Markets Now Closes - 9-11-26 Dan Basse, Ag Resource Company

0:00Market's now is brought to you by Pervantseeds. There are wins and then there are wins that you get with Pervantseeds. Big game-changing wins that turn heads and make people take notice. Get started at Pervant.com slash change the game. Welcome to Market's now. I'm Ashara Work with Dan Biasi, president of Ag Resource Company. Well, lower markets on Friday with the exception of the cattle market and green setting back here. Let's start off with the core market. Dan, we did see USDA Lower Yield 2.2 bushels per acre. We did get the yield cut, but a lot of that was kind of priced in, wasn't it? It was. I mean, if you think about the corn market going back to the middle of August, we've had a big run to the upside here. So, as you look at corn, generally, I think the bull market will continue to the end of the year, at least, maybe longer than that. Again, this year's corn crop is 1.5 billion bushels below last year. And so, with record demand of 16.2 to 16.3 billion, we do have N-stocks coming down to 1.5.

1:00And importantly, we're below that 10% stocks to use ratio. And that opens the upside. And if we have any further fall and yield or increase in demand, I think this market has higher levels to scale. Yeah, I feel like that really got last on Friday or today here that those ending stocks numbers did pull us down below 10% stocks to use ratio. What price do you think we need to be at in corn with that in mind? Well, I think we're fairly priced here at 525 to 550, but if I am correct in our U.S. Corn yield really is 176, I still think we could drop 2.5 bushels by the final. That's based on declining earwates going forward. There's a very strong historical that earwates, ear, excuse me, ear numbers dropped from here through November. So, if that's indeed the case, as your number drop will give us a lower yield. And I also believe that the market has not priced in any of the Black Sea problems. So, USDA and its export estimates in both corn and wheat has no Black Sea in there in terms of the problems and the declines due to the war. We'll see how that

2:04all plays out. And then we got China coming to Washington DC in a couple of weeks. And I'm still expecting they will buy U.S. corn and U.S. wheat. We're timing is everything, but I think that is on the agenda for that meeting. Yeah. Going back to the yield, Iowa did some pretty heavy lifting, didn't it on corn? Wait, I mean Iowa carried the day. When you think about this report, a record bean yield of 64 bushels, an acre, a record corn yield up at 2.19. It was all about Iowa. If Iowa had not had those record yields, we would have seen some sharp falls. Now, a lot of us are questioning those Iowa yields. I think the crop is good across Iowa, but again, those record yields are suspect in my mind going forward. Principally, when you look at states surrounding that saw lower yield trends this month. So let's see how it all plays out. But today's numbers were all about Iowa. And boy, they've got a good crop at least at this point. But as far as your your counts on corn, you said they were down substantially. Was that partially a function of less fertilizer use or

3:05was this extreme weather or what was it? Well, we as analysts can all kind of assume some things, but we don't know in practicality what they were, but we believe it's reduction in nitrogen on corn. We believe it's in some areas. It was the very cold and wet late May and through June. And then we were followed by the extreme heat that came in July. So, you know, as you look backwards every year that we haven't had a July temperature that was two degrees above normal, we didn't do very well on corn yields. And this year seems to be that case. But again, a 178.5 is still within the top three in terms of US corn yields. So it's a big crop. It's a good crop. It's just not enough for the demand that we have. No, in USDA did lower usage by 150 million bushels by adjusting feed and residual, right? Yeah. So if we have a corn crop that's 1.5 billion bushels less than last year, they'll take some of that out of the residual. And that's what they did here today. So it was somewhat of a modification. Whether it's right or wrong, we'll find out more about feed and residual in a couple of weeks when we get the final estimates for the 2025 corn and

4:11soybean stocks as a September first. World lending stocks on corn were also lowered almost 2.6 million metric tons. And certainly that number has been continuing to shrink and is probably going to shrink more, right? Yeah, we expect that stock number, production number globally to shrink with the US crop. We think the Ukrainian crop is also a little lower. They put the European corn crop at 50 million metric tons. There's still another two to three million metric tons that come out of there. So increasingly, we think that the world crop will edge down, but it's a process with USDA. That doesn't happen all at once. They need to see some actual harvest yield data both in the US and the EU before they make those final adjustments. Yeah. We're talking about a lot of bullish things. Corn ending lower on the day. Would it have been lower if soybeans and wheat hadn't been? I think that the soybean and wheat declines really caused a pullback in corn. It was a mentality that we rallied up after the report. We checked the old highs. Corn made it up to the old highs. And then we just couldn't keep it going because of the weakness in beans and wheat. So there was

5:15that mentality heading into the weekend that the markets relatively long or record long in corn that some people wanted to take some some risk off the table. And that gave us the lower close on Friday. But I think when the world comes back today and Monday that the markets will find some gravity towards the upside as people see any kind of breaks as a buying opportunity. Let's talk soybeans yield 52.8 that was up a tenth of a bushel. Market was lower here today. Was it because the market thought it should be lower or was this just profit taking because we scored contract highs yesterday? Well, the market's done an awful lot. I mean, we're back up by the other as we closed out last week. We're back up over that 1325 nearby futures. And then the USDA report came out with a record large US soybean crop. Let's not forget this is a record large crop that is being gobbled up by record large demand. So the market at least at first blush said I've done a lot. We need to correct here. And that's what really happened as we went home on Friday going forward. It's going to be a little bit about Chinese pricing. It'll be a lot

6:17about crushed margins and whether or not we'll see that USDA record forecast. But I think down the road we're going to pay a lot of attention downtown to South America. They started planning. But the forecast has gone somewhat drier. So we'll watch it very carefully as we get into the month of October if farmers down there can get in the fields normally. And when we talk about yield, I go back to that. But does the yield get bigger on soybeans going forward or not? There is that risk that we pick up a few tenths of a bushel. And if someone wanted to argue strongly about a yield of 53 or even slightly above that a new record US yield, it's not impossible. And I say that because pod numbers historically increase from September through November through November. So look for soybean yields to nudge slightly higher. USDA did find a few extra acres today, which also added a little bit to the bearishness. But you know, 52 and a half to 53.3 bushel and acre yield seems to be the range we're now dealing with. So we're coming closer to where this crop really is. But in saying that it's still going to be a record large crop. And for now,

7:21I think that kind of caps the market and at 1325 to 1350 range relative to November. But still we saw ending stocks down 10 million bushel, 310 million bushel. USDA is not accounting for what the full 25 million metric tons of you of trying to purchase is if we get to that point, it's going to go much lower than this, isn't it? Yeah, I think I think the process you're talking about Michelle is as yields maybe improve slightly so will export demand. So I'm carrying an export number of 1735. That's you know, against the USDA. So I'm still up another 40 million 40 or 50 million bushel. So with that in mind, I do think ending stocks can still fall below 240 million bushel. And so, you know, the upside and soybeans will be there. But it's again, I think it's a process when you get up to this 1325 or 1350 range. It's hard to go to 14 unless you have just a decidedly bullish end stock figure of 225 million bushels or lower. Gotcha. What about wheat? No changes on the domestic balance sheet.

8:23We did see world ending stocks of 3 million metric tons. We have ample supplies. It's just about logistics. Is that the problem? Yeah, we do have ample supplies of wheat. I would say when you think about ample, though, we're still down on a 40 million metric tons in the primary X order position. But the wheat market will now start to key off the duration of the war in the Black Sea. I mean, we're only seeing exports out of Ukraine at 40% of normal. Russia's down to about 37% of normal. So when you think about the, you know, the cutbacks of maybe 15 million metric tons by the end of the year, it's the market reshuffling that demand to other destinations. And so that is key. Will it come to Argentina? You know, will it go to Australia, Canada, the United States? I think that's what drives wheat. It's hard to get very bearish of wheat here, but I do see that upside. Well, now be determined by how long this war in the Black Sea persists. I'm just concerned it persists longer than the market's giving credit for it here today. Yeah. Dan, we should also talk about some of the outside market factors, including, I mean, the funds have been buying on inflation fears. And

9:28that's not going to go away anytime soon, is it? No, I'm talking to customers I haven't spoken to in five or six years going back to 2020. And these are the big large investment funds that see commodities as a place to park, at least as a percentage of their money and they're looking for diversification way from the equity markets. So inflation, rising energy prices, a falling U.S. dollar, all that kind of plays into a mindset of being long stuff. And I use stuff gradually about, you know, 38 commodities that they're looking at. That being said, I think the grains is one place that they want to be long with a super elineal lingering. And so I think this big long position from the funds is something that'll be around probably through the first quarter, maybe into the second quarter of next year. So that will also be an underpinning to the grain markets as we think about, you know, prices heading into the end of the year. Well, and I think you have been writing about the fact that the funds were hoping for a pullback around the Wazdi so they could actually add to their links, right? Yeah, they and they did

10:30done the corn market in particular on the break that came out right after the Wazdi. And I still think they have that appetite. In my discussions with those kind of investors, they still have this appetite to be longer of commodities, including grains, including livestock. And I think that will be helpful. So as we think about heading into the election, I think that we will look for that to happen. And again, I highlight we've got this big Chinese meeting in a couple of weeks and it'll be very key to see what happens in terms of China dropping its duties at 10% duty on imports of U.S. grain and soybeans into their country. You expect that to happen at the September 24th meeting, those 10% tariffs are going to come down. I do expect it, Michelle. And when that happens, that means that that pro-rated $17 billion, I think $14 billion for this year can be acted upon. And I think China needs to buy grains corn if that is indeed what's going to happen. Well, then we've got a powder cake ready to explode at some point down the line. Let's talk just quick about cattle. We had a higher weekly close this week. The market's been grinding higher. Do you continue to see this market recovering?

11:37Yeah, I think the cattle market on the break was very politically minded. By that, I'm saying, I was looking at the Trump administration in the comments that were coming from it. Once Trump itemized his decisions in cattle and beef forthcoming. And we all started the chew on that 300 million extra pounds of cattle market started to come back. And I think that's a trend that'll persist now. I've got lower fed cattle numbers all the way into February. So I'm not saying that we're going to go back and make new highs. But I think we could test those highs as we get into the end of the year, first quarter of next year. And I think that's important. And we cannot have any winter weather problems because as we look at outweights, their record large, but I need conversion levels in the beef market to stay very strong. So cattle, at least in my mind, still has upside potential. And we're still not importing enough feeder cattle from Mexico to really dent the supply argument for the next six to nine months. And you think the cash market is also bottom? I do. I think cash market has unseasonally traded differently than normal. But we're supposed to

12:37bottom and I told her, but everything seems to be happening earlier this early this year. Both in grains and livestock, I think we've made our seasonal bottoms a few weeks earlier than normal. Interesting times for sure. All right. Thanks for making much Dan Bosse joining us with Ag Resource Company and Markets now. You can just picture it. The anticipation before the big moment, the band playing, the adrenaline flowing, the confidence that you're about to hit the field and simply dominate. Now you know what it feels like to plan a field of bravant seeds because when you choose bravant seeds, you're not looking for a simple win. You're looking to turn heads and make a name for yourself. This is your turf. And when you get out there, it's sheer domination. Get started at bravant.com slash domination.