End of the upturn as we know it?

Shay

Foulk: Hey podcast, today Dwayne and Shea talk about disappointing price action through today, weather narrative sentiment, and why sweet corn is an interesting look at what may be ahead. Also, if you've had any issues subscribing or want to know how to subscribe, be sure to listen through the end of the podcast. Enjoy. Welcome back everyone to the Ag View Pitch. My name is Shay Foulk and I help here with the production, technology, and some of the delivery for the podcast as well as doing some of the different interview processes. I work with Chris and Alyssa Barron at Ag View Solutions who puts on the Ag View Pitch and really excited to be a part of the team here.

Joining us today is our special host, Dwayne Lowery, and I say special host because he truly is a very well-articulated, pragmatic, and meticulous market analyst that we've had the pleasure of working with for the last few months. So I was hoping, Duane, that you could just take a couple minutes here to reintroduce yourself to the listeners, as I know we've had a lot of new followers in the last 2 weeks, and then we'll kind of jump in today's market narrative.

Duane

Lowery: Okay, Seth, thanks for the kind intro. I appreciate it. I'm from northeast Iowa, not too far from Chris and Alyssa's, and I've been in the commodity business in one way or another since 1978. I've been a grain merchandiser, I was a Chicago Board of Trade member and floor trader. I've done brokerage, I've done farmer consulting, I still do some farmer consulting. And I've been writing market commentary since the mid-1980s in a morning daily written comment. I've done different podcasts, I've done some a lot of speaking engagements regarding markets. And so that's kind of my history. And I've been involved with it for a solid 40 years, and it seems like time flies. And so I try to give a perspective on the market through those years of experience. And it's like anything, it's like the people who make it to the Baseball Hall of Fame, they can fail at the plate 70% of the time.

And I'm not so sure it's not too much differently with the commodity market analysts. You know, nobody's right all the time. And the trick is trying to recognize when you're wrong and try to recognize quick enough so you don't get stuck being wrong for a long period of time and miss an entire trend. That's always the tricky part because the markets are filled with emotion. They're filled with head fakes, or in today's language, you know, fake news. And it's quite a navigational process that, you know, you're not navigating the interstate highway system, you're navigating more of a minefield. And so it's been interesting and I thoroughly enjoy it, but it's always a challenge.

Shay

Foulk: And I think as far as whether you're right 20, 30, 40, 50% of the time, whatever it is, the experience that you bring to the team and why we're excited to have you on board here is just with the perspective that it provides. And so what we try to do with the Ag View Pitch is provide perspective to the listeners out there. And 40 years, that's a lot of perspective to bring into this. So thanks for kind of reintroducing yourself there, Dwayne. So let's talk markets. Maybe, maybe kick things off here, talk a little bit about some of the disappointing price action we've seen here. I noticed, I mean, corn's down 13.25, beans down 11.50 on 19th, September and August respectively. Talk about that a little bit, if you will.

Duane

Lowery: Okay. Talk about that. First thing I want to talk through is to give it a little bit of an intro is to talk about the crop condition ratings this afternoon. Corn and soybeans nationally both improved 1%. Corn good to excellent was 58%, beans 54%. That was— each of those are up 1%. I would say that from Friday afternoon through the weekend, most expectations were that the crop condition ratings were unchanged to maybe down a percent. And I would say that today, as the conversations evolved, that crop condition rating expectation became more mixed with some people looking for the improvement. So I would say that today's improvement on the crop ratings probably is a little bit negative, but also a little bit of a reflection in today's trade.

As far as today's trade is concerned, we opened higher last night, but we opened a lot less high than, most were expecting, uh, for the Sunday night trade, myself included. And, uh, at the time we opened, um, none of the forecasters that I'm aware of or talked to had any change in the forecast, which was basically hot and dry through most of the next 2 weeks with limited precip. And some of the precip associated with the tropical storm Barry would affect the southern 25 to 35% of Illinois, a greater proportion of Indiana and Ohio. But there were large swaths to the west of that, including west central Illinois, much of Iowa, Missouri, the Plains states that were going to have limited precip, and that was perceived to be the more important focus as we entered the Sunday night trade. By the time the market opened, the The opening was disappointing by almost any standard.

And if you were looking for some level of emotional uptick, you didn't get it. And I don't have an explanation for that. The cynical part of me tells me that the right people knew that this weather narrative was going to be changing by Monday morning. But that's a little bit of a sinister viewpoint, but not necessarily a wrong viewpoint. The, so the price action was disappointing. Like you said, at the end of the day, we finished, you know, down pretty much 11 cents in corn and beans both. This afternoon, interestingly, the 6 to 10 and the 8 to 14 day from the National Weather Service continued to show hot and dry for both periods. And I would say probably a larger area that was dry. Than the previous forecast, and they maintain the heat.

And the, the maintaining of that heat in this afternoon's forecast is significantly different than what the marketplace was talking about all day today, and that was that we were going to get a cooler trend after this week. Um, so which weather forecast model is correct, uh, who knows, uh, but the National Weather Service is not really changing their narrative that they've had for several days here. I think when you reflect on how the market performed today, the fact that, you know, you had some people run in and buy the market on Sunday night for what was perceived to be the right reasons, they had to be very disappointed at the close. And more than likely, a large portion of those traders got out of those longs before the day was over. But you may have some more of that you experience tonight and tomorrow with the crop ratings improvement.— this afternoon.

I'm really struggling with the crop condition ratings. You know, I'm not sure how they're put together. And I think there's some— what's the subject? And people might be looking at the corn condition and say, well, it looks better, green, it's growing. It's maybe picked up a little bit of the lost delays because of the recent heat. And I think those are probably accurate statements. But if the crop is small looking good, and that's part of the rating process, but it doesn't reflect the planting date and the delayed maturity and things of this nature. I'm not sure how much confidence I have in those crop ratings, especially that's especially true with beans, which were planted very late and very small. You hear that?— in many places. So I'm struggling to know how to deal with that. I also want to talk a little bit about how does a farmer handle this.

In many cases, producers either have been slow to market, or they may have purchased futures or options against previously made sales. And now At Friday's close and Sunday night before we opened, it looked like we were set for another push to the upside, possibly quickly getting to the June highs. And all of a sudden, 12 hours later, the market is finished lower for the day. And now you got people wondering, you know, is it all over? And I think at the end of the day, that's the question most people would like to know the answer to. Is this all over? Is the weather market of 2019 all over? And obviously I don't know the answer to that, but, uh, in, in the terms of the perspective theme that you gave at the beginning of the podcast, um, I don't feel that we've seen the type of market, uh, action and sentiment that would be conducive to having created a top.

So I don't think that's the case, but price action over the next, uh the next 1 or 2 days is going to be kind of important to see how this unfolds. If the market is really fairly well supported here, we should see support develop on the neck of the overnight lows, or not the overnight lows, but today's lows in corn and beans both. And if we're able to find that support, find some stabilization and not generate a lot of follow-through from today's, today's weakness, I think that would be a constructive sign. So it's going to be a very delicate balance trying to figure out what's important here. The marketplace probably was weaker today, more on the expectation that temperatures were going to cool in the second week— have second week of the forecast. And they were probably also down on the rain seen on the radar in southern Illinois coming out of that tropical storm. Leftovers.

And how that narrative unfolds over the next day or two is going to be important.

Shay

Foulk: Okay. Yes. And to speak to your point there on not only the weather for the temperatures, but for the rainfall as well. I'm located here in Northern Illinois, and the extended forecast for my region does not get below 90 degrees for the 10-day forecast, depending on which weather station that you use. But also the rainfall that came through, most of that right now is sitting in southern or central Illinois from the remnants of Hurricane Barry there. And when you look at expected rainfall accumulation, it's not, it's not anything to write home about at this time, at least an inch to 2 inches, and some of those regions certainly need it. But as far as long-term carry-through with the temperatures and what this crop will need to get solid fill as we move into tassel and silking, particularly silking, as was mentioned on the agronomic podcast here that we did earlier today.

I think that'll, that'll paint an interesting picture.

Duane

Lowery: Yes, it's interesting that you talked about 1 or 2-inch rains out in southern Illinois, or maybe some parts of southern central Illinois. And that may very well be correct.— but if you go outside of that area and you look at a 2-week forecast and try to find precip total expectations, it's measured in hundredths of an inch and usually less than a tenth of an inch. And that's true for west central Illinois, for Missouri, for most of Iowa, lots of areas to the, to the west. And for a year where we have so many difficulties and so many challenges and so many conditions that were less than ideal, whether that was planting dates or soil moisture or compaction, things of this nature.

It doesn't seem to me like we should be very comfortable with a 1 or 2 week forecast period of this, this kind of temperatures and limited precip when already late last week and, and this weekend we were hearing reports of, of corn showing stress. In those areas, and they're not going to get enough moisture in those areas to, to, uh, take that stress risk away. And I find that, uh, very troubling. And I think that to some extent, the, the marketplace for much of this spring and the growing season, I think a lot of people would say that the marketplace has been reluctant to embrace the concerns that the producer experiences when, when he looks at his own crops. And, and I talk— I'm talking about that over a large geographic footprint, not just a small area. And the marketplace has been quick to embrace optimism towards yield potential despite planting dates.

They've been slow to embrace concerns. And how many times didn't we see either a planting progress report or crop condition report that appeared supportive or bullish on the surface only to, to kind of get slapped in the face. And that's kind of what happened with this last night. We had a bullish-looking forecast and within hours we had the slap in the face. And I'm surprised that that happened this time. I'm very surprised, even though some of the models indicated a cooler trend for the second week of the two-week forecast. There's still a large amount of real estate that even if that forecast is correct is going to suffer conditions over the next week. And there's not a broad relief of moisture in anybody's forecast. And the best chance of forecast relief and moisture is all only short-term, and it's favored in the southern part of Illinois, Indiana, and Ohio.

And that leaves a large area that's going to be under stress. So I'm really struggling to know how to deal with today's price action. You know, I've talked about it before. No farmers have a choice when they market on in weather markets like this, you either sell a little bit at stages on the way up, you have to have a plan in place that you sell on weakness. The difficult part selling on weakness is if you look at a bull market, in history, it's not uncommon that for some of the biggest bull markets to have some notable setbacks along the way. And it's very difficult to know when, when it, quote, is all over. And people are going to really struggle with this to know how to respond to today's price action.

But I think until we get below Thursday's low, which was the post-report low from USDA, until that happens, Um, I think the bull, uh, the technician, uh, probably has the upper hand here. And today's weakness, while impressive and in one respect today and disappointing for those that were expecting something else to happen today, uh, and the emotions are high based on that report or based on the price action today, until we take out last Thursday's lows from that was generated from the initial reaction to the USDA reports on Thursday. I think that the overall condition of the market is still supportive. And I guess that's the approach that I'm going to kind of lean into for a bias here.

Shay

Foulk: Great. Thanks for outlining that, because I think that's one of the biggest questions that producers have, especially listening right now after seeing what happened. Today. And, you know, especially over the last couple of weeks, I think you outlined that very well. One last comment that I want to make, not to beat the weather piece to death, but I sat here and was thinking about, again, the podcast that we did with Adam Brinker, the agronomist strategic account manager this morning. And for you listeners, give that one a listen. I thought it was a phenomenal podcast that, that Adam did, but The weather with rain, as you mentioned, Illinois, Indiana, Ohio, that's in the areas that are stressed.

But when you look at the outlook for Lincoln, Nebraska and western Iowa, as Adam alluded to, kind of the garden spot right now, there's no rain in the forecast, and it's mid-90s to low 100s. A lot of heat, a lot of stress there as we move into silk and tasseling. So be interesting to see how, how that pans out there. Any last thoughts here, Dwayne?

Duane

Lowery: Yeah, I do have a last thought. And it's really not about markets per se, but it's kind of anecdotal. But I know Chris and Alyssa have a pretty large sweet corn plot at their place. And I'm like I said, I'm probably, I don't know, 30-some miles north of them. And we had our first sweet corn today of the season today. And we get it from a local grower in the area that, that's a pretty major business for them. And they always have high-quality corn, sweet corn. Uh, this year the ears were 12 to 14 rows around, and that's about as low a row count as you're going to find. And just in perspective, a year ago, uh, his corn, which I'm sure is probably the same variety each year, was 18 to 22. And so the appearance of the sweet corn that we got today was significantly different than what you saw a year ago.

And they used to always say, you know, the sweet corn is a good foreteller of what to expect in, in the, the field corn. And the only part of that, that I've kind of been found myself watching over the years has always been the, the row count. And It was a stark difference to see that sweet corn today versus what it was last year and what it is usually. So I'm just curious, have you— I don't think they're anywhere close to being ready, but have you by chance seen any ears there that you could peel back and count the rows on that sweet corn? Shay, are you aware of that?

Shay

Foulk: Yeah, so one note that I want to make on that too is my, my wife and I have planted sweet corn over here and all the sweet corn in the area that was planted earlier is some of the shortest stature that I think I've ever seen. I mean, 3, 4 feet tall that, you know, it's popping tassels and silks are out for, you know, that and it's getting good kernel set on it. But we haven't actually pulled any back from, from our patch. But maybe that's the real conversation that we need to be having here. That's the important commodity that we need to be thinking about. So Hopefully we don't have a sweet corn crisis on our hands. And hopefully that doesn't correlate to what's going on in the rest of the world out there.

Duane

Lowery: Right. Like I said, it's a little anecdotal, but just for clarity, tell our listeners where you're located at, Shay.

Shay

Foulk: Yes. So I'm 30 miles north of Peoria, Illinois, in the northwestern portion of Illinois. And we are just— when you think about the rainfall that went through here in northern Illinois throughout the spring and the wet fall that we had as well, I would say we were on the southern end of that belt. So I've been able to see a huge variety in conditions and talking with producers in this area of truly where that, that line and that definition was that I think is kind of the narrative of the entire spring and moving into the 2019 growing season. If you were in the right spot at the right time, you might be sitting okay, but not as good as, as most other years.

Duane

Lowery: You know, the sweet corn growers, they plant multiple times, weather permitting. And so this might change, but I'm suspicious that the conditions that we saw this spring lasted for so long and were generally about the same. I'm guessing that the low rows around count on the sweet corn, I'm guessing that's going to continue. It'll be interesting to find out. We'll have to get Chris to peel back an ear from his plot and see what that looks like. But what, what I saw, which is like I said, very close and geographic to where Chris and Alyssa are at, it sure looks, it sure looks like the corn, definitely the sweet corn was definitely under stress and the kind of stress that you don't like to see though. Those row counts are pretty important when it comes to determining yield potential.

Shay

Foulk: Yes, absolutely. Well, I bet if we twist his arm, we can get him to share a few with us.

Duane

Lowery: Yeah, we'll do that. Both. And you know what, I don't know about you, but I wanted to share not just how many rows around, I'd like to share the actual corn itself. Sweet corn this time of year is always a favorite of mine.

Shay

Foulk: Great. Well, I think that kind of concludes our conversation here for today, Dwayne. We'll keep an eye on how things are sitting here through the week and make sure that we're providing the right perspective to the listeners here throughout the week. Thanks for joining us today, Dwayne, and we'll catch you next time on the Ag View Pitch. Thanks for listening to today's episode. We just wanted to have a few housekeeping notes on how to subscribe to the Ag View Pitch, as we know some people have been having issues. The best way to listen to the Ag View Pitch as an iPhone user is going to be on Apple Podcasts. This is the purple icon that has an I and two halos on it that has the title of Podcasts on your phone. Click that. In the bottom right, there will be a little search bar. When you hit the search bar, uh, it says All Podcasts.

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