Sunday market outlook: December decision drivers

Jarod

Creed: And it all comes down to this. Two on, two out, bottom of the ninth. The Farmers lead by one. Full count, here comes the play at the plate, and it's the Ag View Pitch!

Chris

Barron: Welcome everybody to another episode of the Ag View Pitch, and we are heading into a new week and a new month. And so we've got today with us Jared Creed from JC Marketing in Hudson, Iowa. How's it going?

Jarod

Creed: I'm doing well, Chris. Thank you again for the invite.

Chris

Barron: Yeah, yeah, it's the second time we've had you on. Last time you had some pretty good reviews, so we figured we better, better have another conversation with you. And I've got a few topics off the top of my mind here, and I'm going to rattle them off, and then you'll kind of know the direction that, that, you know, what I'm hearing from people. People are asking questions, and number one starts with China, you know, the demand that's there. What's that mean, and what might that look like as we move forward in the next week or month? Basis is another topic of discussion, really strong basis. I want to hit that with you. And then the, um, just the inventory, the carryout inventory, USDA's numbers, you know, it would have been nice to know what we know now, you know, a long time ago.

So I want to touch on that just a little bit and kind of see what your thoughts are there with, with what, you know, what our overall inventory might look like in terms of carryout and that kind of thing. And then Obviously the South American weather has been a hot topic and probably a driver here lately that I think we need to touch on. And then finally, the last thing I want to hit with you is the funds and their long position and what that might mean for the market moving forward in terms of strength or what that looks like. And then the absolute last thing we want to get to is some action items. You know, what should we be considering at the farm gate as producers with our remaining inventory of 2020 and then possibly what things might we want to be thinking about going into 2021. So that is my intro.

I'm going to shut up now and I'm going to ask you first, uh, China, they continue to buy. What's your thought there? What should we be looking at? What should we be thinking about?

Jarod

Creed: China is obviously the monster in a closet in this marketplace. Uh, let's just start with beans here real quick and look at their behavior. Uh, and I don't necessarily want to jump into Brazilian, South Brazilian, Argentina weather to lump it in with China, but I think it is important when we identify what kind of behavior patterns we're seeing out of China. China has bought our stocks on soybean supplies down near to pipeline level. When you start talking about a below 200 million bushel carryout in the U.S. bean supplies, that is basically pipeline, as in saying we really don't want to send any more out the door. We want to keep those for inventory inside the US. Our days to use is rather small when it gets to those type of levels, and we just need to keep enough stocks around to continue to keep the US crusher active.

Now with all that said, you know, one of the first bosses I had in the industry, he had a line that he said over and over again when we go around the countryside presenting to producers. And I might have even said this the first time I was on, you know, producers have two responsibilities come

February: get your significant other a gift for Valentine's Day, and then make sure you don't have any more basis exposure in the bean market. And what I mean by that is I think we're starting to see the beginning of a shift from U.S. demand to South America demand. Consistently, year over year prior to the trade war, China would be a big, big buyer out of the Gulf and the PNW of U.S. beans from September until January. Sales really start to drop off at that point. Shipments do as well, uh, as that business shifts to a Brazilian soybean harvest. And I think you started to see that soybean sales have been dropping dramatically over the course of the last month. But as I just mentioned, I don't know if that's necessarily a bad thing because we really don't have that much more to sell them from a nearby supply.

Now when you start to think about Brazil and you— and the business from China, a few rumors here this last week around some Chinese soybean crushers canceling purchases. Lo and behold, when export sales came out yesterday, it did reflect that there could have been a few small cancellations, but we can't I wouldn't necessarily put that directly on China. And at the end of the day, a sale is great, but an inspection or actually lifting those beans, exporting them out of the country is more important. So we're obviously monitoring what our sales pace is and then conjoining that with what our shipment pace is of the physical sales. So having a couple bean cancellations could certainly spook the market a little bit, but I'm not going to go out on a limb and say that that's the end of the soybean run. Worldwide demand in beans is a heck of a lot more important than U.S.

demand or Brazilian demand. Worldwide carryout, a lot more important than the two again. But when you think about the premiums that you can buy out of Brazil 3, 4 months down the road being dramatically cheaper than the values that they would have to buy out of the U.S., From a business perspective, well, it makes sense that the, the Chinese soybean crusher is slowly but surely shifting their focus to South America. And then on top of that, you obviously have some weather concerns in South America. So it's, it's kind of a middle-of-the-road scenario here. In the snapshot of time for December, January, February, Brazilian weather is incredibly important. But it doesn't necessarily have a lot to— it doesn't, or it shouldn't have much of an impact on US supplies.

What it can have an impact on is price having to do work to ration demand from the worldwide user, whether that's China or other large importing countries. Now when you focus on just South America leather, and you combine Brazil, Argentina, Uruguay, Paraguay, uh, we need to see them raise around 200 million tonnes in total. Uh, you'd like to see Brazil be close to 130, and you'd like to see Argentina be close to, you know, 55 to 60. Uh, I would tell you that there's two different marketplaces in South America as well. Brazil primarily export, Argentina primarily export, but in the form of soybean meal. So your end user of meal products is obviously also in a pinch in the environment that we're in. Argentina is probably more of a weather concern than Brazil, in my opinion. There are certainly places in Brazil that are struggling.

We'll see if the weather maps that have been floating around the last couple of days actually do come to fruition. But we're somewhat early in their growing season as well. You know, Brazil's obviously not a small area. Brazil overlaid with the United States, it kind of takes you aback for a second. You have anywhere from, just call it May 1st to June 15th, or maybe the end of June, is the weather scenario that South America has right now that the U.S. producer would be familiar with. Oh, it's not do or die at this point for Brazil and Argentina weather, but it is knocking on the door of becoming obviously a pretty good concern. Uh, the Brazilian weather has certainly had an impact on our soybean market, um, and it's continued to attract speculative money to be a long owner of commodities. Again, though, I think it is important to remember that US supply, we're tight. That's known.

We're going to be tight on US supply between now and October 1st next year. Nothing's going to change that. Brazilian supply is going to come on pipeline in March, April. That is when we should see that historical shift of business from China to Brazil. And then long term for 2021 soybean production out of the U.S., it's kind of sitting there in the back seat waiting to see, do we need to do demand rationing before we get there, or do we actually have the ability to raise a bumper crop in South America? I think there's still a fair amount of optimism in South America. That crop can change the tone of everything that we've watched in the last 60 days. At the end of the day, we want China to be consistent. We want them to be a buyer of beans. We want them to be importing around 100 million tons.

And that comes at the risk of many different, many different pieces from geopolitical concerns, a little bit of talk about ASF floating around in China. Obviously, you have coronavirus concerns and the impact of how we can execute on all these sales. And then lastly, just them picking and choosing who they want to buy from. But again, world balance sheet, a heck of a lot more important than just the U.S. balance sheet.

Chris

Barron: Right. And so there's a couple different ways to go here with some questions I have for you. So, you know, you're directly correlating the, the Chinese demand with South America, rightfully so. Um, and let's stay on soybeans for a minute. You made a comment that, you know, we may want to have our basis locked, unless I misunderstood you, somewhere in that by February. Is that what you're saying? And the question— well, the reason I'm asking that, I'll ask this real quick, is, you know, this seems like one of those years where basis has been so darn strong that, you know, and we'll get to this when we talk about 2021 sales as well, but a lot of our clients have pretty well cleaned up the majority of their 2020 sales, are looking at 2021, Do they do a hedge to arrive, or do they sell on the board, or what, what are some of the tactics to use?

And then do you really want to lock basis, you know, in some of these areas where growers can go and harvest early? It's possible, isn't it, that we could have a pretty strong basis early, you know, on the front end of harvest next fall?

Jarod

Creed: So you brought up a good point, and that should provide a little clarity on old crop beans, I don't think there's just a heck of a lot left to sell, right? Farmer has turned over majority of ownership. But if you happen to be one that is in an export-driven area, river specifically, and you don't have the crush demand in your backyard, that's where the basis exposure, a long basis position, comes at a lot of risk over the course of the next couple months. But when you fast forward to 2021, I do agree with you. I, I don't want to go out to say that we're making a bunch of agronomic changes to position ourselves for some early harvest, some early harvest premiums, but it would not surprise me to see quite a hefty inverse in both cash corn and cash soybeans in a significant part of the U.S. come next September, October.

It doesn't mean that that inverse is a bad thing on the back end if you're not able to execute on those first premiums, but nonetheless, I don't think it's that crazy to think that you could see a, you know, a 30 to 50 cent cash corn inverse and maybe even a dollar soybean cash inverse by the time we get on a combine next fall. And a lot of that is going to have to do with how we're able to execute sales out of South America come their production this spring and summer, right?

Chris

Barron: And that's kind of what we've been talking about, that South American weather has so much to, to do with this whole thing. In the— on the soybeans. And, and we're going to be a couple weeks here yet, we're going to be a lot smarter on that.

Jarod

Creed: Sure, it's a problem until it's not.

Chris

Barron: How about that?

Jarod

Creed: Exactly. I mean, it's calling a spade a spade. You're, you're almost flipping a coin at this point. We've seen what happens with weather in the U.S. and the farmer's ability to make up for, uh, supply shocks. I don't think we should forget that the current estimates of production reduction in Brazil being around that 130 million ton mark is actually reflective of over a 51-bushel bean yield. 51 bushels. Now, if you compare that to the U.S., obviously that's higher than the U.S., uh, and a 2-3 bushel reduction in Brazil would be just a big enough deal potentially to keep, um, the export pipeline very, very tight again when we start harvest next fall. So again, like I said, call a spade a spade, it might be nothing if South America comes away with a good bean crop. Uh, it's going to be entirely focused on what does our carryout in the U.S.

look like after what we plant and harvest next year. So you got a here and now from concerns of weather and a tight supply pipeline in the U.S. and all of that has the ability to get replenished not once but twice with the South America harvest and U.S. harvest and that entire story could be gone unless China comes in and ramps up their imports even more than they did already this year, which I think is a little bit far-fetched.

Chris

Barron: Yeah, and when you look at the South American weather, this is probably a subjective question for you, but, you know, how much of the, of the price strength that we've had lately is correlated specifically to that, do you think? And then how much risk, and this is probably a better part of the question, is how much risk is here from a price perspective to the downside? Because, you know, weather markets, you know, march up, you know, up the stairs as they say, and go back down the elevator shaft. So, you know, how much risk do we have here as we think about cleaning up the 2020 crop or looking at the 2021?

Jarod

Creed: It'd always be nice to be in the head of a long market participant and know the determination of why they're making their choices that they are. But I think it's probably a lot more than just South America weather. You know, they have front-run the market in that sense of a large export program. A weather event in the U.S. this past year with a so-so bean crop, a supply, a tight supply pipeline. You've got hints of inflation floating, floating around with the change of office that we're going through. And with Yellen coming back to the Fed, there's some arguments to be made out there that commodities are a a good ownership from a speculative standpoint, and that's obviously great for the farmer long term if you want to keep a market participant to be long rather than short. Now, when you talk about the risk, um, the risk is, is, is pretty black and white as well.

Let's just use corn as an example. Uh, if you have near a 300,000 contract long from a speculative community, they're long a billion and a half bushel of corn. If they want to come in and trim that by a third, and they want to be only long a billion bushel of corn, the makeup of the market, or the result of them trimming that position, is all dependent on who is willing to step in and take the ownership from the long that is trying to sell, right? Your end user has been active scrambling on getting coverage on dips in this market. That's been a you know, buy the dip type of methodology here for weeks upon weeks. Eventually that stops as well. It might not be— it might not be in the next couple months. Heck, it might not even be next year.

Perhaps you're going into some type of a higher market cycle, but there's always that risk of whatever may change the attitude of the outside market participants they can sell this market entirely faster than a farmer can ever react. That's tough. Mm-hmm. If they wanted to come in and sell 100,000 contracts of corn, I don't think you're gonna find a buyer to step in and keep the market flat. You're gonna drop a corn market by 25, 30 cents quickly should they do that, right?

Chris

Barron: So speaking of corn, we've hammered beans pretty good on almost all these topics I brought up from China to basis to South America to where the funds are at and the tight supplies and the potential inflation and all that. Let's go back to China again for a minute and I want to ask about corn. They've been buying some corn. Is there anything there there? Is there, you know, is that anything that's going to mean anything? From a demand standpoint, and you can touch on the demand too as part of this question, with ethanol and COVID and everything in China, what's this demand picture and what kind of risk do you think we have with corn from a demand perspective?

Jarod

Creed: Well, let's talk about overall demand here for a second. A very good acquaintance of you and I both, Peter Meyer, I think he's, uh, he's pretty much a mentor to me in this space that he brings things down to a calm, realistic level at times. Our demand since May domestically in corn has only gone up 25 million bushels. That's a result of a severe slash in ethanol and a severe uptick in corn exports. Meanwhile, world corn demand has diminished by over 5 million tons. So you've cut world demand by about 200 million bushels while we've increased U.S. demand by 25 million bushels. So what are we excited about from a corn demand standpoint? I was just speaking with some friends of friends that look at one of your ABC ethanol plants, one of the largest participants in the US. They still have 800 million gallons of ethanol capacity offline and all their margins are red.

So a farmer doesn't like to hear this, but I tell you what, from a demand standpoint, corn is way too damn expensive for the ethanol plant at this point. And at the meanwhile, you don't have the driving demand to support that. Now that doesn't matter, it's all for naught if you bring in another big demand base such as what we're seeing on Chinese corn imports. Um, you know, this isn't, uh, necessarily my thoughts here, but you have to wonder, uh, what if China is actually trying to stand up to their end of the Phase One trade agreement? You know, I think we give them a lot of doubt or a lot of skepticism on what their real intent is when it comes to the Trade One phase deal. Well, if you, uh, If we don't have any beans to sell them, what do we got left for agriculture products to sell them? We got corn and wheat.

Who's to say that this just isn't part of their efforts to get to a certain dollar point of continuing to buy from the U.S.? Uh, who's to say that this isn't a restocking phase? Who's to say that this isn't a growth phase? It's so darn hard to understand, uh, what the buying pattern of corn is. For China. We do know that they had weather events on their own from severe flooding in the course of the last 6 months. We do know and can't forget that we came off of ASF from the trade war shortly after the trade war started. That was kind of the perfect storm. So you could make the argument that they're in a restocking phase or the cheapest origination point for corn for an extended period of time. And I think that's what they're, they're actively doing. They're actively buying corn. When does that stop?

That's a tough one, but I would say there's a little devil in the details here on last month's WASDE. The uptick in corn exports was obviously a monster surprise. If I recall, that went up 325 or 375 million bushels. On that uptick, behind the scenes, you cut 8 million tons of production out of Ukraine. And that cut at the moment does not line up with any other private third-party production estimates out of Ukraine. So I would say that per million ton change of up or down in production out of Ukraine, is most likely a 1-for-1 impact on our corn export number. And, you know, lightly said, don't forget that we were ramping up all these corn export numbers on an entirely different price picture for corn. You know, the board was sub-$4. Now we're at $4.30. Corn is getting expensive for the user. People are starting to holler.

Uh, it's like a rubber band that contracts and back and forth, back and forth, eventually we're, we're putting some strain on the user, which ultimately creates a question mark on our total demand number out of the US. Can we meet the demand estimates, or do we need to even drop our demand estimates? China wants to come in and buy another 4, 5, 6 million ton of corn. You know, another 200 or 250 million bushels will meet our demand estimates. But I would say I'm a little skeptical. I think corn has followed along beans. You've got a big long fund position. And here we are going into the first week of December right around the corner. We're, well, we're 6 weeks away from on paper the USDA giving us an acreage plan. And a yield on corn could be right around 180.

I've got on my whiteboard here in the office drawn up my expectation is at least 92 million acres of corn and 91.5% harvested and 180 yield is 15.15 production. Yep, that would be a monster. It's on paper, but, uh, I would say, um Oh, what's the word I'm looking for here? You know, reality versus perception. The reality is that's on paper, but the perception is we're going to march our way right to a 15 billion bushel plus crop, which even with a further uptick in demand, would still probably get us back to a 2 billion bushel carryout at this time next year.

Chris

Barron: Well, we'll have to chew through that. Theoretical production level for a while anyway at some point. Yep. So as we get closer to the end here, we've pretty well, we've hit all of these topics I mentioned at the beginning pretty well on soybeans. The one other area real quick, and we'll make this short, on the, on basis on corn. Boy, basis is just really super strong almost everywhere. What do you make of that? I mean, doesn't— isn't that telling us something? You know, what's your thought? What's your comments?

Jarod

Creed: Well, it's telling you two things. You know, for example, here this week, corn basis values at the PNW came back at FOB level shuttle loaders in the Dakotas at auction basis, meaning shuttle loaders could in essence sell a zero basis. You back off you know, their margin and cost of handling, so on and so on. You know, that's a $20 to $30 underbid for North Dakota, South Dakota corn producer. That right there is a holy smokes, right? That's, that's more than half of what it has been in the last handful of years. Now the other side of it is though, you have supply and available supply. And I don't mean no disrespect to the US farmer here, but the US farmer is in love with their corn crop and they're stubborn to let it go. Yep. And basis has to do the work to find that price where the user and the producer will exchange ownership. So basis levels are telling us two different things.

A farmer is a reluctant seller, they're barely moving grain at a very snail's pace, it's making the end user stay very hand-to-mouth. Creating these big cash inverses. I'm willing to pay more now than I am 30 days down the road because I don't know what the market's going to be doing 30 days down the road, but I know I need the corn now, right? And then secondly, you obviously have, um, a bid for exportable corn, uh, that has been kind of non-stop for the last 60 days.

Chris

Barron: I think there's a clean take on what's going on with basis. Now I'm going to put you on the spot just a little bit, but As a producer and as, uh, your interviewer here, I guess, or lack of a better way to put it, asking you this question as a producer, what would you tell me, uh, why I shouldn't sell the rest of my 2020 crop, both corn and soybeans, at this point? Is there any reason to not unload it and start focusing on 2021? Why would I keep it? No, I think I knew the answer to this, but right, I mean, why?

Jarod

Creed: I mean, look, A farmer's a price taker, not a price maker. We grow a crop to sell it, not to store it. I get it that price movements create a lot of emotion, but those emotions are often, more often than not, lead us down bad business paths. There are tools not to be able to participate in basis But on the board, if you are so concerned about letting bushels go, sell the grain and buy a call. Turn it into cash. Leverage that cash. You know, you talk about it quite a bit. Well, you know, what's the cost of money, right? Having that in hand in the current environments that we're in, you know, my goal with the majority of, you know, I-80 to I-90 corn producers is to generate at bare minimum $800 an acre revenue in corn with a goal of $900. In soybeans, bare minimum $600 with goal of closer to $650. That requires a lot.

It requires a good yield and it requires some very, very disciplined marketing. But I don't pull those numbers out of thin air. You know, $900 an acre revenue in corn realistically represents for the average producer, cash plus position of probably $100, $150 an acre above any and all expenses that they incur. That includes paying down principal and interest. You're building equity, you're building working capital, and you try to link that into what we're experiencing on this year's crop. Um, with where markets are, with what was forward contracted, with what has been sold post-harvest and basis levels, and the money that we have received from PLC, from CSAP, and maybe another program or two in there, WIP, so on and so on. Those revenue goals are all of a sudden achievable.

Chris

Barron: Mm-hmm.

Jarod

Creed: Well, it's stripping out all that noise Hey, what was my game plan? What was my goal getting into this year? And now where do I sit? Can I achieve it? If I can, move on.

Chris

Barron: And you made a good point. I think the biggest emotion that a lot of us are feeling— I'll include myself in this, you know, um, we all sold, uh, grain at a price lower than we look back now and say, well, we— why'd we do that? We shouldn't have done that. Well, At the time, we, we made the best decisions we could at the time, and we got to not have that emotionally impact our decision on the balance of the grain. And you got to look at the big picture at year end. We're getting to the point where we're starting to do a lot of loan renewals with people, and the, and the bottom line looks pretty good. If you take the average price of corn and soybeans right now with the balance of inventory and you factor that back into the balance sheet, it looks pretty decent on— and pretty much every operation we've looked at to this point But if you don't price that, you don't have that.

So you put that on your inventory on the balance sheet. If that's not priced, you don't have it yet. So do you have that price or do you not have that price? And that's, that's the risk that I see and the emotion that I think that we have to overcome. Any comments on that?

Jarod

Creed: Well, the wildest thing of human emotions is that we have a greater fear of missing out on more then we have a fear of getting less, right? And ultimately, that fear of getting less— if that environment takes place, it doesn't take that long to ultimately put a farm in a direction that they're going to have to look to do something else. I mean, it's the emotions that are attached to this business when it gets down— when it gets down to the real conversation with the banker. Nobody needs to hear the words, "I can't renew you," right? "I can't finance you anymore." That stinks. That, that smells of potential failure. Sometimes it might be out of your own hands, but when you have an opportunity to string together profitable years and move a business in the right direction, You know, it's all about how an individual defines wealth, right?

And defining wealth is not only about money, it's also about quality of life and making sure a very risky business of agriculture, uh, turns profits year in, year out, right?

Chris

Barron: So hey, last question I have for you, and we'll wrap this up. 2021, a lot of people are sitting there on their hands yet. A lot of people have not pulled the trigger on any sales, and there's some that you know, or 30% on maybe both corn and soybeans, at least from what we're seeing. What are you seeing and what are your thoughts?

Jarod

Creed: Uh, so on beans, I've started first sales at $10.50 board price. Um, on average, that's probably somewhere between 5% and 10%. Uh, that doesn't sound so great, but when I get back to talking about dollars per acre and the goal that I'm trying to hit You know, beans still at the price levels that we're looking at for next year is all about yield, right? Unless you're having a massive confidence of being able to raise, you know, 660 to 65 bushel beans and generate that $600 to $650 an acre, well, great. I'd rather be closer to a third sold with an 11 in front, and I might even push that to half sold or more and just buy options against it. Knowing that this is the highest price I've been able to afford a contract for a long, long time, right?

Corn sales are slowly but surely building as the Dec '21 corn market continues to show a little bit of life, ranging from starting at $4, $4.05, $4.10. You know, haven't seen $4.15 yet. Ideally, I think most producers, when I get back to talking about that revenue goal, Uh, if we can have that first 35 to 40% sold at an average of $4.25 these corn, that's going to give me the ability to look at probably $4.30 to $4.40 on another 30, 40, 50% in some type of an option strategy. And then all of a sudden I've just built myself a base to guarantee me above $4 cash corn average across the entire farm. And that's very important comment there.

When you think about a revenue goal perspective and what price it takes to accomplish that, uh, if you put 100 farmers in the state of Iowa in a room and looked at their 3-year average of corn marketing or 5-year average, uh, you might find 5% of them that have been able to average $4 across these last years. Yep. So everything has its price points. $4 ain't pulled out of thin air. Yield times that price versus the cost that we're looking at today going into next year, you know, get the plan in front of you, get the goal visible, and make sure you execute on said plan when that opportunity comes available.

Chris

Barron: I told you last question, last, last question. Occasionally I have a last, last one, and this is it, on On these sales, you're talking about, you know, you're at $10, $10.50-ish, $4.10 to $4.25 on corn. These are board prices. If you— let's assume the producer is pulling the trigger on Dec '21 corn, Nov '21 soybeans. Are you doing hedge-to-arrives? Are you doing, uh, are you selling some on the— are you hedging some on the board? Are you buying some puts? Or Or are you locking in basis?

Jarod

Creed: No puts yet, no basis yet, uh, and it's a mix between hedge-to-arrives and sales on the board dependent on the producer's, uh, comfort level. Or, you know, I would say 9 out of 10 farms has an incredible amount of optionality around them, right, from a perspective of don't have to get out over their skis hedging too much in a hedge account. There can be a time and place, but I would say that that's probably after you cross that 50% threshold before marketing. If you need to regain— retain some additional flexibility, that's when the hedge account really comes in to shine.

Chris

Barron: And there's some pretty anxious processors out there more than willing to do some HTAs right now to get some stuff on the books.

Jarod

Creed: Well, I'm sure you ran through this math, but really, what's the cost difference for a producer to write a 3-cent-a-bushel fee on a hedge-to-arrive versus doing it in their hedge account?

Chris

Barron: It's, it's, it's like pocket change. Yeah, it's minuscule. The other thing too is just the, the peace of mind of the, you know, if, you know, some of these guys just do not want the threat of having, right, having to, to write a check out on the margin side of it. And so that kind of gives people some peace of mind as well. So Hey, I think this is a great conversation. Is there anything I didn't ask, anything I should have brought up that we didn't?

Jarod

Creed: Uh, I'm gonna make one other mention here from a corn strategy for next year. Quiz and quiz and quiz your insurance agent on what add-on products are available. We know we're going into next year a little bit drier. There are some very attractive add-on programs out there, uh, to really, really boost your revenue guarantee. My favorite is a program called RPP. That is a program that fits with the AIP called RCIS. It is very simple. It takes the spring price in February and boosts it by 12%. The farmer can come in and carry an 85% enterprise policy across their entire county and then bolt on RPP at the higher spring price, which is about $4.60 when you add on that 12% at the current market. And a lot of 200-bushel-plus APH producers are able to go out there and guarantee themselves over $800 an acre revenue for probably an all-in cost of less than $40.

So Chris, that's probably a challenge to you too. If I came to the farm and said, here, you give me a check for $40 an acre, here's a check for $820, now go operate your corn crop for this year. Yeah, hard to pass up.

Chris

Barron: Yeah, it is. And I'm all over that. In full disclosure, what I always tell people when we're looking at, at the cost of production from a, you know, line-by-line, uh, cost of production line-by-line, insurance is always, in, in every case, 100% of the time, has been of everything that we purchase as producers, the highest value line item thing you can purchase. Now, I don't sell insurance, in full disclosure either. I'm just saying that You know, 26+ years of doing this, I have yet to find an individual line item cost that we have as a producer that brings us on the production side and revenue protection more value than insurance does. There's nothing. And when you can— I'm all over what you're saying there. I think anything we can do to mitigate risk is going to be an absolute necessity going into 2021 for sure.

Jarod

Creed: Mm-hmm. Just real quick, 200 bushel APH on 85% policy with that program, 200 bushel APH guarantees a guy $790 an acre using the current lease board, right? So if you got, you know, I could tell some guys, make sure you leverage your APH. You've done a lot of operational things very well in the last handful years that has really boosted your APH.. And now with uncertain times, uncertain weather, uh, leverage it, use it, make sure you make money next year no matter what. Yep.

Chris

Barron: Yep. Well, that's, that's great, uh, great advice. I think everybody needs to be working with the insurance agent and be getting this stuff figured out. And Jared, I think this was a great conversation. Definitely plan on having you back again. If people want to get a hold of you, have more specific questions, what's the best way to reach out to you?

Jarod

Creed: Cell phone's probably easiest. They can give me a call or shoot me a text. Area code 402-680-1744. Or if you're ever in the area around Waterloo, Cedar Falls, just give me a buzz and we can meet up.

Chris

Barron: Sounds good. Hey Jared, thanks a lot for the conversation. Really appreciate it.

Jarod

Creed: Absolutely. Have a good one, Chris.

Chris

Barron: You bet, you too. And hey everybody, uh, thanks for listening. Hope everybody had a great Thanksgiving.. And we're looking forward to getting out to you with a lot more content here as we move forward into the wintertime. If you have any topics or questions that you have, please let us know. If you want to get a hold of Jared, reach out to him, and we will talk to you next time. Thanks for joining us on the Ag View Pitch.