Yeager: This is the Friday, February 24, 2017
version of the Market Plus segment.
Joining us now is Mark Gold.
Mark, good to have you here.
Gold: Nice to be here, Paul.
Yeager: So in all of these crazy times that you
travel I suppose we should address the elephant in
the room or the non-elephant with me.
You travel quite a bit for your job going to these
meetings.
I've asked you in the M-to-M podcast about your
travels.
What is your best travel tale since Mike is stuck
where he was at today?
What is the worst -- you've had some in North
Dakota and Nebraska you've talked about.
Gold: Well, I think the worst was one in North
Dakota.
I was in Fargo.
I had to go to Buffalo and then Arthur and got to
Buffalo okay and then was driving to Arthur and a
whiteout blizzard hit and it was the first time I
had actually driven a car off a road.
There was a curve in the road, I couldn't see the
curve, went straight ahead, went right into a
ditch.
The good news was when I hit the cell phone the
signal went through and we told the bank where we
were and we said oh we know exactly where you're
at, we'll come get you.
They hooked up a rope to a truck and pulled me out
and it was fine.
But that was a pretty nasty trip.
Yeager: Well, that's just part of the job that you
do and when you're speaking in the middle of
the winter.
So Mike will be back next week.
But Mike, if he was here, he would ask you about the
cotton market.
We had a rally in that prior to this week and
then cotton still just not improving like it had
been.
What's going on there?
Gold: We were up a penny I think for the week in
cotton.
That despite some higher acres it looks like we
were expecting a shift out of cotton into beans so
that was a little bit surprising.
But the market held it pretty well.
We really need a close over 80 cents in the
nearby cotton to really confirm that something is
going on there.
But we'll see how these acres, I'm still skeptical
about the acres.
Yeager: You think there's less acres in cotton?
Gold: Less acres, yeah.
If we do lose those acres then I think we've got a
story in the cotton market.
And, again, past March 31st we're going to shift
from the acreage ideas to the weather ideas and
that's going to be what is really going to dominate
these markets.
Yeager: Especially if we continue the warm pattern
and the 100s in Texas like you were talking about on
the show tonight.
Gold: Even in Chicago we haven't had one inch of
snow in Chicago since the first week in December
which is unheard of.
There were guys, I've never seen this, in
February on paddle boards in Lake Michigan.
It's really incredible.
We were 70 degrees in Chicago in the middle of
February.
Now, people want to know is there any correlation
between this warm of a temperature in February
and a summer drought and we really haven't seen any
definitive answers of that.
But if I had a guess, and it's strictly a guess,
could we be looking at a warmer, hotter summer this
year and maybe a drought potential?
I believe these weather patterns are setting up
where it could be an interesting summer in
terms of heat.
Yeager: So something to keep an eye on in many of
the markets.
The other thing we were watching for the markets
this week was the USDA outlook.
Tim, $6 wheat guy in Crookston, Minnesota.
Hello, Tim.
Tim wants to know, historically are these
outlooks on planting projections close to the
actual planted acres?
So he's wanting to know what is their track
record?
Gold: I don't know, I've never done a correlation
on those.
I think people kind of take them with a grain of
salt because from year to year, and look at the
shift we've had in corn and soybean acres over the
last couple of years, I don't think that's easy to
predict and that's a function of price and what
is price going to do two and three years out.
If anybody knew they would be long retired.
But the fact of the matter is I think where these
reports are valuable is in looking at trends more
than anything else.
And certainly the report is showing less corn, more
beans and I think that makes some sense.
Yeager: But for years I've heard folks sit out here
and say, we've got to plant more beans, we just
can't keep planting corn.
But this is one of the years we've actually seen
hard evidence, as hard of evidence as it can be at
this point in the game in late February.
Gold: Yeah, and is it going to be a 4 million
acre shift out of corn into beans?
I think when it's all said and done it will be at
least 4 out of corn, some out of wheat, some out of
cotton and that will get us enough beans if we have
the weather.
But keep in mind the bigger these acreage
numbers and the projections get a 10% drop
off of yield makes a huge difference now.
So if there is a weather implication, even though
we've got a 420 million carryout, you can lose
that very quickly with these kind of acreage
numbers.
Yeager: Alright.
Jay in Paullina is our next question.
@MarkettoMarket is how you find us on the
Twittersphere.
He's wanting to know, what is your prediction for
when the summer slump will hit the corn and soybean
market?
So depends on the weather I would imagine is one
qualifier in that.
But when you get into those summer months --
Gold: Some of the best droughts we've seen really
started June 1st.
So between now and June 1st knowing that we've got
essentially enough acres and enough production and
plenty of carryout out here and the funds now
long corn, they're now still long beans and oil
and meal, could that push us into a slump between
now and perhaps the 1st of June?
It's certainly possible.
I don't see the slump, June, July and August as
we've seen it in other years, particularly if we
have any kind of weather issues out here.
IF we did have that kind of a summer slump it would
be really a tough period in American agriculture.
It means we're going to have plenty of acres, big
enough production and possibly significantly
lower prices.
But let's hope that whatever lows we make
hopefully between now and April 15th or so will be
the lows and we can turn higher after that.
Yeager: A lot of times soybeans and meal go
together in a week.
This week not really the same.
Meal off $8.
You mentioned meal in your previous comments.
A lot of times it's the same factors on those two
commodities.
But what was different this week to send meal in
the direction it went?
Gold: I think part of it is the DDG issue in China.
Are they going to take all this meal?
I think that was part of it.
There has been plenty of stories around about
lysine as a replacement for meal in terms of
adding it to other feed sources and using a lot
less meal out here.
I think that is something we've got to consider out
here.
Again, the meal has gotten a lot higher, like the
soybeans did, relative to supply and demand issues.
And are the supply and demand issues as critical
as they have been?
Well, with the advent of funds and long only funds
and hedge funds and all this outside money that is
in the market they just want to push and put money
somewhere, fundamentals can sometimes take a back
seat to what is happening in the real money world
and that is what we see in these technicals leading
the fundamentals so many times.
Where do we go from here on the meal market?
I think as the beans will have a tendency because
the funds are so long, maybe commodities
positions, I think there could be some pressure in
the meal market.
Yeager: And you think they'll maybe move closer,
they'll go back to being in concert with one
another and not separate and this week was maybe an
anomaly?
Gold: Well, meal was down $8 and beans were down I
think 15, 16 cents.
That's about right as long as the oil was about
steady on the week which I think was maybe down just
a little bit.
But the fact of the matter is I think both beans and
meal are overpriced relative to the world
fundamentals.
But if the funds want it, it's not going to make a
difference.
Yeager: You mentioned just a tiny little bit there
DDGs and China and tariffs.
Roger Cooper tweeted and asked a couple of
questions.
So, Roger we're going to put a couple of your
questions together here.
He was asking about livestock production and
exports and tariffs and things like that.
So, politically speaking now, Mr. Gold, do we see
any of our U.S.
products whether it's, there you can see Roger's
question, but do you see tariffs coming on any of
our corn, soybean, livestock, the meats?
Gold: Boy, if I could get into that with the
President I could probably give you a better answer
to that.
I don't know the answer to that.
I think anybody that tries is just foolhardy.
But what I would say is that NAFTA has done a good
job of taking tariffs off, which certainly benefits
American farmers in terms of export into Canada and
Mexico.
There are some tariff left going into China.
Tariffs are obviously not helpful in export markets
when we try to build markets.
What the President is going to do with it is
anybody's guess.
There's so many scenarios that could play out it
would be foolhardy to even try to guess.
Yeager: How soon do you think it'll be before we
have an idea?
Do you think it's going to take him six months in
office before we get a sense better on trade
policies?
I don't know if a USDA chief is going to matter.
The former USDA chief endorsed the current one.
There doesn't seem to be any reason to not confirm
Sonny Perdue.
So you don't have that wildness impacting.
Gold: And I think Sonny Perdue is a good choice
for the job.
I think he brings a certain stability into the
agricultural markets.
I think if the President decides to look at some
things I think Sonny Perdue is going to be the
first guy to knock on his door and say, wait a
minute, these are the guys that elected you, take it
easy here.
And despite maybe wanting to go off and do something
a little impetuous maybe there's a calming factor
out there.
So I'm still hopeful that the President understands
how he got into office, who put him into office
and rural America has been a huge part of that and I
don't believe he's going to turn his back on rural
America.
Yeager: It's a common theme we've heard a number
of times.
So, Mark, before I let you go I've got to ask you one
of our commodity questions of the week.
It's the one that we do for our education folks as
they try to learn more about the markets.
The question this week is, what is being rangebound?
Gold: Well, I think it's a good question.
So often many of us in the business assume that the
public knows all the jargon that we're tossing
around that we've been doing for 40, 50 years.
So, we forget that not everybody, and I get
questions from my emails all the time, Mark what
did you mean by this that or the other thing?
What does rangebound mean?
It means a market that is rangebound on a chart
pattern.
So, for example, if soybeans keep getting up
to $10.60, backing off to $9.90, back up to $10.60,
back down to $9.90 and we just get in that range and
we can't seem to break out of it one way or another
that is a market that is rangebound.
Now, corn had been rangebound and couldn't
get through $3.70.
We got through it for a few days and then we went
right back into the range again.
So even though you take out those ranges it's not
necessarily 100% positive that we're going to
continue to go in that direction.
But rangebound is when you're in that band of
prices and you can't seem to break out of it and you
hit the support and resistance levels many
times over a course of months.
Yeager: You'll have to give us some of those
other questions that you get and we'll put them in
here as well.
Gold: We'll do that.
Yeager: Mark Gold, thank you so very much.
Good to have you back.
Gold: Thanks very much.
Yeager: We'll see you in a few weeks.
Join us again next week though when Sue Martin
will be in his chair and will be with Mike here at
the Market to Market table.
And they will explore how carnivores process cancer
news about some of their favorite dietary staples.
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So until then, thanks for watching or listening.
I'm Paul Yeager.
Have a great week.