The day is addition of back roads of Illinois. We were bringing the elastic for farming sources and information sponsored by AgriGold. This is the Markets Club Podcast. We were talking the canned beels from paradigm futures about the commodities markets especially in the grains markets for right now.
What is going on with the corn markets. Then we were talking about the fertilizer markets for today's podcast with my castle of stone x. Here's this can feels from paradigm futures.
We were talking to canned beetles from paradigm futures about the commodities markets, especially in the grains markets for right now. What is going on with the corn markets? Well, right now, corn has been in a decided uptrend.
Yesterday, we saw grains actually closed at their highest level since his past May in the March contract and on a nearby continuation chart. We saw that yesterday's settlement was the highest since September of 2023. This has been driven by very strong demand.
And we had another good day of export sales this morning. We continue to see our export program running about 30% ahead of a year ago. We have had previously some fairly strong ethanol demand also. However, it did back off a little bit this week because of a little tighter margins.
you know, very high priced cattle and hogs are encouraging feed demand. So it's been the demand sector that's allowed us to rally. Now today, we have had a bit of a correction. Markets are down about between six and seven cents. And during this rally, we've had many different days where
Farmer selling seems to overwhelm that demand because farmers have had a rough go over the last year and have been very anxious to be able to sell some of these better prices. So today was just another correction like any of the corrections that we've had previously. We still think that the setup here for corn is relatively bullish.
Are we going to see $5 again since the fall of 2020 on corn? I do think we will see $5 again. I not only think we're going to see it on the old crop and we're relatively close.
But I think that we may actually ultimately see new crop futures rise to the $5 level as well. The reason I say that is number one, the South American crop is going to be very late in getting planted. We hear evidence that they're short fertilizer,
And that some growers are not even going to plant a crop because it's just going to get too late because of the wet forecast. We believe that the tighter balance sheet is going to require some risk premium in the US market. And we know that there are some weather forecast tours who are already sounding alarms.
for drought type weather here this upcoming spring and summer in the US. We'll have to see if that develops. But all of this in a backdrop where world stocks to use stripping out China is the tightest since 1995, 1996. And so that's why we think $5 is a level that we're going to be able to achieve. How about the beans markets?
Are we going $12 as well? And $12 maybe difficult, but $12 would be a price that could be achieved if we were to start to have some drought in the United States. Another thing that could help us get to $12 would be
a fall in acreage. And right now, current prices in soybeans are about a dollar and a half a bushel below cost of production. So we do think that we could lose two to three million acres of soybeans this year. And if you were to combine a two to three million acre decline with a little bit lower yield due to drought, and the soybeans could then recapture a lot of the losses and get back to that
12 to $13 area. For sure, I can't. Turns with tariffs for Canada and China with the beans markets. So that's another reason why many analysts have been bearish because they're worried about tariffs.
I don't actually have worries about tariffs the way many people do. The reason I say that is because the way our soybean market has worked, not because of tariffs, but because of currency spreads and political realities, pretty much all of the soybeans that are grown in Brazil and in Argentina that are excess over local demand.
end up moving toward China. And that's exclusive of whether or not there are or are not retaliatory tariffs on US soybeans. So in my opinion, it has less impact on our export program than what many people think.
Can you tell us that what is the importance of free trade for soybean to China? Well, I would love to see free trade. Okay. And for the most part, I do tend to believe that our trade is freer than many people think that it is. I believe that the Chinese buy
soybeans that are most economical to them. And what that means is that they are strong buyers of US soybeans after US harvest, you know, for the better part of the next five months. And then they tend to be strong buyers of the Brazilian crop for about the next seven months. And because, because
Brazil has more acreage of soybeans, they produce more beans, and therefore they have more beans available for export. But that's, you know, it's not an unfree trade situation. I think it's, I think it's reasonably free. There are some existing tariffs in place, but the marketplace tends to
Uh, tends to discount those and, and build them into the current price structures. Or they're cooking oil and soy sauce.
You're asking about cooking oil and in soybean renewable diesel production. This has been a big issue. China has exported a lot of used cooking oil to the United States because of subsidies that have been set in place in order to try and grow
the renewable diesel industry. If there's any government policy that is maybe less free trade oriented, it would be that one. But the Chinese have realized that that used cooking oil might be better kept at home for their own renewable diesel industry.
And so whereas the Chinese were revoking export subsidies on that used cooking oil, they have now stopped that revocation. And so used cooking oil is now becoming more expensive into the US out of China. And of course, we are still waiting to hear what the status of 45C rules are going to be.
For the renewable diesel industry going forward. So at the moment, that's still a very large question mark as to how those in how that situation is going to resolve itself. We do know that, you know, there still are mandates from the states of.
New Mexico, California, Oregon, and Washington that mandate the production of that renewable diesel is just going to be a question of it. What price is the consumer going to have to pay for goods that are trucked by diesel in those states? Because without those subsidies, the price of diesel fuel is likely to be higher. Let's take a look for the livestock markets.
Do you have any concerns about these prices in the feeder cattle? Actually, I do. They're, of course, very expensive. Just this week, we made new lifetime highs in both feeder cattle and live cattle. Yesterday we had a major reversal lower. It wasn't a technical key reversal, but it was a reversal.
And we're seeing lower follow through again today. Prices were down as much as $3.45 in the live cattle and another $2 in the March and April feeder cattle. The fact that those prices are moving lower is probably speculative liquidation.
And I think we may get a little more of that ahead of tomorrow. Tomorrow we are going to have the annual cattle inventory report. It's going to, it's going to give us a more detailed.
look at the numbers of cattle in the US and broken out by different categories. And one of the things that everyone's looking for is the number of heifers that are being retained in order to try and start to grow the herd again. And that's been a problem because, of course, our numbers have been falling.
not surprised that we're getting some profit taking ahead of that major report tomorrow. What is the bids in South Dakota and Minnesota? For cattle, you know, I think we're, I believe that we're in the 300 on a dress basis. We're in the 310-315 area.
Everybody's kind of waiting to see what they're going to, what things are going to trade at this week with the volatility and the board. But, you know, we've had, you know, we've had new lifetime highs in the cash and new lifetime highs on a dress basis as well. Do you have any final thoughts on the tariffs right now?
Well, you know, my thought on the tariffs is that no one really knows what President Trump is ultimately going to do. We think that he will establish tariffs, but whether they're blanket tariffs or targeted tariffs is still unknown.
What I think is more important in that what people are paying less attention to is the response from the other countries and what the retaliatory tariffs will be. And with our stocks to use ratio in corn as low as it is, people have been worried that we might, you know,
The worry that we're going to have retaliatory tariffs against US grains might be a little overblown because I'm not sure that there are a lot of other choices for other countries to be buying grains from other folks. There's only a limited amount of supply of grain in the world.
And right now, that limited supply is primarily centered in the United States. Thanks, Kent. Thank you very much. This is Kent Beals from Paradigm Futures for the Markets Club podcast.
This is your commodities markets for this afternoon on the Markets Club podcast. Corn Futures is down to 8 to 6 cents. Soybean Futures is down front today at 3 to 5 cents. Chicago wheat is up at 5 to 10 cents on the quarter. Let's take a look for the livestock market sound today.
Livestock markets are mixed with the numbers in Chicago. Cattle is down at three to five cents on a half for this afternoon. Feeder cattle is down at three to six cents for the quarter. But being hogs is up at five to nine cents. This been your commodities markets for this afternoon.
We were talking about the fertilizer markets for today's podcast with Mike Castle of Stonex. Mike, why does the trends for today's fertilizer market? Let's say on the nitrogen side, certainly bullish kind of across the board here. We've definitely been firming up kind of end of Q4, but certainly here to start Q1.
that New Year's certainly brought some strength, you know, both here domestically and globally. Urea has kind of been driving most of the strength. UAN is essentially just following. So even if you are not a urea user, if you're, you know, somewhere in the Eastern Belt, you're really mostly just a liquid guy or an in-hydrous guy, you really still have to be paying attention to the urea market because that is kind of, I guess you'd say the key driver at this point.
Just kind of a lot of supply issues around the world that are all kind of coming to a head at one time Chinese exports have been absent for they were gone pretty much all of 2024 They actually exported way less this past year than they did in 22 and we were initially all freaking out about losing Chinese supply So that alone certainly has tightened things up. You're missing several million tons just from China being gone and
I ran his been offline because of some gas supply issues here recently. I know we don't think about them, but they last year where the world's number three or ex-porter, they're very, very big. Their stuff just kind of gets out under the name of other countries. So on paper, their exports don't look quite as big as they are. But them being gone is a very big deal in the nitrogen world. That's a lot of not only supply, but very cheap supplies. What has kind of a double impact on the market.
Now, on the demand side, we saw Brazil then poured a ton of urea in the last quarter of last year. Obviously, they're just now starting to plant their Safrina corn crop. So the demand is there for them. India is really kind of the one. I guess you'd say the catalyst that has kind of kicked things off here recently. They came back to the market a lot more. You forward the handful of tenders and announced one here recently. They're currently still kind of awaiting the purchase decision on their current tender.
But their goal coming in was to buy one and a half million tons. They're struggling to get 500K of that locked up. They counterbid suppliers, but essentially with as tight as the market is right now, even though the offers really were fairly tight in this tender, the sellers are essentially saying, no thanks. I think we can go sell higher elsewhere now. It certainly just feels like the seller is more in control on the global market
And, you know, the worry for us here in the States, I know, you know, an India tender sounds like something far away, but if they do have to re-tender on this current round, the current ship dates are, you know, for these vessels to load by March 5th. If they do have to re-tender and this gets pushed out further, then you start seeing loadings, you know, full month March or later into March,
You're starting to directly compete with India, you know, when you're talking about U.S. buyers because here in the States, you know, we have data for the first five months of our, you know, new for years of basically July through nove and across the board on nitrogen, it's been small imports, huge exports. So we know we've tightened up domestic supply. We know we need imports before spring and
NOLA is already kind of cheap versus the world, which means we need rally, but global values keep rallying already. So again, now you're talking about having to be directly with a massive buyer like India, that certainly would make things feel a lot tighter, because again, you're competing over a more limited supply in China's absence, in Iran's absence, with already tight domestic supply here.
Overall, the nitrogen side of things, it looks like we're just kind of, you know, continuing to feel quite firm here going forward, especially with spring now, you know, just right around the corner elsewhere, you know, not as much excitement, phosphate. It's pretty steady. I mean, in the off season, not really seeing a ton of, you know, movement we have seen some stuff kind of come down. Map prices have come down a bit here. The global market isn't quite as hot as it was there when India was really
buying as much as they were, but they do still have more to go. That's what is the importance for our farmers in the Midwest. Oh yeah, exactly. And that's, you know, that's kind of the problem is we talked about these
tariffs, these trade wars, all these things, but it's important to realize at the end of the day, you know, this really isn't good for the Ag economy. You think about the output side too. You know, when we talk about tariffs and trade wars with Canada and Mexico, you know, obviously, we would make inputs more expensive because of this impact on fertilizer, but it would also hurt demand for grain because obviously the big one, Mexico is our number one spot for exporting corn by far.
We've seen back-to-back years of record demand down there, and that's a big part of why corn fundamentals here in the States have started to feel better here in the last hour of many months. It's been that we've started to kind of shift and see ending stocks fall back is in large part because of these solid exports. And at the same time, candidates are number one destination for ethanol exports.
You lose that outlet. You start to see less grind on the ethanol side of things. That hurts corn demand too as well. So it really is a double-edged sword where you have impact at the farm level on the input cost side of things and demand and then subsequently price on the output side as well. Of course Mike.
What is the importance of free trade with our trade partners with fertilizer? Yeah, I mean, like we've covered here, obviously, we touched on just how much of our supply comes from these folks. And at the same time, it hurts not only the US farmer, but we're a major exporter to Canada as well on the fertilizer side of things. So it hurt the Canadian farmer as well. Everyone essentially is paying higher prices than they need to just because of these tariffs.
Um, in a big part of that, Canada used to get most of their urea imports from Russia, but once Russia invaded Ukraine, Canada put tariffs in place to effectively say we're not going to bring in Russian stuff anymore. Um, in the last couple of years, they haven't. And the US has really filled that gap. We're the number one exporter of urea to Canada now.
They've kind of diversified away. They're bringing in more from countries like Algeria, you know, North African and Arab both producers. But again, the US is number one. So if we saw this back and forth, again, that means the area that Canada is bringing in from the US is that much more expensive as well. And at the end of the day, once again, it would be the Canadian farmer footing that bill.
So the free trade side of things, especially on these neighbors that we are extremely interconnected with, right? Like we've built supply chains designed to facilitate trade throughout North America with the US, Mexico, Canada. There's a ton of commerce that goes between us. Obviously we're just talking about the ag industry, but there is a wide range throughout every industry you can think of that are very interconnected. So again, it's very important. I don't think you could stress that enough.
All about in the Middle East like it is real for right now. So we have finally seen a cooling of tensions, which is certainly a welcome thing in the fertilizer space. Obviously, this is a major, major source of supply in the fertilizer world.
I mentioned them on the phosphate side of things, a lot more of that stuff flowing our direction because we're not bringing it in from Russia and Morocco. But the biggest one is on the nitrogen side. And obviously, urea is the number one, you know, over half of the world, Syria exports come from the Middle East and North Africa. So when we had the issues with shipping in the Red Sea, we saw a fertilizer ship get sunk. You know, we saw increases to freight rates. We saw delays to shipping all kinds of headaches.
Thankfully, we've avoided for the most part any issues with production going down or shipments not being able to get where they're headed, say for, you know, the one that actually did get sunk. But overall, we have kind of avoided disaster for the most part and seeing a ceasefire sign between Israel and Hamas is certainly a positive development. Good to see those tensions kind of cool off. It does sound like freight rates in that area have cooled off in turn because, again, the risk
of being impacted by the conflict goes down. So it's a very welcome development in the fertilizer world. Hopefully we can continue to see things improve their sea tensions cool off. But it is kind of funny that we, you know, one of the biggest fears of this conflict, especially with Iran being dragged in more directly was seeing, you know, sanctions or even just, you know, the war involvement in, you know, affecting production.
The loss of Iranian supply was certainly a very big fear because of this conflict. And now that we've gotten a ceasefire, we still ended up losing Iranian supply because of production issues. So you lose one risk for another. But again, certainly a good thing to see tensions cooling off there.
Do you have any final thoughts on the fertilizer markets for this weekend? Yeah, I would just say, you know, for the farmer, have the conversations with your supplier earlier than you would think. Obviously, you know, we're wrapping up the month of January here. It's not going to be far off until we're in the field. Spring season is now just around the corner at this port.
point, you know, supplies are tight on the nitrogen side of things. I think if you're waiting till the last minute to buy, this is not a good year to be doing that. So have that conversation with your supplier early. Again, it's important to have a plan and it's also important to take advantage of a good buying opportunity when you see it on the third side and a good sales opportunity when you see it on the grain side.
You know, we finally seen some life in the grain markets that kind of alluded to a bit of a better tone here in the grain markets after that Jan Wozdee. So you got to reward the market when you get, when it gives you the breaks, you know, sell the rallies and also think about the input side of things because if you sell the grain and you think you've locked in a great margin, but you don't lock up the input side of it, you're leaving yourself open to that risk as well. So we always like to stress to the farmer to think about the two as a ratio thinking about, you know,
cost of fertilizer in terms of how many bushels it takes to buy one ton, that kind of thing. Looking at the two to kind of take some of the emotion out of it, just look at the relationship of the two because at the end of the day, that is what impacts their bottom line. Thanks, Mike. Of course, thank you very much.
This is Mike Castle of Stone X on the Markets Club podcast. Thanks to Kent Beals and Mike Castle. This has been the Markets Club podcast. I am Cesar Delgado.