USDA S&D, acreage reports, and weather, oh my!

Duane

Lowry: And it all comes down to this. 2 on, 2 out, bottom of the 9th. The Farmers lead by 1.

Brad

Downing: Full count, here comes the play at the plate, and it's the Ag View Pitch! Hey, okay, the Ag View Pitch. Today I'm Brad Downing filling in for Chris Barron. Chris is in the middle of the field right now going back and forth, living the dream, side-dressing corn. I'm kind of envious. I'd like to be doing the same, but we're broke down at the present moment, so hopefully get back to side dress some corn and give a little fertilizer squirt to the corn out there later on this week. But once again, it's Brad Downing. I am the owner and president of Cross Creek Ag Solutions based out of Greentown, Indiana. We are a Beck Seed dealer. We also have a biological business where we are a distributor and dealer for multiple different manufacturing companies in biologicals and plant nutritionals. And we also run a spreading business that we spread Custom Makers for chicken litter.

We also farm a little bit through north central Indiana, and we just are happy that we're here today, and we look forward to having a great conversation with Dwayne Lowery. Dwayne, it's good to have you.

Duane

Lowry: Good to be here, uh, Brad.

Brad

Downing: Good deal. Well, Dwayne, I appreciate your time and, uh, talking on a Sunday here for all the listeners out there. We're going to jump right into it and get into talking about Many different things, trying to stay positive with the crazy world we live in today and the many things that have happened in the last week. Uh, don't want to get into too much of the political side of things, but we'd like to look at, you know, where are we at in the market right now. And Dwayne, let's just start off with the obvious side of things. We've had a small rally and some positivity in the market. What, uh, what's going on? What— why are we seeing this? And is this a false narrative or is it a short-lived—

Duane

Lowry: Well, look at it, uh, back up just a little bit from the last few days. We've basically been in a very narrow range at the bottom side of parameters for the last, uh, 45 to 60 days. And then here this last week, uh, we had some strength in corn, especially in beans, that I think was unexpected and to some extent a little bit difficult to explain. We started out the week last week worried about pricing of old crop basis contracts, the lack of a weather narrative, and concern that we were getting here towards the mid part of June. And if we don't have a weather market, we're concerned about a sell-off. We come in Thursday and Friday and end up having, you know, stronger performances in corn and wheat. For the week, corn was up 5.5 cents. Beans are up 27 cents. And then wheat was down 5.5 in Chicago, Chicago, and down 9.25 in Kansas City.

I think the beans were supported on some Chinese business, both what was occurring and expectations that maybe they were in the process of beginning to buy larger quantities and maybe it was going to be a new theme and a weekly theme. I'm not sure that's going to be the case. Uh, there's also talk about, uh, weather and whether or not weather is a storyline. Um, it's difficult to talk about a weather market when crop conditions on a nation— nationwide level are very good. And some people say the weekly crop ratings may get better here this coming week. Um, the tropical storm in the Gulf is bringing up moisture into the Midwest Monday, Tuesday, Wednesday, depending on your locations, with a lot of places supposed to get, you know, in that 1 to 2 inch or maybe locally higher across a large portion of the midsection.

You look at a soil moisture map, you don't have concerns about a drought, but after the next 3 days, then it looks like we're going to have a more limited precip pattern. We do not have the latest weather on Sunday here for the longer-range models, but what came in Saturday maintained the themes that we had Thursday and Friday, with the exception of the 6— excuse me, the 8- to 14-day map that came out Saturday showed more of a normal precip across the northern half of the Midwest and still below normal precip in the southern half. But all of these, uh, recent, uh, longer range maps have been talking about a below normal temperature theme. And given the soil moisture profile and the lack of heat, it's a little bit difficult to anticipate that we have a weather market. But that was one of the explanations going into the weekend. I'm not sure how we're going to open up here, um, tonight.

I think that there's going to be some mixed expectations. Some people are going to look at longer range weather, they're going to look past the near-term rains and want to say that the market can be higher and we're going to build on the, the strength that we had Thursday or Friday. Others are going to come in and look at the short-term rain event and question why we were up as much as we were late in the week. So that's kind of a, a mixed bag. Um, we have the, uh, uh, monthly supply and demand report on Thursday. I don't think there's going to be any large changes in those. Certainly I don't think there'll be any changes in their 2021 balance sheet projections that they had from May.

Despite the fact that the ethanol situation and usage and production has increased over the last several weeks, we still look like we're on path to, to fall further behind on overall ethanol production, which could end up causing carryout to be increased. Export sales, despite the fact that they've been quite good, um, we still might fall short of the mark. And, uh, so carryout estimates are going to be similar or maybe even slightly higher. And then who knows what we've got for the acreage report. So fundamentally, it's difficult to see a reason for a rally right now, Brad. And I'm torn between how to interpret weather. What's your thoughts on weather and crop conditions, Brad?

Brad

Downing: Well, it's a mixed bag, really. It's the tale of the haves and have-nots right now. If you really look at through most of Indiana, the parts of Illinois and the parts of Ohio, let's take the eastern Corn Belt for starters here, that were able to plant in April. And even the first part of May, the first 5 days before the Mother's Day freeze and frost problems we had. It's a mixed bag of that corn that was planted super early looks really good now. But the emergence was extremely erratic. We have corn that is now approaching V5 and corn that's V2 to V3 all in the same field. It looks a lot better from the road when you're driving 80 miles an hour trying to get somewhere. But when you get out and start looking at it, there's some variances in it. And so when I say from a condition standpoint, I would maybe give it a B+.

We're definitely not on an A+ rating by no way, shape, or form because of the low ground and, you know, corn just, it was that long stay in the ground. The later planted corn up against that freeze really had a lot of condition problems. There was a lot of replant that happened in the eastern Corn Belt. And there was a lot of replant that happened because of that planted right up against that Mother's Day freeze. And so a lot of your, your high moisture, your higher water holding capacity soils that stayed wet and cold super long during that freeze just didn't make it or just didn't even germ. So there's quite a bit of replant to fix that along with the same thing in beans. But what's interesting to me is now looking at a crop that looks like it's in pretty good shape for the most part that was planted there early.— and I could talk about the B+ type rating score.

You know, it's June 7th as of today. And I'm looking at a crop that normally would have been planted in April that would have been at least 2 stages farther along and a lot more— normally, historically, a lot more growth to it and vigor. So it's interesting to see that. Yet on the other hand, we've got areas that were extremely affected by the rain, southern Illinois, southern Indiana, southwestern Ohio, that there's parts of those areas that are still planting. They're not done yet. And obviously we've run up against, you know, the prevent planting timeframe. How many prevent acres are going to be? Uh, probably not as many as we think, but those areas are going to be obviously behind. And I know everyone's always talking to me about, well, last year, you know, we didn't plant until, you know, the second week of June and look at the yields we got then.

I want to remind everybody we had the largest amount of growing degree units in history in September and October last year. The chances of that happening again are probably slim to none. And that was a record of all time since we've been keeping track of growing degree units. And that happened last year on a late planted crop. That was a gift from God that we all got that we didn't think about. And we tend to think— forget about it now. So I would be looking at that from the friends that I have out west. You can probably speak in more of the Iowa side that I can. I've talked to a few in the Wisconsin are still planting, especially in the areas that have been wet in the southeastern part, the northern Delta, through the Delta, through Mississippi, northeastern Arkansas, and southeast Missouri. That area through there has been, I mean, just hammered with rain after rain after rain.

Some are still planting, some are still trying to decide what to do, but I would say it's been continually wet, a lot more than normal. So that's kind of where it is from the weather standpoint. But getting back to your early comment about ethanol stocks, and looking at our usage, you know, the one thing I'm looking at, and I'm looking at a chart here from Clearback in April 10th, our usage from a year ago on April 10th was right at almost a million barrels a day. We were down to half a million barrels a day. We're back up as of the 29th of May, the report showed that we were back up to 765,000. So we're increasing and getting back up. But we're not— but on the stock side of things, Dwayne, you know, we're looking at 22.5 million barrels as of May 29th of stock. And a year ago, that stock number about the same time was almost identical.

Duane

Lowry: So yeah, the ethanol— go ahead, go ahead, Brad.

Brad

Downing: I jumped around on there from weather to ethanol. But you know, what, what does that look at from a standpoint? Let's say we are staring down, which I, I don't know if we are or not, on a 3 billion carry on corn. But if our ethanol stocks are still staying where they were a year ago, we're sitting on a massive amount of corn planted and possibly trendline yields. Where does that put us at?

Duane

Lowry: Well, first of all, on the ethanol side, we were down 40-50% in production for a while. Now we're down about 25% from a year ago. That's kind of the pace. It looks like USDA is going to have to lower ethanol— corn use for ethanol again, and it might end up having to be reduced ultimately by 100 or 150 million bushels from where it is currently. We'll probably get a 50 million bushel reduction in that this month. Feed usage might be lowered. The, the exports could possibly be raised. Ending stocks are going to be similar but going up. And, you know, old crop production or carryout is probably going to be somewhere in that 2.1 to 2.2 range when we're all said and done. You talked about next year. Currently, the carryout expectations are around 3 billion and some, 3.3. And you can find private conversation estimates that can go higher than that.

A lot, of course, will have to depend on yield and what the acreage estimates are. But in any scenario, it's— we're going to increase carryout at least 1 billion bushels given normal yield projections. So we're producing 1 billion more than what we're consuming. And it's hard to picture down the road what it's going to take for that to change. And so that's certainly troubling. And the only thing we can think of for that to change would be basically two things: either a massive purchase program by China, which we've all been disappointed in so far to date, or else a production problem. And that's where weather is— is important. And in the last 15, 20 years, it's not been uncommon to get to the 15th of June, and the marketplace, even though we live in it in real time, we have anxieties about production. The marketplace seems comfortable making a commitment that the crop is made.

Well, here we are, the 7th of June, only a week away from that. We're staring down a very good Midwest rain event over the next few days and then a period of dryness. And we have had weather markets before that have begun basically at the 1st of July. So it's certainly possible for something to happen, but it feels a little uncomfortable talking about a weather problem right now just because of the crop conditions and where we're at. And so I think there's two, two general themes here that one of, one of the two is going to play out. And to be honest with you, I don't know which it is. I'm going to, and I'm going to take a look at the bigger picture. We talked about the corn carryout situation. I'm going to shift gears a little bit to wheat, and I seldom talk about wheat, but we're at the time where wheat harvest is beginning in, in the southwestern U.S., the hard red winter wheat.

And from reports and expectations I get, that's probably going to be a good crop. We're still— we're probably going to end up with an overly abundant wheat carryout situation, same as we had last year, roughly a billion bushels. And Wheat is currently and has been at a historically upper end of a premium versus corn. So I think there's a, there's a real threat that the wheat market, absent a U.S. row crop weather problem, the wheat market looks vulnerable to me to having weakness that could maybe mushroom into being, you know, 40 to 70 cents from where it is right now. If you look at more of a traditional relationship of wheat-corn, If that happens, that opens up the door for July corn and Dec corn to possibly make new contract lows.

And I could theoretically see that happening before this month is over as we wash out July positions, we deal with remaining old crop stocks in farmers' hand on price basis contracts. If we have a lack of a weather storyline, I think that's the downside risk. And I think wheat initially would be the downside leader. And so far wheat has performed poorly last week at times where corn and soybeans are trying to perform well. And I'm afraid that wheat weakness can continue. So I find that scenario is one scenario where we really don't have a weather problem between now and the 1st of July and, and corn and beans all face, you know, some serious sell-off from where we finished Friday. In the case of beans, maybe that's 30, 35 cents of downside risk. In the case of corn, you know, my— I think the downside risk is contract lows. In the case of July corn, that's like a 22-cent decline.

In the case of Dec corn, that's roughly a 20-cent decline. So when we look at and feel good about how the markets performed last week, we have to look at it through the perspective and the lens that we're only 20 cents off contract lows. So how good can we feel about it when we're one week away from the timeframe that in recent years there's been a lot of times the market turns down by the 15th of June. And so I'm really struggling. So that's one scenario. The second scenario is that after this near-term rain event, we have a dry pattern and this dry pattern ends up building momentum and lasting longer and longer. And, you know, if you have a scenario like that, then all of a sudden, you're, you know, you open up a whole new set of circumstances.

It's going to be very difficult for the marketplace to, to buy into a major weather problem after last year when we thought we had one, and we thought we were dealing with, you know, biblical proportions of weather and crop situation, only to find out we didn't have a problem at all, I guess, in the end. You made the reference to the fact that we were blessed with abnormal, you know, growing degrees and extended growing season. That's very true. But the marketplace, I'm not sure how they're going to grab into that. And like I said, as we're recording this, I don't have Sunday's outlook on the longer-range forecast. And maybe that's going to be, you know, super bullish. But right at the present time, the lack of heat, good moisture going into a dry period, I struggle to see, um, the grain markets, uh, gaining a lot of traction on a weather narrative right at the present time.

And I remain fearful that as we go into Thursday's USDA report, we're going to get— be reminded again of the abundant supplies we have now and the expected increase of that abundant supplies in the next marketing year. And then between now and the end of the month, we got— the acreage report to talk about. And it's hard to get anybody to have anything positive to say about the acreage report. Some people will reduce corn acres a little bit, but it's not enough to alter the overall situation. And you start adding bean acres and, you know, you start increasing your carryout. The one thing I would say that I think is kind of bullish fundamentally is the overall soy demand globally. I think is being underestimated. And this U.S. new crop carryout at 405 could easily be in the low 300s without a change in the acreage.

And then you start adding, you know, a million acres, maybe you increase that potential for carryout by 50 million. But that is a relatively still borderline tight situation. In a stocks-to-use ratio. So I think the beans have potential even for a weather market in the US to get traction after the 1st of July. I'm just not sure that we can trust the gains that we had on Thursday or Friday. Any thoughts on that, Brad?

Brad

Downing: No, I mean, we're, we're at this place right now where some kind of bullish report or either weather events going to push us up into a different range, which I don't know what that's going to be, but You know, from a technical standpoint, I look at— we're all sitting on basically a synthetic put option, those of us that have crop insurance, which is somewhere around the $3.30 December futures price. So if you look at that, and just the grind that we've had since, you know, end of February on the COVID-19 issue, as we start this new month, and especially it seems like a very critical 30 days to getting a price that we can live with and stay somewhat solvent.. And yet trying to get us back to a profitable level, which I think that— I mean, it seems like there's very little hope. And I'm trying to be positive here on a profitability level.

Yes, we've got the crop insurance, what I consider a synthetic put. But the big thing I want to talk about and ask you about, which we, you and I have talked about before, is right now the funds on corn especially are the longest or the second longest— I'm sorry, the second shortest in history on record at 275,000 contracts short. On corn, where beans and wheat have both become a neutral position. Technically speaking, going into this, we have a huge, huge short market. My question is, we've got that $3.30, what I consider the crop insurance prices at our lower level, the chances of pushing into a 2 with this little strength we've had here, and let's say this weather market does push into what we've been talking about, have we possibly hit and, and secured our low?

Duane

Lowry: Well, I don't know. Um, if you get a weather market, um, it's possible we can certainly get a recovery. There's certainly energy to chase shorts, that's for sure, as you pointed out. And such a situation would open up the door for, you know, $3.70 to $3.85 December corn futures. As a possibility and still probably leave us with a situation that fundamentally is bearish enough in the end to return us to levels at or below where we're at now. On the other hand, the timing of a weather market is in, in question here. I If, if we get any appearance that we don't have a prolonged dry period, okay, which so far we can't say that we do have a prolonged dry period, at least not a prolonged enough one to cause problems.

Brad

Downing: If, if, or anything to that matter, that's, you know, threatened the idea of any kind of a trendline yield, corn or beans, right?

Duane

Lowry: So far we don't have that to Correct. So, and as long as that remains the case, and let's just say that remains the case over the next week, all right, I'm not going to even look out farther than that. Sure, we are. If we, if weather can't develop a bullish traction over the next week, and right now I don't, I'm not convinced that we have enough weather here to even call the markets higher to get follow-through from the strength we had on Thursday and Friday. So I, I I'm inclined to think that we're going to come in here Sunday night and maybe trade on both sides but not have any vigor to the upside. And I think that makes us vulnerable to weakness.

And if we don't have that, if that remains the case all week, I'm afraid that these other factors, the pressure of our USDA report on Thursday, which will not paint a pretty picture, it may paint a similar picture, but it won't paint anything prettier. And then you have the acres report, which probably isn't going to paint a pretty picture either. People will be worried about the stocks report. Most farmers have the attitude that remaining old crop corn or beans, for that matter, they don't want to be the last one holding the bag. And they already feel like they're vulnerable to not getting much of a rally. And if this weather storyline doesn't extend much into this week with any real confidence and vigor, I think there's potential that by the end of the month, before we go to that acreage report, we can have a washout that takes us to contract lows in corn.

Because again, even though we had this rally and we're trying to feel good and optimistic about it, um, we're only 20 cents off contract lows. I mean, that, that's kind of is a statement about just how pathetic prices have been. And we've— and then considering we've been in this range for 45 to 60 days. You know, we just really suffered from all these things— the COVID-19, the crude oil debacle, the ethanol problem. We've suffered from that. We've never got any recovery. Crude oil went $40 in the negative territory. Now it's worth $40 a barrel. It went— if you take away the day that went into negative territory, it still bottomed out in that $10 to $15 range. And, you know, so it's more than doubled its price. So you had recovery there. The stock market has recovered, I don't know, 70 or 80% of its decline.

And agriculture, whether you're looking at livestock or whether you're looking at corn and beans, we haven't participated in any of this recovery. Correct. And it's very discouraging. Farmers feel that discouragement and they look on the horizon. They want to be hopeful, but it's difficult to see how pieces fit together to get this hopeful scenario. And they're betting on— or hoping, I should say— on two things. One, China, so far clearly a disappointment. And two, they're wondering, will there be a weather scare? And right now we have a little bit of a weather narrative, but I don't think we have enough of one yet. And again, if this remains the case this week, I think we're vulnerable to corn and beans suffering into the end of the month going into that acreage report. I do want to point out one other thing that's a little bit of hope, but also it's a truth.

And that is, you know, I had put my comments on Friday, the chart of December corn from 2010, and I was alerted to that year because of a customer who called me and had a conversation about that, and we checked it out. And so it was quite interesting. But our price action this year from, you know, late fall all the way till now has been not too different than what it was in 2010. In 2010, we bottomed out like the last day of June, first day of July. And then from there, we had a sizable rally, took corn from 3-something to $6 at harvest time. That's not— I'm not making that as a projection, but I am pointing out that such things are a possibility. And I also would point out that I'm being torn on this weather thing because I do see some aspects of weather that are concerning. And I go back to the late winter and spring. We've had large windows without precip.

That's what allowed a lot of areas to get planting done so early. We've had other areas that have had excessive moisture and cool, like you mentioned, but, um, we are going into the timeframe of the year. Once we get into July and August, we certainly could see a reduction in rainfall. I happen to think if there's a weather storyline coming, I think it is going to be something that occurs in July and August, not something here for June.

Brad

Downing: So you definitely could have seen it. No, sorry, interrupting, but you definitely saw in a lot of our travels and deliveries we had going on in March and early April, a lot of people were putting tile in, you know, subsoil moisture, including us putting tile in. There was a lot of tiling going on and subsoil moisture was not your typical, you know, you're down there 36 to 48 inches and just water gushing in. It was dry. I mean, it was dry enough that you were able to work in the— so that's not a normal late March type situation coming out of the winter.

Duane

Lowry: No, I think we have the possibility that it's, it's reasonable and plausible to imagine having dryness in July and August. But I'm, I don't think we have one right now. And I'm afraid this little strength that we had late last week is not going to be sustained. And with prices only 20 cents away from contract lows, so many times just before the market wants to have a more significant rally, which I think might be coming in that July-August window, we end up having a washout. So I'm— I have concern near-term, but I, I do open the door for weather risk to build again in the marketplace from July and August. And I, again, I point to the bean S&D that the global care— global soy demand is very, very good. The possibility that China may have desires to build their stocks, the fact that our carryout is, you know, around 400— as the USDA has new crop carryout pegged at 405.

And if a lot of people are assuming that we've got 1.5 million more acres of beans, if we end up having anticipating too much and maybe we end up with less beans than what the market thinks, which seems possible to me, then all of a sudden it might take— not take much of a combination of a weather concern and July forward and a realization that this global soy demand actually is quite good, all of a sudden you're going to have carryout discussions, you know, in the $300s, and to get to the low $300s is not very difficult. And so I think there might still be a weather market ahead of us. I'm just concerned that what we experienced this last week might be a false start.

Brad

Downing: Yeah, and I think I can speak for majority of farms and the ones we work with and talk about. You hit on something a minute ago about, you know, from a standpoint of free and trade market, we, we all don't want to have to deal with playing the games from government funding and, and all the programs that are coming. We want a fair and, and profitable market where we can get back to at a profitable level and be sustainable and continue to produce. But we're in a situation of overproduction. And we're in a situation where our trade is let's just say diminished quite a bit. And if, if the weather market doesn't come, the positivities we have right here are, you know, what, what incentive do we have corn or beans to be selling old crop or new crop cash in the face of, you know, possibly putting basis contracts in place?

Because, you know, we may be sitting on the best basis here right now.

Duane

Lowry: We don't have any incentive to make new crop sales. However, there are people that anticipate corn at $2.50, $2.75, $2.80 in the fall, and some people are deciding that the market will get to the point where they'll get an insurance payout based on price, and therefore they think that making sales, you know, now or on a small rally is an opportunity. To me, If you elect to go with that approach, you have, um, put yourself in greater risk. You haven't reduced your risk. Your, your least point of risk is to sit there and do nothing. If you make the sales now, you run— your new risk is that something happens between now and the fall price and the insurance that causes prices to actually go up, not go down. Therefore, you get— have less of an insurance payout based on price, or maybe none. And then you have to wonder, why is it price going up?

If it happens to be because there's some sort of production shortfall somewhere, then the risk is that it's occurred in your county. So until you can get the market up to where that risk-reward is maybe a little bit more in your favor— in other words, If you get short covering from the funds, you get concerns about weather, and you find yourself at $3.70 or $3.80 Dec corn, maybe the risk-reward is better then, then that you can maybe do some price protection strategy. And in anticipation that in the fall, after the weather scare has worn off, we'll still find ourselves with a very plentiful supply, even if the carryout might not be quite as high as anticipated, it would still be more than adequate. Um, I want to interject here, I've said all year long that any price protection done in new crop, I really want to do it in the form of buying puts.

And I have— the reason I'm doing that is because I am concerned about some surprise. I am very concerned about everybody being negative on and on the short side. But even saying that, I don't really want to buy puts here. I want to wait till after we get some sort of a weather rally. If we don't get that weather rally and we do end up sliding prices lower, then we'll look for a different type of an opportunity. But I'm not too anxious about doing anything marketing in new crop corn at current prices. And in the case of beans, I'm quite optimistic about the longer-term upside potential, and I certainly have no interest in selling beans here.

Brad

Downing: Well, that's very good. I think we probably ought to try to wrap it up here and close up the ag pitch. But Dwayne, as usual, thank you very much for your time and your thoughts.

Duane

Lowry: Thank you, Brad. I usually end up having one last thought, and I happen to have one here. Yes, we don't want to talk politics, and I don't want to get into that, But the events that have happened in the last week certainly have stirred the political pot. And it's certain anytime you stir the political pot, you run the risk of, of changing whatever the dynamics were before. At one time, the dynamics were a strong economy and things of this nature that have a historical precedence in the favor of whoever the incumbent is, no matter what the party is. Now you've got all this unrest. You've had economic slowdown. Now you're trying to get economic recovery. You've seen people go to the streets. And, you know, you got a whole lot of different narratives along those lines.

And I don't have the answer, but I think people should begin to ponder what does the world look like if we have a new president? What does the world look like if we— if the political balance of power shifts from those traditionally offering lower taxes, less regulation, and it shifts over to, you know, maybe a move towards higher taxes or removing of some of the recent tax breaks, or maybe more regulation. And agriculture has been a political football here, even though agriculture has been known to both sides of the political spectrum. It's been a political football and, and been strongly connected to the president and has been brought into the narrative because of tariffs and China and, and things of this nature. And let's say that we have a new president and there's a power shift away from where it is right now. Is there payback risk to the agricultural sector?

Is the ag— will agriculture remain a political football? If agriculture is going through a difficult time, will they not get the same attention and the amount of payments that they've gotten in the recent history? Will there be a whole new outlook on how to deal with agriculture instead of continuing to plant fence row to fence row, which has been the way it's been here for the last few decades? Will there be some move towards some other method? Will the government say, we're not going to spend— continue to spend money for subsidies unless we get something in return? And what will that in return get? Will it be, you know, some sort of a set-aside program? Will the whole dynamics change? You know, will ethanol be a friend or a foe? Or, you know, will the leadership be a friend or a foe?

I think there's an awful lot of questions that make the political landscape and the results of the upcoming election, to me, very volatile and very uncertain. And I'm not sure how we navigate that, but I think it's something that we need to be thinking about and planning for. I know some people have been advocating new crop sales in 21 months because of their proximity in their current prices and because of the view that maybe the future is not going to get better for a while. That might sound good on one hand, but what happens if the dollar declines in value by 20% because of the massive printing of money by the Fed and maybe some political upheaval in, in November and and suddenly the US dollar may not be the preferred currency in the, in the world of investing anymore. Who knows? There's a vast array of possibilities, but I throw that out there full of uncertainty.

But I still think people should think and ponder that and enter that into their equation when they start making management decisions.

Brad

Downing: No question. The one thing that this whole entire process of COVID-19 that's happened, you know, we all talk about this is a huge black swan event that no one saw coming. The one thing that it's taught me is when we shock test our system, and whether it be through Profit Manager or anything else on our operation, we need to do even a bigger, deeper test than we've ever done because I never had anything in a contingency plan in our operation that even looked anything like what we've experienced. So I think where we're at today, you know, everybody says, well, it could never happen again. Well, I think this is the one thing we could leave as a point point, everyone needs to shock test their system at the— maybe even 20, 30% above what your worst nightmare would be and try to figure out how do you survive?

What, what do you need to do or have in place right now for good or bad shock testing to make things flow and make things work? Because we're dealing with things that we've never seen ever happen, and a system— and from a world order, national economic system that we haven't seen, at least in my lifetime. And I turn 40 here in a few weeks. So I, I may be still a young pup, or maybe I'm midlife crisis. I'm not sure which yet. But, um, that's one thing I'll leave the listeners with is that, you know, coming out of this, we're looking at the markets and where we're at, but also everyone needs to really, you know, sit down after we get done side dressing, spraying, whatever it may be. We all need to really shock test our system and see what changes we need to make and how we need to go about doing business in the future because—

Duane

Lowry: well, you talk about, you talk about shock testing your system and making changes and starting to think out of the box. Just to give an example, in my daily comments, I always put in there what the spring crop insurance price was in corn and then what the price protection is on different policy rates. And the spring price protection price was $3.88, and the 85% RP kicked in at $3.30, and 80% kicks in at $3.10. 10. But there is also another policy, crop insurance policy, offered, you know, last September, October, and before harvest, August, September. And that offered a spring price of $4.03, and it had a 95% payout at $3.83. You know, very few people even know that existed and looked at it, but people that purchased that policy have a $3.83 price protection versus an 85% RP as a $3.30. I just got an email, uh, one day this last week.

Haven't even looked into it in great detail, but now there's going to be another insurance policy on top of this margin protection for the '21 production that will be— become available then in discussion here in August, September. That will allow you to take the Dec '21 futures, which right now is at $3.75, and be able to lock that in as a spring price, and you'd pay an extra premium cost per acre on top of your insurance. So I mean, we're going to have to start broadening our ideas and visions and seeing what else is out there that gives us some level of protection, but doesn't necessarily remove all of the opportunities and things that if something were to change and get better, and I only point to the, the crop insurance thing as just being one part of the toolbox.

But, you know, most producers have reached kind of the end of the rope in terms of cutting expenses without, you know, cutting yields. So these are going to be some very challenging times ahead. And We're just going to have to stay on top of it. And again, like I said, all these uncertainties, I'm, I'm full of questions and possibilities, but I'm not full of answers. So I guess we have to wait until we're suddenly enlightened with some answers, I guess.

Brad

Downing: Yes, sir. Well, we need to wrap it up and end there. And once again, thank you for your time. Appreciate it. And thank you for your insight. It's always good.. And I'm very honored that we could talk today, and I appreciate Chris asking me to fill in for him today. And, you know, just the last thing I have on my mind is that we're all, you know, we all talk about this, we're all in it together. But in the ag community side, everyone listening, I would really encourage everyone, we need to be very cognizant of watching out for our neighbors, anybody, because we're in some of the toughest times I've seen in my career. And Just if we can help anybody out here and there, I think all of us together stronger getting through this will be better than each of us individual trying to go through it. So I'll leave it at that. And we appreciate your time.

And once again, from the Ag New Pitch, this is Brad Downing from Cross Creek Ag Solutions filling in. And thanks for your time, Duane.

Duane

Lowry: All right, thanks, Brad, for your time and your expertise here today. Thank you very much. Thanks for joining us on today's episode of the EggView Pitch. As always, you can reach out to us at cbarron@agviewsolutions.com or duanel@netins.net.

Brad

Downing: We'll catch you next time on the EggView Pitch.