Markets, acres and bears, oh my

Brad

Downing: And it all comes down to this. 2 on, 2 out, bottom of the 9th. The Farmers lead by 1. Full count, here comes the play at the plate, and it's the Ag View Pitch! Well, good evening everybody. This is Brad Downing, the owner and president of Cross Creek Ag Solutions located in Greentown, Indiana, which is north central Indiana. We are filling in tonight for Chris Barron So we are hosting tonight. Chris is on leave right now on vacation with Alyssa, and they'll be back here fairly soon. But we just want to welcome you guys back to the Ag View Pitch. And tonight we've got Dwayne Lowry. Many of you already know him and know what he does. So tonight we're not really going to dilly-dally around. We're going to get right into it and talk about some things that we want to talk about in the grain markets.

What's happening currently over the past week, what's happening over the weekend, if any news, and also where we're looking to go this week and what Duane's position thinks it could be and where we are going to land further down the road and where we are from a crop standpoint. I may give a little update and talk a little bit about that from a lot of our customers that we have all across the Midwest. But welcome, everybody, and we're going to get started. So, Duane, thanks for being here tonight.

Duane

Lowry: Thank you, Brad.

Brad

Downing: So, Duane, I guess we're going to jump right into the big thing and some big talk that was happening and some information that happened on the market as of Thursday and Friday. The U.S. government had made a statement and Bloomberg put it out as of Friday that China was giving a huge signal that they were going to once again seek American exports starting on corn, beans, cotton, and hogs starting next week. And there was some information out there from anywhere from 204,000 tons to maybe upwards, like you said, maybe of 600,000 tons that could be being announced in the next 2 months. This comes up the first really big announcement we've had in more than 2 or 3 months. What's your thoughts on this?

Duane

Lowry: Well, I think it's a big development. It's a positive development. It gives the appearance that we're on a pathway to try to get back to normal, and getting back to normal will take some time in terms of raw numbers. Part of that process of getting back to normal has to do with African swine fever, so we have that part, that cloud that's still hanging over us, and, you know, China has purchased a lot of product, soybeans from South America, and so, you know, we're not going to instantly go up to the levels that we are, but I think it's fair to say that we're on a pathway to get back to normal. USDA announced 200-some thousand tons sold to China on Friday. My understanding is they were in for about 10 cargoes on Thursday and between Thursday and Friday there may have been 10 cargoes done. That'd be about 600,000 tons.

And I think that it's a situation that we're probably going to continue to see some announcements and some business transact here over the next couple of weeks. And I think it's important to look at where this started. I would say the breakthrough kind of was first suggested when Hong Kong withdrew the legislation that caused the protest initially. And most likely that came under the direction of China, and if not the direction of China, certainly the blessing of China. That was followed up within a day or two of President Trump saying that he would hold back and delay some of the tariffs. And China also responded and listed about 16 items that the U.S. could export into China without tariffs. And then the last piece came when China indicated last Wednesday, Thursday, whatever it was, that they would allow soybeans and pork to be imported without the tariffs.

And so that's a pretty strong gesture when you think about that. They're going into some negotiations here in October, and initially they saw soybeans as one of their strong leverage points. And so for that, for them to, you know, remove the tariffs and allow companies to import U.S. beans into China without a tariff on what I would consider was one of their stronger leverage points either tells you that they've already kind of come to a framework of an agreement and the rest is just kind of the process we go through to get there, or it tells you they really need those beans, U.S. supplies of beans. And maybe both of those statements are true. So I think it's a very positive development, and I think it's only the starting point. And I think from here we're on a pathway to see improved relations, more business.

It won't immediately go to the levels maybe we'd like to see, but certainly on a pathway. And the other thing that's important to remember is U.S. beans have been priced, you know, quite significantly at a discount to South American supplies. This will cause that to adjust, probably with some South American values coming down and some of us coming up. And the last thing that's important about it is if you're a world user and you felt the beans were in no hurry to get your needs covered, you had U.S. harvest ahead of you, China and the U.S. wasn't anywhere close to agreement, suddenly you've been put on notice that, hey, if you don't get in there and get your needs covered, China's stepping in to buy theirs. So it elevates the urgency of every single global buyer. So I think it casts a wide net, and I think it's a very supportive feature.

Brad

Downing: Yeah, that's very interesting. I mean, we understand, we all know we're really a long way from a tight supply and demand scenario. So I mean, this is where, like you're talking about, we've kind of limited some further gains and some upward gains that really could have probably happened really fast, but falling on the eve of the USDA report on Thursday. You know, we really, really saw the essentially bearish news really for the most part. There really wasn't a whole lot of bullish news in that. And, you know, we kind of trended upward and closed higher off of that Thursday. And then Friday, obviously there were some signals in the market.

But like we talked about, you know, you really think and from what I'm listening to you and have conversations with you here, the market really hasn't factored in this news that was announced on Friday yet, or if they have, it's, it's very small in what they're looking at. Would that be correct?

Duane

Lowry: Yes, it's, it's only just a beginning process of factoring it in. And this is only one component of the price discovery process. You also have a situation where you are correct, the USDA report really didn't offer anything for all that bullish of data. And we do have a plentiful supply from a US and a global standpoint. But everything's about being in perspective. And we spent the entire last year with the idea that we had a billion carryout in the last year's carryout, the entire last 12 months. And we spent virtually the entire 12 months expecting we were going to have a billion in this next 12 months, maybe more. And with Friday's or Thursday's USDA report, that carryout suddenly is down to 600 and some million carryout.

And I think once the narrative changes a little bit and the buyer has a little bit more urgency than they had before, like I discussed, suddenly it's okay to talk about things such as Maybe the crop is still overstated. Maybe demand will improve and instead of having demand plugged in with no China business or little China business, now that has to be adjusted. And all these things are just little pieces of the puzzle that we just keep building a few foundational blocks that are improving. And from this point forward, probably the biggest adjustment that's going to be important and something to watch is going to be what is the U.S. soybean yield nationally because right now I don't think we know.

I still think USDA has this too high and soon, very soon in the next week or two we're going to start to see more Midwest bean yield reports and then I think we're going to get a better handle on this. So I think it's just a starting point. I believe that the marketplace has been bearish for a year and a half. Even this summer when we had all the problems we had, 60% of the beans planted after the 1st of June, the large specs never even covered their short position. To me, that's a complete disrespect for any upside potential. And I believe with what we have experienced so far to get the carryout down from something over a billion down to 700 million or less and possibly going lower, to having just 2 weeks ago, there would have been extremely low optimism of any ability to get a US-China trade deal. Suddenly we don't have the deal, but we have the tariffs removed.

That's virtually the same thing as a deal as far as I'm concerned. Or at least it implies that why would you do that if you didn't think you were going to get a deal? Okay. So I think there's a lot of positive things from which we can build. And the last thing that happened just in this, this last weekend was the rebels that attacked Saudi oil facilities. And you got crude, crude oil up $5, $6 tonight. That is inflationary. It's a sign that commodities might gain favor over stocks and creates another level of energy and excitement and something different. I think that's going to be a supportive feature tonight when we open, and that might end up being short-lived. But the last component of this is at the end of the day, we don't— we trade money. We might call it soybeans, but we really trade money.

And beans right now, where they settled Friday, was higher than they were before the August report, higher than they were after the August report. So you have probably 6 or 7 weeks' worth of trade that suddenly has been stranded below us, and during that time we had nothing but negative trader sentiment. So the tables are turned. There's going to be short covering activity, and the fundamental narrative has changed with China, and now the question is going to be, are we going to get a change in the fundamental narrative regarding national yield. And I think that looking ahead to tomorrow afternoon, there's a decent chance that we're going to see corn crop ratings decline again, maybe bean ratings decline again. I'm not sure how important those late season rating changes are, but the most important thing is going to— when we start to get more combine yield reports.

Brad

Downing: Yeah, so I'm going to jump back on the yield thing. Yield report situation and what's going on kind of here in a few minutes. But I mean, to your point of the market really trading money and the big issue, I'll be interested to see the fund position of managed money because as of last week, if I remember right, corn was short about 123,000 to 124,000 contracts as of last week. And then I believe they were short 71,000 at the beginning of last week on beans. So what would be interesting to me is as we do see yield reports, We'll talk about that in acres here in a minute, kind of what we're hearing and seeing.

But if we are seeing yields on beans of early indications, maybe off anywhere from 5 to 10% what we anticipated, or even corn yields, which we haven't got much of in the Northern Delta and southern, southern Illinois to western Kentucky is kind of far north as it's made so far. You know, as we get into the Midwest, it was planted in June all the way through, you know, even some that was planted late to early July. The question being is how much will this managed money position move their short covering positions and how fast will they do it?

Duane

Lowry: Well, in my opinion, in the case of beans, I think we already have the components to get them to completely reverse their short position for the first time, which will be different than they did in the summer. And The question is, are we going to get them to go long? I don't know the answer to that part, but I think we're starting the process. We have the narrative, we have the components, and I think that we will drive them completely out of their short position, which is something we did not accomplish during the summer, but I do predict that will happen, and I think it will happen very quickly, and I think that that could easily translate to soybean futures trading above the, the highs made in June, June, July, whatever that was. And I think that is going to happen despite the fact that we have harvest, you know, right upon us.

Brad

Downing: Good deal. Well, let's, let's transition right now to talking about the yield component, acre component, and what we're hearing around the country. So We currently have customers that cover about 8 states across the Midwest, and we also dip down into the Northern Delta, who we work with at Cross Creek Ag. And, you know, what we're hearing right now in the Northern Delta through Western Kentucky, Southern Illinois, bean yields for the most part, the stuff that was planted early have been average to maybe slightly below average. Corn yields have been good, but they've been close to APH average or maybe slightly a little bit higher. Uh, but they have not been the, you know, 10 to 20% higher that we've seen the last 2 years out of that kind of situation.

Um, as we get into some places in Indiana that did happen to get some beans planted in May and also through Ohio, Southern Ohio and parts of Illinois, which were very, very few acres. But I have talked to a few customers that have been doing that and what they anticipated, they thought were 55 to 58 bushel beans. They're cutting some 2.5s and 2.6s, which are extremely early for those guys that south. You know, they're getting into the 42 to 52 range. So, you know, we're off, let's call it 5 to 8 conservatively to what we thought we would be at. How does that—

Duane

Lowry: Brad, let me interrupt you for one second. You're off how many bushels compared to what you expected? 5 to 8, is that what you said?

Brad

Downing: Right now, early indications, you know, soybean yields that were planted in May, and maybe the June beans will be much better. We don't know. They look a little a little bit better, but, you know, we got to get to the finish line, which we're a long way from it. But early indications— we're talking very small amount of acres that have been harvested— have been off by the reports of the growers, 5 to 8 bushels off of what they thought they would be.

Duane

Lowry: Okay. Now, the next important question is what they expected them to be. Was that something that would be equivalent to a normal year, or was that also less than what they would have had last year or what then they would have expected under normal circumstances since these were planted early. So I'm trying to get a handle if 5 to 8 is just 5 to 8 from last year or what they considered normal, or did they already anticipate something below normal and now we're another 5 to 8 below that?

Brad

Downing: So early indications, if their APH— let's call it 58 to 60 is where they're sitting on APH. That's kind of— they thought they were going to be right around their APH. Or their normal yield, and they're coming in 5 to 8 below that conservatively.

Duane

Lowry: Okay.

Brad

Downing: So that is a solid, which is a solid 10 to 15 below last year's yields.

Duane

Lowry: That to me, based on how what the market is expecting, if you look at the USDA number and the trade estimates going into Thursday's report, I would say those yields translate to a more negative outlook than what USDA is projecting. Would you agree or disagree, even though it's early in the season?

Brad

Downing: Right. It's extremely early. And I wouldn't, you know, I even though we're on the air right now, I'm quoting this, but I'm just saying if somebody held me to it right now, I'm not saying that's the gospel of where it's going to be for everything. But right now, early indications do indicate that what has been harvested in those early maturities that was planted early in the, in the middle of May timeframe have been off more than the USDA was anticipating.

Duane

Lowry: Do you feel that what you've learned, even though it's early, I understand that, do you feel that what you're learning there has implications about what was planted maybe in mid-May or the June stuff?

Brad

Downing: It could be, it very well could be. Obviously the mid-May went through a lot more of the, uh, what, what could got planted, and then they were wet afterwards. They went through a time period of growth, which was very challenging on the crop versus the late planting. What we looked at all summer long was that it looked like the later crop could have quote unquote caught up with them, and I just don't see that the case on the bean side of things because obviously beans are a photoperiodism sunlight crop and heat helps.

But, you know, we're seeing anything that was planted in mid-May making it to senescence and making it to full maturity here in the last, you know, week to 2 weeks if you're farther south and even around central Indiana and central Illinois where I've traveled, we're looking at 2.4s to 2.6, 2.7 maturity range of beans, probably are 2 weeks away if we continue this heat. If we don't continue this heat that we've had in the last week, probably, you know, October 5th will be the timeframe. And so in that indication, you know, we won't know from that standpoint, but It looks to be that obviously the May-planted varieties still seem to be a little bit off.

Duane

Lowry: From when I sat in on a couple of different Pioneer seed meetings, the agronomists there indicated— and I think they were making a broad statement across the Midwest— they indicated that there was a definite pattern of lower nodes with each planning window and they kind of indicated 3, like the April, early May, the mid-May, and then the June and after. That's kind of how they seem to describe it.

Brad

Downing: Sure.

Duane

Lowry: And they felt there was a steady decline in the number of nodes and a steady decline in the number of pods. Would you say that that's a fair assessment?

Brad

Downing: Absolutely. The one thing— Hey. And I don't care what— absolutely, I wouldn't care what company or, you know, variety, some are going to be different, but most of the fields we've walked and we've seen all the way from Ohio clear out to Iowa, especially, and I'd say 95% of what we've walked has been planted in June. But I will say the, the pod count was obviously down, we all know that, compared to what we saw the last 2 years. But the thing that I've noticed more than anything is the amount of pods per node, and there's a lot more tubing pods this year than I've ever seen you know, it's very tough to find 4-bean pods. We have not near as many 3s as what we're used to also, but you rarely in the last couple years saw 2-bean pods, and you see that quite often this year.

So that's the, that's the key factor I look at when I'm looking at beans is how many 2-bean pods do we have, and then what's our weight going to be, you know, where are we going to get this crop matured, and when, when are we going to be able to harvest? Because if we're not able to harvest beans through most of the Midwest that were planted, let's say the first week to the third week of June, you know, we're looking at anywhere from October 5th, 10th, all the way till, you know, anytime in November. And the harvest window, obviously we know it gets really narrow at that point in time. So my question is, you know, where are we going to be at on weight and what's the quality of this crop going to be? I don't know what the weather is. I'm not a meteorologist, but I really question, you know, what's the quality going to be? We'll find out when we get there.

Duane

Lowry: Well, I don't know either. I'm suspicious that we're going to find out that we don't fill as well and we don't end up with the weight that we'd like to see with those really late planted beans. But I find what you just told us, I find that a little bit troubling and a little bit alarming because the highest profile tour was the Pro Farmer Tour, and their pod counts from a percentage were, you know, 20, 25, up to 35% below the previous year. And I realize it was late, but I'm not sure that we're seeing that those pod counts really changed all that much. And if you're telling me that some of the earliest yield that was planted early is also coming in below expectations. I kind of sense a pattern here that, you know, maybe it's too early to say that, but I kind of do sense that a little bit.

I'm reminded of 2003 when we thought we had better beans and only to find out that that year I think we had some dryness issues late that didn't get a good fill, but we ended up finding a lot of 30-bushel beans. I'm not trying to imply that we have 30, but I am trying to imply that there might be as much as a few to several bushels an acre that could end up being shaved off these national yields. And so when you have all these other factors in there, you know, this— whatever the yield ends up being with the combine yield reports, that's going to have a big influence on what the price outlook here is. And one thing I didn't mention, and I don't even like mentioning because it's way too early, But I'll mention it only because there are people that are trying to point out how dry Brazil has been over the last 2 or 3 months and how dry their forecast is.

You know, there is an area that this can change a lot by the time it becomes important, but right now that's another factor. And I don't think it's much of a factor for real at this early stage, but it is something that wears on traders' minds, and I think it's another thing that the shorts are— could be running for cover a lot quicker than maybe what we think that the market could respond during a harvest period. So these type of yield reports, if what you're describing ends up being seen as a common theme in the days or week or two ahead of us, I think it leads to an abrupt shift by the marketplace because I think they'll look at the whole picture and say there's just too many things here that have changed from what we thought it was, say, even as late as 10 days ago.

Brad

Downing: Sure, because I mean, you look back at the August USDA report, they were 48.5, Pro Farmer came out at 46.1, FC Stone was 48.3, Allendale, I believe, was 46.1, and Informa came out at 48.4. So we're all within 2 bushel. And, you know, if you look at that from an APH standpoint, from probably the survey and the amount of acres they took, they were below the APH. But my question is, are they going to be another 5 to 8% or even 5 to 8 bushel? That's a different percentage number. But are they going to even be below those numbers that we haven't accounted for? And I'm not a great indication of bean yields. It's very tough to It's very tough to see that. But if the early indications are what they are, it will be interesting to see if we come in slightly below that or will we be 8 to 10% below that number.

Duane

Lowry: I personally think we're going to be below it by a larger part of that scale myself. But this is a personal opinion. Time will tell. It's too early to tell, but it'll be important to watch. Well, are you seeing— what are you seeing for corn here?

Brad

Downing: So yeah, I'll switch to corn real quick. So corn, I'm getting ready to leave on Tuesday to go to Ohio. I'll be through central and southwestern Ohio, then I'm turning around on Thursday and leaving for Illinois, Iowa, and Missouri and coming back Friday night. Um, I'll talk to a lot of growers during that point in time to get kind of even a better handle on what they're seeing here as we get near the finish line. We're nowhere near the finish line, but we're getting, at least we round the corner to see where the finish line's at. We'll have a better indication there, but early indication from the Northern Delta that they're shelling corn. Exact words from them, average to good corn yield. And this is an area that was, for the most part, looking really good. They didn't have to run a lot of irrigation.

They had most of the summer, you know, they were— I think a comment I heard from the grower we work with down there that farms in Missouri or Missouri, Southeast Missouri, Arkansas, Mississippi. They had about a 20 to 25% reduction in cost on the amount of water they were using this year, just because they had such timely rains and the amount of rain they had. So, to their point, their crop looking good. The early indications out of Western Kentucky have been phenomenal. Tennessee, we've talked to a few people, yields from there have been phenomenal and very good from the corn standpoint. I did have a chance to walk through and look at a couple fields and northern and central Indiana in the last few days, uh, last week, you know, I would say that 60% of it was full dent with the milk line down 10 to 20% at best.

Um, there was just some of it that was just getting to dent and some was still in milk, which was planted late. Um, the question I have, I'm looking at how long it's going to take So we get to that point of getting down to black layer. I can kind of give you an example of we were looking at a hybrid that's in that planting date around the June 5th, June 6th timeframe. And they're basically about milk line, about 20% down. And it had about 2,400 to 2,470 growing degree days accumulated on that. Field in that hybrid. We're looking to the point we get to black layer, if we maintain this heat, we're probably going to be about 10 days to 14 days before we hit that point. Once we get below 33%, if we can continue to maintain this heat, we're looking at an October 5th, October 10th, getting down below 30%.

That's a good indication of where we're at on some of those hybrids and where we've seen some things that were planted quote unquote early for June. I do question—

Duane

Lowry: I was just going to say, how much do you feel your yield potential is down just because it was planted late, even if you reach black layer as you described?

Brad

Downing: Yeah, that's a great question of what the quality is going to be and what kind of test weight we're going to have. That's my biggest, biggest fear in this whole thing and biggest question is where we're at on that. The weirdest thing is we all talked about this in spring, even Chris and I, and I believe Chris even discussed it on this one, one episode. The biggest thing we've seen is hybrids that were in fields that were really pushed and guys did not pull back the inputs on it. We had the stand. The crazy thing was we planted in the worst conditions I've ever seen in my lifetime, and we had a stand that came up that was almost perfect. If you pushed inputs and pushed nutrients to these plants, I really believe you're going to pay out huge this year if you can get it to maturity.

The one fields that are high yield fields that have been pushed, and we looked across different growers, I hate to say it, but they were looking right on APH, if not slightly above. Some operations and some fields that were not pushed and did the bare minimum, got a crop out there. We all thought we were farming for crop insurance check, it's starting to show. We've seen a lot of tip-back. We've seen also convergence of rows. If you started out 16 around, you ended up with 12 around because there was some nutrient issues. We went through that dry period where we started seeing some potash deficiency in certain fields. We even saw potash deficiency in bean fields. It's not the fact that there wasn't enough potash there. It was the fact that we were super dry through August timeframe, right after we're getting done pollinating, and that had some issues. Within a plant.

And we're starting to see that now as Grainfill has come to almost the dent stage. And we're getting on towards, you know, moving the milk line down. So, do I still think personally that we're on par with USDA's 169.5 or, you know, Pro Farmer's at 163.3, FC Stone was 168.4, Allendale was 167.7, and Informa was 169.6? I personally believe 160 to 161 from my conversation with people around there is probably more realistic. That's where I'm at. Just, and I, and I have no great formula other than just listen to what people's APH are. A lot of these people we've worked with across the country for many years and looking at what they predict their yields are and then just putting it in as an average and me doing a really rudimentary calculation. I think 160, 161 is probably close to where we're gonna fall in that.

Duane

Lowry: Well, I certainly could, uh, uh, I certainly could easily get to an agreement of a similar number, and I'd like to see a little bit more yield data before I said that confidently, but I see plenty of fields that make me believe that what you just said is very possible. What you said is really a mouthful because that by itself, if you're correct, would wipe out 25% of our current carryout projection. And all of a sudden you'd be down in that $1.5 billion range. And Marketplace has been talking about reduced demand for some time. They've been focused on ethanol, but even with ethanol reduced demand, it's tough to pencil in that much of a reduction in demand with the ethanol. And there's one other wildcard here that if China and the U.S. reach an agreement, you know, going back several months ago, it was believed that China was on the verge of beginning an import program in corn.

So, you know, I can guarantee you the marketplace is not anticipating any China export business to China, but it is a possibility. And so we got a lot of things here that could change the outlook of the corn market significantly. And with the yield report, it's going to be very, very important. And if you're talking about $1.60 as being a possibility, I think that deserves respect because you're obviously a well-respected opinion with a lot of contacts and you've seen a lot of fields and these are the kind of reports that you're getting. And ideas you're formulating. So I think it's going to be very interesting. And just, just a week ago, the marketplace wasn't willing to entertain anything like that. So then this can change very quickly. I, I'm in Minneapolis right now, and on the drive up here this weekend, I was surprised how unhealthy the corn crop looked in northern Iowa.

And come up into Minnesota. The farther north you went, it became more of an issue just being late. But I was surprised at how unhealthy a lot of northern Iowa looked, where they were running out of nutrients. There may have been some moisture deficits at one time in the last 30 or 45 days, but very unhealthy. And I'm concerned that We have more of that than what the marketplace is given credit for. So it's not difficult at all for me to embrace that type of yield that you just mentioned.

Brad

Downing: I think part of that getting that yield will also be the fact that we will have a quality issue, or I don't know if we will have a quality issue, but it certainly plays the question of saying, will we have a quality issue that, that leads to that number? Because what you're talking about in the Upper Midwest and what we've seen in the last week is the amount of rainfall they've been getting.. And with a crop that's maturing, starting to flare the husk open up and trying to dry down, yet this plant is still living, that, that causes some concern for ear molds, cause concern for any kind of disease pressure we get and proliferating that disease and what's that going to mean to quality. So I've got some questions on that. I don't have an answer for it, what that means on the end, but I do have some questions of wondering what kind of quality we're going to have.

Now that doesn't mean that there aren't parts out there, anybody that's listening, that that there aren't parts of the Corn Belt and little pockets here and there that are going to be phenomenal. They may be just as good a yield as they were a year ago. But I think for the whole, it's very hard to have a late planted crop as we did with the weather we had and following up, you know, a cool period of late August, first week of September. And then, you know, that was a very crucial time that we slowed the growth of this crop down that we did not need to stop the factory from growing. And we did.

Duane

Lowry: I agree with that.

Brad

Downing: Now we're— I know we're not— now the factory's back online and she's pumping up pretty hard. But I've got some questions. You slowed it down for 3 weeks. What's that going to look like from a yield standpoint? But also what's it look like from a quality standpoint? So I think time will tell. We'll find out. I think the bigger question, though, is still on acres. I still want to— the yield may be— I may be way off. It may be 168, 169. And I'm just crazy. Probably am. That normally happens. My wife tells me that more than once. But the big question is the acres. I just— I question still how the acres were formed. I wonder how many true acres are out there.

And real quick, before we get off here, we'll take about 2 minutes here and just— in your travels here and anything here late, have your intentions or any of your thought process on the amount of acres that were planted out there, has that changed in the last month? Month or two?

Duane

Lowry: Well, I don't know how much confidence I have in USDA's acreage either, but until they change it, that's what we have. So I'm not even going to address the planted acres, but when they included cover crop or corn planted as cover crop, and then I think it is possible that some of that calculation could be off a little bit. And I think that we'll see that displayed by them lowering harvested acres. They might lower them beforehand, but until they issue the silage report, which won't be until January, we probably won't get too much of an adjustment from USDA on acreage, which brings up another point. What anecdotal reports I've heard regarding silage is it's taken more acres to get the same amount of silage. So that, I think, might add to the narrative that we can reduce harvested acres. Me personally, I think harvested acres will ultimately be lowered 2 or 3 million acres.

If you lower it 3 million acres, you know, there's another, you know, 400 million bushels, you know, maybe more than that. And if you get your yield scenario that you talked about, all of a sudden instead you could be having to lower carryout down by $800 million or more, and all of a sudden that you're down to $1.3 billion. And I can guarantee you current prices are not factoring that in. Everything we've talked about was talked about during the growing season, and we felt that it was real and it was something significant, but we couldn't gain any traction on it. And then when USDA came out with their acres report and followed up by raising the yields again in August, The market just capitulated and everybody dumped positions and kind of gave up.

But we could resurrect that entire narrative, all the stuff from excessive water, poor root development, inability to take up nutrients, everything along those lines can be resurrected again. I honestly believe that's the direction we're going, where we're going to start— we'll be bringing that kind of thing back up into it again. The outlook from my perspective, both corn and beans, very important what the net— from the— what the combine yield trends show. And my belief is that we're going to see those lowered from what the market has been trading. And if that's the case, it's going to change the market outlook quite a bit, especially with the developments that we've had here from China.

Brad

Downing: That's good stuff. I don't want to take too much more time here. We want to move on, but I just, I think we're probably a solid month away before we start getting a good handle on some early numbers. I mean, we've got some early indications now, but I'll be really interested to hear what I have to hear in the next week, talking with growers from Ohio all the way to central Iowa. And then on my way back, well, this is the first trip I've made out there in about a month. Month and a half. So it'll be fun to see what we got going on there, and then we'll probably talk to somewhere around 15 to 16 farms across the whole stretch during the course of that 3 or 4 day trip. And it'd be good to know what's going on here, what their take is. But it's gonna be very—

Duane

Lowry: it's gonna be very interesting, and we certainly want to hear what you're finding out. And so we look forward to having you back again.

Brad

Downing: Sounds good. Well, Dwayne, thanks for taking the time. Greatly appreciate it. And thank you all for listening and spending time here at the Ag View Pitch. And for Chris Barron, I wish he was here tonight, but I got to host tonight and check it out. And I thank you guys for taking the time to listen. So everyone have a great Sunday night. Markets open here in 15 minutes and we'll be sure to talk to you soon. Have a good evening. Thanks, Brad. Thanks, Dwayne.

Duane

Lowry: Thanks for joining us on today's episode of the EggView Pitch. As always, you can reach out to us at cbarron@agviewsolutions.com or duanel@netins.net.

Brad

Downing: We'll catch you next time on the EggView Pitch.