Pre-harvest price prospects: weekly market outlook Aug. 21-25th

Duane

Lowry: Thank you for listening to the Weekly Market Outlook. It is our pleasure to bring an industry-leading market analyst to provide you with the most value possible in your farm business. Please reach out anytime by emailing cbarron@agviewsolutions.com.

Chris

Barron: Welcome everybody to another episode of the Ag View Pitch. We are heading into another marketing week, August 21st through the 25th. And before we get going here with the market conversation, just want to remind everybody about 19 Minutes. One just came out here on the 19th and got some really good content in there. There's 22 episodes in there. If you're not already subscribed and listening, check it out. We do send, send that out. It's on Spotify and some really good content with Shay and I talking about all kinds of business topics. But with that said, We're going to get rolling here with the market outlook with Duane Lowry back again with all kinds of information. Duane, how's it going?

Duane

Lowry: Good, Chris. Glad to be back.

Chris

Barron: Well, it's good to have you. Haven't, haven't had you here for a while. And so excited to kind of get back in the groove and get some of your perspective on some of the things that are going on. And what I was hoping to start with is the crop conditions. We spoke yesterday And, you know, this, this is the Pro Farmer Crop Tour week where the scouts are out in the field this whole entire week. And I'm going to be giving some reports, but from what I've seen driving around, and I told you yesterday offline, kind of stopped and looked at a few fields, looked at a few things. And boy, that from my perspective, the crop looks pretty darn good in a lot of areas. I know the people that are in the pockets where it's not so good. Don't want to hear that, but I'm in one of those pockets too where it doesn't look real great.

But you fix the backyarditis a little bit when you get out and see a lot of what's out there. What are you seeing? What are you hearing? What's your perspective on crop conditions?

Duane

Lowry: Well, I think it's a difficult year to get a confident handle on what the national yield is. I think part of that you know, questioning, trying to— lack of confidence comes from the fact that the vast majority of the month of June was extremely dry. And probably that's probably true for at least 50, if not 60% of US production during that period. Then we had, you know, much improved conditions as far as moisture was concerned during the month of July. But I'm not sure that we banked a lot of moisture into the soil that was beyond what the crop was consuming. And I think that's true for quite a bit of the area. And then since the 1st of August, we've had some good rains over a large part of the US production areas. But We've had minimal amount of precip in the last week or so for many areas.

And we're going to— looks like we're going to finish out the month of August with very little rain anywhere in the major production areas. And I don't think that's going to fare too well for finishing. And I think it's going to be a threat to soybean yields. And then we have, you know, a temporary period of heat to experience with that. So, you know, how's that going to impact it? And even from the time when we had increase of moisture, say you'd go back to say June 25th and take it to August 1st, you know, you still had key areas that were on the, you know, below normal and not by a small amount. I mean, Iowa during that period, probably in the upper 40% of normal to maybe 75% of normal in the best areas, and with most areas probably still at 55% of normal production or normal precip.

Missouri, Minnesota, North Dakota, South Dakota all probably fell somewhere in that 70% of normal precip. And the point here isn't that you created crop stress during the period. The point here is that you didn't really build any soil moisture reserves. And a lot of times when we get into this August timeframe, and we get some periods of crop stress, whether that's moisture or heat, it ends up being not as bad as worst fears. I'd say that would be the, you know, most common thing to happen. But the thing that makes this year a little different, I think, is the fact that we just have such poor, uh, soil moisture content. And for many areas, this has been true for 2 years. We've kind of been getting by on, on not a lot of soil moisture reserve. And the area that's probably, uh, uh, based on just looking at soil moisture and precip as a percent of normal, probably is the state of Iowa.

That's probably the, the worst of any place. You have parts of Minnesota, you got parts of Missouri. But I think it's probably Iowa that's suffering the most from that. And I don't know how that pans out. I mean, the current USDA yields are, you know, still very close to record in corn. It's not quite a record, but it's, it's perched right up there close. The trend has been in August they lowered the yields from the what they had in July. My inclination is to think that we're probably going to get a lower yield in the next report. And if it's true that the national yields are better than expected, and to your point, from your travels, the crops look good. If that ends up being the prevailing situation, I'm suspicious we won't get that until, you know, October at the earliest and possibly later and maybe not until January.

So between now and harvest, I think the production ideas are going to slip. I think that's a decent chance that's what happens from USDA. And I think that that's probably going to be a perception in the marketplace is that maybe we're shaving some bushels off the fact that we're not finishing well in terms of of moisture, and the forecast has been consistent and remains consistent today, which is Saturday, that, um, over the next 10 days to 2 weeks, there's just very little precip anywhere in any of the main production areas. So we throw all that together, I'm suspicious that we've got a period of time where, right or wrong, the marketplace is going to think that yields are declining to some extent. Um, keep in mind that the backdrop that this is occurring is The trader sentiment has been over the last few to several weeks bearish to quite bearish to little confidence in any rally.

And if there is a rally, nobody expects it to hold. I've heard a lot of extremely bearish comments that we're going to have Dec corn at $4 by harvest. I've heard people say that we're going to be at $3.50. At next year's harvest. And I don't believe either of those two scenarios are correct. But I am just trying to convey that the market sentiment is definitely not bullish. And I would argue quite universally bearish, with the only argument amongst the bears about the degree of the bearishness. So giving that as a backdrop and giving what we're dealing with, that the present time where the, the, uh, we're going to finish out August with, you know, no precip and some heat stress, you know, we do have an opportunity where we can build upon the strength that was found, uh, this week. It would be my overall feeling.

So, so in terms of crop conditions, I think there's a period of time where the marketplace, uh, at minimum is uncertain about sustaining the current yields from USDA, and there's probably a leaning that those yield ideas will come down.

Chris

Barron: Yeah, that's interesting. You know, the— you kind of got into my second topic there on the yield prospects and where USDA numbers are. And, you know, in the last report, you know, the 175.1 and 50.9, I think it was, you know, if, if those numbers are moved down, so let's say, you know, Pro Farmer comes out with a lower number and then the USDA in the next report and in September, you know, because they've got— they're using actual in-field data. Does the market respond to that, do you think, from where we're at, say, you know, where we kind of finished last week? And, you know, maybe the market responds a little bit to Pro Farmer, maybe it doesn't. But, you know, there's other things we'll talk about in a minute here. But, you know, if we carve another couple of bushels off of corn, you know, maybe carve it back down to that $173, $172 range or something.

They don't ever seem to move it drastically unless there's some major surprise. And then, you know, if we trim soybeans, it seems like soybeans is the one that's jittery here. What do you see the market doing if we— if Pro Farmer trims it and the USDA? Is there some hope for some counter-seasonal or, you know, price opportunities? Going into actual harvest, do you think?

Duane

Lowry: Well, let's start with corn. Whether it's Pro Farmer or it's other sources or it's USDA, ultimately that lowers corn yield, and they happen to lower it 2 bushels as you suggested there. I think the marketplace sentiment today is, so what? They think that we will still have a plentiful enough supply. The marketplace in terms of corn believes it's very possible for, uh, it's very possible that USDA's current export projections are overstated. And, uh, so they, the marketplace feels you can reduce the U.S. yield and still not have an overall problem. And in general concepts, I would probably agree with that. General statement. But because that has been a prevailing sentiment for some time, and because the market has sold off, and we've gotten, you know, spot corn got futures got down to $4.60-something.

And, you know, for months I had talked about the downside risk being somewhere in that $4.50 to $4.80 zone, we've achieved that with a spot contract, we've achieved that with the Dec corn contract. And these are some of the cheapest prices we've been for quite some time. And so if you take a step back and take a big picture, you can argue that the corn market has absorbed a lot of bearishness, a lot of bearish sentiment, achieved downside price targets. They've had a major liquidation flush in that process. They've demoralized trader sentiment and any sort of optimism. They've demoralized producer optimism about price recovery. So many of those things that you look for when a market has achieved a level that maybe it doesn't have a lot more to go, a lot of that has already happened.

And, and so it's possible that if soybeans and/or wheat stage a very good rally here, that corn can tag along with some recovery. But the overall prevailing sentiment, and I would probably tend to agree with this, that is that even if we get a recovery in corn prices, and even if it would happen to be 30 cents, and we took Dec corn back to $5.20 or even $5.30, the, the odds of that being a pre-harvest peak from which prices can fall again would probably be quite high. So That's kind of a long answer to your question. But I think that the— even if the yields are down, the marketplace isn't going to get very bullish. And but that doesn't mean it can't get a reaction to it, especially if maybe soybeans are performing much better. So there's some room for price recovery here. But it may not be sustainable when you look ahead, you know, as you get into October, November, December.

And as far as soybeans are concerned, that's the real kicker. And if they lower the soybean yield again, you know, we're going to get carryout to levels we haven't been at for a while. I mean, currently, USDA has projected 245 million carryout. Last year, we were 260. The year before that, it was 274. And the year before that, it was 257. So we're already looking at a carryout projection that's the lowest of the last 4 years. And if you look at where November beans are, this is after Friday's gains, you're at $13.53. And you compare that with spot soybean prices that we've been at since— let's just go back to January 1st of '21. We've only been below current prices of November futures about 15 to 17% of the time in that window.

So if you're a world consumer buyer, and you're looking at November beans at $13.53, and you've been dealing with basically 3 years of prices, this is— these prices are cheap. And if you look at the US carryout at 245, I want to go back and put this in perspective. When was it? Was it July that they lowered acres? Or maybe it was June, they lowered acres by 4 million acres. Okay. Well, 4 million acres is a huge drop. And somehow magically, USDA decided they were going to cut demand and exports by 150 million bushels. And if you look at the— they're deeper into their balance sheet, and you look at their projections for South America, They didn't suddenly shift that business there. They just took it out. They just said, no, we're not— we're just not going to have that demand.

Now, ultimately, global supplies are ample, they're plentiful, and these— this tight US balance sheet, you know, isn't necessarily a problem on a global perspective. But the process of shifting demand from US to South America requires certain things to happen in the marketplace. It also requires not having a production problem in South America. And that even if that ultimately ends up being the case, that doesn't mean the marketplace can't be nervous about it for a period of time between now and, and early January. And so you've got a situation here where USDA has kind of arbitrarily lowered this demand, which I argue there's nothing that suggests that there's merit in that. I think they backed into that number because if they had just dropped the acres 4 million and dropped the production and supply by what amount that represents, suddenly your carryout is under 100 million bushels.

And oh my gosh, they can't allow that. And so that's, that's why they just whacked off the US exports. And I think the marketplace is The global buyer is going to look at this and say, well, US soybeans are going to be the strongest per se for a period of time. So if anybody's going to step up and, and try to get coverage, they're going to buy US sourced soybeans. And then later down the road, maybe they'll change it and switch it out to a different origin. In this process of getting this all done, I think soybeans are too cheap. And I would have said that a week ago or 2 weeks ago or 3 weeks ago. They're too cheap relative to where we've been in recent history. And with, you know, 4 million acres less. So I think there's a chance here, because of the fact that the August weather also is playing into this, is not just this loss of 4 million acres.

There's a chance here that this August weather that we have, and just the momentum of the marketplace, and the the back— again, against a backdrop where the trader sentiment has been, I argue, too bearish given the set of fundamentals that I just described. And I think the marketplace is caught out of position by this rally. If you recall, we had this weather forecast for a few to several days and got virtually no reaction in the corn and the beans. In fact, we probably made the lows, uh, when that forecast was out there. So I think there's some opportunity that beans can surprise people to the upside here. And at the risk of sounding crazy, or more crazy than maybe people perceive me anyway, you know, soybeans could have a dollar of upside here at $13.53 to get back to $14.50, $14.75. That's not an unreasonable possibility. And that would represent a new contract high.

So that's a pretty significant development. But again, if you look at where we've been the last 3 years on spot soybean prices, we're still cheap. We're, you know, on a scale of 0 to 100, we're only at like 16, 17 of where we've been over this last 3 years. And so there's plenty of opportunities for the soybean market to rally. And the midpoint of that happens to be probably around $14.75 of that last near 3-year period. So a return to that would not be unreasonable. If beans were to manage to get another dollar, that could drag up— that could be what it takes to drag the corn up, you know, 30, 20, or probably 30 cents. Okay. And in the end, that rally in corn might not be sustainable. In the end, the rally in soybeans might not be sustainable.

But the timeframe of when you get to the end for soybeans, maybe we have to— maybe the market is well supported even with US harvest until the market can be more confident about a return to favorable or normal production in South America. So the marketplace has some what-ifs in front of us that it needs to respect in the case of soybeans, and that's much more true than it is for corn.

Chris

Barron: Yeah, the demand side of the equation is a, is a big component too, because, you know, we, we're all still pretty focused on the production side of the equation. That demand does have to come from somewhere though, too, right? I mean, it's not a lot of that doesn't come just from the, you know, just from the production side. The other comment I want to make, and you can, you can go off on this one too, but is, you know, for a lot of producers, they're going to be cheerleading for the price to go down, down, down during the month of October, during the insurance discovery, you know, the fall price discovery period. And what you're talking about, it actually could, could go the other way. In that event, it looks like it, like 502, I think it is, at 85% APH, you start getting into the indemnity realm of, on the insurance.

And I, and I know there's a lot of producers that are probably on that fence at 80%, you know, there's probably less likely of an indemnity payment if you're yielding your APH, you know, I think that's, you know, the number probably off top of your head somewhere in that 4 $4.80 range, I think it is, or $4.70-something, high 70s. So talk a little bit about that, or what you see, you know, coming into harvest. And then also, I mean, there's going to be a basis discussion. So quick, quick two cents on what I just said, and then I want to hit some stuff on basis too.

Duane

Lowry: Well, in terms of the crop insurance, the producer that has the most at risk on a rally here would be the guy that has the margin margin protection policy. And I've been talking about for the last 1 or 2 weeks trying to encourage people to at least consider the fact that if they have a fairly large percentage of their expected production sold and, and let's just say anything greater than 50%, then that guy that has that margin protection policy has the most to lose and will lose net revenue if he looks at his overall situation if the price rallies. The guy that's got the 85% policy, he's going to lose a little bit, uh, if the market rallies, but he doesn't really have enough that maybe warrants trying to offset that risk by doing something bullish in the corn market to protect against that. The margin protection policy has a different calculation.

If he's got a fairly decent amount of his crop sold, um, he's his incentive to do something to offset a risk of the price rallying and therefore reducing this imaginary indemnity payment that theoretically exists today but may not exist, or it might exist in some lesser degree in October. He has a greater incentive for that. But in terms of the timing of this, if— and this is a capital if— if the soybean market happened to continue to gravitate higher, stayed higher into and through the US harvest, because at the same time, the marketplace became less confident or became more uncertain about a South American production capability, that environment could possibly keep corn elevated somewhere, you know, $5.20+ maybe, but it's also possible that the corn and soybeans kind of move independently here.

And, and even if we got a rally to $5.20+ in Dec corn, say, over the next 2 or 3 weeks, you could still find yourself back to current levels by the time you get to October. Um, but, um, I, I do have concern for, especially for that margin, uh, policy, margin protection crop insurance policy guy that has a lot of his crops sold, I do have concern that the corn market could rally enough to take away some of this imaginary indemnity payment. And I have in the back of my mind a bit of a concern corn market maybe rallies more than people think it can right now. And So that is a risk. And as far as the soybeans are concerned, I don't think we have anything like that to deal with.

Chris

Barron: And to get it to rally enough where the, the margin that people would like to get on the balance of not sold bushels is going to be difficult to get to probably those wishful levels. But on the same token, I think, you know, the thing that, that what we're seeing, so we've been out in the last 3 or 4 weeks doing on-farm visits, doing '23 cash flows and '24 outlooks and estimates and those kinds of things. And, and, you know, what I'm seeing is a lot of people, you know, sort of on average, and I haven't actually done the numbers exactly, but I'd estimate probably our clients that I've worked with in the last month here, probably 60% sold on corn, and probably about 50 to maybe not quite 60% sold on soybeans. At pretty darn good levels, I mean, approaching $6. And so to make sales in that low 5 range is, is hard when your last sale was, you know, significantly higher.

But I think a person still needs to look at what that average is, you know, and maybe have some targets. And, you know, especially like in your, your case, if you think maybe we could rally a little higher, I think a person needs to have those offer sitting out there because sometimes those things— and I sound like a broken record saying this, but, you know, every time you get a rally, a lot of times you only have 5 minutes or it happens in the middle of the night. And start, I think, calculating what your average selling price is because to hit the highs and hit those, those opportunities when we ebb and flow higher and lower, you know, what I'm hearing you say is those rallies are probably some selling opportunities to kind of keep, you know, keep plugging some of that in if I'm hearing you right.

Duane

Lowry: A few things here to unpack that. Um, yes, I think it— I definitely agree that the offers should be in place. And if I were to pick a range where those offers go, I think they go— they're $520,000 to $550,000. And the chance of getting $550,000 is probably low. The chance of getting $520,000, I'd say, is probably pretty decent., and, you know, some sort of scaled-in approach. And for the guy that's got a lot of sales on the books at quite a bit higher prices, these may not be good prices, but the, the per— you can't evaluate the merit of selling the price of the re— those remaining bushels against those old values. You gotta evaluate it given the set of situation we're dealing with and what, what is the potential.

I don't think it's likely we're going back to the levels that they had those previous sales, So if they wait for that, they might as well wait till next September and then plan on dumping it just before harvest. I mean, they're probably, you know, they may not get anything. The other thing to look at here is, there's a possibility here that, to your point from early in the podcast, your inclination is to think the US corn crop could be better than people expect. And I don't have, I don't, I don't have a reason to really argue very hard against that. The only thing I'm trying to say is we could have a period of time here, a window of time where the marketplace doesn't believe that or is concerned that that is not the case. So in the end, I think there's a chance that you're right. If that is the case, and if the U.S.

corn crop really is 175 or higher, then there's a real possibility that the corn market is quote unquote no good.. And there's a possibility that the market will, will not be able to earn its carry that will be built into the futures market, say, between now and March or April. And if that's the case, you know, this $4.50 to $4.80 zone for spot futures, we may revisit that multiple times. We may see each deferred contract come back and chew into that area and we may spend some time in that type of atmosphere. And if that's what we have, then this pre-harvest rally, this pre-harvest peak from which you can fall, I think has to be seen as a selling opportunity. This is a little bit of a corn market of old. We haven't seen this recently, but this is— I've seen this work out this way many times in the past.

And I, I, I think that's what producers need to prepare for, they need to anticipate, and they need to protect against that situation. And going on, one other point I want to make, you, your clientele is, is probably a different clientele than the overall average of all producers. Yeah. And if they're, if your clientele is 60% sold, I would argue there's many, many producers that are far less sold than that. Oh, yeah. And I would argue there's probably quite a few that have, you know, very minimal amount. Those guys have the most at risk if the scenario I just talked about, where the corn market is no good and can't earn its carry. Those are the ones that are— have the greatest exposure here. Because none of these prices are going to look good. They had a production year with high input costs, interest rates are much more than they've been for several, several years.

And therefore, the cost of carrying that inventory is going to really weigh on them as they look ahead 3, 4, 5, 6 months. And I think all of that makes this rally— if we get this rally, this pre-harvest rally, it makes it more important to, to try to put yourself in a position where you don't have that risk on such a large percentage of your crop.

Chris

Barron: Right.

Duane

Lowry: Yeah.

Chris

Barron: I mean, you know, if you're, if you're selling $5.20 corn for October delivery, if you're going to wait till July, I mean, that's, that's kind of like selling with no carry. I mean, the problem with carry in the market now, and you said it, is the cost of the money. And, you know, so selling $5.20 corn in October, you're going to need $5.40 in in January to make that work, to cover the cost of your in and out and your, and your interest cost. I mean, it just, it, it's just a whole different scenario now than it was, which leads me to the basis conversation as we get closer to wrapping up here is, you know, if, if you've got a good basis and you can get some basis numbers locked in earlier rather than later, do the math and figure out, well, what's it going to cost me?

And if I've got money borrowed on a line of credit, um, we need to get that zeroed out, you know, on the front end of harvest if we can, um, for those operations. And there's a lot of them that have money borrowed, you know, at the very beginning of harvest. And at least cleaning that part up and recognizing the cost to carry is, I think, is huge.

Duane

Lowry: Yeah, and as far as that brings up another point, we talked about basis. If you happen to be in an area or you happen to have the varieties planted or whatever, that allows you to capture some very early harvest bids that are still, you know, impacted by old crop price structures, and you can get some positive basis or get a much better basis than the gut slot harvest window, I would encourage anybody and everybody to try to take advantage of that situation. And the— whether you've got a lot sold or whether you've got very little sold, because I'm not sure that will last. And I'm, I'm not the right person on, on your list to ask about a lot about basis. But I will just throw out there that I have concerns that because we might be dealing in a situation where demand projections are constantly lowered, as we go into this marketing year.

This, this of course is absent a major problem in South America. But we might be in a situation where exports are continually lower. The domestic demand is pretty stagnant. And the overall supply situation, especially since I think most producers have way too little sold, I'm afraid that the farmer is going to be storing a lot.. And that's going to be a heavy cloud over the market. And I have concern that the basis will not perform like it has in the last few to several years where you get this big improvement in basis after harvest into that December, January period. And I'm afraid that there's a possibility basis will be an underperformer here. I'm not so confident that I'm would really encourage anybody to go out there and lock in basis. That's not my point.

But my point is that there's a possibility that we're really going to struggle to find a way to make storing the crop, the physical bushels really work.

Chris

Barron: Yeah, I want to wrap up with a silver lining here. We've talked about a fair amount of negative things and a fair amount of things to pay attention to. But one thing I want to make sure that we talk about here as we finish up is 2024, I talked to you offline. You asked a couple of really good questions yesterday as we talked about recording this and what I'm seeing with a lot of the 2024 plans. So we, you know, we roll '23 over to '24, we're seeing a significant cost of production drop. It varies. You know, I was thinking about mentioning a number. I don't think I'm going to because I haven't actually calculated exactly what it is yet, but It's significant to the point where, you know, $5.20 to $5.40 sales for, you know, the— in this use corn as an example for the conversation here, but, you know, that's, that's kicking out about a 10 to 12%, somewhere in that range, average ROI.

That's pretty darn good this early. And I think, you know, the thing that scares me is the potential or the threat that, you know, this whole thing could shift in if in fact the yields are good, if in fact South America steps in and, and just hammers out, you know, another killer crop again. And you couple that with the pressure, potential pressure of, of just the fact that demand is kind of crappy, and it's going to take China, or, you know, somebody's got to buy this stuff. And so I guess what I'm saying is there's a silver lining there for 2024. I think people, if, if you, if in fact what you just talked about would happen to occur, you know, going into harvest and the numbers come in lower by Pro Farmer and the numbers come in lower with the USDA in September and we get a rally, I think we need to really be watching 2024. That's what I want to wrap up with. Any, any comments on that?

And then we'll kind of wrap this baby up.

Duane

Lowry: Well, okay. A few things. You started out that saying that we've said a lot of negative things. One thing that I think is positive that we haven't talked about, I think the wheat market could be very, very well supported may be very firm and maybe has, you know, a couple of dollars of upside potential at minimum over the next few to several months. That could help support the price of corn too. However, if, if you take a look at production capability in the US and South America, if both of those end up, you know, having good crops, and then there'll be a natural optimism that starts out the 2024 U.S. production cycle season. We have the capacity to produce and build ending stocks and make what would appear statistically as a very burdensome situation.

So there are— that provides the rationale and the reason that producers have merit in taking a defensive approach to the 2024 production. And therefore, if the futures market for 2024 provides a profitable return, and a, you know, a desirable return to management, and covers, even though costs are down, you're talking about, you know, production costs, but labor costs, equipment costs, interest, all these other factors, and still, we're still functioning in a backdrop of inflation that probably isn't going away. And, um, uh, so it, it, it does give merit in, in, uh, seeing value and trying to protect that and to make some sales in 2024.

And I think a guy needs to be mindful of that, um, because even if 2024 ends up offering better prices than that, it's possible that between now and next summer, uh, there's going to be, uh, times where these prices, uh, look very depressing, and, or at least people have the fear of it being depressing. So there's merit in looking at that, right? Um, I think that's, uh, legitimate. Um, I also, in the same token, I don't want it to sound, um, I don't want to be complacent to 2024 and think that there's not some scenario that causes prices to go higher, and for these to be sales of regret either. Yeah, there's a lot of them.

Chris

Barron: But I think just keeping, you know, keeping the opportunities for those price plugins, you know, having, you know, again, just having some, some offers in there for some incremental sales at levels that do generate, you know, because what I'm seeing is a lot of people have bought fertilizer and bought inputs. And what I'm also seeing is that they're not quite one-to-one yet. And I'm not saying sell the farm, I'm just saying that, you know, if you've, if you've bought $500,000 worth of inputs, collectively between, say, fertilizer and nitrogen, or, you know, you know what your rents are locked in, or, you know, you've got, you know, like our guys all have their, their machinery and equipment. Costs dialed in essentially to the penny per acre. And so they know what a high percentage of their costs are.

And so, you know, if they can lock in a margin on those known expenses, you know, that's just good business. And yeah, is there potential opportunity above that? Probably is. So I'm not saying, you know, go gung-ho, but I'm just saying pay attention to these, you know, these numbers real close.

Duane

Lowry: I agree with that totally. Because anybody that's been involved in agriculture for any length of time knows that we've had, you know, a few plus years of very good return here. And the farmer tends to get a target on their back when that happens. And if the Fed wants to fight inflation, you know, this is going to be one place they could do it. And there's nothing that says that production agriculture can't experience drawdowns in equity. We've seen it before. And if you look at raw data and imagine normal production cycles, we could easily get into that situation again. So there is a reason for being defensive. And I think one should take a, defensive approach not only on 2024, but also on, on remaining unsold bushels in '23 production. So I'm, I'm totally in that camp.

And hopefully, over the next few weeks, the marketplace will offer some, you know, more respectable opportunities to do so.

Chris

Barron: Yeah. Well, hey, Duane, this has been a good, good conversation. I don't think we're giving any recommendations here. But we are making sure that we all, we all need to really keep our eyes open, watch this stuff super close. Harvest is getting near really fast here for us all. Maybe faster than we want the crop to get ready. But I think everybody just needs to keep an eye on stuff. And as usual, Duane, you had some really good perspective there and things for us to think about and look forward to getting you back again real soon.

Duane

Lowry: All right. Thank you, Chris.

Chris

Barron: Yeah, thanks, Duane. And also like to thank everybody for listening. As you get closer to getting things ready, if you got any questions or things that you'd like us to be hitting on either 19 Minutes, if you're, if you're listening to that or any other business content or marketing questions that you have, get those to us because we will address those things on the podcast here. So with that said, Hope everybody has a great week, and we will catch you again next time on the Ag View Pitch.