Markets Now Report Analysis 9-11-26 Jim McCormick, AgMarket.Net

0:00Markets now is brought to you by Pervantseats. There are wins and then there are wins that you get with Pervantseats. Big game-changing wins that turn heads and make people take notice. Get started at Pervant.com slash Change the Game. Welcome to Markets now in a report analysis. I'm Michelle Rook with Jim McCormick of AgMarket.net. Jim, we did get USDA's numbers out from September. Let's start off with Cornield, down 2.2 bushels per acre from August. No big shocker. That's pretty much what the trade thought didn't it? You nailed it. I mean, the trade did a pretty good job estimating that they were a tenth off. So if you look at what the market did, Michelle, it rallied dramatically from the Auger's report. So, you know, we're not getting a massively bullish movement on that number simply because it looks like it was pretty much priced in by the trade. It kind of confirms what we've known all along though. The adverse weather that we saw in August is kind of taken a toll on the crops, hasn't it?

1:04It is. I mean, our clients we've talked to the early yields coming in 10, 15% below a year ago levels. I'm going to stress it is not a disaster. Even with this revision down, Michelle, you're still looking at the second largest corn crop ever by almost 500 million bushels. So there is no shortage of corn, but you know what the USDA found is kind of what the industry was looking for. Is this crop just it had its nicks this summer just a little bit too much rain at certain parts of the country and a way too much heat in other parts of the country. Yeah, so whether tickets to a 178.5 bushels per acre and we should talk about the state by state breakouts, the big ones anyways. Iowa actually went up three bushels per acre for the statewide average from last month Illinois went down three Nebraska down six. Does that surprise you at all? That doesn't surprise me when you talk to our clients in Illinois. They definitely been disappointed. We remember we had that big rains that came through at the wrong time. They were expecting the yields to be disappointing. We're seeing that Iowa in general, the crop ratings have hung in there very strong all season long, which you know looks like that's what the USDA kind of found.

2:12And then Nebraska the dry land corn it's definitely struggling is that heat and dryness out in the western. Or about it continues to take a toll. As you point out 15.8 billion virtual crop, but we ended up with ending stocks at 1.567 billion bushels down 86 million bushels from last month. How bullish is that when you look at what it means for stocks to use ratio. When you look at a stocks user now below that magical kind of line of 10%. So it is definitely on the bullish side of the equation. The government did come in a little bit higher than the average trade guests. They did cut that feed residual number for the new crop by 150 million offset in some of the lost production. They left the feed residual number for the old crop and play that will probably Michelle be adjusted down the line once we get through the quarterly grain stock here at the end of the month. But in general when you get that stocks below 10% you're going to argue for most part you're in a bull market. For sure, is this a stair step to lower yields going forward do smaller crops get smaller gem.

3:15That is tradition what you would look for. I mean now could be be surprised as we get deeper into harvest and maybe find it's there potentially. But in general it seems like when the market starts to see a shrink in September follow up in August the bias would be for this crop to get a little bit smaller. But maybe not quite as big a cuts maybe we'll be looking for a half bush or a bushel cut from here on out. But still under 10% stocks to use ratio where should we be for price on court. Well where you're at it's kind of really where your ad is also going to pin not just on the domestic side of the Quasimus shell. We also need to look at what's going on the world number the world numbers stock stocks could you to drop even though this is a huge crop like I said second largest ever that's putting that road stocks use at the tightest level in 12 years. So our stocks use numbers one number we're looking at but you get a look at that world number because it's South America has a production issues that a lot of people fear could happen because traditionally there to wet in the north to dry in the south in arts of Brazil.

4:16In an El Nino year that'll tighten that stocks you up even tighter on the world number and then it's a situation where the markets got to go into somewhat of a rationing mode. Now the one wild card still also is going to be the feed and wheat wheat feed type of situation Europe crop is obviously smaller but the world wheat number actually crop up a little bit the problems logistics and shell can we get that wheat out of Russia in the Ukraine and that's the major hiccup for the wheat market right now. Absolutely OK into your poor world ending stocks were lowered by 2.56 million metric tons so we continue to shrink that let's talk about suedeans yields. The trade that we were going to see a little bit of a lower yield market came in at 52.8 or USDA came in at 52.8 up point one did that surprise you. You know the trade obviously was looking for a little bit of a move down I don't think the market was actually shocked by the number it wasn't a massive upward revision and the bias for the most of the month of August in general was we had a very wet August and you know we haven't had a wet August in last couple years.

5:19And the thought process was that would help fill out the beans and maybe make maybe have less pods but bigger beans in the pods and that might have been accounted for so even though the average trade guests was down a little bit I think going up a tenth of a bushel really didn't shock the market today. Yeah looking at the state by state breakouts Illinois down a bushel from last month Iowa was up to buy two bushels Nebraska up three North Dakota down for and that seems to be pretty much in line with what we're hearing from farmers don't you think I would not exactly me show the nailed I think that is just in line with what the market was thinking and it's you know nothing really or shadowing at least on the yield side of the equation. So put the bottom line in here though in terms of ending stocks 310 million bushels so down 10 million bushels from last month we are still looking at historically tight ending stocks right. We're looking at tight ending stocks and the two numbers we're watching right now near term is going to be this export demand they did raise it which I think you can justify it because China has been very very aggressive buying in front of this Trump G meeting and the accounting does look like they don't have all the

6:29demand account of for if China would fulfill what the White House says was in agreement to buy 25 million metric tons so you could see that export number rise even more which could draw down that ending stocks then it all pivots into South America can they what kind of crop can South America pull out of that southern hemisphere if they struggle the world supplies going to the window and then on top of it the bean market Michelle right now I tell my clients you don't really produce a food product anymore you're producing an energy product. Keep an eye on this diesel market it is trading at all time highs you're paying $6 for diesel on the road that is driving a lot of money into the bean market just on that energy play and that unfortunately look at what's going on in the Middle East and in the Ukraine and Russian war I don't see any way to get out of this diesel shortage anytime soon and that will be price supportive any kind of production losses if it's being cropped in US get small or the South America crop stumbles we are going to get into the very interesting situation where the market may have to surge even higher to ration out demand.

7:33Yeah we're sitting on a powder cake there's no doubt about it and if we maybe get more confirmation of additional purchases on the September 24th meeting between the US and China it could be even more explosive could not. It could because essentially you know it is just going to confirm what people believe we've seen China buy the guess right now is they bought about half of the 25 million metric tons of what they were forecasted the buy. Before the G meeting now we'll see how this G Trump meeting goes here on September 24th hopefully it goes well. Yeah and I think USDA right now only has what 15 16 million metric tons of the 25 million metric tons on the balance sheet here today is that what they use that is the argument of a lot of people now it gets very good. Because the USDA doesn't always break out who they think the world's going to sell to but the argument is you know if we're going to sell more beans to the Chinese will just let sell less beans to other people and those and those other people normally buy our beans may come in and buy the South America beans where the problem comes to the bean market is if South America has a production issue due to the super elineo then there is no plan B for those secondary buyers and that's when they're going to get forced to come in and buy US prices.

8:45And that's what could really drive the markets this winter if South America has production issues. Yeah well profit taking today in the soybeans we just hit new contract ties not to be unexpected here. Well I think you got to remember we've had a huge move up here in the last 30 days you are looking at a very big bean crop you're looking at a pretty big gone big corn crop even with today's revision the funds are carrying this massive long position. It would not surprise me to see them lighten up a little bit as these farmers have to sell some grain statistically speaking Michelle our best estimate is about 80% of this corn crops on price or if it's in the field and roughly 20 80% of the beans are on price the farmer cannot store all that grain on farm. It is going to have to bring he or she is going to have to bring some of that grain to market that will force some hedge pressure on to it and the question is will the funds kind of lighten up in combination with a hedge pressure allowing the market to get that quote unquote fall break. That's a good point you make this isn't just profit taking it probably is some farmer selling a finally we we got a nothing burger on the U.S. or domestic balance sheets but world ending stocks were raised 3 million metric tons and so I don't know that seems that seems counter intuitive to me with what I know about what's going on with production and export disruptions.

10:05It does like I said the big problem the market Michelle right now it's not the supply of wheat like you said this week crop got bigger the real problem into the market is the logistics issue if you cannot get that product out of Russia and you cannot get that product out of the Ukraine this is going to become a situation where do you find that product if you look at the export sales for the U.S. right now they've not been that good but the prices have rallied but if we go keep not limiting the availability of wheat out of the market. So if you're not going to get that out of the black sea region it will force a reshuffling who's going to supply wheat to whom. Good point all right thanks for your time is always Jim McCormick with ag markets at net and markets now. You can just pegged the anticipation before the big moment the ban playing be adrenaline flowing the confidence that you're about to hit the field and simply dominate now you know it feels like to plan a field of robot seeds because when you choose robot seeds you're not looking for a simple win.

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