Strong crop, weak market: weekly market outlook July 14-18

Chris: Welcome everybody to another episode of the Ag View Pitch. We're heading into a new marketing week, July 14th through the 18th. We're in that middle part of July. This is the heat of corn growing time frame and actually soybeans as we start to see the soybean fields starting to look a lot better. We've got Jeff Fichtelman with us today. Jeff, how's it going?

Jeff

Fichtelman: Going well, going well. I wish the market was a little better, but we'll dive into that, I'm sure.

Chris: Yeah, unfortunately we will have to, I think, in this conversation. It's a little depressing, but we'll try to make it less depressing in the conversation. So, um, and speaking of that, let's, let's transition that, that first part into how good the crop does look. Um, we were just talking offline a little bit. I'll get your take in your area. But, you know, I was telling you before we started recording, I've been everywhere from Oklahoma this week, all the way across Kansas, Missouri, all the way across Iowa, up and down, and then into the southern half and up into the east, east central portion of Minnesota. I think I told you I saw what, maybe 2 bad fields. I mean, this crop is like unbelievably good.

The other thing that I've noticed this year in comparison to many years when I drive those treks, is it's pretty typical you'll see pockets of areas that are struggling as opposed to like one field here and there. And then the other thing too is 98% of all the fields you see are really even. You just don't see the unevenness. You just look across and it's like— and it's not that stuff's hidden anymore, hidden in this situation either. It's like this, this crop is, is a potential monster. What are you seeing in Ohio? A couple of weeks ago, I was over in your region bouncing around doing some stuff with farm operations and peer groups and looked like you guys were behind, but everything I saw over there looked good. What, what do you see?

Jeff

Fichtelman: Yeah, behind is definitely the key term. But since the corn got in, I mean, we've had near perfect weather. I actually drove up from Lexington back to Columbus, Ohio yesterday, and that entire drive from kind of call it central eastern Kentucky up through Cincinnati and then up to Ohio. Almost identical to your point is it looked amazing. And it was interesting, some corn was tasseling, the field next to it was a foot shorter. But everything looked even deep, like dark green, extremely full. I mean, the roadside view is just incredible. We just seems like all year we've been putting the right amount of rain at the right time, maybe not all year, in the last 4 to 5 weeks. It's been extremely conducive.

And I think back, it's been interesting because this springtime, all the big weather guys were very adamant, especially out where you're at, the western half of the Corn Belt is going to be extremely dry and hot. And they got warm. It's definitely been above average temps in most of the Corn Belt. But it's been consistent rain almost everywhere, and obviously too much rain in some spots in the spring. But now it feels like we're really in a pattern of half inch to maybe an inch every 7 to 10 days. And I mean, July is a key month for producing good crops. I mean, there's a lot of key months, but July I feel like is the most important. And you look at the next 14 days of forecast by NOAA, and it looks above average rain and now almost cool temps, definitely moderate temps. So we're really testing the limits of how big this crop could be.

Now we're transitioning the argument of 181 is ridiculous because we planted 95 million acres. Our previous record yield was last year, 179.3. There's no way we can do better than last year on another 6 million acres. But if there's a year to test it, this is it. And I think the market's waking up to that reality. It's been interesting seeing the, the pure fundamentalists get so angry at the market right now because you see the USDA, and as we're recording this is the day of the July report. And they lowered carryout again for old crop just a little bit, 25 million bushels off continued strong exports. And honestly, the current pace will warrant probably another 25 or 50 million increase again in exports and therefore drop in carryout for old crop. Like we're coming in, you look at the last 20 years of times we had that type of a carryout, corn was almost always $5.

And that's making everybody really frustrated. I mean, pissed really of why is the market at sub-$4. And I just, in my experience in these markets, I hate to say it, but fundamentals, I don't want to say they don't matter, but there's periods of time where the market doesn't care about fundamentals. It cares about the balance of buyers and sellers. And we're living in a moment right now where the US farmer for '25 crop, the stuff that's growing, is massively undersold. And I think the funds know it. They've been obviously leaning on the short side. And we're seeing pockets out east where basis is doing all the work. I mean, we're getting $60, $70 over if you still have corn in the bin for old crop. But new crop basis levels are nothing to speak of yet. It's still early. So but yeah, I mean, bottom line, Eastern Corn Belt looks good. There's certain spots in Kentucky that are not ideal.

There's a spot here and there in Michigan that's maybe a little bit dry, but they've been getting some timely rains. I mean, and that's another struggle I always have is there's not a farmer I work with that says, hey, you know what? Yeah, my backyard actually is pretty good, but I know a guy who maybe even knows a guy that they're not doing well at all. Why does the market not care about them? And it's—

Chris: you can be smarter than the market. I was told one time, too, you know, you can know something the market doesn't know and the market doesn't really care. Yeah. And, and to your point, you know, the funds continue to tack on short positions. And furthermore, to your point, and I think what we really got to be cognizant of is the unsold bushels. And so when we look at our profit manager clients, you know, I think, you know, there's some that are heavily sold. In fact, I just got off the phone with somebody, he's 70% sold, you know, of his APH, and he feels pretty smart, feels pretty good about it. And, you know, it's pretty easy to talk to somebody that has nothing sold And then there's those who have 20 or 30% sold that typically are 60% sold by now.

But the offers they had in never quite got reached, you know, so and I think a lot of them started in that 4, you know, 56, 51 to 57 range was where I think a lot of those offers were at. And we just, you know, we, I think it was in early June there sometime or mid-June, we got back up to that, that these got back up in that 447 range for like a day or two. And that was it, you know, and if a person didn't have any targets in there, you know, and then the unfortunate thing is for a lot of producers with expected yields at that time, we were still in the red, you know, in terms of, you know, marketing with any kind of, you know, feeling that that's an okay place to, you know, to plug in a 20% sale or something, you know. And so I think, you know, it's kind of the farmers kind of got their back against the wall right now, I think.

With respect to trying to be any level of profitability, even with the big beautiful bill, quote unquote, and all of the other funds that have come farmers' way, you know, we've seen a lot of farmers, you know, in that $100 an acre of government payment. The problem with the government payments is, you know, you look at cost of production, and typically the farmer's lucky to keep about 30 cents to every dollar that's paid out. From the government because that, that goes right through their hands and goes into land rents and equipment and seed and fert and chem and all that other stuff. So, so the other thing I want to kind of bring up and talk to you about is, is with all those unsold bushels, there's a lot of bushels that don't have a home. In other words, it's that, it's that 10% or that 20% of overrun bushels that there's not storage for that isn't yet sold.

And then if we start to see a rally and people do start selling into that, all of a sudden you got this wet blanket on the, on the market that really limits it. And so as we record now, and we'll use Dec corn, you can talk soybeans, you can talk wheat even, you know, we're, we're at levels that to get much upside is really going to be hammered with the farmer selling on the other side, right? Talk about kind of impact of that.

Jeff

Fichtelman: The phenomenon of, of these kinds of markets is the farmer much prefers to wait till they know their yield to sell, whereas the market is always a step or two ahead of the farmer. They'll look at the forecast and say, hey, if those rains play out, that's going to produce a big crop. So I'm going to sell it today. Whereas the farmer says, I want to wait till those big rains come and then materializes and I'll sell it tomorrow. And what happens is when you get to tomorrow, the market's down, and then you say, oh, well, I want the price of yesterday, and we just can't ever get back there. And it's this kind of recurring game. And to your point, it— and I can't fault any farmer for being undersold relative to where they normally are because of your exact statement, which is at any point this calendar year, most farmers are not generally super optimistic when they forecast yield.

You tend to be conservative. So if you use that conservative yield and you look at where the market was, $4.50, $4.60, it was not profitable. And you say, hey, should I lock in unprofitable levels in March, April, or May? When you look at the seasonals, what, what, what could happen if we get a hot and dry summer? And so it's a tough predicament right now. And that's— the market knows it, I think. And the tough thing again is you're spot on, Chris, which is here forward, rallies will be capped because there is so much corn that needs to be sold. An interesting kind of parallel was the summer of '24, where a lot of guys had a lot of unsold '23 corn in the bin, and the market never really got back up to levels that they wanted to sell. And there was a historically high percentage of unsold corn.

And what happened, the market broke all the way till middle of August, when they ran out of time. And they absolutely had to move it because you got to get the corn out before harvest. And a lot of grain companies would not allow them to keep rolling that corn if they had basis contracts, or if it was in the bin, they just— you couldn't roll it to the next crop year. So they were forced to liquidate. What happened, we kind of V-bottomed and we had a sharp rally afterwards. And Now the tough thing is a lot of farmers are sitting here with unsold corn and everybody says, okay, well, maybe we V-bottom in August and we can rally after that. But sorry, my dog's barking.

Chris: They can't even— can't even hear—

Jeff

Fichtelman: can't even hear it.

Chris: All right.

Jeff

Fichtelman: Good deal. But yeah, so the tough thing is a lot of the '25 crop can be drawn out. It's not like most guys can store the corn, delay pricing, which means the V-bottom rally is going to be much tougher this year. What I'm recommending guys at Challenge them with is like, hey, let's, let's be optimistic with your yield. Because if you're normally using 180, 180 at your desired $4.60 corn price might be the same as a 210 yield at $4.10, $4.20, or $4.30. And also we're seeing big carry in the market. So I'm looking at March corn futures at $4.30, and I know that's not exciting to most guys, but the same phenomenon keeps happening, which is the price today doesn't look appealing. But fast forward 2 weeks from now and you might say, hey, that $4.30 was pretty interesting. And hopefully basis helps. And you had mentioned the government programs.

I mean, one thing we're really emphasizing, guys, on is let's thoroughly understand the money that's out there. That is not your normal flow, like this disaster relief. Let's make sure that we apply, that we at least put our name in the hat. So if there is money, it comes our way. The update to the R&D tax credit, which most farmers don't even think about, but that became extremely interesting. There's big opportunity there to create an asset in that it's an offsetting tax credit that you can carry forward for 20 years. So even if you don't show income this year, It's something that you can just keep carrying forward, and maybe even allows you to bring cash into this year and show income and offset it. And then there's, there's still programs out there for reduced till, cover crop, lots of other ways that I think we have to find value in, in what's out there.

And obviously, the big beautiful bill going forward with insurance made that more appealing. But it's going to be tough out there. I mean, there's, there's no easy solution. Those who have storage, have a big benefit. But if you feel undersold at the moment and you feel like your yield is going to be good, I'd recommend at least closing your eyes and selling half of the rate to get to where you'd be comfortable at. But I do want to ask you a question, Chris. I was thinking about this and I'm not a farmer myself. I've worked with farmers for 20 years, but what is more satisfying? They both of these Option A and Option B are not great, but which one is more satisfying to a farmer? Having a big crop in a crappy market or a crappy crop in a high market?

Chris: I think it depends. Um, you know, I'm going to give you the, the wishy-washy answer here because, you know, everybody's different in how they're structured, you know. So for some operations, it's going to be better one way versus the other. I think the typical farmer though prefers a good crop. I mean, that's why we, we put all of our energy and all of our resources into a good crop. With that said, this year, you know, we're at that decision point now, and I know Shay has done some, quite a bit of work with a lot of our clients on, you know, vest to continue to vest in this crop. In other words, you know, through fungicide, extra nitrogen, managing you know, insect pressures and anything that could be impacting what we view as a Cadillac crop as opposed to a used Buick is how we use an analogous example.

So I think, you know, what, what's going on is, you know, those little pockets, and they're small, it doesn't mean it doesn't hurt if you're in one of them, but if you're in one of those little pockets, I think a person's better off to shut off the, the money flow. If you're, if you're at or near that insurance level, all you're doing at a certain point is saving the insurance company money and costing yourself. So you have to make sure you know where you're at on your insurance. And if you have some things sold and that crop's going smaller at a decent price, your percent sold goes up as your yield goes down. And so again, I think it sort of depends on the situation at hand when the producer could have that choice.

Not like we ever get the choice, but, you know, when you look at that, which one is more advantageous depends on, you know, the circumstances and the situation that you're in, especially when you get about halfway through the growing season because you have a pretty good idea of what you've got in the crop and you have a pretty good idea of what what the insurance level is going to bring you, and then it's just navigating that algebra along the way. And then that's where Profit Manager— a plug for that for us— but, you know, that's where Profit Manager is nice. And you've brought it up in previous conversations where, you know, scenario planning your yield to look at gross income per acre is more advantageous than trying to navigate one or the other independently because they have— they happen to work in concert. You know, so you got to really look at that, that gross income.

The problem with the gross income, to be a downer here, is a high percentage of our clients right now, still even with the higher yield, may not yield their way out of an issue. In other words, we, we don't, you know, the price is just low enough, and it's not that much lower than some other years, The problem is the cost of production, where land rents are at, where machinery and equipment costs are at, where seed, fert, and chem is at in terms of cost of production because of the inflationary impact we've recently had. And so I think that's really the dilemma that a lot of, a lot of us are dealing with right now is navigating that piece. And especially for those who truly know their cost of production, You know, and I always tell people, you can either be informed or you can be happy in this type of a situation.

You know, informed, unfortunately, is probably a better choice, but you might not be happy with the information. And so, but we can navigate that and at least we can have a conversation with the lender and we can have some conversations. So that's a really long answer to a pointed question.

Jeff

Fichtelman: Quick question on that. It feels like we're entering an area where something's got to give, right? Like the cost of production. And I've helped guys look at individual line items, you would know way better than me. But there's not a lot of line items on the cost side that feel like there's a lot of room to fall. There's not. Guys have gotten exceptionally good at growing this crop. But to your point, it's almost— costs are so high, we can't grow our way out of it unless we get a bailout from the market. And the market doesn't seem to want to give that. We're entering a point where something's going to give. Do you fast forward 5 years from now? What do you think are some of the major changes that are going to have to happen to the farming business model to adapt to this possible new world?

Or are we— do you think this is like one of those, hey, we just got to buckle down a couple of years of not ideal scenario after a few years of great profit back in 2020 through '23?

Chris: This is my 40th crop, which I don't feel that old, but this is my 40th crop I've had vested interest in. And in my experience, if history would happen to repeat itself, all of this stuff is always cyclical. And it always seems like, you know, when everybody's really down, that's about the bottom, you know, and when everybody's really high, that's about the top. And then there's everything, it ebbs and flows in between in the middle. While I'm saying that though, I would say that the other thing I've noticed over the last 40 years is there's been continued consolidation, and I think there will be continued consolidation. And during that 40 years, we've had a slight acceleration of consolidation, and I think that slight acceleration of consolidation is going to continue, if that makes sense.

We're going to continue to see farmers have to collaborate and work together if they want to survive. In some, in some cases, we're going to see operations that if they don't have their transition plan put together well, it's not going to last, and they're going to, they're going to, you know, we're going to have attrition, accelerated attrition. So I think, you know, it's— there's a lot of opportunities though at the same time. I mean, I'm an optimist. I look at it as That's some huge opportunity for the people that are taking the time to listen to this discussion and to focus on their numbers and to be informed and to manage all of that. I think those are the people that are going to be farming in 20 years and, and their legacies will continue on.

But I think, you know, there's going to be those who don't do the math and that don't manage that stuff, and it's not going to be easy for those who survive. I mean, this is a survival time frame, right? This is what large industry calls the economic trough of trends. And so when we're in this trough, hopefully we saved some money in '21 and '22 and we made money so that we weren't burning working capital. And then the other thing I would say, and I'm on this soapbox, I'm supposed to be interviewing you, but I'm answering these questions, I guess. But the other thing I would say is that we observe is just the idea that producers are inherently more profitable if they have additional profit centers or diversification. And so, you know, I had a young producer that's probably listening to this podcast, he's gonna know who I'm talking about.

I was at a marketing meeting with him that we hosted and he came up to me and he said, you know how you make your balance sheet stronger? And when he just kind of came up to me with that statement and I, I looked at him and I kind of scratched my head and I'm like, change the numbers? I wasn't, you know, I kind of caught me off guard. And he's like, have cattle, you know? And he's 1,000% right because all the operations we work with right now have cattle. The thing I forgot to say to him, and if he's listening to this, I want him to know that save your money because the cattle market won't stay like that forever. And so just like the commodity market and corn, soybeans, wheat, cotton, rice, you name it, all of the commodities, everything that we produce has highs and lows. And when things are good, you, you, you pack it in and you plan and you strategize.

So when things get tight, you know, but it is a diversification thing because, you know, if you can figure out a way to generate additional revenue in the business, maybe you go out and do custom work or maybe you do some trucking or maybe you you know, sell seed, or you, you know, you do some things, or you collaborate or whatever, we're gonna have to get creative. Because, you know, you go back and look in history, the operations that have been successful tend to be a little bit more diversified.

Jeff

Fichtelman: 100% agree with that. I mean, just thinking about, we're looking through the cost of so many of the farmers that get to work with the theme of impossibility is these guys are always over-equipped. The cost of new equipment. And I'd be curious your perspective. But if you— let's just say today you go out and you buy all brand new equipment. And maybe it's two brothers farming, how many acres would that equipment be able to handle? Obviously, knowing you got to plant it in a specific window, my guess, my educated guess is a tractor and a combine can handle 5,000 or 6,000 acres in a spring and fall, given the speed at which we can get the crop in, and maybe it takes a little longer to get it out. But you see that number, but the average farmer is about 2,500 acres. So it feels like everybody's long of equipment and has room to grow.

But you take the very expensive equipment, and you divide over 2,500 acres versus another guy who maybe is dividing it over 5,000 acres, and that cost per acre spread is pretty massive and can really be the differentiator. So I agree, the collaboration, and you really nailed it too. Like, I think of the farmers again, I get to work with the ones who seem to be doing really well, have side hustles, whether it is trucking or selling seed, excavating. That's a popular one I see because that's a good off-season. Yeah. Yeah. Having cattle, I think cattle is more cyclical. So I generally like that approach. But at the same time, you're right, it seems to be somewhat offsetting of corn, where if you get some more non-diverse or non-correlated revenue streams, so like trucking is pretty consistent.

I feel like the average farm has so many factors out of your control that massively impact your bottom line. It's nice to have some revenue streams that are fairly predictable and fairly consistent, but Yeah, diversified and increased revenue streams is definitely going to be the way out. Collaborating, which I know is complicated, but those who figure out that connection can really benefit from it.

Chris: And yeah, it's— as far as, you know, when you think about that and you roll back to the here and now and say, okay, right now the crop is about as big as it's going to get. Probably. You know, I heard some others talking today, you know, is this crop, you know, what is, what is the funds, what are the funds trading this crop at? And before we wrap up, I wanted to ask you this specific question. What, what do you think the trade is trading right now on corn and soybeans in terms of yield? You know, and I've heard some people talking, you know, 185, 190. Is the trade trading that number? Is that a part of why the price is where it's at? And maybe aren't that good, or maybe we are that good. And is the trade trading where we should be?

Jeff

Fichtelman: Thoughts on that? I would say, getting a chance to talk to my business partner and I would talk to about 3 of these funds, because they love picking our brain to get what's going on with the farmers. And then I picked their brain to see what their perspective is. They have 2 main thesis as to why they think corn is going down. One, and this is more of a recent phenomenon, that yield is better than 181. But most of them are realistic, 182, 183. You see some of those models that use a good, good to excellent ratings, and they're like, oh, based on these good to excellent ratings, we're 6 bushels above trend. Well, trend has been inflated for the last 5 years. So that's not a great model, in my opinion. The big thesis of the funds is actually demand is overstated, that the USDA came out with record high demand again, when they put out their first estimate for new crop.

And their idea is like, hey, Trump's out there pissing off all of our biggest clients or our biggest customers. They're going to try to buy from South America. And Brazil had a big corn crop. So they're, they're saying exports are 200 too high, feed, feed may be in line, ethanol may be down just a smidge, but the export number has a lot of risk in it. And then if you start at a 1 6.5 carryout, and you add 200 from overstated demand, and maybe add a couple bushels on the yield, suddenly we're 2 billion. And 2 billion bushel carryout is $4 corn. And so they're getting there in a hurry. So to your point, the bullish argument from here is one of those two arguments is wrong, that demand is that strong, or yield is not 183. And you think about when will the market wake up to that reality? It's not July, it's not August. It'll be in harvest when we get in there.

And those results start rolling in because USDA never really touches the yield number until September at the earliest. It's really October, November when they start to really play around with yields. So between now and the end of August, funds have no reason to be scared. The USDA is not going to put out some shocking number. And then again, on demand, we're not really going to see the brunt of that export window until December, January, February, March to know if like we're really on pace. And if, for example, for the last 6 months, the market keeps saying, oh, there's no way we get those exports and we actually do, we're shipping them like crazy, even though we've thrown all these tariffs out there, our business is still very robust. So the market again will wake up to that reality in one of two ways. Basis will be strong because the futures are too low.

Or the futures will wake up in December, January, February when our big window of exports showcase that the pace is really strong. So you think about when the rally will come, it really is harvest and later. And I do think there'll be— well, definitely, I strong feeling we'll see better values than today. But the problem lies in somebody who needs cash and doesn't store much of the corn crop and therefore is kind of forced into pricing corn in the next 2 months.

Chris: Mm-hmm.

Jeff

Fichtelman: That becomes a little more complicated.

Chris: And that's probably— yeah, and that's probably a conversation we get to when we get a little closer to harvest where, you know, a little bit of reownership there might be a strategy to think about. And it's not a recommendation, but it's kind of the same as putting it in the bin. But you got to also, though, You know, reownership, I know some people don't like it at all, but on the same token, it's kind of the exact same thing as putting it in the bin. And so you'd have to get your mind right if it's not something that you're used to doing or, you know, and you'd got to be, you'd have to be willing to tolerate some margin potential. But on the same token, then if you don't want to do that, then you're just going to stick a fork in it and call that price and yield and that, that gross income good then. And just be okay with it, you know.

And one thing I didn't want to touch on that you just said, just to kind of summarize and make sure I understand and that we're all thinking about this in the right way, but, you know, you mentioned the, you know, Trump pissing off some of our, um, you know, some of our customers, so to speak. And, you know, you kind of don't want to make a customer mad. And I, I look at China kind of like farmers in the sense that You know, if you piss off a farmer, you aren't getting them back for 10 years. I mean, you've just destroyed the opportunity. And I think what you're saying, if I understand you right, then, is we don't have demand reduction, we have some demand destruction. In other words, we aren't getting some of that back, is kind of what they're saying. Is that my—

Jeff

Fichtelman: I would say it's here more specifically because Brazil and Argentina become such powerhouses in production.

Chris: You have other—

Jeff

Fichtelman: and now, yeah, there's, there's two grocery stores to go to, right? The US and South America. And we would want our customer to come to us first. Now they're going to start there. And if their price is out of control or they can't get access to supply, they'll still come to the US. But it's not their first stop, which just makes it hard to have super robust demand because whether we like it or not, I do think we're entering an era where the technology and the farming practices and the applications are so darn good. We just grow consistently good crops year after year. And maybe this is just an 8-year aberration of like good yields, and we're going to have some 2012s ahead of us. But if we always consistently have pretty big supply, we need big demand to keep the market in check. And this is not a time to be kind of hurting our customers.

And I, generally speaking, I'm not political either way. I could honestly care less. But I see what Trump's trying to do, and I generally agree from a U.S. perspective why he's doing it. But it just doesn't help our cause because we are so tied to the ups and downs of exports.

Chris: But if the grocery store manager in the one grocery store yells at the customer, they might not come back either for a while.

Jeff

Fichtelman: That's— there's—

Chris: There's a little bit there too, I think. Yeah. And again, not being political, I'm, I'm kind of, yeah, conservative myself, honestly. But it's, but you know, there's sometimes got to take care of the customer as well. I guess what I want to do is I want to bring it home and I want to have you put your farmer hat on for a minute. You don't have all the answers. You're in the same boat of struggle we're all in for a second here with your farmer hat on. What do you do in the next couple of months? I mean, we don't know what the prices are going to do. What are we paying attention to? What are we watching and what type of opportunities do we want to try to capture? And I'll give you the last word here.

Jeff

Fichtelman: I mean, middle of July, I am making a call to my crop insurance agent. They got to do a little work in the offseason and you have them run through some scenarios and you say, hey, if the market's here and my yield's here, what kind of payouts can I expect? Because Right now, crop insurance is becoming a really valuable piece of the equation. And it's going to be even more important going forward because of what the Big Beautiful Bill did and ratcheted up coverage levels, cost down. I mean, it's going to be key. And that may be the linchpin in how we continue to farm profitable— profitably each year, hopefully, is some of those insurance payouts. So I would first understand like, hey, if the market drops to 4%, what's my payout? If it goes back to 4.50%, what's my payout?

Because we're at this moment where if a guy is extremely well-insured and they're not going to have 20% above-trend yields, let's just say they're at trend or maybe even 5% above trend, they're probably in the payout zone. And arguably there is no incentive to sell more because the worst case scenario is you sell $4.12 these corn and then the market rallies back to $4.50 and you not only sold low, but you don't get any insurance either. So I'd say first try to challenge your agent to give you just a couple scenarios and don't hold them to it, but just say, hey, roughly if we go down to $4 and my yields trend or 5% better, what's it look like if we go back up to $4.50? Like truly understand where is that at floor actually?

And then I would challenge yourself and say, okay, if I'm going to calculate all the money, all the bills due by the end of November, and understand my cash flow, and then I'm going to look at the sales I have on and try and estimate how much cash coming in, figure out what that gap is, and close your eyes and sell it. Because I worry that all the farmers who don't want to sell anything today on July 11th we'll probably end up having to sell something September, October, November. And as much as this current market is awful, these corn in '24 traded down to $3.86. And I know it's not great, but the worst sales tend to happen when you're forced to sell for cash flow reasons. And I like your point, Chris, like, for astute farmers who want to manage risk in a conservative way, you could always reown it, but cash flow is king right now. And we're riding thin edges here.

So we got to be mindful of that. And anything beyond that, I think you could be patient, but the stuff that has to move at harvest or the bills that need to be paid, really understand your crop insurance and then be thoughtful of those because the time window is too short. Everything else, I think you can wait and challenge your local grain companies not yet, they're not going to be negotiating on basis. But when we get to late harvest, December, January, February, never set basis without asking for at least a nickel push, because I've been in the grain industry world for most of my career. Every posted basis just about has a nickel push built in. So minimum ask for that and then challenge them, say, hey, I feel like I could probably do a dime or even 15 cents better. And you'd be surprised how quick they might take you up on that.

And if they're saying, hey, who cares, I don't need it, you could still lock in the posted level, but be negotiators, challenge those grain companies, because basis might be pretty key in how we get through this.

Chris: And I think in some— to your point, in some geographic areas, there's probably going to be some basis opportunities in early harvest. Because the tin can harvest might or might not happen because some of that stuff's not leaving. You know, some of those, some of those that, that can, for whatever reason, can stay put and sit on a crop for a long time must have more money than I do. But, um, you know, some of that stuff's going to stay put. And, and some of the areas, I mean, we've seen some pretty strong basis pushes in certain areas, and that might happen, you know, in that early September. And it's, it's going to be geographic, and it's going to be if a person has something planted early that's an early maturity that they can can, can knock out early and take advantage of that. So, uh, great conversation. I think we covered a lot of ground.

I don't know if we have a lot of answers for anybody right now other than just for some perspective and things to think about. And to, you know, and to sit down, to your point, do the algebra, do the math, figure out your fall logistics. What are your overrun bushels? Do you have any of them priced? If you go ahead and make some sales, you know, look at the average price. Don't look at those lower sales you made. You know, it's going to pull your average down a little bit, but it's, it you know, pay attention to the average price rather than each individual price and don't get high, too high or too low. You know, look at that average. And I guess the other thing you had mentioned too, Jeff, that I liked was, you know, getting with your insurance agent. We have a tool if anybody wants it.

Don't email me, I'm going to be on the road next week, but you could email Shay at Ag View Solutions and we have an indemnity calculator that we can send out to you that you can plug in your, your yield and your APH, and then you can play with your levels of coverage, and it tells you kind of where your, your guarantee is at, which is kind of a neat little tool to play with. So, um, so I appreciate you bringing that up, Jeff. Um, Jeff, thanks a lot, really appreciate your time today. Great comments as usual, and, and we'll get you back again here when we're a little bit more informed. We get into August and be a little bit more informed, we'll get you back.

Jeff

Fichtelman: Yeah, thanks for having me.

Chris: All right. And again, thanks everybody for listening. Again, check out 19 Minutes if you guys aren't on that. I'll make sure Mac has the link to 19 Minutes in the show notes here. Check that out. There's close to 90, I think, episodes in there. They're all business topics that are not time-constrained. They're, they're more just things that will help you as you work on your business. And this is the trough we're in. It's time to be working on the businesses. So check that out. With that said, thanks everybody. Catch you again next time on the Agri-Pitch.