Planting pace: will markets react?

Chris: Hey everybody, before we dive into today's episode of The Aggie Pitch, I want to invite you to check out our exclusive podcast, 19 Minutes. For just $30 a month, you'll have access to high-level business insights and new episodes that are released on the 9th, the 19th, and the 29th of each month. Topics include finance, cost of production, team health, taxes, collaboration, and much more. With 77 episodes already available, signing up gives you immediate access to all past and future content. Click on the link in the show notes and subscribe and start boosting your bottom line today. Welcome everybody to another episode of the Ag View Pitch, if I can get my words out here. Um, yeah, I guess what we want to do today here is have a marketing conversation with Mark Welch at Texas A&M. Mark, how's it going today?

Mark

Welch: Chris, doing well. Always good to enjoy these conversations.

Chris: Yeah, that's good to visit with you. And we're having this, this, you know, this marketing week ahead is also a pretty heavy planting week ahead. I think, you know, we're in that middle part of April and it's that time when everybody's thinking about planting and there's probably not as much thinking about marketing. And so hopefully some people are listening to this, you know, we're coming off of Easter and so we'll release this. We're recording this on Good Friday. We're going to this on Monday morning. I think at 5 AM, Mac's gonna have it out so people can listen to this on Monday and, and after Easter and reflect a little bit about where the market's been, what it's been doing. But where is this thing going is really what people are always kind of wondering. And there's a lot of volatility right now. There's tariffs and all kinds of different stuff.

So we'll have a pretty good conversation here today. I guess I want to start with the planning pace. You You know, you're in Texas. Are all your guys done planting or what's going on in your world?

Mark

Welch: You know, and we've got, and that's one thing that I had to learn to appreciate and broaden my horizons quite a bit. I'm from the Panhandle of Texas up between Amarillo and Lubbock up that way and irrigated corn on our operation up there. And we're a Corn Belt-based crop calendar up there. You know, we plant our corn, you know, middle, latter part of April, harvest first week or two of October. So kind of, you know, fit, uh, kind of the general kind of Corn Belt kind of season. You get down here in Central and Texas along the coast, uh, yeah, we're planting corn late February. If it's not in by the first week of March, you're behind. Yeah. And so fortunately, across much of the coastal bend area along the coast and into Central Texas, got a good start on our corn crop. Got it in a little bit early. It's taken off real well.

Far South Texas, where they're planting in late January, they were dry early and some water issues. My understanding is there's some, quite a bit of a preventive planted acres down in very far South Texas. But yeah, about half of the Texas crop is in the ground and up and going, and that's the Central Texas along the coast, the non-irrigated, primarily non-irrigated, our dryland crop.. And so we still got the other half of the production to come up in that Panhandle region and they're just getting rolling good. So we're about half and half if you look at corn planting in Texas.

Chris: Yeah. Interesting. Yeah, it's a big state. It's almost like its own country.

Mark

Welch: So it's— but, you know, it's so interesting as you come down here in the central part of the state and along the coastal bend. When I first came here, I thought, gosh, you've got a growing season that's 11 months long. You know, you can do kind of whatever you want to do whenever you want to do it, but it's just like everywhere else. You gotta get it in early. Yeah. And that just has such an impact on what that final production number can look like. Here is that by the time you get into late May and early June, it's getting so hot and it's not cooling off at night. And, you know, the impact that heat accumulation can have on yield potential Right. Uh, and, and here is you need to get that thing pretty well finished by the beginning of the first part of June, or that really starts to take that, uh, that top level off the, of your yield, off your bushels per acre.

So yeah, it's, uh, even though you got all that season left over at the end of the year, uh, man, you gotta, you gotta push, you gotta get it early. Yeah. To, to preserve that, that top potential, which we need. I think in a, in a, the price environment that we're in and what the input costs are still running, uh, yeah, that, that break-even gets really tough if that yield suffers at all. And so at least we got a pretty good start across much of Texas to this point.

Chris: Nice. So with that said, you know, we're talking planting pace, we're talking conditions. And with that said, there's a lot of, you know, and we'll be talking volatility in a little bit. There's a lot of volatility in the weather. We were just talking before we started recording. I try to trust the weatherman about maybe for 2 hours into the future, and you get much more than that in the spring or fall. Their accuracy diminishes significantly. And so there's a lot of areas that are pretty wet that are, you know, I just talked to a guy a little bit ago that's in, uh, northern Indiana, and they're trying to plant, but he said the conditions aren't great.

And, you know, they're gonna— they're trying to get stuff working, but they— a lot of those guys probably know that soil conditions is— are not the number one key, you know, and temperature is very important, but You know, you don't— definitely don't want to be putting anything in when conditions aren't pretty much ideal, especially this early. So with that said, as early as we are in some of these areas that are having trouble, do you anticipate any kind of weather market at all? Because it seems like corn has stayed strong even with all the tariff volatility and stuff, which we'll talk about in a minute. But do you anticipate if we go another couple of weeks that, and we stay wet in some of those areas that have really been wet, um, that that could give us a little price bump on stuff, or what do you— what's your thought?

Mark

Welch: Yeah, um, and, and certainly, you know, any factoring in, you know, weather impacts, you know, very far into the future, yeah, that, that's a big challenge. But, but also don't think that an economist is going to disparage a meteorologist. Uh, we have a little— I understand completely that, uh, you know, the forecast that I give you may not be good or 2 minutes, much less 2 hours or 2 days. So I'll, I'll respect the challenges that they face as well, because every time I give an Outlook talk, the first thing I do before I step up to the microphone is check the markets. They probably changed significantly from the time I put that presentation together, maybe just a few hours ago.

Chris: And while you're talking.

Mark

Welch: Yeah, exactly. Exactly. Well, before I, before I sit down. So there, yes, a lot of unknowns to unfold. Obviously, and not only just in the U.S., but you look at the Brazilian crop, you know, what's the prospects there as they're, you know, getting their export-based crop up and going. And it's interesting that that Brazilian crop seems to track very well with our Central Texas crop calendar. You know, they're planting that thing in, you know, early March, harvest late July and August. So it's kind of an easier for us to track that one. Here in this part of the world. But, and you did mention, I think, something that's very interesting, that the, the strength of the corn market, you know, we had a nice run-up from December to early part of February. Then I think with tariff talk and, uh, you know, the respective plantings report, you know, came out, we took that big step back.

But really, we've seen corn, particularly the December contract, uh, in particular holding up pretty well given all the turmoil that's going on in many other markets, not just ag markets, but certainly, you know, crude oil to the stock market, you know, other investment and asset classes. The corn market's held up very, very well, and the thing that I would attribute that to is the uncertainty that you just mentioned, that even though we're looking at a significant increase in planted and harvested acres for 2025. There is enough question around that yield potential that to me is a significant factor in the undertone of support that we've seen in the corn market. To see that December contract holding up, you know, $4.16, making another run at $4.70, you know, to me that's just incredible given the concerns we have on the demand side.

If we do have some challenges in access to export markets and how we'll participate in those. But particularly in the face of 95 million acres of corn, you know, that's just pretty incredible to see the price holding like it is. And so I think that's one— you mentioned another thing I think it's very important to kind of keep in mind. Yeah, there's a lot of folks will be really, really busy for the next couple of weeks. They got to get a corn crop in the ground where, you know, conditions are favorable and things are running well. You know, that doesn't mean that these aren't some really good marketing opportunities. And yeah, you're going to be busy, you're going to be tied up and you're focused on some other things. Who's keeping their eye on that marketing ball while all this is going on?

Just because we're busy and got a lot of irons in the fire and a lot of things we need drawing our attention doesn't mean that this still may not be some of the best marketing opportunities that we could see in this marketing year. And just scratching a couple of prospects and, and what-ifs before we got on the call here today. If you kind of look at the, you know, the price models that I have and, you know, given the supply and demand numbers, production and use categories, and kind of what that might mean to a futures price at harvest. If I plug in the numbers right now of planting 95 million acres of corn, and a yield of 181 bushels per acre, given the demand or use numbers that USDA had in the, at the Outlook Conference back in February, that looks at a December price in October of around $4 or $4.10 a bushel.

Again, using the use numbers out of the Outlook Conference and 95 million acres of corn planted and 181 bushel and a normal harvested percentage. The yield it would take to hold the futures at $4.65 a bushel, leaving all those use numbers unchanged— of course they will, they will change— but if you plug in the yield it takes to get $4.65 corn in October, the yield that I plugged in to get that number is 176. So that 5-bushel difference to me would play out to that 50 or 60 cents between now and October. And is a 176-bushel yield— well, that would be the, what, the second highest, third highest in history. It's a really good yield, but it's below, below trend. So it does— that would incorporate some challenges somewhere along the way. It's not 180, it's not 181, but it's, but it's still a really strong yield number. So to me, that's, that's kind of the undertone of the market.

Is there enough uncertainty around this year's growing season, getting a crop in in time, what the growing conditions are going to look like? Uh, yeah, a 5-bushel variation, uh, you know, off of that 180, I think that seems reasonable. But if, if it does play out, and I think that's going to keep our eye on the ball here, if, if the broader conditions would be leaning toward, yeah, taking a little of that yield off of that 180 Or are conditions adding more support to the idea that, you know, I think this may be that 180-year— might influence our, our attitudes around getting something done marketing-wise.

And not just what you and I think about it, but what does the broader investment community think about that prospect, given all the other factors and issues and disruptions in, in the broader markets from the macroeconomy to, again, the other outside market influences, that as well as, you know, ag markets as well. Can corn hold up that strength given everything else that's going on? And so I really think it's imperative that someone keep an eye on that marketing piece because we're going to get busy for the next several weeks. And if there's some indications this thing's slipping or getting away, Again, I think the downside, given, oh, you know what the final yield is going to be, and I can't tell you that number, but we can, we can run likelihoods of what it will be. Uh, it's certainly that, you know, $4.65 corn by the time we get to next October.

I'm, I'm thinking there's a lot of factors that can make that look like a pretty darn good number.

Chris: Yeah, uh, I have a kind of a question comment, I guess, but Would, would a contrarian say that, you know, if you yield 180 at 95 million or 181, that, you know, we're picking up a bunch of acres that maybe don't yield like— with all love and respect to all areas that grow corn— that don't maybe yield like central Illinois or something?

Mark

Welch: Right, right.

Chris: And so, you know, are we, are we more likely to have that 176 with the 95 and more likely to have, you know, if it's 96 even. I mean, I, I can't believe the amount of corn acres that our clients have indicated they're going to plant. And, you know, and, and just looking at the math, I mean, even if we get late, I think guys are going to stay planting corn because you can plant corn later and have less of a yield hit and You know, with soybeans, you know, just doing the math, if you drop soybeans by, you know, right now we're $2 below the cost production on soybeans for our average client right now. And so that bodes pretty well for corn. Same thing with cotton and some of the other crops are just, you know, you just, they're just not near the revenue from an insurance standpoint and everything from risk management, let alone, you know, profitability.

And I think if you look at, you know, taking 5 bushels off a soybean crop, that increases the cost of production by $1.12 a bushel, just reducing 5 bushels on soybeans.

Mark

Welch: Wow.

Chris: And, and we see kind of the same thing with corn, but corn has proven to be a little bit more consistent in most areas. There's going to be an exception. Somebody's going to be listening like, I got a different— that's fine, there's exceptions to everything, but in general That's kind of the observation we've had. And it just— but on the same token, you know, it seems like, you know, we throw in those extra acres, and I wouldn't be shocked if we hit 96+ just based on what I'm seeing. But then I think that brings that yield level down. But to your point, which I think is the best part of the point, is you're talking a price range, theoretically price range between that $4.10 and $4.65. That's below our cost of production. I mean, our average client's somewhere around $4.70 for cost of production with APH yields, you know.

So if we yield above APH, then obviously that cost of production comes down. But on average, I think that means that we get much above $4.70, I think a person needs to probably start, you know, layering some of this in, in terms of just having some offers. And like you said, you know, if everybody's busy and you're not paying attention to nothing, And the best thing that I think people can do is make sure you figure out what those numbers are and put some offers in. Even the reach offers are fine. Put them out there. Mm-hmm. Or something. I don't care. But, you know, I mean, put those offers out there, but layer them in because I think if you go too lofty and don't have any layers, you might not hit anything. And then a lot of times you have 5 minutes to hit it anyway. So any comments on that? And then I've got a couple of key questions here for you.

Mark

Welch: Yeah, you bet. And first of all, I think that, that yield, uh, uh, equation will be very, very interesting because yes, many times we're expanding acres significantly like we are, we're doing that maybe on some marginal kind of ground, uh, and so yeah, it's not all 220-bushel Iowa and Illinois corn ground we're bringing in, uh, to get those extra acres, uh, and so that, that could have some impact. And many times we do see that when acres are lower, actually, yeah, your yields per acre or higher because you lose that some of those, uh, you know, acres on the edge, uh, that may would drag your yield potential down. So that is an important piece, uh, to play into that. So, uh, I think we can get to that 95 million and still talk about some pretty, you know, solid corn ground.

But yes, as we've expanded corn acres in this biofuel era, you know, when we went to planting from 70 million acres of corn to 90 million acres of corn,— that kind of came into the play too, but we've adjusted in a large degree, and it's still just amazing what the productive potential of not only the varieties today, but the practices that farmers are using to grow that corn. It is just incredible to see, you know, in this central part of Texas, to see the yield potential. You know, if, you know, when we were looking at 80 and 90 bushel an acre corn crops to looking at 120, 130, 140. Is, which in standards of many parts of the country, that may not sound too good. But, you know, down in the world where it's not real corn country, it's amazing what we've been able to do. So that won't raise the national average yield, but it still can add to those production numbers.

It adds to the total. There you go. There you go. And yes, and throwing those kind of bids and offers out there around doing something marketing-wise, whether it's locking in the basis or, you know, getting a little something done along. Yes, if you're having that conversation when everybody else is busy not doing anything marketing-wise, that may be somewhere you can craft some of those better opportunities that we are willing to make some commitments, layer some things along, and have that conversation that, that might maybe get that little bump, bump in the basis around timing or when you need it or the bushels that you need. We're willing to make some commitments when everybody else is too busy doing, doing other things than not having that conversation. So again, just, just monitoring, uh, this situation.

Yeah, $4.65 is, is not where we maybe need to be, but that doesn't mean it doesn't have some potential and some possibilities as well as it, it could still be better than where we could be depending on how this thing plays out. Just, just sort of lay that into the, your, your, I think our our marketing outlook and planning around, uh, you know, that's not— hope that's not where we end up. Hope that's not the best we do, but it might be something worth not letting this get away, uh, given what the downside of this thing could look like.

Chris: I want to shift gears for a minute to basis, um, and, and I'll relate the soybean side of this too. I mean, a lot of guys are planting beans first One of the things we've learned is to plant early maturity beans first because of basis. To, you know, it seems like with soybeans you have this opportunity a lot of times if you're harvesting maybe a week or two before everybody else, you could give up a little bit of yield and have— and I hate saying that because it's kind of a secret we've used in our own operation, but, you know, is being that first one out there delivering those beans in that old crop market. And really taking advantage of some extra dollars there that are kind of dollars from heaven if you kind of play your cards right. With that said, let's relate that back to corn for a minute.

It seems like to me that there's not as much corn out here as maybe we think there might be in terms of, and maybe a lot of it's in the commercials at the elevators and stuff, but most of the farmers I talk to are pretty light. There's, again, there's some exceptions to this. However, Most of the farmers I talked to are sitting on, you know, 5, 10%, and that's it. Wow. For a few reasons. Number one, cash flow. Number two, interest rate costs. And also the need for the increased debt service in that cash flow is more than it was a couple years ago because people bought some stuff. And then commodity prices came down, and so they got a lower price, so more bushels got to go away to get the same dollars in for debt service, all this other stuff.

So with that said, if that's the case, wouldn't it be— and I want to get your two cents on this— would it be advantageous for some of these operations to make sure some of that early corn planted early and taken advantage of some of the basis might make sense, you know, for that early harvest and get some of that old price. You know, I think just to me it looks like there's now easily be a pretty big opportunity there on basis. I wanted your two cents on that.

Mark

Welch: You know, that's, you know, that's one reason I like these conversations, Chris, that, that, that you bring that perspective and, uh, context that we lose a lot down here in this part of the world. In that we don't have, you know, lots of on-farm storage and the advantages and the flexibility, you know, that can bring in the opportunities that can bring. And what you're saying does seem to reflect maybe what we're seeing in the— and looking for those near-term contracts, you know, in corn. And my thought this whole winter season would be that if we saw any kind of significant price rally as we were looking, you know, back at $4.40 and $4.50 corn, and seeing that thing moving higher, that there, you know, so much corn in storage, prices, you know, fell off so bad, they've been so weak that we were going to snuff out any kind of rally with, you know, all this corn coming to market.

And, uh, now as we're seeing that, uh, just glancing at the, at the May and July contracts back up at, uh, you know, $4.80, $4.90, uh, that we're perhaps not seeing that to the degree that I thought we would see that. Is the corn there? You know, maybe it's been accounted for, it's moved to that degree, that, you know, maybe in other hands, uh, but that there may be some, again, another underlying tone of strength, uh, maybe that's what's reflecting in our market. And that's, you know, kind of what a focus on the basis tends to tell us, uh, more reflecting the supply and demand conditions in your local area rather than you know, just the prices trading on the board, you know, which is more of a global price of corn. Uh, you know, the basis is telling you something about your local supply and demand.

Uh, and so yes, leveraging again that advantage or that opportunity that that may offer for you and your operation timing-wise or just logistics and communication-wise, recognizing that wherever you're going to deliver that grain, uh, just having that conversation of, yeah, how can perhaps my management and marketing decisions add value to what you're trying to do as you try to secure bushels and what you see as your needs? Can we work together on that? It gives me an advantage, obviously helps my operation. And when these margins are really slim and those nickels and dimes could really make a huge difference, as well as, uh, allowing that, uh, that grain to move where it's going to go to, from the farmer, what their customers are, are doing with that grain.

And that's another piece that's come up at, uh, through the meetings at TPAP, the Executive Program for Ag Producers, that through the, the sales program that many times as farmers we think of the, the grain elevator or the ethanol plant or wherever we take our grain, we think that we're their customers, that I'm the customer of the co-op, that I'm the customer of the grain elevator. It didn't work that way. No, they're, they're our customers.

Chris: Exactly.

Mark

Welch: We, we need to be, uh, nurturing and maintaining and growing that relationship and that, that value component that, uh, how can I, how can I make my customer, uh, uh, more, more efficient, more profitable? Because that's going to help me as a supplier. Uh, and so to kind of keep that focus, especially when we're busy. When we're busy doing other things, to recognize that we have customers that we still need to show care for, uh, in this, you know, broader profit proposition.

Chris: That's huge. That's actually enormous because, you know, I think there, there's, you know, I think farmers are smart and everything, good business people, but what you just said is so important is that, you know, the, the end user, they're the customer, you know, the the Cargills, the ADMs, the places we get mad at and we think, you know, right, bastards, you know. But it's like, you know, be careful because for the customer, you know, you, you can't fire your— you know, if you fire your too many of your customers, you won't have any. So you kind of gotta, you know, it's always amazed me somebody that'll call and yell at one of the grain buyers, like, that's going to do you a lot of good. You know, they're, they're your customer. Why would you ever even say anything negative to them?

You know, you can ask for things and But right, yeah, that's, uh, that, that's a whole nother probably topic for a whole, uh, a whole podcast on, on navigating that relationship. But, uh, so the last couple of things I want to hit on, um, which is sort of a gamut of things, but it's, it's tariffs, demand, geopolitical, and, um, you know, the Trump administration's history showed that there was an MFP payment in the process of the negotiations through tariffs and all these other things. What does your crystal ball, your lens of things that you can see and that you're looking at, tell you these are the things that farmers need to pay attention to between tariffs, demand, geopolitical, and MFP that has a practical application, right? Something that, you know, these are the things— and then we can talk about all that stuff and it's just volatility and nobody knows.

But what are, you know, looking at it from an economist perspective and from somebody with a ton of experience like you have, what, what's the best advice for producers to pay attention in, in those categories?

Mark

Welch: And, and again, short-term, uh, you know, well price volatility and just uncertainty, you know, as that plays out, you know, day to day, week to week, you know, perhaps as we go through month to month in this growing season. But even looking a little more broadly, a little more longer term, I think it does create some challenges for us. If we just look at what the world looks like today, go back to 2017, 2018, early 2019, in that, you know, previous disruption by tariffs that was primarily the US and China. And how that disrupted much of the grain trade and kind of what happened that period of time. And what came out of that, yes, as much of that was settled and we saw China re-emerge back into the market in 2020, 2021, we saw a very strong feed grain demand of exports back to China coming out of that tariff dispute.

But if you look at market share and how markets maybe were rearranged after that particular period of time. The U.S. grain industry did not have the trade presence and market share that we had with, particularly with China coming out of that situation, that they expanded— the Chinese expanded their trading opportunities with other suppliers. And so the market share that we had coming out of that particular tariff episode or experience is that moving forward we continue to trade and, and had, you know, some specific market opportunities, but yet that market share was declined by other, uh, you know, growing, uh, entities in the world grain market, not only just South America, but we've seen that out of the Black Sea prior to the war with Russia and Ukraine. And so it does kind of change some of the dynamics.

One significant concern I have in this current environment and, and the implications a little longer term is impacts that a tariff war more broadly with China is bad enough, but if we expand that more broadly, just blanket tariffs with many of our trading partners, the impact that will have on global economic growth. And one factor of that is the degree to which world grain consumption has increased over the last 20 or 25 years as the global economy has grown. Particularly in emerging and developing economies around the world. As the middle class began to expand, as those economies participated more in the, in the export trade and export markets, the opportunities that created for them, the per capita increase in grain consumption from 2000 to 2020 was just incredible.

If we are now entering into an era of post- globalization or restricted trade and we don't continue to see that path of economic growth, particularly in those, again, emerging and developing economies, it's kind of the category that I watch in particular. If that rate of growth slows, does that slow those consumption patterns for grains? And we think of the categories, things like, you know, feed and food and fuel, you know, all of those components.— in this part of the world, we throw fiber in there too with our, with our cotton markets. And so what that does, if we're slowing the demand growth, what that means is that it's still going to grow and you still need to supply those markets. But in those big crop years, we've got supply increasing in abundance relative to what that growth on consumption is to balance that..

And, and so big crop years and expanded grain production around the world, we can put more pressure supply-wise on that price picture, uh, relative to those environments where you have that robust demand as an undertone as we go from, from year to year to year. And it looks like at this point that if this is the environment we're going to be in for several, or months, are we talking years? I don't know.. But it does look like we're in an environment that one thing tariffs will do, they will slow economic growth. If you learned anything in Econ 101 about tariffs and trade, they raise prices and it slows economic growth. And there are some other benefits that other parts of the economy that we could certainly explore and talk about. But generally speaking, more broadly speaking, that's why generally a free trade environment is better for economic growth.

And so if we're stepping away from that, or if we're impeding that, then I think that starts to fall back on ag producers, particularly in that kind of environment.

Chris: It just— this is just purely opinion, but it looks like, you know, the war, quote unquote, economically with China is going to persist, probably. I'd be shocked if it doesn't, just based on how it looks. And then China has not been the best trading partner in terms of intellectual property and some of that stuff too. So I think there's all these other layers of stuff that we really don't probably understand or even have a clue of, of how deep are some of these things. But with that said, it feels like this deal with China is going to be long-lasting. Which is, you know, going to impact the soybean thing, you would think. You know, it already has, but I mean, you know, long term potentially. So it's going to be interesting to see what— how the administration handles it.

You know, they had the trade deal during the first administration, and then it kind of fell off when we got the next administration. And so it's going to be interesting to kind of watch and see what happens, I guess. You know, that's about all we can do though, right, is just watch and see. And Well, we're going to have to deal with it.

Mark

Welch: And again, and, and we try to manage around that, you know, the best we can. And certainly, uh, you know, there may be, you know, again, those market facilitation payments, you know, maybe another round of those as some compensation to lost marketing opportunities. That will get to be determined. But again, marketing-wise, and, and about the best that I can do is I try to anticipate that again, and it's not, it's not perfect, but, you know, build that balance sheet and take that 2.5 billion bushels of corn exports, make it a 2. What's that do to your price prospects, right? Just that alone, just change that one number, take 500 million bushels off of that. Uh, do we have the feed and the fuel capacity to absorb that domestically in our current environment? That— how cheap does grain have to get, right, perhaps to incentivize that?

And it may, uh, but Are we, you know, in a— we're in a world where gasoline demand is not growing in this country in this, in the current environment. So that has some limitations on fuel, corn for fuel. Now we're exporting some ethanol, maybe we'll increase blending rates, you know, all those things could compensate to some degree. You know, we're the cattle industry, we're in a significant time of contraction in terms of our numbers of beef cows. Cattle on feed. Now, pork and poultry may have some more growth prospects, but, you know, a third of our grain consumption in the, the, uh, on the cattle side looks to have some real constraints right now. So anyway, I'm just, as I would speculate, then the risk of those numbers changing significantly, what the price impact of that would be, to try to manage around some of that, uh, some of that.

And whatever the price of corn is today, given what we know right now, as the prospect of change that yield, change that acreage, change that use category, and what does the price impact be. And if it's a risk that would have a significant impact on staying in business, then I think certainly it adds to the incentive, try to manage around doing something about that. And whether that's with some kind of minimum price contracts, contracting along, get something coverage along through the year, not just being wide open given what the significant decrease you're talking about, what soybean prices where they are now relative to the cost of production. Doesn't mean the same thing could happen to corn in the short term.

Chris: Yeah, yeah, yeah. That's the scary part. I mean, that— and, and we have been there, I think, you know, relative to, you know, 2.5 ratio or whatever. I mean, corn's you know, what was it last fall, got down into the high 3s. And that's kind of the same thing. I mean, you know, you're talking $410. That doesn't mean— as an economist, with all love and respect, you could be wrong and it could go below that, right?

Mark

Welch: And I will be wrong. Whatever I tell you, it will be wrong. Yeah, too high or too low, but it will be wrong, right? But again, just trying to evaluate, uh, the, the risk of up or down. And to me, in the current environment, uh, geopolitically, as well as even just agronomically, uh, how would you, how would you, how do you assess that risk and is it worth taking some protection, uh, to mitigate some of that?

Chris: Yeah, seems like in these kind of environments over the years that I've been farming and working with producers is that the years when the commodity prices are under pressure, having the targets in And then looking at your percent sold throughout the course of the year, like at planting time, you know, are you at 30%? And this is just generally speaking, but then after planting and, you know, about the time the corn's getting laid by, if everything looks good, are you at 50%? You know, tassel time, everything looks good, are you at about 60-65%?

Over the years that has seemed to— and it's not always the case because in '21, and I think it was '21 and '22, you were better off to not do anything until the last But, you know, 12— and our data shows that about, you know, out of a 12-year window, you only have about 2 years where doing nothing is the right thing, which means the other 10 years being proactive tends to be the best approach to your point of, you know, putting these targets in, putting floors in. And then the other thing I would say, and kind of in closing and then give you the last word, but is, um, you know, the insurance price on corn in particular is is right at cost of production or a touch better. So a lot of people bought ECO, bought up on insurance, so they're right.

So that, you know, you should have some peace of mind there that, you know, you're gonna have, you know, you're gonna live to fight another day, so to speak, because of the insurance. Whereas, you know, plugging those sales in, we get, you know, a little above that $4.70 range. It sure seems like a place to to really look at seriously on the corn side. And soybeans, I don't know, it's terrible. I mean, where things are at, and it's the same thing. I mean, cotton, not really much better. I mean, those two crops, and that's why the more corn acres, you know.

Mark

Welch: Right, there you go.

Chris: But with that said, I guess I want to give you the last word. Anything you want to leave producers with, what they need to be thinking about in the next couple of weeks?

Mark

Welch: Uh, God, I think that's what you're saying is such a great point as well, Chris, is we do have some tools that can help manage a lot of that downside risk and the endorsements and other insurance add-ons that we have in today's world really have that such higher level of risk protection that makes that safety net much more relevant rather than just counting on a PLC payment if prices really do collapse. And again, with your choice of ARC or PLC this year, that can lay into that. That merged with your crop insurance choice, yes, can really mean some very meaningful, you know, safety nets in place. And, you know, add that to trying to take advantage of some opportunities that the market may give us. And again, it looks like to me a relatively strong corn market in contrast to a lot of other markets around us, you know, struggling to hang on.

And then just back to the, you know, the very best marketing plan, you know, is getting that breakeven price down. You know, the best place that you can be. And so certainly controlling that cost of production and doing that in a degree that doesn't, you know, we're not going to try to take anything off yield and production, you know, in economic terms to protect our yield base. But obviously keeping that price under or cost under control the best we can to lower that breakeven price. And then it's, there's not a single factor to focus on, absolutely. But all those components together, I think, can still— we're in a world that we can manage what does look like to be a tough year moving ahead, but it's not unmanageable.

And if we do get overcommitted this year and say we sold too much grain too cheap and we've got that 60-70% sold and the market does take off, there's a drought at the end of the year, the geopolitical world changes, and we're surging higher, wouldn't that be a terrible problem to have? That I sold half my crop too cheap and I'm getting a much better price than I ever thought I would get on all the rest of that stuff. And the opportunity that creates for 2026, because I bet most people listening to this are going to be selling corn next year too. Yeah. And if that creates then a better marketing environment moving ahead, if that's the worst problem that we have, I'll take that any day.

Chris: Yep. Yeah, that's the way I've always looked at it. I appreciate that, um, where, you know, you sell and you, you're too heavily sold, you're always long. So, you know, unless it's your last year of farming, you know, right on it as long as you want, I guess. But right, you know, it's a really good, um, conversation. You know, I know Shea has been a fun one to watch, you know, and he's very transparent about his marketing. I mean, he's he was sold to his insurance level on this year's crop a long time ago. He just has always been very aggressive. He's not emotional. He has no emotion at all when it comes to marketing. He really doesn't care. And you say, well, what happens if it goes higher? I don't care. You know, and he's up a little bit on '26, you know, and he just, he's very, he's very disciplined. He's very calculated. And he has no emotion, zero emotion.

So it's been fun to watch somebody that's that regimented, you know, because a lot of times I think we bounce around, we change, you know, from one year to the next. And consistency is pretty important, I think, too.

Mark

Welch: So, yeah, we can learn a lot from those folks.

Chris: Yeah, for sure. It's just there's not very many of them.

Mark

Welch: So, no, you're exactly right.

Chris: Here. All right. Well, hey, this has been a great conversation. I hope everybody had a great Easter and, you know, a safe planting season. And if anybody needs anything, wants other things for us to be chatting on, also, again, make sure you're checking out 19 Minutes. I know there's a thing at the beginning of this, but there'll be a thing in the show notes you can click on to get signed up. Good time to be listening when you're in the planter. A lot of good business topics in there on 19 Minutes. With that said, Again, thanks, Mark. Really appreciate your time today.

Mark

Welch: Thank you, Chris. Always a joy.

Chris: Yeah, Mark Welch at Texas A&M bringing us the information. So really appreciate it. Thanks, everybody. We'll catch you again next time on the Ag View Pitch.