Podcast Summary
Agricultural recession: Bearish market conditions, low soybean yields, potential layoffs, and geopolitical tensions in the Middle East are contributing to an agricultural recession, with potential fertilizer supply disruptions and price increases.
The agricultural industry is facing a potential recession due to bearish market conditions, with soybean numbers coming in at 51.2 bushels per acre in the latest world agricultural supply and demand estimate report. The Midwest is feeling the impact, with John Deere announcing layoffs in Illinois. Additionally, the fertilizer market is being affected by geopolitical tensions in the Middle East, which could lead to supply disruptions and price increases if conflict escalates. The situation in Gaza and potential sanctions on Iran could significantly impact nitrogen supply, as the Middle East is the world's largest exporter of fertilizers. Farmers and ranchers are being warned to prepare for these market conditions.
USDA corn report: Unexpected yield increase in USDA corn report neutralized reduced harvested acres, leading to slight market tightening and potential selling opportunities for corn and buying opportunities for inputs
The USDA's World Agricultural Supply and Demand Estimate report on Monday brought some surprises, particularly in the corn sector. While harvested acres were reduced by 700,000, yield was unexpectedly bumped up to 183 bushels per acre, resulting in a neutral to slightly friendly report. The corn market responded with increased exports, both for old and new crops, which helped tighten ending stocks slightly. Conversely, soybean exports saw a smaller increase. The overall impact on corn wasn't overly bearish, considering the demand adjustments and international crop issues. Farmers and traders should stay informed for potential selling opportunities on the grain side and buying opportunities on the input side. For more information, follow Stone Axe Financial on Twitter or contact Mike Castle at mic.castledstonex.com.
Agricultural market fluctuations: The agricultural market is experiencing yield, production, and demand fluctuations, impacting prices, with Illinois projected to have a high corn yield but lower overall production, USDA's demand projections a concern, and potential surplus of soybeans, while the cattle market has seen a price recovery but faces challenges with limited rally potential and strong feeders cash market.
The agricultural market is experiencing significant changes in crop yields and production, particularly in corn and soybeans. Illinois is projected to have a high yield of 225, but the overall production is slightly lower than last year. The market is currently being influenced by the old crop corn and its storage, as well as the yield increase in soybeans. The USDA's demand projections are a concern, and the carryout number for soybeans could potentially surpass 600 million bushels if demand does not pick up. The wheat market received a more friendly report, but it's facing challenges due to limited rally potential. In the livestock market, the cattle market has seen a price recovery but is trending lower, with cash trade still above futures. The feeders market has also recovered, and producers are expected to put more cattle back in the pipeline. The cattle market could see a wild card with the feeders, as their cash market remains strong. Overall, the agricultural market is experiencing fluctuations in yields, production, and demand, which are impacting prices.
Hog market opportunities, Grain market concerns: Opportunities for gains in hog market with discounted October contracts, but grain market prices and potential large corn harvest add pressure, producers advised to stay active and be defensive for fall lows
There are opportunities for gains in the hog market, as the October contracts have a significant discount to the August prices and could potentially see a technical breakout. Meanwhile, the cash market in the Upper Midwest is trending downward, which may keep a lid on the cattle market. Grain market prices are also a concern, and producers are encouraged to stay active and explore their options. The potential for a large corn harvest could lead to a "quagmire" of corn, adding pressure to the market. Producers are advised to be defensive for a fall low and to engage in conversations with experts for guidance. You can contact John H at TotalFarmMarketing.com or call 800-334-9779 for assistance. Overall, the conversation with Tony Duncan from Advanced Trading focused on the current crop conditions in Western Illinois, which are looking very good, and fall planning for producers.
Midwest Agriculture, Hog Production: Farmers in the Midwest are focusing on healthy crop growth while monitoring the first frost and securing coverage for hogs and grains in hog production.
The current agricultural season in the Midwest is showing great potential, with excellent weather conditions contributing to healthy crop growth. However, farmers are keeping a close eye on the approaching first frost and the impact it could have on getting their crops across the finish line. In addition, hog producers are encouraged to secure coverage against any remaining hogs for the quarter and first quarter, as well as lock in soybean meal and corn bids for their hog production. The pork market has seen some support from strong demand for bellies from Mexico, but cutout values have been trading sideways. Farmers are advised to assess their storage capacity, plan for cash flow needs, and consider leaving some upside open in the market, as the funds' large short position could lead to market rallies unrelated to fundamentals.
Balanced perspective: Maintain a balanced perspective in commodity markets to avoid getting too lopsided in one direction or another. Markets can be unpredictable, so stay informed and adaptable.
Learning from today's conversation on Back Roads of Illinois with Tony Dunker from Advanced Trading is the importance of maintaining a balanced perspective in commodity markets. Tony emphasized the need to avoid getting too lopsided in one direction or another when making market predictions. Corn, soybean, wheat, cattle, and crude oil futures all finished with gains, while lean hogs saw losses. Market movements varied, but the overall message was clear: it's important to stay informed and adaptable in the face of market fluctuations. Don't get too attached to any one prediction – markets can be unpredictable. Thanks to our guests Tony Dunker from Advanced Trading, John Heinberg from Total Farm Marketing, and our cast from Stone X Financial. You can listen to the full show wherever you get your podcasts.