[00:00:00]
>> Good morning to everybody what a beautiful spring day that we've got today and I know we're all appreciate that and appreciate the Cooperative Extension both for provide this opportunity for us to get together and have a discussion about market action thank you very much for that and certainly on behalf of Virginia farm bureau thank you as well.

[00:00:25]
As the world the world is really in a battle right now fighting this code 90 issue and the corona virus that causes it. We we've seen this building an escalating really since the 3rd week of December. When most people myself included that was an early if earliest time that we heard of this virus and what it was doing to some communities particular one sitting in China and it seems like since that time.

[00:00:59]
The speculators and the world markets whichever one you want to look at equity energy commodities all of them started planning for the worst case scenario and started selling futures contracts and instead of buying a remember any. Question marks get into a futures market that's trying to predict the future and it raises fear and most of the time when the seer gets into the market it turns into to sell and then it turns into lower prices then we've certainly seen that.

[00:01:35]
It's been an encouragement to me talking with you all extension and the producers the last few weeks. Just knowing and being reminded that you all really do enjoy what you do even in the middle of circumstances that are very difficult outside influences that are very difficult and it's been encouraging me to hear that you all are focusing on the details trying to make all the.

[00:02:01]
Visions you've got to make and you've got a lot of directions to go and a lot to do and a really seen a lot of folks. Teach me and talk about looking for opportunities and they do exist right now definitely heard a number of you who've locked in a lot of your fuel purchases for the year even locked in a lot of your fertilizer needs for the year.

[00:02:25]
I've heard a lot of folks talk about the big benefit refinance and any debt that they had so those are just some of the opportunities and that's what we've got to continue to do going forward is work on controlling what we can control in the field and focusing on opportunities we can sign.

[00:02:45]
And ya'll are doing that you know congratulations for that and this in this atmosphere when we think about the future part of your cash price when we look at what then influencing these prices for for particularly corn wheat and beans over the last few months we came into the year in January with a lot of optimism.

[00:03:10]
Speculators were long futures we were totally focused on a trade deal getting done and China being on the clock to having to purchase $40000000000.00 in end products by the end of the calendar year and about the time that deal got in the middle of January the last time a lot of us met together we saw the speculator change their opinion and go from optimistic to pessimistic and instead of being long futures they turned into being short or sold futures when they found out that wasn't going to go into effect until February and that it didn't have any any details in it.

[00:03:51]
And then that certainly that pessimism transferred over to the code 19 and the coronavirus that really shut down as we all know world world communities and we're all economies and that in turn is in some instances created demand destruction and in some instances it's created increased demand and I let let's take from the futures part of your price let's take corn 1st and really look at probably.

[00:04:22]
In my opinion the largest headwind that corn futures have ever had to face and that's going to be the issues with the ethanol industry. Depending on which numbers you look at They're all correct it's just a look at the scene or the situation a little bit differently whether it's us the numbers or private industry numbers about 35 percent of the nation's corn goes to ethanol production.

[00:04:52]
And it's been about 2 weeks ago now 2 weeks ago Tuesday because the lack of demand for crude All in all of its Coke products everything that comes from crude oil its derivatives. Those markets have really crashed to put it mildly because of lack of demand it brought ethanol futures down to the lowest price on the board they had ever been 2 weeks ago Tuesday we started the end multiple ethanol plants go no bid in the Corn Belt shut their gates as of last Friday 20 percent roughly 20 percent of America's ethanol production was offline with more plants closed in this week and more will be closing in the future is they just can't they can't make a profit making ethanol right now we've also seen some strange interactions with ethanol futures being more valuable now than gasoline futures that shouldn't be that way no blender would would blend ethanol into gasoline above the federal mandate if ethanol is going to stay higher it about $0.82 a gallon on the futures board higher than gasoline which I think we closed yesterday at about $0.54 a gallon on the futures board so a big headwind for corn that's going to be bearish corn for a long time as these ethanol plants stay offline.

[00:06:30]
And even yesterday with the weekly a report coming from the ethanol industry we saw a record stocks of ethanol at the same time that we saw the weekly grind just really go down down down and that's that certainly bearish price when you when you switch gears from corn to soybeans.

[00:06:54]
Certainly a lot of people in the last 20 years with ethanol increasing in the plant making a lot of dry distiller grains their D.G.'s it's been a wonderful coproduct and people who see chickens and turkeys and hawgs and cattle have really use that as the protein sources you'll note in their ration you can't you can't find D.V.D.'s now.

[00:07:17]
And what what has happened is a rally in soybean meal you all heard me say that before we got to watch what soybean meal futures are doing to try to determine a direction for soybean futures we've seen a significant rally in soybean meal futures that is Kerry soybean futures up off of those multi-year lows that we made 3 weeks ago on the soybean board so with meals in May and increasing because of the lack of the t.t.s. because of the ethanol plants shutting down we have seen some opportunities come in to price old crop and even for some folks some new crop soybeans when we switch gear Guinn and go to wheat we've definitely seen global demand for wheat and Cree over fears of the virus and coated one team we've also seen for instance Egypt the world's largest importer pullets inspectors out of the Ukraine one of our top competitors for we go but we trade we seem Russia as late as last week.

[00:08:27]
Their ag Ministry announced that they're going to be limiting. Exports and trying to sell that we them ethically as fears over food grow we know all of what you all grow corn we being since up on everybody's dinner table but we didn't up on their dinner table this week and and it gets a little bit more influence fears of food shortages even though there is no shortage of wheat in the world it's just become an issue where countries can load that's another issue that the virus to cause many ports around the world to issue stop loading orders and vessels are unable to get in and America just has really shot here in the last few weeks keeping our ports open and looking like the most reliable source for wheat in the world and when we hit the had the recent highs here several days ago on the futures market was about $0.70 a bushel higher than we were 3 weeks ago so a nice rally and we and nice rally and being and the reaction to the virus.

[00:09:37]
Thinking about the basest part of your cash prize this situation with with ethanol as plants have closed in the Corn Belt and country elevators some instances have dropped their basis 50 Cent a bushel for old crop corn we're seeing and we're seeing opportunities say for the hares and burger market buyers to buy corn for the feed mills we're seeing opportunities for them to be able to buy the corn cheaper in Ohio and Indiana we're also seeing and rail freight rates come down as well so what does that mean for us that means we probably have some negative pressure coming on local basis for corn keep that in the back of your mind when when you look at being from a basis perspective we've actually seen bid basis bids increase over the last several months for being this optimism over the trade deal with coming as well is this this phenomenal container market that's developed for soybeans here in Virginia and Pennsylvania and Maryland and North Carolina and South Carolina over the last 5 years and this container market is really helped keep up the demand for the base you produce and keep basis value strong we've even seen being this increase this week so that's very positive.

[00:11:09]
Basis old crop a new crop is pretty much the way I see it that it's quote We know interestingly enough over the last 10 years we've seen basis for we be the highest of the year at harvest time you've all seen that you know that appreciate that it's very opposite from corn and soybeans where we normally see the lowest basis values of the year harvest we we've seen.

[00:11:36]
Recently in recent years the highest basis values for a week come at harvest time we're hoping for that again this year and one thing to keep in mind we have seen 3 flour mills shut down 2 in Pennsylvania and one in Maryland since last harvest then and is a little bit of anxiety for me around our 2 week mills and Virginia and what the buyers and country elevators will it will get back to those how harvest basis values in the absence of these 3 mills.

[00:12:11]
So thing and all of that a lot of influences on your futures price a lot of influences on your basis price it all comes back to keep in your mind on the details in the field what you're doing every day in keeping your mind around what your cost of production is.

[00:12:29]
Those saying that Oprah marketing if we're going to talk specifically about marketing right now those bushels well that you've got on an impi contract basis contract whether you've got bushels in the bin that aren't attached to any destination any price associated with them whatsoever Matt My recommendation right right now today is to do a real assessment of those remaining 0 crop bushels that you've got we can market our okra bushels with a lot more confidence because we know what are you know it was we know exactly what our cost of production was on those bushels and the same reasoning is true now that that was a year ago or 2 years ago even when we weren't in these the situation if you can lock in a profit Oprah corner Oprah beans in the bin in this market environment you want to do so you want to make small regular sales and we know that from a marketing standpoint not from a cash flows standpoint but from a marketing standpoint you've got until the spec and week of July to pull the trigger on these okra bushels folk out to assess how many bushels you've got left look at the days that you have the week from now till the 2nd week of July kind of divided up in your mind with just to clean with trucks and shipping and start making some regular sales were we are seeing extreme volatility I mean just look at yesterday we came into a new quarter a new month we get new money flow we get new ideas when we when we enter a new month the new week a new quarter and we really saw all the speculators driving markets lower yesterday all the news from President Trump and his press conference the day before a very sobering conference press conference about we're not.

[00:14:28]
Seeing the worst of this virus yet and the respiratory disease that it causes so that got the markets selling off yesterday they were up in the overnight we all are used to this kind of volatility now it's become a norm even then in the corn we being markets I know you got your left on last cattle feeder cattle and hauled futures markets but boy there there are limits limit down expanded limits they're just really around this thing and that's another reason to make your own crop sales on a regular basis right now and in small increments if you if the 1st thing I would say to about corn is if you're not at your break even price.

[00:15:14]
Still consider walking into basis very concerned with this much old crop out in the bin still around the countryside across the whole state that this this corn has to go has to go to the end user before the new crop comes think rail with rail values falling and basis falling in the Corn Belt we've got more tendency for basis to fall between now and July than we do for it to rise so I would highly encourage young to lock in a home for your corn even if you don't price the futures but lock in that home and lock in the basis and consider call options.

[00:15:58]
There are some opportunities if you're making cash sales right now and you still one of the 10 show there are opportunities with call options and call who you market your grain to and your beings to and talk to them about those. Call options and what it would quit the premium would be or you can call me as well and we can talk through that is going to go into new crop marketing.

[00:16:24]
Assess Also what percentage you're priced on your new crop production for corn wheat and being Take a look at the futures plus basis minus freight and see if you are above breakeven with your expected yield and certainly if you're above breakeven with with futures and basis and freight per to gether on your cash price I would I would feel very confident about being at least 20 percent priced right now on my new crop corn and being and remember when you're when you're thinking about new crop marketing and you're printed on paper divided in your mind and on paper what bushels you have to move at harvest time and then what bushels you're going to put in the bin spend your time right now focus time on new crop marketing on those bushels that you have to move at harvest time and if you're above break even with the expected yield I would feel very good to see you lock in 20 percent of that production.

[00:17:30]
So so we're definitely we're definitely in a very bearish environment especially for corn corn is facing a headwind that it hasn't faced before with about 35 percent of the nation's corn going to ethanol if we lose a lot of percentage of that until the demand for crude oil comes back it's going to be hard for a futures price to recover barring some type of a North American weather disaster or a.

[00:17:57]
The positive side is China China has been buying a lot from us the last 2 weeks you can look at the export sales report cotton pork or gum we boys beans and corn there's the hope out there with this break in the price that China will keep buying a lot of corn from the u.s. and that will make up for some of the.

[00:18:21]
Bushel that we're losing for lack of ethanol ground. Your futures price corn wheat and beings who are definitely definitely tied right now to the outside markets when you have a day like yesterday where the Dow Jones Industrial Average was down about 4 percent about one point it's going to be very hard going forward for our commodities to rally or to any count of positive price movement when when the the stock market the currency markets in the energy markets are all negative.

[00:18:55]
We have seen speaking of the currency markets we've seen the dollar in the last 2 weeks at 3 to 4 year highs we've seen the dollar break significantly lower and that's obviously going to help us going forward we need to be on the alert and looking out for details last Friday when Congress and the president signed the rescue package there's a lot of information out there about agriculture how what type of agriculture businesses are going to qualify for small business loans and small business grants some of you I'm sure are already more educated on that than I am but keep your eye out for this rescue package we know that the u.s.d.a. Sonny Perdue with we know that the commodity credit Corp I think it was $14000000000.00 for for farm aid going into commodity critic or peroration and about now and $1000000000.00 set aside separate from that for beef cattle producers dairy producers and specially crop producers so we'll have to see what happens there looking out South American weather has been basically been on the futures price and they started planting in northern Brazil in mid September still the same today they're dry areas they're wet areas but all in all we really haven't gotten an influence on your futures price that's positive or negative from South American weather that hasn't changed and when we look at North American planting We saw numbers this week that Texas is 50 percent planted on their Corn I think with the end it was just over 60 and when you look out the 10 to 21 day weather models shows good good planting weather ahead for most of the Corn Belt and so temperatures are where they're supposed to be.

[00:20:53]
We got the quarterly stocks and intentional Aker report out of the way this week we definitely were all shocked by the 97000000 acres of corn the American farmer said they intended to plant but we know this survey was done the 1st 2 weeks of March affected of March 1st corn it had about a 40 cent to $45.00 cent break in the futures price and most traders I don't think believe that the American farmer is going to plant 7000000 acres of corn this year because of the change in price we won't get the actual planted number until June the 30th but the stocks numbers this week were very friendly the corn stocks what was in the bin on March the 1st the beans stocks and we all came in below expectation that was obviously friendly to price and I think most of the speculators just look through the report because of all the negativity around lack of demand because the world economy shut down on on the virus so.

[00:22:01]
I guess I'm I'm up on my time right there and I'd be glad to listen and be a part of the discussion going for Grant try to answer any question John might have Robert I do have a question here from from Mike in he says What is the chance of an upcoming depression any talk of this you have heard.

[00:22:24]
Yeah yeah yeah great great question. I've seen one to one economist and I'll see if I can pronounce this word correctly you know we think Mike you're talking about just in general over and over all economic depression across the whole the whole economy. 11 economists said we called what happened at the end of the 1920 s. and for the next 30 years when we crawled out of that great depression we called what happened in 2008 what happened with the mortgage situation in the banks the Great Recession one economist is already calling this the Great.

[00:23:06]
Yes How did he what's the word I'm looking for cessation like the great stoppage and what we've seen never can get that word quite quite right but the great cessation we've seen world economies that have really developed into consumer driven economy where most of the world the 1st world.

[00:23:30]
Credit has been readily available and credit is been very cheap in the consumer the small businessman and the Corporate America folks have taken advantage of all that credit then it used the developed economies that are vibrant and growing and when you pull every consumer out of a consumer driven economy like here in the u.s. there's really there's really no playbook on how this is going to play out.

[00:23:57]
There's no debate anymore you know for the 1st week or 2 that we got involved in this people said well we're heading we're heading for a recession we've seen equity markets correct as much as 30 percent off their highs earlier this year for instance where there are people pontificating that unemployment is going in the u.s. is going to go from 3 percent to 30 percent when you put all that together my question is is true that there are people who are saying this was such a quick stoppage of everything that even with Central Bank monetary policy here Central Bank monetary policy all over the world was stimulus going into economies that we could we could see an economic depression and there's no playbook for this type of.

[00:24:48]
Crash that we've seen where where you take the consumer out of the consumer driven economy so I think everything is on on the table one thing we do know when we look back at an American History sense that the early 1900 look at. Economic recessions and depression we have seen all of those times.

[00:25:13]
Be a town where people in agricultural production had more profit and more profit potential. It seems like so often the general economy in the agricultural economy work opposite of each other and I think maybe that's one thing abroad trying to make lemonade out of lemons and look for opportunities if the overall economy does get stuck in a recession or even a depression for a period of time that there could be profit potential and growth potential in the ag sector All right well with prescience Everybody joining us today Robert thank you so much for your update your words I know that that's something that everybody really was concerned and wanted to know that information so we appreciate you sharing that with us hopefully that will be a big benefit to the producers.

[00:26:05]
We thank everybody for joining us thank you Rob approach your time joining us.