeah.

00;13;07;20 – 00;13;12;19
Dr. Hunter Biram
And that, you know, Grant, you know, I talked about this last night that goes back to the, to the Ohio River Valley.

00;13;12;19 – 00;13;25;14
Dr. Grant Gardner
Yeah. And so 70% of that water that feeds in the Mississippi is actually it’s on a lock in the Ohio River. And so a lot of that, if, you know, if the whole Ohio River gets low, it means the Mississippi low, right?

00;13;25;21 – 00;13;26;19
Dr. Ryan Loy
Right.

00;13;26;21 – 00;13;33;27
Dr. Grant Gardner
And I can definitely see why it be low. You know, being I’m an hour south of there in Lexington. And like I said, we didn’t get rain for over a month, right.

00;13;34;01 – 00;13;58;12
Dr. Hunter Biram
Yeah. So we talked about you know, the prices are pretty low right now. I mean, we can throw out some numbers, but there’s a lot of numbers go down right there. But, what I really want to shift to is risk management. Okay. So, you know, we’re now thinking about post harvest. You know, we’re definitely not pre harvesting or thinking post harvest for this 2024 crop and storage and with that I’ll shift to finance as well.

00;13;58;12 – 00;14;09;12
Dr. Hunter Biram
We’re going to bring all this together. But let’s let’s talk about marketing assistance loans. Right. Yeah. And, if you want to give a little primer on that, they will live in a storage and we’ll let grant and will chime in on that.

00;14;09;14 – 00;14;35;04
Dr. Ryan Loy
Absolutely. And they’ll get into all the craziness about what? The marketing assistance, loans, you know, how they work, you know, essentially it is let’s say you are facing having to sell in the cash price at harvest. And of course, we all know that those prices are probably the lowest you’re going to be facing at that time or you can basically put up your crop in storage as collateral on this alone, which carries, I think it was a 1% above the prime rate as far as the interest rate is concerned.

00;14;35;04 – 00;14;43;11
Dr. Ryan Loy
I could be wrong on that, but it was. It’s much better than any commercial loan is. You know, commercial loan is going to be at least probably 2 or 3% above the prime rate already, which.

00;14;43;11 – 00;14;44;13
Dr. Hunter Biram
Is about what right, which.

00;14;44;13 – 00;14;50;11
Dr. Ryan Loy
Is about 5% right now. So you’re looking at minimum 8% probably. And that’s minimum. And good luck trying to get.

00;14;50;16 – 00;14;51;10
Dr. Hunter Biram
More like or ten.

00;14;51;10 – 00;14;54;07
Dr. Ryan Loy
Yeah. Exactly. Yeah. And people are probably even.

00;14;54;07 – 00;14;56;27
Dr. Hunter Biram
More that’s on operating. That’s on operating. It’s a not working.

00;14;56;28 – 00;15;15;10
Dr. Ryan Loy
So now the marketing assistance loans they carry more favorable interest rate. So really from a 30,000ft view, all you’re doing is you’re putting up your crop as collateral, borrowing at a lower interest rate so you can pay back your higher interest rate. Now. So what people do is they’ll do that and say, okay, well my interest expense is going to be high on this crop in this storage.

00;15;15;10 – 00;15;27;01
Dr. Ryan Loy
So I’m going to take this marketing assistance loan, put up the crop and be able to pay back that high interest and then just, you know, and then pay over my marketing assistance loan as I sell that crop and you get more favorable interest that way.

00;15;27;02 – 00;15;44;13
Dr. Grant Gardner
So and it’s I think it’s going to be really important as we’re moving into, you know, lower commodity prices. You look at the past few years and producers may have been able to float their storage just because they could sell what was left over at harvest, take high prices. Their they could pay all their bills down. And then you don’t need a loan at all.

00;15;44;13 – 00;16;00;15
Dr. Grant Gardner
If even if you’re going to keep grain in storage, you just wait, see where those prices go and sell and you want to sell. Now we’re going to see that pressure of, you know, we don’t have cash flow. And so we’re going to see we need more marketing loan assistance or we need a larger operating loan. And so the interest rate is going to play a large part in that.

00;16;00;16 – 00;16;04;19
Dr. Grant Gardner
Hopefully the primary keeps coming down and I think it is projected do that.

00;16;04;19 – 00;16;22;08
Dr. Ryan Loy
It will and I you know the fed funds rate is going to come down probably you know you know 125 basis points, 1.25% by the end of the year. That’ll drop down the prime rate to, you know, three and a half, maybe 4%. So it’ll be more favorable. And you know that that opens opportunities for debt restructuring, which is nice.

00;16;22;08 – 00;16;24;05
Dr. Ryan Loy
You know, so going into next year, you.

00;16;24;05 – 00;16;37;27
Dr. Hunter Biram
Know, and so leading into this, post Harvest Marketing grant, you know, a lot of work with, the cost of grain storage to kind of that trade off between letting the bin or let letting the grain sit in the bin, paying off your loan, can you go into that trade off and talk about the cost of storage?

00;16;37;27 – 00;16;56;13
Dr. Grant Gardner
Yeah. I mean, know, a lot of that comes down to are you on a loan? Are you not? Because what your biggest part of your cost is going to be your interest expense. And so if you got that interest expense at 8 or 9% in your compounded monthly, you know you’re not going to see prices increase enough to pay off your storage till at least January, February, possibly March.

00;16;56;16 – 00;17;13;28
Dr. Grant Gardner
And so you’re sitting on that grain, you know, if you’re in the South, you could hold in September through February. And that’s a lot of month of storage. And so that just keeps building up. And so you got to make sure that, you know, you’re you’re balancing that trade offs. And if prices don’t go to where you think they’re going to go, it may be just time to cut your losses and take what you can get.

00;17;14;04 – 00;17;15;06
Dr. Ryan Loy
That’s right.

00;17;15;09 – 00;17;18;25
Dr. Hunter Biram
Okay. Any other comments on that with mortgage assistance loans?

00;17;18;27 – 00;17;33;18
Dr. Ryan Loy
I think that you brought up a really good point about, you know, having the cash flow, you know, that being an option in the past, but not really being an option now. You know, I think we’ve seen those working capital over the last few years. Those reserves and those producers have kind of dwindled over to over time. And now we’re in a position where that can’t happen.

00;17;33;18 – 00;17;36;11
Dr. Ryan Loy
So I think that was good to bring up.

00;17;36;13 – 00;17;52;25
Dr. Grant Gardner
My other thought is, you know, where do we think prices go? And I don’t think even as we move throughout this year, you know, I don’t see us going back to $5 corn. I think we see some volatility in the soybean market because we always do. And so there’s going to be days where, you know, we see futures jump 30 to $0.60 maybe in three days.

00;17;52;27 – 00;18;02;14
Dr. Grant Gardner
And so there’s some opportunity there on the beans side. But I think really what we’re looking at is if you are going to store, you’re going to make money back through basis and it’s not going to be through. Can’t we walk in a higher price?

00;18;02;14 – 00;18;13;21
Dr. Ryan Loy
That’s right. That’s exactly right. How many of the few producers I’ve talked to about storage, like they’re putting their beans in storage, but they have no plan? How many producers are you running into like that?

00;18;13;21 – 00;18;27;06
Dr. Grant Gardner
A lot. And I think it’s happened a lot more with, you know, we’ve had these past few years, USDA has put out assistance loans where we can put up storage. And really, if we want to get into it, what they’re doing is they’re just shifting that risk of storage from the elevator to the producer. Right?

00;18;27;08 – 00;18;27;22
Dr. Ryan Loy
That’s right.

00;18;27;25 – 00;18;48;27
Dr. Grant Gardner
And with that, you know, people are putting these up because they’re thinking, well, I’m not getting great prices at harvest. Maybe I’ll get a better price later. And there’s a lot better strategies you could use with storage. And so what I’ve been trying to do is when I go out and talk in the state, you know, how do I talk through these strategies where you know, you’re collecting on basis, but you at least know what your futures price is going to be.

00;18;48;29 – 00;19;12;23
Dr. Grant Gardner
And so taking a storage hedge, for example, compared to what I call a store in late strategy. And so if you’re looking at there’s a matrix I can send you guys and you know, we’ll I think you’ve used it in years before you know, is basis low and is futures low. That’s kind of where that stored weight would fit where now I think we we’re at a period where you know I don’t see big swings in that futures price coming up.

00;19;12;23 – 00;19;16;17
Dr. Grant Gardner
And so I think that storage hedge is actually going to be the better play.

00;19;16;19 – 00;19;26;20
Dr. Hunter Biram
So we talked a lot about post Harvest. Will you do some stuff with pre harvest marketing. So looking forward to 2025. What are some tips that you got for some grain farmers. Vindicator.

00;19;26;22 – 00;19;44;03
Dr. Will Maples
Yeah. Because in Mississippi we really just don’t have a lot of storage capacity in our state. We, super it seems like we got a lot more producers are interested in it. It’s kind of more on board. I mean, they have a great advantage of the added calls for the poultry feed mills, for corn. I mean, they had some storage.

00;19;44;03 – 00;20;11;22
Dr. Will Maples
They can make good money holding in to the year. So we focus a lot on the pre harvest side because this is what a lot of guys have to take advantage of. You know my basic thing is just trying to simply show them the advantages of doing something and not waiting around till harvest to have the sale so that a student kind of put together, like, what if you just make some sales throughout the year just to show that we’re seeing of 20, it kind of is a backward look.

00;20;11;22 – 00;20;23;12
Dr. Will Maples
So it’s not really a, you know, forward looking thing, but, you know, over the last 15 years if they just did something, they could be 15, $0.20 better than the market on soybeans. So, so and.

00;20;23;12 – 00;20;28;09
Dr. Hunter Biram
So what’s the what’s the typical seasonality that we see throughout the growing season.

00;20;28;12 – 00;20;41;12
Dr. Will Maples
Soybeans or can be a little weird because if Brazil has issues, you could get that January to February bump with their harvest or then you got that summer months in the US with the production.

00;20;41;15 – 00;20;43;22
Dr. Grant Gardner
In June or July. You could lock in some high prices there.

00;20;43;24 – 00;20;45;18
Dr. Hunter Biram
That’s pretty much is what I’ve seen.

00;20;45;21 – 00;20;50;27
Dr. Will Maples
So you really can see a boom early in the winter or later in the summer.

00;20;51;02 – 00;20;58;07
Dr. Grant Gardner
Yeah. And I think if we look back at the past few years, it has come later in the summer for sure, but you could definitely have that as high as prices in what was.

00;20;58;09 – 00;21;02;19
Dr. Will Maples
Three years ago when Brazil had the drought. Yeah, they had some decent opportunities.

00;21;02;22 – 00;21;28;09
Dr. Grant Gardner
And typically my advice there is, you know, pick a day. You may pick the 15th of every month. And just make sure that you make a sale that day. And so you multiply your APH, your average, your production history by how many acres do we have and we want to sell. Make sure that we pre marketed, you know, 75% of the bushels because almost every time like we’ll say you’re going to you’re going to have higher prices and you’re going to look at the average of what was all our sales.

00;21;28;11 – 00;21;34;01
Dr. Grant Gardner
But you make some good ones in there, draws that average up, and you’re making an extra $0.20, $0.25.

00;21;34;04 – 00;21;59;02
Dr. Hunter Biram
Well, and you know, the space I work primarily is crop insurance. And one thing I’ve done with Andy Mckenzie at Arkansas, we had a look at what if you leverage your crop insurance with your forward contracting strategy. Because the risk for contracting is that non-delivery right. This is not delivery penalty that you could incur. And so being able to leverage revenue protection policy, they can provide that bare minimum, safety net.

00;21;59;02 – 00;22;22;29
Dr. Hunter Biram
I guess what everyone would say where if you can’t deliver, you can use the cash from the proceeds on indemnity to go towards your own delivery. And what we found is, marketing more in the June, July, May than May sometimes window. You know, depending on let’s say you do 100% forward contracting, you know, going with that, 75, 80%, revenue protection policy to kind of undergird that, it was going to be a way to go.

00;22;22;29 – 00;22;37;00
Dr. Hunter Biram
So, you know, we talked about finance and market assistance, loan talk about post marketing for hours, marketing, private insurance. I mean, there are definitely a lot of things that we’re going to need to be talking about this winter and talk about right now with our producers, just to kind of get through business pretty tough.

00;22;37;02 – 00;23;00;02
Dr. Grant Gardner
And I think that’s the hardest part about marketing itself is, you know, everybody’s busy, you’re in the field planning, you’re in the field harvesting. And, you know, especially when you’re playing, that could be some of your highest prices. Been all you’re thinking about is, man, I got to get this crop in the ground when you can probably should take 15 minutes out of your day and say, or at least once in that month of planning, that I gotta make some sales, because this can be the time.

00;23;00;05 – 00;23;01;00
Dr. Hunter Biram
Yeah, that’s right.

00;23;01;01 – 00;23;17;02
Dr. Ryan Loy
I think there’s, you know, to some degree in to in the extreme, I think there might be some anxiety on the producer side about doing that. Some, some of the ones that I’ve seen, they’re saying, well, what if this happens and I can’t deliver, you know, and those sorts of things and I’ve seen that comment come through on the pre harvest marketing and how they do it.

00;23;17;02 – 00;23;28;26
Dr. Grant Gardner
And so well and it takes more education. But I think that’s part of the advantage of in locking in a price using a futures contract. Because then you have the choice of where I do where do I deliver and when do I deliver. That’s right. As long as you’re going to offset that contract, if.

00;23;28;27 – 00;23;29;11
Dr. Ryan Loy
That’s important.

00;23;29;16 – 00;23;35;09
Dr. Grant Gardner
Instead of saying, you know, I’m going to sign this forward contract or I have to deliver at this date, you’re not you got some more movement in there.

00;23;35;11 – 00;23;35;28
Dr. Ryan Loy
That’s a good point.

00;23;35;28 – 00;23;46;01
Dr. Hunter Biram
For some accountability. You know, I mean, we talk about price targets a lot. What are some ways or what do you think is the best role for setting a price target that you’re trying to hit? Every month.

00;23;46;03 – 00;24;07;28
Dr. Grant Gardner
And so for me, I go back to that traditional seasonality in the fact if we’re going to be 95% of our 90% of our average price at harvest, where does it go after that? And so, you know, you get out to February, March, you’re looking at 1.1, 1.12 times what our average price will be. And so normally I just look at what’s our price harvest.

00;24;07;29 – 00;24;17;05
Dr. Grant Gardner
And if you I can provide those numbers if you guys are interested. But if you just multiply them by that, that gives you a pretty good price target that says, man, if we’re above that, I’m going to make some sales.

00;24;17;07 – 00;24;18;13
Dr. Will Maples
That’s a good point.

00;24;18;15 – 00;24;20;03
Dr. Hunter Biram
What about breakeven analysis.

00;24;20;05 – 00;24;42;04
Dr. Ryan Loy
On the break even as well as you know, first of all, you have to know your cost. And to know your costs you need to have records, which is you have to walk before you run. You know, you need to know all those things. And I think that’s one of the issues we see in the Delta sometimes is that, you know, folks farm like they can’t make a mistake, you know, kind of farm like it was the 80s or, excuse me, the 90s and early 2000 where the prices were good, they could sell doesn’t matter what their costs were.

00;24;42;04 – 00;24;57;13
Dr. Ryan Loy
But let’s say hypothetically, you have all your records and you want to do that and you’re looking at your budget. You know, you look at that, that yield, calculate your break even prices. But the break even is not going to get you into next year. It’s not going to get you into that next year. You know, if you have cash reserves, it could.

00;24;57;13 – 00;25;22;13
Dr. Ryan Loy
But that’s just covering everything you’ve done. It’s not taking any more money home. So you know when you calculate your breakeven prices and that looks at I’m just covering my expenses at this cost. I’ve covered everything I put into this crop. So I’m zeroing out zero profit. You know, one of the things you can do is you treat it as a cost category and call it profit, and add a cost category to your budget and say, let’s say I want 20, $25 an acre above my break even price.

00;25;22;13 – 00;25;36;09
Dr. Ryan Loy
Add that as a cost category and then recalculate your break. You can price and shoot for that price. And so you kind of know this is my minimum. This is maybe if I want to earn 20 more dollars an acre, this is maybe if I want to earn 50 something along those lines. And those are how you can kind of look at it.

00;25;36;11 – 00;25;41;20
Dr. Grant Gardner
I think another thing, Will, you’ve done some work on having a short memory. How important you think that is.

00;25;41;22 – 00;26;01;18
Dr. Will Maples
Really important when it comes to marketing? I mean, is this I tell producers a lot of times, you know, when I look at like their investments, you know, all that kind of stuff is like, we don’t really know where prices are going. What happened yesterday is not going to necessarily mean that’s what’s going to happen. Tomorrow and this if the prices are there make some sales.

00;26;01;25 – 00;26;02;03
Dr. Grant Gardner
Yeah.

00;26;02;04 – 00;26;16;13
Dr. Grant Gardner
We know like the way I think about it is that we know where we’ve been. You know that’s easy to look back and think, dang I should have sold that day. But you didn’t before that day. You didn’t know if prices were coming down or if they were going up and what you were, you were sitting there waiting.

00;26;16;15 – 00;26;33;15
Dr. Grant Gardner
I don’t know, maybe tomorrow I can get 15 more cents. And then before, you know, you missed it and so on. My ways that I kind of talk through that with producers is to take that trailing stop strategy. And so what that is, is when we hit a peak, maybe wait two more days, and if we’re down two days in a row, you sell that day.

00;26;33;15 – 00;26;50;16
Dr. Grant Gardner
And so, you know, we’re not going to lock in the highest price. And normally no one is right. You may look around, you have that one lucky producers that like yeah I sold on the Ukraine invasion on that day. Right. No one knew that was going to happen. And it fluctuated so much. And so that trailing stop at least puts you close.

00;26;50;18 – 00;26;51;24
Dr. Hunter Biram
Yeah, right.

00;26;51;26 – 00;26;54;00
Dr. Hunter Biram
It’s been great guys. Any other comments?

00;26;54;03 – 00;26;59;25
Dr. Ryan Loy
I think that’s it man I really appreciate y’all joining us for this. I think our listeners are really going to be they’re lucky to listen to this.

00;26;59;25 – 00;27;02;23
Dr. Hunter Biram
Oh man this is awesome. Yes. But also appreciate y’all having.

00;27;02;23 – 00;27;03;25
Dr. Grant Gardner
To do it again sometime.

00;27;03;25 – 00;27;13;22
Dr. Ryan Loy
Absolutely. Now we figured out the virtual way to we just figure that out last week. So we can have you on anytime you want. If y’all are working on something you want to highlight, reach out anytime for sure. Yeah. With appreciate it.

00;27;13;25 – 00;27;23;12
Dr. Hunter Biram
Yeah. Awesome. Well with that, when we sign off here and appreciate y’all listening. See ya.

00;27;23;14 – 00;27;48;01
Dr. Ryan Loy
Hello, everyone. This is Ryan Loy with your market report. December 2024. Corn is currently at $4.21 a bushel. A month ago, that was at $4.07 a bushel. And a year ago, we’re at $4.86 a bushel. November 24th. Rice is at $15.17 a cwt month ago. That was $14.72 a cwt. Looking at some upside potential there a year ago.

00;27;48;01 – 00;28;19;06
Dr. Ryan Loy
That was at $15.87 November 24th soybeans, $10.20 a bushel. A month ago, that was $10.18 a bushel. And a year ago, we were looking at $12.72 a bushel. That’s down about $2.50 over the year. July 25th. Wheat is at $6.42 a bushel. A month ago, that was at $6.04 a bushel, while a year ago that was $6.29. So we’re actually up about $0.13 right now over a year, December 24th.

00;28;19;06 – 00;28;43;16
Dr. Ryan Loy
Cotton is $0.72 a pound. Month ago, that was $0.68 a pound. And a year ago we were looking at $0.85 a pound. That’s down about $0.13 over the year. We, US average for peanuts currently is $526. A month ago that was $506. And a year ago we were looking at $442. So we’re up about $84 over the year for urea.

00;28;43;16 – 00;29;17;07
Dr. Ryan Loy
We’re at $487.50 a ton ammonium nitrate. We’re at $545 per ton ammonium sulfate, $505 a ton DAP, $770 a ton triple super phosphate, $662.50 a ton. Potash, $450 a ton pellet lime $247.50 a ton. Off road diesels $2.60 a gallon, while highway diesel is $3.32 a gallon on the Mississippi River level. We are looking at -1.44ft.

00;29;17;09 – 00;29;46;17
Dr. Ryan Loy
And a year ago we were at -11.38. So that’s a significant improvement over the year. And that is your market report for this week. Thank you for tuning in.

00;29;46;19 – 00;29;46;29
Dr. Will Maples