Yeager: This is the Friday, February 2, 2018
version of the Market Plus segment.
Joining us now, Ted Seifried.
Ted, how are you?
Seifried: Doing great, Paul.
Yeager: Happy Groundhog Day.
Seifried: That's correct.
Yeager: I mean, do you celebrate that?
Did you see your shadow this morning?
Seifried: I knew immediately that I would
see my shadow, and then I shaved.
Yeager: And then you shaved and it was all
gone.
Seifried: It was all good.
Yeager: Is that a good movie?
Do you like the movie?
Seifried: Of course, one of my favorites.
I'm a huge Bill Murray fan.
Yeager: Well how can you not be living in Chicago?
Seifried: I mean, yeah, sure.
Yeager: He's a native guy.
We have a couple of questions from our viewers
themed with Groundhog Day.
So we'll get to those right now.
But before we get to that, Ted, I have to ask you
about the cotton market.
We saw the story about cotton in the program.
We didn't get a chance to answer it.
I believe December was the most bales since 2014 that
were sold but yet the market hasn't really
reflected that this week.
It has been a great run for the last three weeks,
four weeks.
Seifried: Yeah, so we have come off highs.
We've basically seen a 15% retracement now at this
point.
But we followed that up with marketing year high
exports here this week.
So we're finding that those exports are really
coming to life on a pull back off the highs.
That is really good news.
The lower dollar I think might be helping out there
as well.
And overall we've got a quality issue in cotton,
our exports have been really good so demand is
really quite good.
There is a good side to the story.
However, you're probably going to pick up a fair
amount of cotton acres down in the South as well.
So longer term you see production respond to
higher prices and I think that kind of idea had kind
of crept into the market and maybe why we pulled
back a little bit.
But I'm looking for a bounce here.
I think the strong weekly export sales, again,
suggesting that global end users are really liking
the price here, if the sales can continue to be
strong I think you get a bit of a bounce.
Yeager: Well, cotton is tied to our first question
from Dan in Geneseo, Illinois.
He says, if there is abandonment in wheat,
insert the word cotton if you want too for this
discussion, Ted, will that add to corn and soy acres?
Seifried: Well, I think you look at the corn and
soybean ratio and it is really asking for more
soybean acres.
But we saw that again last year.
I think there's a good chance we look at this
corn and soybean ratio and might see some more
soybeans here this year, but for the most part I
think it means that we hold the higher soybean
acres.
Overall I think you do see a little bit more corn
acres and a little bit more soybean acres.
The reason why I think you see more corn acres is
that while the guys up in the North are almost
forced to move more toward soybeans your guys in the
I states, you look at how well corn yielded last
year, a new record yield, in a year where we had a
fair amount of diversity.
So we've just gotten so comfortable with the corn
yields now at this point that I think corn acres
really hold on.
And honestly if you look at it we've really built
up corn demand very well with lower prices over the
last few years.
We really do need 90, 91, 92 million acres of corn.
Yeager: There's people that argue with that.
Seifried: Oh I know.
Yeager: But do you see wheat acres or cotton
acres then going away in favor of corn or soybeans
to fill that void that you're talking about?
Seifried: Wheat is the one that -- Yeager: You think
wheat is the loser in that?
Seifried: It continues to be mainly because there is
so much competition with everywhere else in the
world.
Yeager: Kylo is asking another wheat question.
This one is very specific and so Market Plus is a
great place if you have a very specific question
we'll try to get to it.
He's asking, if it stays mostly dry and Kansas
harvests a 30 to 35 bushel to the acre wheat crop,
what is the top end for Kansas City wheat?
Seifried: 30 to 35, that's pretty aggressive.
Yeager: Especially when you have 44% poor to very
poor, 47% of the crop is in drought status.
Seifried: Sure, but there's still time for
some of that to come back around.
The very poor category you look at that and figure
there's damage done.
But anything from poor and fair I think can have the
chance to come back.
That's a really aggressive cut to yield, it's not
impossible, but we'll see.
That being said, if that were, let's call it 35
national average yield, $5.50.
I'm not sure we can hold above that though and if
we get there I think that's a great sell.
Yeager: Absolutely considering what we've
seen.
Flinton in Zumbrota, Minnesota, there by
Rochester, is asking again about weather.
La Nina this year, does that mean lower than trend
corn yield?
And the he asks a follow up, how high can corn go?
I kind of pinned you down on the program a little
bit.
La Nina, do you think that has really taken effect?
Seifried: Well, the current forecast models
are for a warmer, drier growing season.
But in a lot of places we saw that already last year
and still end up with a national average yield.
I think the big question for corn nowadays is how
do we look going into the growing season?
If we have good subsoil moisture, like we did last
year, and we have a good August, like we did last
year, we're going to have record national average
yields.
So the next couple of months as we get into
planting how are we going to look, what does the
soil profile look like going into that?
That is the bigger question I think.
So yeah, some of the models are suggesting we
could have a warmer, drier summer.
It could be very similar to what we saw last year.
But we had national average yield records last
year.
So again, subsoil moisture going in.
Yeager: But we're still in early February so there's
still a lot of ways to go.
William in Hiawatha, Kansas.
He's @wtmcc on Twitter and you're @thetedspread on
Twitter, by the way.
Can we get $3.75 for corn and $10 cash beans for new
crop?
We're pushing $10 already on new crop beans, we're
close.
Seifried: So he's asking cash, right?
Yeager: He's asking cash.
Sorry.
I left out that word.
Seifried: Where did you say he was again?
Yeager: In Kansas, Hiawatha.
Seifried: Not exactly sure what basis is doing right
there.
But let's say this, we're not far off those numbers
unless your basis is really terrible.
I think there's a good chance that we see some of
those things just in a normal summer rally, June
rally, if there's any sort of problems there.
The problem I have is soybeans, again, I'm
worried we're going to have a really hard time
moving this year's crop because of the quality
concerns and if we've got a lot of soybeans left
over from this year and we're planting extra acres
next year it's going to take a lot of, a major
weather problem to really get us to where we need to
go to get to the better prices you want to see.
Yeager: And Drew in a question he was asking the
significant selloff, you did kind of cover that in
the program.
You are concerned a little bit long-term here on
beans.
Seifried: Yeah, like I said, everything is kind
of pointing the soybean crop that we have is of
lesser quality than what we've seen in years past
and global end users have really made it somewhat
apparent, China in particular, that because
of poor crush margins they really want to seek out
the more premium and the better product soybeans,
South American, Brazilian in particular, soybeans.
They're willing to pay more for it because
they're getting better margins off of it.
So yeah, that is a major concern for me.
And if we have a hard time moving the soy crop we
either need to see much lower prices in order to
incentivize making the sales or we're going to
have a lot of bushels hanging around.
Yeager: Alright, we talked about Groundhog Day
references.
Phil in Dresden, Ontario, Canada, he's @agridome on
Twitter.
Seifried: Hey, Phil.
Yeager: Hey, Phil.
He's asking, December corn is approaching resistance.
The last two years we've had lower highs in
December corn, June 2016, July 2017.
Is it 6:00 a.m.
again in 2018?
You know, deja vu?
Seifried: Yes, well, Phil, the last two years, we're
in an overall downward trending channel on a
weekly and monthly chart, not just the daily chart.
And yes, so we spent a lot of time in the month of
December coming up with what our target prices are
under normal conditions for the year.
The last two years in December corn it was
$4.44, which by the way the market got through it
by 4 and three quarters of a cent.
Last year it was $4.21, the market missed it by 2
and three quarters of a cent.
This year it's $4.14.
So that number continues, it's flattening out a bit,
but that number continues to go lower under normal
market conditions.
We can do a lot better than that if we have a
major weather issue, something of that nature,
or something happens on the demand side that we're
not currently seeing.
But if all goes normally, if we have just a normal
growing season, then yes it very much is 6:00 a.m.
again.
Yeager: Alright, well let's keep asking
questions about Groundhog Day.
And this one is from Glen in Bryan, Ohio
@glen_newcomer.
In the movie we talk about that anything different is
good.
Can you apply this to the grain markets at this
time?
Seifried: Something is different, good or bad?
Yes, hi Glen.
I think a lot of us will say that yes, anything
different is good because we had gotten so lulled
into very tight ranges in grains that nothing was
going anywhere and obviously when we see
volatility from a producer angle we would like to see
it to the upside and especially when we're down
at low prices we like to see volatility to the
upside.
But no I think we wanted to see some movement.
So something different in this case very much is
good.
Yeager: Well was this one of the more volatile weeks
we've had in quite some time for the majority of
the markets?
Seifried: We had 10 minute periods where soybeans
would trade a 10 cent range.
That hasn't happened for a while.
For corn to have more than a 4 or 5 cent move, or
more than a 2 or 3 cent move in a week is pretty
impressive, especially since we did it to the
upside.
So yeah, I'd say there is some volatility coming
back into the markets.
Yeager: Alright, well this one is really in the
weeds.
But Hair Farmer in Groton, South Dakota.
That's his name this week on Twitter, @schuelkecorn.
For an already well hedged 2018 soybean producer who
wants to protect up to and past APH what option
strategies do you like?
He wants to say he's throwing you a softball.
Seifried: Yes, well, because he knows buy puts.
No, right, so in soybeans you never want to oversell
because it is always an explosive market,
something could happen and we could see soybeans
rally $3 just out of the blue.
Brazil rains continue to linger and the quality of
that crop deteriorates quickly.
So yeah, I think you've got to look at puts and
put spreads.
Now is he talking about old crop or new crop?
Yeager: He didn't say, well hedged 2018 soybean
producer, so new.
Seifried: So if you're already well hedged and
you want to get shorter I'd be hesitant to do it
with futures, although by all means use a stop and
just keep it tight.
But if you don't want to put that much work
watching it like a hawk owning puts is not a bad
thing to do.
Yeager: We try not to get too political on the show
but the issue, Jennie in Marion, Iowa is asking if
there is anything that grain marketers should do
now to actively, proactively plan for
changes to NAFTA?
This is one where I've had the analysts sit in the
chair and I've asked them what way do they see?
Some see no difference.
But is there something a producer can do to look
ahead if something were to change?
Seifried: Well obviously if we're concerned about
changes to NAFTA we're concerned about changes
that aren't in our favor as far as grain exports
are concerned or cattle and hog exports.
So always looking at, keeping an eye on the
downside and having maybe a little bit more
protected or hedged than maybe you would knowing
that you have this other conflicting or other
potential big negative factor out there.
That being said, I don't think we're going to see
any movement in the markets until after
something actually happens and if something actually
happens I'd almost rather be more reactionary to it
because I do kind of feel like there is a good
chance that we're going to see NAFTA not only hang
around but end up being really a pretty decent
deal for us.
So it's not something that is at the forefront of my
mind.
I could be terribly wrong and we'll see.
But I'm not putting on NAFTA hedges here at this
point.
Yeager: Okay.
We are really long on time so I have to be really,
really quick with this.
Baloo wants to know if Ted had to pick his top five
bands and their best hits from the '90s, because Ted
and I have discussed music and his music career on
the MtoM podcast if you want to find this
conversation and why this gets asked.
So real quickly, five bands.
Seifried: Gosh, five bands and their best hits?
Yeager: Let's just stick with bands -- Seifried:
You referenced Presidents of the United States of
America, which was one of my favorite bands in the
'90s, although as much as I like Peaches I think
Kitty is a very good song too.
Wow, I was really obviously into Pearl Jam,
Alice in Chains.
We can run down the list.
Yeager: Foo Fighters is what we were discussing
before -- Seifried: You were talking about Foo
Fighters, Nirvana, Dave Grohl, the whole grunge,
alt, yeah I was big into that I suppose.
Yeager: Spin Doctors.
Seifried: Yeah, we talked about that a little bit on
Twitter last night too.
I'm trying to think of some off the wall, but
Presidents of the United States of America was one
of my favorite bands.
Yeager: If you want to see more and interact with Ted
when it comes to Twitter or his bands, hit him up
on Twitter.
Ted, thank you so much for joining us, appreciate you
coming.
Seifried: Thanks, Paul, thanks for having me.
Yeager: That will do it for Market Plus.
Join us again next week when we'll explore how
urban consumers are getting fresh produce from
a different kind of container and John Roach
will sit across from me here at the Market to
Market table.
So until then thanks for watching, listening or
reading.
I'm Paul Yeager.
Have a great week.
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