Yeager: Welcome in to the Friday, February 23, 2024 installment of Marketplus.

Naomi Blohm still with us here.

And you want to talk movies, the whole segment, The Shawshank Redemption.

I have to admit, Naomi, that's something I really didn't think you would bring up.

That's something I would bring up.

I was I couldn't contain my smile enough when you said that.

Blohm: Yeah, well, I thought it was a perfect illustration because it's like no one really realized that the funds were, you know, slowly exiting their wheat positions because the wheat price hasn't gone anywhere.

But meanwhile, they've lost or exited, you know, 40 to 50000 contracts.

So they're sitting in a good situation.

If the news starts to emerge from a friendly side that they can pounce and they can be, you know, quick to be buyers, quick to be making money on the upside instead of trying to just exit their short position.

So it's very stealthy the way they've been doing it.

Yeager: I have a couple of questions.

I think we can answer that about corn and soybeans in a minute.

So but first, I want to I kind of had to quickly glance over this in corn.

Let's start with Mitch in Iowa, if we could, please.

Mitch wants to know, is a three handle inevitable in corn?

How are you marketing with this in mind if you're a feeder or a seller?

Keep in mind, we do know Mitch Yes, we close at 399, I think, on the on the March contract.

Yeah, on March.

He wrote that question before we had hit that mark.

So how long does three stick around?

Blohm: Okay, so here's, here's my best guess of what I think is going to go down.

So I feel like over the next week to three weeks, corn prices are going to find their low.

The March contract is getting ready to go off.

The board maybe comes front month.

The question is going to be does the may just kind of sit at these lower levels?

Is it going to try to work a little bit lower and go down to where the march potentially goes off the board?

That's that's the question.

But I do very strongly think that we'll see some sort of a seasonal rally at some point, and it might, reality wise, take until early June to get this market to move.

It could be tied to a weather scare with the suffering a crop, because that's going to be their major portion of pollination is two months away.

It could be in conjunction with some type of weather scare here for planting.

Or when we start looking at the weather in June and saying, hey, this drought is getting bigger.

So whatever type of a rally that we can get off this market place when we get our summer rally, that's going to be the cue for people to do marketing, not only for anything they have the Ben also for what they have planted in the ground and for 2025, because in order for prices to have a true fundamental reason to get over $5, it's going to take a drought here in the United States.

So let's just let's not say like we're going to have this drought, because hoping for a drought is not a way to market your grain.

Okay.

So if we can whatever, you know, spring summer rally we get, you've got to be making sure that you're pulling the trigger, because then here comes the Debbie Downer reality is that even if we plant 3 million less acres of corn, if we have, okay, yields of let's just say like 170, we're still going to be dealing with 2 billion bushel carryout for another year.

So that's where whatever type of a summer rally we get, whatever that scenario is, it could be $0.50, it could be a dollar.

We'll break that down a little bit more later.

You got to be Johnny on the spot.

And so Johnny on the spot means it's going to be hard to pull the trigger because it's going to be dry weather.

And just like what happened last year, people were just like, I can't forward contract, I don't know what I'm growing.

But that's, you know, oftentimes your best prices.

So you've got to start thinking strategically now about where you're going to be putting your cash sale orders in at the elevator.

You need to be thinking about, okay, if this corn can get back up to $5, what would a $5 put be trading at in value wise and have an open order sitting there at that level?

So it gets triggered because you know how this works.

The market will rally.

It's only there for one or two days and that's it.

And you're busy in the field or you're busy worrying about the crop not growing, that you're too scared to make a move.

So back to the original question, about $3.

If the weather ends up being good enough this summer, we're going to have 2 billion bushel carryout and come harvest we're going to be back down to the low fours with potentially moving into the three.

So that reality is there, but there's a little bit of hope between now and then.

Yeager: Because we don't have as far to fall like we're closer to three or four.

Blohm: Dollars is such such such big support on the charts.

And from that pennant flag formation, if you follow me on Twitter, you'll see the chart I posted.

We hit the downside target today from the pennant slide formation.

Yeager: Okay, you I want to just again say this for everybody in the back.

Jason and I was question here.

He thinks that the market is ignoring E15 aviation fuel mild winter continued dryness.

You talked about two of those items already.

Downtrend, he says seems overdone.

What are my strategies and 25 and 26 which seem flat right now you just talked about a couple of them, but how do I again set to the side the emotion of I think it could go higher, but I have to do something to try to stay profitable.

Blohm: Yeah, it's such a tricky thing.

And so right now the thing that producers are facing is price or roll with the March contract coming around.

And so, you know, quite frankly, if you haven't done anything now, but if you are still concerned that prices might fall if you are in that camp because you're going to hold on to your grain waiting for a summer rally, in that instance, you might want to look at a may put to give you, you know, about a month and a half, two months of time that just in case things go lower, you have some price protection.

But again, to what I said on the show, you know, we're so oversold, we've hit the downside target.

The funds are so short that part of me wonders how much lower could it go.

But the market always surprises us.

But I think the bigger thing would be have the orders in place anticipating the summer rally, but be ready to market for a couple of years out.

So that means you need to be working with your lender right now.

You need to be talking to your elevator to know are they going to be willing to cooperate and help you in a market and forward contract out that far?

You have to have those conversations.

Now.

Yeager: There's some lenders that are getting a little nervous and maybe making some tough phone calls and talking to people.

But I can't afford for you to two holes.

You're going to have to sell something.

What blinks first?

Who blinks first?

Where do we know something is changing fundamentally in the things you just talked about out there?

And maybe some grain comes out of the market sooner than.

Blohm: I think a lot of grain got moved the last two days and next week, because there's been, you know, just the people who, for whatever reason need cash.

So they're making the sale.

Also, there's the point of when you you know, if you're storing it at an elevator, there's the storage costs.

You know, you think about interest rate costs, all of that in some regards.

Everybody's situation is different.

But you can sell the cash right now and you can buy a July for 50 corn, call for $0.15, which might be cheaper than storage and have that upside potential between now and the end of June.

So that way you're still participating and running on paper and not feeling so bad.

If prices rally and you've sold it.

But one thing I would really again say is if you're in that camp, start the relationship process soon, because again, with her, we're not going to know that the market has found its low for sure until we're already up $0.30 and charging higher.

So just be mechanical about it.

Make the cash sale if that's what you need to do and turn around and look at the July corn call's germane.

Yeager: Your question was kind of asked and I'm going to mold it here.

We're going to move into Eric in Wisconsin.

And this is a weather question Eric is asking.

We had the news about El Nino, La Nina with the pattern seem to have we had less snow in the upper Midwest.

How low water levels in the upper Mississippi River affect our inputs and exports in the area?

Blohm: You know, I hadn't thought about how that would trickle through again for this year.

But if we do have another year of drought conditions, yeah, that Mississippi River is going to be low again.

That is going to affect exports.

So we'll I know like we've seen more exports in the Great Lakes.

Of course, the PNW is a great route, the rails through Mexico, but that would be an issue down the road.

So we do have to be aware of that, but nothing that we can trade or forecast at this moment.

But it is definitely something there because, you know, when you think about how dry it is right now, you know, it's 60 degrees.

I walk into the studio today and the tank top and that's the end of February.

And I not have a parka.

I don't have my snow boots in the car.

And it is a lot like 2012.

You know, where I live in Wisconsin, Lake Winnebago is opening up.

It's the biggest inland lake for our state and in 2012, people were fishing in their boats on the lake in March instead of wrapping up ice fishing.

So there are a lot of parallels to 2012.

And the other thing that maybe is frustrating for producers is that, you know, people are going to assume that these new hybrids are going to be fine.

Everything's going to be just fine.

And one timely rain will save the day.

So I don't know if we're going to be quick to have a weather run higher or if it's going to be slow to happen because like the market is just anticipating that things will be fine.

But this is not normal.

All of Iowa is in a drought.

The northeast portion of Iowa is in a red drought.

Two thirds of Wisconsin's in a drought, two thirds of Minnesota in a drought.

Two thirds of North Dakota is in a drought, Eastern Nebraska in a drought.

So it's not looking great for a start, but we'll see.

We'll see what Mother Nature brings.

Yeager: We will see what other questions we'll get next time that you're with us.

But that'll do it for right now.

I appreciate your time today in Marketplace.

Thanks, Naomi.

Blohm: Thank you.

Yeager: All right.

Next week, we are going to look at the ticking clock on a resolution over, you guessed it, water.

We'll also have the commodity market analysis with Elaine Kub Thank you so much for joining us and have a great week.