Sunday night market outlook for the week ahead

Chris: And it all comes down to this. 2 on, 2 out, bottom of the 9th. The Farmers lead by 1. Full count, here comes the play at the plate, and it's the Ag View Pitch! Welcome everybody to another episode of the Ag View Pitch, and we are entering the final stretch of March and getting into the first part of April amidst lots of crazy stuff still going on and a lot of people cooped up up in their homes. And today you've got Chris Barron and Duane Lowry. How's it going, Duane?

Duane

Lowry: Good, Chris. Anxious to get USDA's reports out of the— behind us, anxious to get the coronavirus behind us, and anxious to start to see planters show up in the fields here soon.

Chris: Yeah, it'd be nice to see the weather start to warm up, that's for sure, and, and be able to get out of the house. It's been interesting at our, at our house with the 4 kids bouncing off the walls all the time. It, it's good, but it, I think it tests your patience once in a while too, which is good though.

Duane

Lowry: Yeah, there'll be a time you look back and be anxious to have all 4 kids back in the house.

Chris: Yeah, yeah. Well, between Alyssa and I with 8 of them, you know, the other 4 aren't obviously around right now, but it's definitely Definitely a different time, a different season for all of us that we're dealing on. And one thing I wanted to do real quick too is just put a plug in. There'll be another podcast here coming out either today or tomorrow depending on when Shay posts it, but Paul Niefer and I had a conversation on the, on the relief package that was signed on Friday by the, by the president and how that relates to agriculture. So I wanted to throw a plug in there for that and then Dwayne, obviously, you know, you mentioned the USDA report. Normally, that's really like one of the biggest, maybe the top 2 or 3 biggest reports of the year, isn't it? And with the stuff going on with the coronavirus and everything, it's— there's a lot of noise going on.

It's not thought of as much. But talk to us a little bit about what, what some of the estimates are there and kind of what we might see out of that report coming into Tuesday.

Duane

Lowry: It's always a big report and one that's watched closely and has a lot of opportunities for volatility. But prior to a couple of days ago, it had almost been forgotten about with all the attention on either coronavirus or crude oil and, and things of this nature. And, and most specifically, this last week was, in the case of corn, was, was engulfed with ethanol concerns and plants closing down, threatening to close down, or dropping their bids to where they're all but closed down, and whether or not some plants might declare force majeure and not be able to honor contracts, either the purchase of corn or the sales of DDGs. And all of that created a week full of a lot of uncertainty, that for sure. As far as the report coming up on Tuesday, the corn acreage ideas, the average trade guess is about 94.2 million. The average bean guess is 84.7 million.

And in relationship to what that means versus what USDA offered at their Ag Forum, that's not much difference in corn. And it's not that much different in the case of beans either. But the, the real important thing is regardless of what USDA offers for acreage on Tuesday, which by the way, I would say the conviction in the marketplace is very thin in terms of what to expect. But regardless of whatever the number is, the trade is going to view it as a very, very fluid situation, much more so than other years. I mean, I can even tell in conversations with producers over the last week versus maybe 2 or 3 weeks ago, there's a significant change in farmer thought process.

And now all of a sudden they are considering possibly making some changes where either a few weeks ago they weren't, or over the last several years they haven't tended to want to get away from being more dominated by corn acres in a lot of areas. Those areas that have been more dominated by corn acres, those are the areas that are thinking about dialing back the corn and maybe increasing beans. And I think the biggest component that's caused that to become a topic of conversation and a new thought process for the producer isn't that he's all that optimistic about soybean prices. It's that he is concerned about what corn demand looks like.

You know, a lot of these operations send the vast majority of their bushels to an ethanol plant, and if that ethanol plant is, is seen as possibly not a continual supplier option in the next 12 months for whatever reason, then that makes them uncomfortable with what they're going to have for a corn market. And I think that's been driving a lot of uncertainty. I don't know if tho— if those concern levels have risen to the point where those actual decisions are being made, but they might be right at teetering at the edge of it, that given the right input from USDA on these reports Tuesday, it might be enough to put them over the edge. So if USDA offers large numbers and that we get a negative price reaction in new crop corn, I think that could be enough to cause people to, to shave a certain percentage and go to beans. I don't think it's a wholesale shift.

I don't— if a guy's been all corn and no beans, I don't think he's suddenly going to go 50/50. Um, if he's been 75/25, I don't think he's suddenly going 50/50, but it might be, you know, maybe 10% of their acreage mix might be switched, that type of thing. Maybe a little bit more in some cases, but it is certainly a topic of conversation. As far as the stocks report, the big part about the stocks report is it's going to imply, you know, what the first, you know, part of the year has been for feed usage. And it also may be a statement about reflecting on what the final size of the 2019 crop may have been. There had been different times over the last few to several months where people would have thought that this stocks report might reflect a smaller production number than what USDA has offered.

I think that with the ethanol situation suddenly that arrived, that even if we get a bullish number in the stocks report, some will also want to, you know, downplay that because of the concern that from here forward, maybe ethanol consumption will be off. Another impact affecting the ending carryout is what kind of demand numbers we have plugged in, what, what will that be for, for China, etc. And there's just an awful lot of moving parts here that makes today's or Tuesday's reports, you know, on the one hand, still very important, but no confidence that a knee-jerk reaction will will actually follow through with a sustained reaction. So if we get something that's a little bit supportive in acreage, they'll say, yeah, it's less acres than expected, but it's still carryout levels that are higher than we've been dealing with the last few years, so it's still negative.

If we get stocks that are less than expected, they'll say, yeah, but ethanol usage might have to be lowered versus— in the next few months versus what we had thought. And therefore the impact of this report won't be that positive.

Chris: There's a—

Duane

Lowry: there still remains a default expectation that USDA reports might be bearish, and there's a default expectation that in the current environment that everything is seen through the lens of a, you know, more of a pessimistic outlook. So it's going to be difficult to get bullish reactions to Tuesday's reports that can be sustained. But it, um, I look at it from the standpoint, um, I think it's very possible we could get a report that casts a more supportive outlook for old crop stock situation. And the negativity part of, uh, Tuesday's reports, if there is a negative part, it's going to be more reflected towards new crop. So I think that it's possible that if we can get a near-term negative reaction following this USDA report on Tuesday, which— and takes— and market goes down and violates recent lows, which is about 15 cents away, give or take.

That might be getting to a point where the market can quickly get to a point where the prices have absorbed all this negativity. So I think your downside risk from where you're at right now could be 20 cents. Hopefully it's not much more than that. And I think logic, for a lot of other reasons which we may talk about as we go along, suggests that downside risk may not be any more than that. So the good part about any type of negative reaction to Tuesday's report, if we get one, is it sets the stage for the market having absorbed an awful lot of negativity at a timeframe that is typically not the time for tops to be made or for markets to continue to trend lower. Be a good opportunity to maybe put in some sort of a seasonal bottom.

Chris: So based on what you're saying, there's probably going to be little impact on, on the report from the acres as much as the stocks is probably going to be more of an impact. You're talking maybe 20 cents potentially if it were to be a bearish report, maybe to the downside. What's that mean for soybeans? Does there anything—

Duane

Lowry: well, soybeans are, are The soybean market probably has an, uh, a belief or an understanding that, um, carryout levels, uh, in old crop are probably going to continue to be shaved back. So, uh, regardless of what the USDA report Tuesday has to say about, um, stocks, um, or acreage, um, there's probably a belief that if there's a negative aspect to the stocks report too, soybeans, the marketplace will be quick to want to ignore that because they're— they— I think they're more optimistic towards demand than what USDA had— has plugged in. So I don't think the marketplace is going to want to embrace much of a bearish reaction to the stocks report, even if there is one. In terms of acreage, I think the marketplace is, is bracing for a belief that final U.S. soybean acreage will be higher than whatever number USDA offers in Tuesday's report.

If Tuesday's report shows a larger than expected acreage number, I think the marketplace will be fearful of even a larger number. Um, so I think that what that sets the stage for is in terms of how will the market react. Any negative reaction on from Tuesday's reports in relationship to old crop months is going to be somewhat muted and short-lived. In terms of relationship to new crop, it might have more of a long, longer-lasting negative implication. I think how that presents itself and how that plays out is that you're going to see the spreads tighten between old crop and new crop, or in case of where they're at right now, you're going to see the old crop inverse over November contract continue to to build and to increase. So if there's an opportunity or, or something to look for after these reports, it will be how those spreads play out.

And that might keep the new crop bean futures on the defensive in relationship to old crop, but old crop values may very well be able to experience, um, some trending higher movement in price over the next 90 days., and therefore any weakness in, in the old crop months, um, or even the new crop months from this report is probably going to be short-lived. And I think that's the general expectation I would have. So we get a bearish report or some sort of bearish reaction in the bean market because of Tuzy's reports, whether it's old crop or new crop, I think both would be short-lived, but I think the, the reaction short-term negative reaction in old crop would, would be much less in duration than even the new crop. So I think the spreads are set to perform well. I think the outlook for demand is good. And there's other factors going on here.

There's, there's question about availability of South American supplies because of port problems, strikes, how they're reacting to coronavirus versus how we're reacting to it. There's a lot of different variables here, but any negative reaction from the report itself in beans is probably going to be relatively short-lived.

Chris: Yeah, so I agree with you a lot. You know, I've never been a big fan of any kind of reports. I know traders like them because it gives, gives you volatility, and we haven't had too much shortage of that lately. And, you know, you look at what you first said in the beginning of this question on the USDA report was this is a fluid situation, and having said that, you throw out the, you know, some of the conversation as you watch what's going on with the, with the politics and with everything that's happening with Phase, you know, Phase 3 going through now, the odds, you know, and you've talked about it too, the odds of probably, you know, 2, 3 more aid packages coming our way, and you look at you know, the ethanol concern right now, you know, the idea of maybe an ethanol reserve, or, you know, the government may be coming out and doing something on the corn side of things.

No guarantee of that, but obviously they're going to be looking at all kinds of sectors of the economy, ethanol being one of them. Uh, what's your thought there? I mean, I mean, this USDA report sort of backwards looking at any— if anything, it's, you You're pretty— from what I hear you saying, it's probably a flash in the pan, whether it's bearish or bullish. Either way, there's going to be other factors that are going to drive this market that are going to be way more important than what comes out on Tuesday. Is that what I'm hearing?

Duane

Lowry: Yes, I think so. I would put it in the context that the markets have all been weak, had a sell-off for varied reasons. And so if you get an additional sell-off off of these reports, The market is quickly getting to the point where, okay, all this stuff has been factored in. It's possible that some of the reasons for weakness that we've already experienced over the last several weeks, it's very possible that some of these reasons have been overly exaggerated in the marketplace, and therefore prices, you know, can very quickly get to a point that are too cheap, too discounted, too negative in terms of, of how much liquidation there's been and longs pushed out of the marketplace. It's almost been, you know, thorough, completely thorough, okay, in terms of pessimism, optimism, sentiment, you know, it's without hope is the stage that we've got.

When those two things happen, you know, you're basically at the bottom side of where you're gonna get. It's tough to push it out any worse than that. The other thing is that, you know, we're just gonna be starting a new growing season The what-ifs are always worth a certain amount of premium in a marketplace, and you have the opportunity here that ethanol is, we felt, kind of maybe the worst-case scenario that, you know, the best case or something better than the worst case could involve, you know, some government bailout of the ethanol industry that keeps them more in operation than they would be without it, some increase or notable purchase by China of DDGs and ethanol and/or corn. I think those are high probabilities that they're going to happen. The question is timing.

I think the fact that the river export system is pretty much on its way to near fully operational strongly indicates that this can happen very soon, if not almost immediately. So, you know, some purchases of DDGs or corn or ethanol, any of that would not or should not surprise any of us. That can be an offsetting factor to some of the current negativity. And so I think that one needs to be careful not to get overly bearish if we do actually get some numbers that create an initial bearish reaction. I think we should more look at it from the standpoint where we're likely to quickly reach the point where all this stuff is discounted.

Chris: I'm going to come back to an ethanol question in a minute, Duane, but before I do that, um, just real quick question on wheat. That's been, been, you know, obviously strong, and there's a, there's a demand story there for milling wheat or whatever, but is, is there any, you know, does that market, or does any one market that gets some strength, whether it's wheat or soybeans or whatever, is that helping corn? Is, are there some, is there some continuity there that's going to kind of pull other markets along or not so much?

Duane

Lowry: Well, let's answer it this way. First, a little disclaimer. I don't pass myself off as being any sort of a wheat expert at all, but the wheat market in relationship to corn is at levels on the very high end of a wheat premium versus corn. Not to say that it couldn't get a little bit stronger, but it's on the very high end. And therefore, anybody that in the U.S. that may have over the last 12 months been feeding wheat, they are strongly discouraged to feed wheat at the present time. And so wheat in the feed ration will be minimized, corn in the feed ration will be maximized. And so, you know, that, that impact of wheat being stronger should have a supportive feature to corn. I mean, corn can't weaken up much more independent of wheat than where— what it already has.

So unless the wheat market is going to also sell off significantly, the corn market has a limiting aspect of how much more it can weaken. And so yes, there's a supportive feature to corn there from multiple perspectives— the intermarket relationship versus wheat and the impact on the the feed rations and how much corn will be fed now versus where it would have been maybe over the last 2 years when the relationship was more inclined to promote feed— wheat feeding in some regions where now it will, you know, will not. The wheat market, we can't say supplies are really tight even if demand outlook has improved. Our export sales are ahead of a year ago and things of this nature.

But we still have, you know, ballpark in it, you know, carryout of 40% of an entire crop is left in carryout, where in the case of corn, you know, you're talking about, you know, 12 or 13 or 14% or whatever it calculates out, or beans, it would be even less. So we certainly have an abundant supply of wheat, both US and globally. But there's also another element that China may end up being a buyer of more world wheat. Than they have been in the past. Part of that's due to WTO rulings, and part of it is, is due to their need to buy— for Phase 1 commitments, they might be a buyer of U.S. wheat. So there's supportive elements in wheat that may very well keep wheat well supported, and therefore that should keep corn well supported not too far below from where we're at now.

Chris: Okay, that's, that's good. That's kind of what I think a lot of people are wondering is just that interrelationship there, so I appreciate that. And the next question, and we're going to go back to ethanol, and we got a question from a client that we work with, very intelligent, good grower in, in South Dakota, that is in an area where, you know, there's a lot of ethanol plants, and there's a lot of areas that, you know, are dependent on these ethanol plants operating for obviously their basis and where the corn can go. And one of his questions was, and I'll try not to butcher this and get the main part of it out because it's a pretty long question, but just, you know, substituting these DDGs is going to be consideration for the users from these ethanol plants. And so, you know, if they're, if the, you know, are they going to be using, you know, a lot less corn?

I guess the question really boils down to how much less corn will be consumed as these ethanol plants, you know, shut down in total, and what does that mean? And then maybe also, you know, what other commodities will some of these feedlots be using if they don't have as much access to DDGs, and kind of what's your thought on that?

Duane

Lowry: Well, here again, there's probably a lot of people listening to this podcast that are better able to answer that question than I am, and more of an expert on the feed ration mix. But I would say that the DDGs are probably about a 30% protein product, and so when— if the ethanol plants are down and DDGs are not available, or they're not as cost-effective to be available, the impacts are going to be increased soy meal usage and to some extent increased corn usage in those feed rations to make up for that. And I think there's probably a lot of different ways to figure it, and depends on, you know, what size cattle you want to figure in that ration and how much feed they're going to consume.

But I would say that the— you will probably end up with a situation that for every bushel of corn that doesn't go through an ethanol plant and therefore doesn't produce ethanol, doesn't produce the DDGs, you probably have lost consumption of corn for about 70% of that. So in other words, if you have 1 bushel that doesn't go through the ethanol process, 70% of that 1 bushel is demand that's probably been lost. The other 30% of that loss in demand from the ethanol plant is gonna be made up by increasing the feed ration, or the corn in a feed ration that will displace what is no longer for DDGs. And then there will also be an increase in soybean meal to make up for the protein lost from the DDG part of that feed ration. So I would just use a ballpark figure that every bushel lost of ethanol demand results in 0.7 of a bushel loss of net corn demand.

And if you were to, you know, look at ethanol consumption being about 5.4, 5.5 billion bushels a year, you know, you're talking about a situation that even if you lost 30% of your ethanol usage demand for a period of 3 months, you would lose less than 300 bushels— 300 million bushels of net corn usage demand. And I think that number that I just threw out there is strictly a shot in the dark, and if anything, it's probably highly overestimating the amount of loss in demand from the ethanol. Even this week, when you had ethanol plants being talked about shutting down, It was not all plants were gonna be shut down. There was talk of a few being shut down immediately, a lot of plants not being competitive on bids but continuing to operate to meet their existing contracts, et cetera.

And I read someplace where they said that the ethanol plants may, may shift the focus to where the focus is on the DDGs, which implied they'd have to elevate, increase the cost of that DDG, which therefore I think would have a pretty direct impact on their ability to sell DDGs. So I'm not sure how much weight I put into that, but if over the last several years there's been a lot of different times where the ethanol industry has been put under strain, not had good margins, fears about how many of them were going to shut down. And yet if you look at ethanol usage in the USDA balance sheet over the last several years, it's hard-pressed to find more than 200 or 300 bushel variance in any of those years versus the rest of the years. So it seems like the ethanol industry manages to continue to crush through a lot of adversity.

Maybe the adversity is not quite as severe as it is now, but here again, it's, it's boils down to supply and demand. And already you have ethanol stocks below where they were a year ago. You've already been declining in that regard. So to the extent that ethanol plants reduce their grind, it's not going to take very long to suddenly get that ethanol, uh, supply back into a more workable situation. And I don't think we should underestimate at all the potential for China to swoop in here and buy ethanol and DDGs, and suddenly that changes the equation. I think it is far easier to believe any of those combination of events than it is to think that the ethanol industry is largely going to shut down for the rest of the old crop marketing year, which is what some of the worst-case fears are out there. I don't think those worst-case fears have a lot of merit.

The other part of the component is, is crude oil price.. And if you go back in history and look, how much time do we spend under $40 crude oil over the last— I don't know, let's just say the last 10 or 12 years— it's minimal, extremely minimal amount of time. Once we get down to that level, the marketplace quickly makes adjustment that causes things to go the other direction. U.S. rig counts on oil-producing rigs have already fallen a notable amount, and they're on a pathway defaul— a significant amount, uh, just given the current set of inputs they're dealing with, that the decisions have already been made. They're gonna shut those down. You got other global oil-producing countries that are not going to produce at their normal rate with these prices. They are going to cut back.

Even Russia and Saudi Arabia, the two at the core of this oil price war, they can't afford to produce oil at these prices. Yes, it's true that their cost of production is less than this, and so they theoretically can produce it, but they rely on oil to be a significant part of their income for their budget, and their budget do not allow oil at these prices and that— for that to work within their budget structure anywhere close. And Saudi Arabia is not the same Saudi Arabia as it was 30 or 40 years ago. This is a— they, they're a different country with a different type of budget, and so is Russia. They're not going to want to stay here for an extended period of time. So the odds are that they themselves will find some reason to get back to at least $40 crude oil. At $40 crude oil, it may still prevent or discourage some U.S. shale oil production,.

But at $40 crude oil, it would have enough of an impact to significantly reduce the negative impact on the ethanol industry. So my point here is that history has shown us that we're not going to spend a lot of time here, and therefore the concerns about the ethanol industry being extrapolated into the rest of this year and all the way through next year, I think, are just overblown in terms of those concern levels. Because in order for that to even have a chance at being the correct scenario, you'd have to be talking about crude oil staying at current prices for, you know, 12 months or something. The history says that's not likely. And I'm going to take a little moment now to stand on a little bit of a soapbox here. The Federal Reserve has dumped trillions of dollars into the system.

The Congress is spending trillions of dollars that they don't They don't have this money that's just being printed. It's just fake money being printed by the Fed, being underwritten by the Fed.

Chris: That's—

Duane

Lowry: and they don't have the money either. They don't go into the vault and pull out a gold bar and, and cash it in and turn it into dollars, or pull out a stack of hundreds and all of a sudden put it in the economy. It's fictitious paper that's manufactured out of nothing, okay? It's just, it's just, it's just a transaction. So all of this is negative to the dollar. The US dollar index went down 5 to 6%, probably just in the last week. And it may level off for a minute, but the pressure on the dollar to weaken is going to be pretty intense in, in the months ahead. And that means the pressure on inflation for any dollar-denominated asset is going to be pretty intense. And the Fed has been on the record for several months that they want inflation. They were very loud about their desire for increased inflation even before coronavirus hit. Okay, the Fed in the end will win.

They will get exactly what they want, which is inflation. And everything that they've done as a reaction to coronavirus only adds to inflation. The only part of the entire landscape we're looking at that is not inflationary is the energy sector. And you can't have inflation without energy and/or, or probably both, the agricultural markets involved in that inflation process. So if the Fed is going to actually win out, and I'm 100% convinced they will, they will get inflation. That means the, the energy sector will get turned around as well. And the energy sector on its own historical basis has all kinds of history, historical proof that it will not spend a lot of time here. Therefore, it will return to some price trajectory that becomes inflationary.

And the ability of the, of the energy industry, the crude oil industry, to go from, you know, feast to famine to feast again is, is very well documented. So again, this won't end with prices in crude oil hovering between $20 and $40 for an extended period of time. This will end with an abrupt cutdown on U.S. rig counts, global production elsewhere, and suddenly we will be going back in the trajectory to, you know, something quite a bit higher in crude oil prices. So in the end, all of this stuff is going to be inflationary. That will be the path that we get on. And the current doldrums from crude oil prices being down, coronavirus impacting economy, this will end up being short-lived in a relative stance in terms of inflation. And if you doubt that based on the coronavirus, I want to draw your attention to what China's domestic soybean prices did from February 25th to last week.

They're up more than 20%, okay? So that increase in their domestic prices is probably at least a part of the reason why China's been active buying beans, corn in, in just in the last, you know, week or so. And the odds are that they're going to continue down that trajectory path. But the point here is when they left the coronavirus impact, they saw their domestic bean prices go up 20%. Why was that? Because it was a change in inventory. Suddenly they had people wanting to build inventory as opposed to being in a fear-based mode where they wanted to deplete and use their inventory. It's gonna be exactly the same thing that will happen in the US, not just in agricultural markets, but in virtually everything.

When we come out of this coronavirus, everybody's gonna be tired of being wrapped up and cooped up in their house, and I'll guarantee you there'll be a pitch by President Trump and everybody else that whenever we're coming out of this and quarantines and the restrictions and things of this will be lifted, there will also be a statement made you know, go support your local restaurant. If you're used to eating out once a week, go eat out twice a week. I mean, there'll be a big push, and that will be how the economy responds. Now, that's my little soapbox here, but all of that, in, uh, in me, to me, encompasses an inflationary thing, an outlook that is significantly different than what we're feeling exactly in the here and now. And I don't think we should underestimate what that looks like to every single component of prices down the road.

And therefore, all the negativity that we're feeling right now needs to be taken in the context that we might already be experiencing and overreacting, uh, too much to the negativity, and the snapback rebound could be quite different. I understand there are certain, you know, levels of, of excessive supplies that we'll be contending with based on acreage and a normal trendline yield. I get that, but there are other components here that will have an influence on price as well, of which inflation, the dollar, is certainly going to be an important one. And it appears to me that the, the cards are stacked in a favor that those inflationary aspects could have a lot of influence on price structure over the next 12 to 24 months.

Chris: That's a good answer to a lengthy question. The only other part of that I would ask or comment on, and I guess with a question and a little part of another piece he had in there in his question, was I guess, you know, you're talking about, you know, that it's a short period of time, but, you know, a short period of time in the, in the situation we're in right now you know, nobody can really predict. So is it a month? Is it 2 months? Is it 3 months? And I guess one of the things is, is in some of these areas where ethanol plants aren't operational for a period of time, in some of these cases, they're just not hardly any corn in those areas either. And so part of it is like, you know, what are they, what are they gonna, you know, what are they gonna feed, I guess, is one of the questions, you know.

When, you know, because there are areas where, you know, and that was— he's in one of those areas where the prevent plant was massive. And so part of it is just, you know, just availability of corn too.

Duane

Lowry: Well, in that particular area, I would imagine that they'd have to look at importing corn from another region. I think they might have some wheat they might be able to feed, but I'm not sure how attractive that would be either as well. They could look at more of a, you know, hay or grass type, pasture type of approach. But if it's on a feedlot, that's not an option. I think their only choice really is going to be to pull corn from another region. And with basis levels off everywhere, that might actually be the more attractive point. And there again, I think all of that adds to the element that I think in the end, over the big picture, it's going to be very difficult to get ethanol usage to fall off dramatically versus what was projected. Could you lose 100, 150 million bushels of corn use for ethanol? Possible. Losing more than that, I think, becomes a bit of a stretch. Mm-hmm.

Chris: Okay. Well, I like your answer. I mean, it, it Basically what you're saying is, if we understand you correctly, is this is a short, short-lived thing on the ethanol, and there's a lot of things that could improve that situation. And when everybody's down and out, everybody has a tendency to look at the negative side of things, and sometimes we need to be also looking at the upside of stuff too.

Duane

Lowry: Well, I think that's correct. I mean, we don't know how long this ethanol thing will be a problem. I'm just telling you there are forces at work that make that be less of a prolonged thing than what worst fears currently say. And, and first place you have to look for that to not feel quite as bad as your worst fears is the fact that, you know, each week your ethanol stocks are declining versus a year ago. The next place you're gonna look for is the possibility that China imports ethanol and DDGs that would directly impact the ethanol profitability. And the last place you look for, which probably is one of the most important components, is, is getting a fix to, you know, current crude oil prices. If you can get crude oil prices back to $40, which based on history is not a difficult thing to ask for, then that too alters that situation a lot.

So when I try to look at the big picture and step away from the, the near-term panic that's in the marketplace, The odds of this ethanol problem being a long-lasting problem, as in measured for the rest of this year and spilling over into the new crop year, I would say becomes rather slim.

Chris: Gotcha. Anything else? We're getting a little long here, but anything else I didn't bring up as we go into the final stretch of March?

Duane

Lowry: No, I don't think so. I think we're just all anxious to get some of this stuff behind us and get on the other side of this coronavirus. Thing. I would also encourage producers to very much try to get up to speed as to what this relief bill offers for agriculture and what that might mean for their operation. And probably the best starting point to find that out will be in the podcast that, that, that you alluded to and talked about it early on that will be out in the next day or so. I think that will be very important. It appears as though Despite the efforts by maybe at least half of the political side of the spectrum to make sure that the rural Trump supporters didn't get too much benefit out of this program, there is going to be quite a few opportunities for agriculture to participate in the stimulus monies that will be available.

Chris: That's for sure, yeah. And you know, just as a little teaser, you know, the The, what Paul and I talk about, Paul Niefer, who does research on this stuff and is a CPA across the United States that knows this stuff really well. I mean, his comment was, you know, there's over $30 billion in this, in this package that has access to, access to the ag sector. And there's a lot of things that we as producers need to pay attention to, both on the payroll tax credit side of things. As one opportunity, or the other opportunity is an SBA loan for small businesses. And so that applies to the majority of the listeners here. So again, I appreciate you mentioning that and really encourage people to go over and take a listen to that podcast. So Duane, thank you very much for your words of wisdom today. Really appreciate it.

Duane

Lowry: Thanks, Chris.

Chris: You bet. And thanks everybody for listening, and we will catch you next time on the Ag View Pitch. Thanks for joining us on today's episode of the Ag View Pitch. As always, you can reach out to us at cbarron@agviewsolutions.com or duanel@netins.net.

Duane

Lowry: We'll catch you next time on the Ag View Pitch.