Start your engines: Sunday night market outlook

Narrator: Welcome back to the Egg View Pitch, everyone. Today, Chris and Duane discuss 2020 acreage plans, the validity or lack of USDA's 10-year baseline projections, Phase 1 potential, and this past week's poor corn price action performance. And Duane makes a promise to the Egg View Pitch listeners that you won't want to miss. Also, in honor of today's Daytona 500 race, here's a special introduction from 2013 we hope you all enjoy as you get things ready in the shop to soon start your engines.

Junior

Johnson: Race fans, it's time for the most famous words in motorsports. Here to give the command, please welcome your Grand Marshal, winner of 50 Sprint Cup races, charter member of the NASCAR Hall of Fame. Please welcome your Grand Marshal, the last American hero, Mr. Junior Johnson. Drivers, start your engines!

Chris: Welcome everybody to another episode of the Ag View Pitch. We're heading into a new week and you've got Chris Barron and Duane Lowry. How's it going, Duane?

Duane

Lowry: Good, Chris.

Chris: Great. So hey, we're, we're entering, what is this, week 3 now of the discovery period for crop insurance. Let's start there. Where are we at at this point in the middle of the month on corn and soybean insurance levels?

Duane

Lowry: We're just under $3.92 on corn, which is $0.08 below last year, and we're just under $9.20 on November beans, which is about $0.30 below last year. And it's quite clear now with 2 weeks behind us that the marketplace has no interest in getting values up to something more palatable or something equal or better than last month, which prior to the 1st of February, you know, I think that argument was in play that, that the, they may very well have been wanting to provide some sort of safety net to the farmer from that perspective. Now it gives the impression that the marketplace is going to try to send the signal to that which is more of an economic signal that, uh, the marketplace doesn't want any of your acres and, uh, they don't want, uh, any extra large corn acres, but in the same token, the marketplace isn't sending a very positive signal with beans either.

So, um, it's almost a certainty that we're going to have a February price less than last year in both of them. And depending on how the next 2 weeks unfold, it's possible this could get a little bit worse.

Chris: Yeah, I mean, we're looking at it from our angle, from, you know, doing the cost production, that kind of thing. $20 an acre doesn't seem like a big deal of less coverage, but it, it sort of is like we talked about last week on both corn and soybeans. So that, that's kind of an issue. And the corn market's been pretty sluggish this week. I mean, what do you, what do you thinks the cause of that, and what's your thoughts?

Duane

Lowry: I'm not sure exactly what the cause is, but I'll throw out a few possibilities. In the case of the corn market, it's really been sluggish since, you know, since January, and, you know, for almost a month here. And if you want to look at a little bit bigger picture, you can probably argue it's been sluggish for a longer period of time than that. But in terms of the recent history, we've been in a very narrow range. Friday's price action was poor. I thought Thursday was a very poor performance. The market has missed a lot of opportunities for corn to get upside follow-through to generate something. You've had technical conditions in position to build some sort of upside momentum, chase shorts, etc. Multiple different times in the last couple of months, and we've never been able to generate any follow-through. We get a good one-day performance and then it would fail.

And, you know, we had a good performance on corn on Wednesday, and I thought for sure that we would be up on Thursday. Instead, we were down, and that was, I thought, very poor performance. And those that get my daily commentary saw that I was not at all pleased with the performance on Thursday in my Friday morning writing, and Friday sells off as well. The corn market's got a couple of different possible scenarios here. If you want to be— well, let's start out this way. If you, if you're looking to— if you look at price action, it looks like they're going to chase out some longs. They're going— they want to go on a stop hunting expedition here is what it looks like right now. And it's looked like that before, probably also multiple different times, and the market held together and rejected that. But, you know, you knock on a door long enough, eventually it's going to open.

And I'm afraid that's what's going to happen with corn here, that we're going to get some sort of a sell-off. And then what that sell-off looks like, you have a couple different choices. This could be a you know, 7 to 10 cent sell-off, generate stops, take out chart points, get some liquidation, trick some people into selling weakness, that kind of thing. And the next thing you know, you got a 7 or 10 cent break. That storyline would fit with the idea that we have a lot of March basis contracts held by producers, which is basically an annual occurrence. And, uh, it— at this point, because of the price action over the last several days, there seems like there's a heavy hand that keeps the market from going up. And so in the next week or so, a lot of these longs and these basis contracts are going to be forced to either roll or to price.

And the discouragement level and the fear level is so high that I am sure a chunk of producers with those basis contracts will opt not to pay a rolling fee and just out of disgust will want to get it priced, and they'll be fearful of lower values. That type of scenario, um, implies weakness during the next several days, and I would say the quantity of weakness for that, something like that, is probably 7 to 10 cents. If you want to take a more bearish view of the corn market and a more fearful view, then you're talking about the possibility of maybe 20 or 25 cents down from where you're at.

And that type of scenario— and I'm talking about the front month, the old crop months— under that type of scenario, if it happens to be one that is more prolonged, takes a few to several weeks to unfold, and with that would imply, you know, we didn't get any Chinese corn purchases in the nearby timeframe, the weather forecast looked like you were going to have a you know, favorable or acceptable start to the spring planting season or spring weather warm-up period, or however you want to call it, that would imply more of a prolonged break, as in take several weeks. Under that scenario, if you got the front end to drop $0.20, you might get the Dec to drop even more than that.

I'm not— I don't really embrace that way of thinking, but I'm just saying you have to consider it as a real possibility for the purpose of the fact that we've had several weeks to try to have the corn market perform well. We've had days where it looked like it was going to perform well, and then we get no follow-through the next day. And, uh, I am concerned that, uh, we're going to see some type of sell-off here. And which of those two sell-off scenarios it's going to be, I'm not sure. But, you know, it's, it's not a very good feeling here for corn.

Chris: Well, one thing that would do You know, wouldn't it really continue to strengthen cash basis levels? I mean, we had last week several clients again talking about some really strong spot bids with really strong basis levels, almost record levels in several areas, and Cedar Rapids was one of them. Cedar Rapids, Iowa. So, you know, wouldn't that continue just to make basis that much stronger yet?

Duane

Lowry: Yes, I would have to agree that that would be a logical expectation, and I would agree with that expectation. I would also say that it implies that the corn spreads will stay firm with nearby not falling as much as the new crop December. So I would, I would say that is an offshoot of that, and I would also add that as negative as what I am saying here probably comes across, and it is, you know, discouraging and disgusting all together. In the case of old crop, at minimum, this would probably be a temporary sell-off, and it would probably still lead to some level of a higher value down the road. In the case of new crop, it might very well be temporary as well, but it's, it's going to feel much worse than the word temporary implies.

But for a bit of encouragement, I just want to say again, I've said it before, for the last 13 years, there's only been one year that the December, January, and February high of the December contract of corn was not violated later in that, in that growing season, whether that was days or weeks later, it's always been violated with the exception of one time, and that was in 2013 when we were retreating off of some very high levels. Completely different scenario than this year. So if you are betting— and by the way, that November, December, January, or the— excuse me, the December, January, February high so far in Dec corn is $4.04 and 3/4. So if you don't think that's going to happen, you're saying that between now and the rest of your opportunities during the growing season to make a sale, you're not going to get a chance to sell Dec corn at $4.05, let's call it.

Then you are betting against, uh, a 12 out of 13 year history of recent history. And I don't think that's a very good bet. So I think that gives you some level of optimism that whatever this weakness is, it's probably going to be temporary.

Chris: Well, from what we're seeing, we're still getting around to a lot of growers and, and we're seeing a lot of cost of production numbers for people across the country. And, and we're gonna have to get back to that level to get black ink on the bottom line for most of the people we're working with, you know, when we look at their numbers and look at their true cost of production, and I know the market really doesn't care that much, but that's just kind of where we're going to have to be. And we're going to, you know, hopefully being patient is going to pay off to get to those levels and just being calm and kind of waiting it out a little bit on the new crop. Same thing with soybeans. I mean, we're seeing a way worse scenario there. I mean, The $9.20 is not going to cut it.

I mean, we're going to need to see either levels back up close to $10 to get black ink on the bottom line, or we're going to have to have another MFP round or some kind of thing, because that's really the only thing when we look at the 2019 information that kind of kept people in the, in the black this year was purely the MFP. And about 90% of the cases, there's— it's very rare that you pull that money out of the equation that there would have been black ink in the bottom line.

Duane

Lowry: Just a comment, I guess, but You know, I imagine somewhere along the line here this morning we're going to talk about acreage mix.

Chris: Yeah, let's do that, because going into 2020, I mean, that, that's kind of where I was leading you, I guess. But you know, what's your thought there?

Duane

Lowry: Well, the first thought I have about acreage mix is, number one, I have no idea. And I think nobody else does either. And, and I actually find it a little bit futile, futile to try to think about wasting too many brain cells on trying to anticipate what that acreage mix is going to be, because number one, it doesn't matter if you're right or, or not unless you pick the number USDA picks. There's no point in guessing. And in terms of what USDA is going to guess, I have no idea. I can't even figure out what farmers are thinking. I know this— conversations going back to last August have been that farmers are fearful of some big huge acreage number. A lot of people say we're gonna plant 100 million acres of corn this year. I think there's a 0% chance we're gonna plant 100 million acres of corn. But could it be 95 million? Yes.

And I'd say, you know, somewhere around 95 million or less is probably the reasonable answer. I'm also inclined to think that whatever the expectation is, that the final, the real number is probably going to be a little bit less than that. But that's neither here nor there.

Chris: What's that do for soybeans then?

Duane

Lowry: Well, that's just it. I mean, I'm going to, before I get to a real answer on that, I'm going to throw a question back to you. I want to talk about the USDA came out with 10-year baseline numbers on Friday. I want to talk about that. In more depth later, but in the, in the near term, well, let's just do this. I'm going to ask you the question. The price on corn is not very profitable for most operations. The price on beans is not profitable for hardly any operation. And, but yet, if you're a corn and soybean farmer, you're— you only have choices. You're either going to plant your normal acreage and then figure out which is less painful and plant it, or you're going to plant less acres. So I'm assuming nobody's going to go out here and voluntarily have their own 20/20 set-aside program.

So what exactly is a farmer going to do that is in the corn-soybean rotation given today's prices and and to whatever extent that outlook factors into it. So I'm going to ask you, what, what are operations going to do for in terms of acreage?

Chris: Well, I think in general, a lot of operations aren't going to change their plan that much. But unfortunately, if you sit down and really crank on the numbers, what we're seeing is $50 to depends on the area and basis and stuff. But, you know, it's pretty easy to see a $50 an acre difference, you know, with beans being less revenue than corn by at least that number. Plus, when you look at the insurance level that you, you can't buy on the soybeans versus the corn, and then you take into account all the prevent plant acres in the north and all that kind of thing that, that growers will need to use those corn acres for, um, on the, on the prevent plant side to the north, because there's so many acres that aren't even yet harvested.

So a lot of that corn up there is not going to get planted, partially because of price and partially because they need to use their corn acres for their prevent plant versus other crops. So, you know, they might end up planting a few more beans to the north, but the weather is going to have to be conducive for it. And the conditions are gonna have to be right. And, you know, to the south, I think it's going to be, it's going to be corn and cotton, it's not going to be soybeans, at least from what we're seeing. I just, I just, that's why I was asking you on the soybean acres. I don't know how the soybean acres gain anything or, or get to any lofty levels at all, just because, I mean, the market's 75 cents away from being able to grab any, any acres more than what people would absolutely plant just because it's in the rotation and they either can't change or they won't change it.

To bring any more acres in aside from those acres. I think you need 75 cents on the bean market to a buck to, to pull any more acres over.

Duane

Lowry: Well, there's nothing economically sending a message to the farmer to plant soybeans whatsoever.

Chris: Not at all.

Duane

Lowry: You're going to plant soybeans solely out of habit, solely out of a rotation that they don't want to change. Um, and I'm not saying that's wrong. I'm just saying that's what it's going to be. It's not going to be due to economics. In the case of, you know, the Midwest farmer that's in that rotation, I would say given historical relationships— and I, this is just me thinking out loud, I don't know if I could back it up with facts or not— but it seems to me that current profit differentials between corn and soybeans has got to be on the, the wider side of where they've been before. And I know that we have seen producers in the Midwest opt for more corn acres on a— as a general theme, uh, over the last, uh, 10-plus years. Um, not all operations, but some operations that used to be 50/50 have been 100% corn for a period of time. They've been They've gone to 75-25.

They've gone to, you know, some level that's heavily weighted towards corn. But then there's another group of farmers that haven't made that move. They've maintained a rotation or only changed it slightly. One, is my statement correct that the differential between corn net profit versus bean net profit is the, you know, is at the bottom side of the last 10-plus years for, for favoring beans. In other words, beans is about as poor as they've been. And if one, if that's true, then, um, is it possible that some farmers that have, have refused to alter their rotation, is that enough of an economic incentive to get them to do more corn and less beans and follow maybe the pathway their neighbor's been on for the last 10 years or not? So I'll throw that to you.

Chris: Yeah, I think it's going to change some of the acres a little bit, but the problem is, is I think back to the, you know, a lot of people won't change because they don't feel like they can handle the excess bushels. They've got a lot of land paid for and they aren't really looking at their costs. I mean, they are, but they aren't maybe as granularly as they should, you know, really dialing it in. And so it's just a, it's a, it's the path of less resistance from the production side of things in some cases, you know, with all due respect.

Duane

Lowry: And what's that then? What about the, the maybe peripheral areas of the Midwest? Are— do they have, uh, where do they line up? I mean, beans is not—

Chris: they're not going to favor beans, but they're going to plant a lot less corn in the north because of the, um, all of the acres that are yet to be harvested. Specifically North Dakota as an example, you know, the conditions are not good. What does, does get planted, they're gonna not plant all of their corn acres because there's undoubtedly, with as wet as it is, unless you have Hawaiian-type weather in the north for a month in March or whatever, mid-April, they're not going to be able to get planted to corn in a timely manner. And plus they get paid a lot more on the prevent plant acres for corn. So they will utilize those acres. So as a result, there'll be a lot less corn acres planted to the north, in my opinion. What might offset that though is the acres to the south where guys will plant corn instead of cotton.

So I don't know, those will probably balance each other back out, just from my observation of what we're seeing.

Duane

Lowry: Well, the guys in the north and the people that have contacts in the north are people who have paid attention to what's going on there. Right or wrong, they're fearful that it's so wet that, you know, they may have a problem getting it planted next year. And they're also concerned that even if they do get it planted, what's that, you know, what's their yield potential?

Chris: Well, that's just it.

Duane

Lowry: They're not going through— yeah, the guys, I don't know the answer to that, but that's a factor. But a lot of people up there, I will say this, that last year when they may have wavered whether they were going to take prevent plant or they, they weren't, almost without exception of everybody I've talked to in that region, if given the prevent plant date and they haven't got it planted, they are taking prevent plant on day one of that opportunity. They're not even going to consider going into that field and doing the same thing they did this past year. Would you agree that that's correct?

Chris: Yeah, all they're doing is saving the insurance company money and screwing their fields up. So I mean that, and we're talking hypothetically. I mean, maybe we'll have phenomenal, amazing spring weather and everything will change, but if we just have quote unquote normal weather, the, it just, the math doesn't work out with how much is left for a lot of these growers to harvest and and to get the field conditions the way they should be to plant corn. Now, will they plant some of those acres to beans? Probably, but they're gonna, they're gonna, they're gonna max out their prevent plant acres because they'll make more money on that, you know. So it's just, just the way that it's probably going to shake out. I mean, we'll see. I mean, I'm not predicting the weather, but I'm just saying if we have normal weather, you can kind of see what's going to happen. To the, to the north.

You were talking to— not to change the subject, but you were talking— what was the comment you were going to make on the baseline, the, the 10-year projections that USDA had?

Duane

Lowry: Well, I just thought there were some interesting things in there, but first thing I want to say about baseline projections, these 10-year projections, um, throughout— I've been around a long time, and as far as I'm concerned, they're all completely worthless because there's, uh, well, that's why we talk— they come to pass. You can't make a decision based on them. But yet the market likes to react to the headline part of it. But so I don't have any faith in them whatsoever, but I do find a few things interesting here. I'm going to shift gears. I want to talk about the meat, meat a little bit. They had China's pork imports, and I'm only going to focus on the next 5 years. I mean, I don't, I don't believe all 10. I don't Certainly don't believe 6 through 10. So let's just focus on the first 5.

In the first 5 years, they have China's pork imports up 266% between the first year and the last year of that 5-year window, which would be '23-'24. And they have— during that same time, they have U.S. pork exports jumping 52%. If you look at poultry, they got China imports growing, uh, 264% over the next 5 years. U.S. exports are only going to grow 9.8%. You go to beef, you got China going to increase 232% over the next 5 years. The U.S. exports are only going to go up 10.7%. Um, if you look at, uh, cotton, they expect China's imports to grow 30.2%. You look at corn, it's, it's hardly changes at all. Soybeans, it has, you know, maybe a 10% increase, little bit more than that. Wheat, up, you know, a little greater than 10%. Then if you go to the wheat, you know, over the next 5 years, the US export market share of all wheat that's exported goes from 14.7% down to 12.8%.

So we lose market share there. If you look at bean exports, we— this might surprise people— that we're at 32% of market share, and by the end of that 5-year period, we're going to go to 35.2%. So despite all the stuff with Argentina and Brazil, we're actually going to increase market share. If you look at Argentina's bean exports, they're pretty much flat during the period. Brazilian bean exports grow a little, but, you know, not a lot. If you go to Argentina, Brazil, and Ukraine and look at their corn exports, they grow minimally in Brazil, pretty much flat. Ukraine is actually a slight decline, and Argentine corn exports are flat to up slightly, just barely. So hardly any growth there.. But if you look at U.S. share, we start out at 29.5% of market share and we finish with 30.8%. So we gain a little bit.

Uh, the takeaways here, um, if you look at corn, soybeans, and wheat for China imports over the next 5 years, they, they're basically flat or up a little bit. So clearly USDA has zero impact, impact of Phase 1 built into this, these balance sheets. So as far as I'm concerned, other than the standard fact that I just don't find any value in them at all, I find, find that if they're not factoring in Phase 1, then you might as well throw the entire thing out and never look any farther. What's the point of looking at these numbers if Phase 1 is not factored into these numbers? So that's, that's the first problem I have with them. But I did find the— it was— that it was very interesting that USDA did up pork, poultry, and pork imports, and beef even, as far as that goes, by China significantly over the next several years.

I think that is more a statement about their diet and their consumer base and the trend that they've been on And I think that's part of the, the trend that has been impacting their soybean imports over the, you know, virtually every year, with the exception of this US-China trade war period. They've constantly been growing their imports. And so I think there are factors there that, that are favorable for global demand, but I don't find any value in those baseline numbers for the reasons I stated, but I guarantee you there are people that feel that the market was down Friday because of these baseline numbers. I don't particularly agree with that, but, uh, if that is the case and if the corn market does weaken up some, you can rest assured that these baseline numbers are going to be given part of the credit for that.

But again, they're worthless as a historical record And they're also worthless since they don't have anything with Phase 1. You know, if we could easily have, uh, 8 million tons of U.S. corn be exported to China in the first marketing year and again in the second marketing year, that combined over those 2-year period is 640 million bushels of, of corn that wouldn't even be in these balance sheets. And there's a good chance that China's, uh, uh, corn demand has been increasing and gradually declining their stocks, and there's a good chance that their corn usage and demand will go up given just their natural trend they've been on.

But I think there's a strong likelihood that when China leaves this coronavirus situation and their leadership feels somewhat threatened and, and realize how, you know, loose power can be if you have, you know, civil unrest, so to speak, You know, they're going to have to do something to be seen positive in the eyes of their 1.4 billion constituents. And I think there's an excellent chance they're going to go back to trying to improve air quality, which means they're going to go back to an increased use of ethanol as being the very quickest and most efficient fix to that. And that's the path they were on. The trade war disrupted that path. I think there's a strong likelihood they're going to get back on that path. That's going to mean, uh, increased ethanol, uh, imports.

We're probably talking about more DDG imports into China, and the ex— the US is in a position to capitalize off of that more than anybody else. Um, and I think there's a strong likelihood that that is part of what the corn demand looks like over the next several years, as well as I think Phase 1 is. Neither one of those things are anything found in this USDA baseline balance sheet, nor is it found in anybody's discussion about what the corn market may look like here in, in, in the months or nearby years ahead. And yet I would consider it to be a major component.

So if USDA is not going to throw in and factor in Phase 1 in their monthly S&D report, and they're not going to factor them in into the, these baseline How in the world can you sit there and think the baseline numbers provide any value whatsoever when they're— the same government is telling us how great Phase 1 is and how great the US-Canada-Mexico agreement is and how great Japan's trade agreement is, and yet supposedly none of this is factored into their balance sheet, but yet they're very quick to factor in supply excess expectations.

Chris: Yeah, there's a little bit of disconnect between the Trump administration and the government because it's not— he talks about it being good and you talk about Phase 1 being good, but I haven't found anybody else talking about it. Even USDA or even most of the other analysts, you know, are so suspect of it, you know. But in a nutshell, I like your message. I mean, short term, not so much, because it sounds like we've got some pressure here for a while potentially on, on, on the grains in general. But, you know, I like, I like your outlook as far as, you know, there's some hope here for, for some stronger markets and for some, some real demand that can come out of here, even though everybody's on one side of the boat right now. There's a couple of you on the, on the other side. So hopefully you guys are right.

Duane

Lowry: Me and Donald, we're, we're best of friends. Yeah. Yeah. So he calls me twice a day, and that's only because I won't take the third call.

Chris: Yeah, between, between you and Donald, you know, you guys get this stuff figured out, we can, we can count on some decent markets here.

Duane

Lowry: Well, I find it astonishing and amazing and almost a study of human behavior, which you'll appreciate, Chris, but Here we have anticipation of a US-China trade deal for months, wondering when it was going to come. And when we actually get it, it suddenly means nothing. It's negative. Nobody cares, or they're never going to honor anything about it. And that's the attitude here. And we're just, you know, we're one month past the signing of it. And, you know, nobody is a better futures trader or global trading historical success story than China is, right? And they're playing this thing. Everything is to their advantage. They've seen ocean freight come down, they've seen futures prices come down. So they're the ones getting all the advantage by them holding off and not making a purchase here.

That has zero to do with the, any implication that they won't ever make a purchase or they won't honor their commitment. And the ability of the people to embrace this as a sign that they're never going to import anything is absolutely astonishing. And if we fast forward 12 months and, and for 12 months that storyline is correct, that they didn't honor it, they didn't import anything, and it was all just smoke and mirrors and absolutely nothing, I will make a promise to you right here now. I will never, ever do another Ag View Pitch podcast report if that ends up being the case, because it would be a clear case that I have no business putting my opinion out here on the airwaves. Even if they will honor this—

Chris: over there, they're going to eat food, right?

Duane

Lowry: They will honor this agreement. They have an appetite that's growing at, at a tremendous pace. So, you know, even though I don't think these baseline numbers mean anything, I OK, and most of the time they're always cast a negative light. I'm going to say that the poultry, beef, and pork numbers, probably I can't trust them either. But I find it amazing that they're showing China's imports on pork, poultry, and beef all up, you know, 266% on pork, 200 and 32% on beef and 264% on poultry. That is absolute— that's a food item. That implies actual demand increases and/or a change in their— an improvement of their diet which implies an improvement of their base economic condition of their consumer and a transformation from rural dwellers into more city dwellers and different types of lifestyle, which is what they've been on for, for a few decades here, and it's going to continue.

All of that implies a lot of demand. So how is it that all that meat production can go up and yet we're not going to— they don't— they evidently aren't going to need to eat anything? You know, there's just a lot of things that don't make sense here. But I'm telling you, China will honor Phase 1 for all the reasons I've stated about before. And the fact that nothing's been purchased in the first 30 days since it was signed, which, by the way, it technically only became into effect on the 15th, yesterday.

Chris: Yeah.

Duane

Lowry: So, you know, how everybody can write this off and they're never going to import anything is just bogus as far as I'm concerned. They need to have a little bit of patience. Now, separating that from market, yes, we have some near-term market weakness potential. I think it's more of a corn storyline for that than it is beans. I think the bean outlook is much better, more quicker than even corn. But even so, this weakness in corn is most likely going to be temporary, whether that's temporary measured in days or whether it could be temporary measured in weeks. I'm not sure about that. I hope it's something that's measured temporary that's over by the first week of March. Let's put it that way., and I think that's very plausible because the maximum amount of selling pressure, uh, will be when during the, the pricing of these, uh, basis contracts.

So I think the outlook still has a lot of hope in it. We could easily exceed the January highs in beans. That implies more than a dollar upside potential. We could, uh, easily see corn go back to the higher levels than we've seen during, uh, December, January, or February, both in old crop and new crop. So my concern here is about near-term, next couple of weeks, next several days, whatever, in the case of corn, and to a much lesser degree about near-term downside risk in beans, and much better prices, opportunities for both of them after we get this near-term weakness in corn, which is where I think the majority of the threat is to some weaker prices. But, uh, go ahead.

Chris: I think that's a good way to wrap it up. I mean, you're basically— to summarize what you're saying is some short-term pressure and some longer-term promise and/or positive direction hopefully in the market. And I think that's a good place to kind of wrap it up unless you have one, the one final thing from Duane.

Duane

Lowry: The one final thing for me this week would be that while I have zero idea what the acreage mix is going to be, I have no confidence in trying to anticipate how that farmer will line up. It appears to me that due to economics, um, you're not going to get the corn acres of 100 million, which a lot of people are fearful of. I doubt if you're going to get 95 million due to economics. I wouldn't be surprised the acreage total in general is down. I think you got parts in the north that are very wet, and I understand they're living it. So the people that are living there and dealing with that situation are going to be more— have a more heightened awareness and sensitivity, and maybe even a little overly sensitive to the, to the conditions. I mean, it certainly can dry out there, but they are facing a challenge.

They can't have any semblance of a, of a wet, you know, pattern develop up there in that April-May timeframe. Otherwise, you know, they're going to face similar situations to last year. But I do believe that anybody faced with a prevent plant situation this year, because of what they saw last year, they're going to stop planting on that first date.

Chris: Yeah, there were a lot of lessons learned this year.

Duane

Lowry: Absolutely. So to the extent that affects the northern areas, you know, getting out to their planting dates, that's a long ways out there. Weather can improve, you know, it could be a whole nother story, right? But it's just going to be some of the economic messages being given here are not to you know, is going to end up keeping some of the acreage mix down. So, you know, like, again, I think that a lot of the 100 million acreage talk in corn originated from the idea that we planted the same amount of acres last year as what we had predicted in the spring, even though we had a total of 20 million prevent plant acres. And they also got the amount of acres planted, and then they add on to that the amount of corn acres that were prevent plant. But you also got to factor in and realize that a lot of those prevent plant labeled corn acres were never really intended to be corn acres.

They were just maxing out the, uh, their maximum limit that the farm program allows them to do that. So some of these acreage ideas are inflated on probably some false information, but getting to 95 million, it's possible. Getting above 95 million acres in corn seems like a very much of a stretch given the economic message that's being given. So I guess that's kind of my final message here.

Chris: Sounds like a good wrap. I think we're coming up on 40 minutes here, and we appreciate everybody listening. And if you guys have any questions or any specific topics that anybody would like us to kind of hit on or whatever, give us a, give us a shout, reach out to Dwayne or myself, and we'll be happy to get back to you as well. So thanks a lot, Dwayne, for the conversation today. It was a great one.

Duane

Lowry: All right, thanks, Chris.

Chris: You bet, we'll talk to you later. And thanks everybody for joining us again on the Ag View Pitch, and we will catch you next time.

Narrator: Thanks for joining us on today's episode of the Ag View Pitch. As always, you can read Reach out to us at cbarron@agviewsolutions.com or duanel@netins.net. We'll catch you next time on the EggView Pitch.