Market Plus: Ted Seifried

This is the Friday,
January 3, 2020 version of the Market Plus segment. Joining us once again
is Ted Seifried. Ted, it feels weird to
say 2020, doesn’t it? Seifried: New decade. Howell: New decade
and new year. Ted, we’ve got a lot of
questions to cover today so we’re going to do a
rapid fire if that’s okay with you. Seifried: Let’s do it. Rock and roll. Howell: All right, we’ve
got a bunch of questions about the January 10th
WASDE report coming right up. We’re going to kick it off
here with Craig in Iowa. With next Friday’s WASDE
report do you see any limit moves either
in corn or soybeans? Seifried: Hi, Craig. It’s possible. I think the trade is
very much keyed into the production numbers. That might not be where
the fireworks are though. It might be the
quarterly grain stocks. If the corn quarterly
grain stocks number comes in well below expectations
it would go a long way to explaining the tightness
in basis that we had seen and that would potentially
be your limit move. I don’t know what would
give us a limit down move aside from a 174 national
average yield but I don’t anticipate that. I suppose it’s possible. Howell: Ted, why would we
see a tightening in those grain reports? Seifried: The
quarterly grain stocks? Maybe the corn is just,
the corn that was expected to be there might
not be there. That’s certainly what a
lot of rumors have been around the country as far
as why is basis so strong? Where is all this corn? Another answer to that
is possibly it was a very late harvest and what was
coming in was very high moisture content so it
wasn’t the fact that we couldn’t find corn so
much as we couldn’t find available corn
ready to use. That’s part of it. But another part of it
might very well be corn wasn’t there. Howell: All right, Ted,
taking our next question we’ve got Darren coming
in from us on Twitter. What are the odds that the
January report won’t be bullish for corn but we
kick that can down the road until September
favoring the end user? Seifried: Yeah, so I think
there’s a good chance that this report isn’t
bullish from a production standpoint. I think the expectations
are going to be too bullish. We haven’t seen the
expectations yet, we’ll see that early next week. I think Monday is the
deadline for all the big polls. So we’ll see it Monday
afternoon or Tuesday. But I think the
expectations are going to be really rather bullish. I don’t know if we’re
going to see big changes from the USDA on this one
even though I think there should be, a lot of us
think there should be, I don’t know if that’s
what is going to happen. So maybe it’s
disappointing. But keep an eye on that
quarterly grain stocks number. That might be the one
that really motivates us. Otherwise we might shrug
that off with the idea that hey, if the trade
deal is good, if we’re exporting an extra 5 to
10 million metric tons of corn to China that does a
big thing to the balance sheet and our export
number, I think there’s still reason to be
optimistic for corn. Howell: Okay, Ted, we’ve
got just a couple of other report related questions
coming to us from Tim in Yarmouth, Iowa. Do you think any reports
play into the CBOT and funds in the market? Seifried: Do they play
into the CBOT and funds in the market? I’m not sure I understand
the question to be honest with you, Delaney. Howell: Okay, we’ll take
a different one, Ted. We’ve got one other one
here coming to us from Troy in Tama, Iowa. With all the corn standing
in the fields in the Dakotas will the USDA
add that to the on farm storage number to make
up a number for ending stocks? Seifried: No. Officially that is
on farm storage. So that is how the
USDA counts that. Howell: Ted, let’s switch
tracks here just a little bit looking at a
bigger picture thing. Obviously we’re in 2020
now, we’ve got to talk about some bigger
picture things. We’ve got a question here
from Terry on Twitter saying, do any of the
other commodities have enough strength to take
acres away from corn and soybeans this spring? Seifried: Cotton is
an interesting one. Wheat is interesting. Howell: Tell me more. Seifried: Well, wheat has
had a really nice rally off the lows and Chicago
wheat has gained on corn pretty significantly. Does that mean we go and
plant an extra three or four million
acres of wheat? No. But wheat acres could
be back up a little bit. We’ll see on winter
wheat seedings. I think that will give us
a very early indication of how we’re leaning, just
how we’re feeling about wheat in general. But no, I think the
row crop is very well established, we know that
we’re going to have close to 180 million acres there
one way or another next year as long as we
can get them planted. It’s just a question
of how the mix happens between the two of them. And I think there were a
lot of people that were expecting maybe 96 million
acres of corn and 84 million acres of
soybeans a few weeks ago. But if this trade deal
goes through, again, looks like it is, I’m confident
in it, we might have to plant 100 million
acres of soybeans. I don’t think
we’ll do that. But that might get us
closer to that 90/90 mix that we had seen
in years past. Howell: And Ted, what are
the implications do you think for the markets if
we do not see that January 15th signing happen? Seifried: I don’t think
that’s, I think we’ll see it. If we don’t see it it’s
not a huge crushing blow to the market because
we’ve been very skeptical about it, although
yes, we would be down. But would we be down
two or three dollars in soybeans? No. Again, I don’t think we’ve
really factored in that deal as a certainty so
yeah it would be bad but it wouldn’t be
a train wreck. But I think that
deal happens. I’m not making contingency
plans for it not to happen. I’m very
confident it will. Howell: Okay, Ted,
we’ve got to keep going. We’ve got a lot
of questions. You’re a popular man to
answer questions this week. We’ve got another one
from Paul in Iowa, @NEIowaFarmer on Twitter. What is your target on
the board for May soybeans stored on the farm? Seifried: Hey, Paul. $10.25 for me. Howell: All right,
easy answer. I like it. Let’s move on. We’ve got a fun one here,
Ted, because you did not wear your corn hat today. You had some viewers that
were disappointed by that. Lexi wanted to know does
the no corn hat mean you have a bearish tone for
the January 10th report? And also with the
potential Chinese buying or lower U.S. production could this
tighten ending stocks even further? Seifried: Hi, Lexi. No, I’m not bearish corn. I do think that we can
have a disappointing reaction to what we
actually see on the January reports because
again I think our expectations are a
lot, a lot of people’s expectations are going to
be for massive sweeping changes on production and
I’m not so sure we’ll see that. But no, I’m friendly corn. I think there’s a lot of
good reason to be friendly corn. I think the U.S. dollar is going to
continue to be under pressure here this year. I think our exports are
going to actually end up being quite a bit better
than what we’re currently thinking. I think ethanol is
going to do all right. Feed is a very
strong category. So I’m friendly for corn. What was the second
part of her question? Howell: The second part of
the question was with the potential of Chinese
buying or lower U.S. production could that
tighten ending stocks even further? Seifried: Yeah, so Zaner
Ag Hedge’s expectations for this January report is
for 1.795 billion bushel carryover. I think those ending
stocks numbers could shrink down to 1.5 to
1.6, somewhere in that neighborhood. That’s not $5 corn but
it’s probably $4.40, $4.60, somewhere in that
neighborhood, maybe close to the highs that we had
seen back late spring into June. Howell: And what are you
expecting for soybean ending stocks? Seifried: So we’ve got
soybean ending stocks going to 490 on this
report, bumping production ever so slightly a little
bit higher yield, which is contrary to what I was
thinking when I was going out on crop tour. That being said,
ultimately when all is said and done I think
our soybean ending stocks could be well below
200 million bushel. We’re talking pipeline,
possibly below pipeline if China buys what they say
they’re going to buy. I’m not sure we have the
soybeans to sell China to get them to the numbers
that they need to hit under this deal
or whatever. And so like I was saying
earlier, I think there is an explosive potential
in soybeans here. We could be talking $12
soybeans at some point. And if that’s the case and
if it happens before we really make our final
decisions on acreage you could be seeing a big push
towards soybean acres. We might actually
need that. I don’t know if it will
happen in that timeframe though. And if it doesn’t then we
could have another year next year, 2021, where
things get really interesting as well. Howell: Ted, you’re going
to get people really excited by saying
$12 soybeans. Seifried: Oh yeah, so that
being said, we’ve had a nice rally off of lows. It is a good idea,
especially if you still have old crop soybeans
laying around, let’s take advantage of that and then
look for pullbacks like we saw on Friday to come
in and reown, own calls, things like that. So you’ve just got to
play these markets. But definitely take
advantage of the rally off of lows. I’m not saying don’t sell
cash, to the contrary. I think guys should be
more aggressive selling cash on this rally
than they have been. But there is reason to be
optimistic so this year maybe more than any year
we’ve seen in recent history is a great year to
be looking at reownership strategies. Howell: Okay. Ted, I’ve saved one of the
best questions I think for last here coming to us
from Matt in Anamosa, Iowa. With corn test weights
lighter, how much corn will it take to feed
cattle and for ethanol is any taking this
into consideration? Seifried: Yes. So that is a very
good question. Yes, the idea is that yes,
the lower weight corn, in the Dakotas in particular
you’ve got a lot of three and four grade corn. That is going to have to
be blended a lot more and then yeah, we’ll probably
have to feed, feed rations are probably going to have
to increase weight wise. So yeah, that should be
better for demand for feed. Feed demand I think is
ultimately going to be better than what the USDA
is currently looking at and that’s part
of the reason why. As far as ethanol is
concerned, there’s a lot of question
marks out there. But same thing as we
were talking about feed, ethanol or corn as a feed
stock for ethanol, lower test weights mean we’ll
probably be using more bushels. Howell: Ted, I’ve got to
ask you too since you’re kind of our ethanol guy. What do you make of the
big 5 or the big ADM, Bunge getting
out of ethanol? Seifried: It’s an
unfortunate situation that has been created by this
administration’s EPA. It’s not a problem
that has been fixed. There’s been Band-Aids
I think put over it. But if you look at ethanol
prices they have gotten better. Our production is coming
back a little bit. Ultimately as far as those
companies are concerned that was their decision
and what they want to do is they want to make
their stock prices higher. They thought that was the
way to do that or a way to do that. That’s fine but I think
the ethanol industry as a whole is a very good
industry, especially if the dollar is coming down
and we can get the ethanol export market
rolling again. Ethanol can be really
quite profitable. So I think the ethanol
industry is going to be good going forward with
the trade deal for China and the potential
for a lower dollar. Howell: Sounds like pretty
bullish sentiment from Ted Seifried overall. Seifried: For ethanol yes
and therefore for corn demand yes. And look I think there’s
a good chance that two or three years from now we
look back at the end of 2019 and the beginning
of 2020 as where things changed in American
agriculture. We’ve gone through years
of I’m not going to say struggle, for some of us
for sure it has been a struggle, weather wise
certainly last year was a struggle, but financially
is more what I’m talking about. But I think things start
to get better again. Maybe we just hit the low. Maybe we didn’t. A lot of that is going to
depend on what happens, in my mind the dollar is
maybe the biggest driving force, but certainly the
trade deal with China. And do they live up to the
promises that have been made? If they do that, wow I
think things can look really good for a while. Howell: Ted Seifried, a
great beginning of the year discussion. Thanks so much
for joining. Seifried: Yeah,
my pleasure. Thanks, Delaney. Howell: Join us next week
when we’ll look at the debate over protein levels
in livestock feed and Dan Hueber is back at the
Market to Market table. Until then, thanks for
watching, listening or reading. I’m Delaney Howell. Have a great week!

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