Summer volatility heats up: weekly market outlook, June 27 - July 1st

Pete

Meyer: Thank you for listening to the Weekly Market Outlook. It is our pleasure to bring an industry-leading market analyst to provide you with the most value possible in your farm business. Please reach out anytime by emailing cbarron@agviewsolutions.com.

Chris

Barron: Welcome everybody to another episode of the Ag View Pitch. We are heading into another marketing week and we have with us Pete Meyer. Pete, how's it going?

Pete

Meyer: It's going well, Chris. It's a little bit drier. I'm in Ohio today. It's a little bit drier here than it is by you, from what I understand.

Chris

Barron: Yeah, it is. Yeah, you're on the road driving, heading for Ohio. We just, as we record this now on Saturday, we had about 5.5 inches of rain here locally, and it sounds like there's some other areas had a little more and some a little less, but That's all, that's enough, we're good. You can turn the faucet off now, Pete.

Pete

Meyer: Yeah, you know, I mean, I was looking at the GFS ensemble, uh, on Friday, and it looked like, uh, most of Iowa was going to get, you know, somewhere between 2 and 2.5 inches in the next 10 days, and certainly nobody expected to see twice that in, in 10 hours, right? So, you know, I think it's a It's an issue. So, you know, now that that water has come to a major part of the east and eastern part of your state and it's moving towards Illinois, uh, it'll be interesting to see how the market reacts on Monday, even though I don't really think—

Chris

Barron: it probably won't—

Pete

Meyer: the market, the market has, uh, yeah, rain makes grain, right? Well, I mean, look, I wrote a report to clients yesterday, Friday, that basically said as of yesterday morning, there was probably not a farmer in the U.S. that couldn't use some rain except for maybe some farmers in North Dakota, right? But I mean, when you look at the CASMA map, which is a collaboration between NASA and NASC, you can just kind of see that looking forward to some rain. So, but yeah, nobody was looking forward to as much as you got in a shorter period.

Chris

Barron: Yeah, it kind of created— turned the creeks into rivers. But with that said, let's, let's talk weather again here for just another minute yet. So, you know, obviously it doesn't rain everywhere, it doesn't get hot and dry everywhere, and we all have different stuff. What's the, what's the market watching? What's going to move the market one way or the other? We saw a lot of shift here last week on the markets, you know, kind of this swing back to the downside and maybe more risk that way. Is weather connected to that, or kind of what's— talk a little bit about what's driving that.

Pete

Meyer: Well, when we watched the markets, you know, after June 15th, you know, I wrote the clients that it looked like that week after the 15th that it really looked, or for a few days around mid-month. It looked like the weather market was starting early. I'm used to the weather market starting maybe this coming week before Fourth of July and then after Fourth of July as we head into pollination for most. But it seemed like even though planting was late, it seemed like the market was paying a lot more attention to weather mid-month. And then as soon as the Fed raised rates by 75 basis points, The weather market was gone. So I was wrong. I thought that we were trading weather there around mid-month, and maybe we were for a couple days, but that was the end of that.

Chris

Barron: Well, is it— so what that said, is, is the stock market or other things driving that pressure then? Are the funds just saying let's take some risk off, or what's your thought there?

Pete

Meyer: Well, there's a couple of things going on there. I'm not a huge believer that money moves between commodities and equities, right? Even though last week we did see commodities in general go down while equities went up, but I don't— The funds that we talk to, they don't have those swings. They either get invested in commodities or they don't get invested in commodities. A friend of mine, Trent Croner from South Dakota, who I'm actually going out to visit this week, he said to me, he goes, You know, after the downfall midweek, and we did have a shortened trading week, which seems like we compressed 5 days of trading into 4 days whenever we have holiday weeks like that. Mm-hmm. But he said to me something that really rang with me. He said, we're gonna see how strong the inflation trade is. And it's true. And you know what?

As rates go higher now, what we've seen is we had 1 or 2 days of strength, especially in corn after the Fed hike. Of 75 basis points and it's gone nothing but straight down since then. So, typically higher interest rates equate to stronger dollars. So, I can see that correlation. But to me, I think Treg is on to something. I really think that what we're going to see is, do the funds, do they have an opinion that thinks that inflation is still gonna go strong? Or are they of the opinion now that, you know what, now that the Fed is getting aggressive, that inflation can get nipped in the bud? I have a funny feeling when we look more broadly at commodities, it's probably the latter rather than the former. They think inflation can be maintained here with higher interest rates.

It's going to be very interesting to see what happens, but the funds that we talk to They're kind of agnostic on ag at the moment. I don't really have any funds that have major positions in there anymore. I shouldn't say I don't have. We don't service any funds that have major positions in there from what they've told me. We're not a trading house, so I wouldn't even know what their positions are. But in the conversation I've had with them, they're kind of done with it. We'll see what happens.

Chris

Barron: Yeah, I mean, if, if we continue to jack up interest rates like it looks like is going to occur, that really— if that does start to fix the inflation, what's the incentive for, for having grains or livestock or any of the commodities as an inflation? It's kind of the inverse then, right? You'd walk away from it, right?

Pete

Meyer: Right. Now look, I don't— you know, my personal opinion, we have a $6 price target on on the marketing year '22 to '23. And that's the average price, that's the average cash price. The USDA, I think, is at $6.70. I've been at $6 for a few months here, and I think that probably holds true. I'm not saying it's going to go down, you know, with the rain in your area already. All the Twitter pundits are out there, oh, we're going to $4.50, we're going to $5, we're going to $4. You know, I just don't see it. But I think that, you know, it's really hard for me to make much of a, much of a bullish story above $7.50 again. And, and the reason for that is because of the higher rates. I mean, I certainly understand that that's easy for me sitting here and say, oh well, should have sold it at $7.50. That's not what I'm saying.

What I'm saying is that we cannot— I can't come up with a bullish demand story at a $7.50 price at the moment with rates going higher. That's my point.

Chris

Barron: Another thing I would bring up too, it's always interesting that, you know, when we've had these high prices before and maybe not as high as what we've seen recently, with the exception of 2012 or whatever, but— or in 2008, maybe a little bit too. But, you know, it's usually the conversation is around demand destruction or demand reduction or whatever, and there just hasn't been much talk about that. It's like everybody's, you know, there's been so many things that's created the perfect storm, quote unquote, for the price to stay high, to go high, to stay high, and there's nobody— everybody's on that one side of the boat. What, you know, talk a little bit about the other side of that.

Pete

Meyer: Well, the other side of that is, is that, you know, I, I was, I was fooled. I mean, I, I thought that old crop, uh, corn demand would have been about 2.6 billion bushels after Russia invaded Ukraine because we lost that supply off the global market. And here we are now But USDA is down to 2.45. They're actually reducing their export numbers. So they would be 150 million below me. I'm at 2.5, but I had to reduce this year. I mean, I was at 2.5 for a long time. I went to 2.6 in April because I thought that given Ukraine, I know some guys went to 2.7. And it's interesting enough that some of the commercials who we have contact with said, "Pete, don't get over your skis on this. We're just not seeing it." Boy, were they right. So I don't like the export demand at all.

I do think, I was at 2.6 billion for next year too and I'm down to 2.5, so I'm 2.5 and 2.5 year over year, kind of flat, and the USDA has just cut it by 50. Your other big demand segment is ethanol and I think what we hear a lot of is, Oh my God, the ethanol guys, look at them, they're bidding $0.50 over, $0.70 over, $0.80 over, some are paying $8 in Nebraska and here and there or whatever. Yeah, but that doesn't mean that the crop's not out there. What that means is that maybe some farmers are holding on to old crop and not letting it go, and these guys want to run a little bit, you know. So I don't necessarily think that ethanol demand looks kind of flat to us. Export demand looks kind of slow. We're going to see there aren't as many cattle out there as we thought, as we've seen recently.

So we're going to find out here next Thursday with the stocks report on the 30th, which is going to come with the acreage report at the same time, and see exactly what the demand looks like. I typically think that the quarterly reports are very, very important for understanding where your demand is. Now I don't— We don't guess for the quarterly reports because the quarterly stocks reports are just impossible because of the feed residual component. I think we're going to learn something on Thursday, and that's what people have to look at.

Chris

Barron: I might ask you a couple more questions on that in a minute. Back to your basis thing, you, you commented on basis. One observation from, from, for like Shay and I and kind of what we see with clients scattered across the, the Corn Belt and other places as well, but it's like you know, we had that price pressure and then it was an almost an instantaneous basis push everywhere. Like, you know, they got to keep the flow moving. So at least, you know, they do— they are using stuff though, right? I mean, their stuff's moving. So whenever that, that, you know, that board price goes down, that's creating, that's creating some basis opportunities and probably means that if a guy is sitting on old crop, that's probably your opportunity to at least do a basis and get that, get rid of that, or do you see some really big basis opportunities as we get further into summer, early harvest?

Pete

Meyer: I think gasoline prices are really, you know, I worry very much about gasoline and diesel prices. We finally start to see gasoline prices come down a little bit. Yesterday was the first day that the national average was down in 9 weeks. Okay, it's still up to $5, I get it, but I would have thought that at those prices that we would have seen a little bit more demand for ethanol crush. And even though the basis is high, we just kind of see the ethanol crush being flat. So I don't really know how to play that, Chris, if you have old crop, but I will say this, whether it's old crop or new crop, let's not forget that we're still between $6.50 and $7.50, and that's a lot of money for corn.

Chris

Barron: Yeah, all of a sudden the basis isn't very much of a percentage of the total value.

Pete

Meyer: Exactly right. And you know, I mean, look at— but you know, we've also seen that there are some indications. I mean, the July-December spread this week in corn, you know, acted very strange early on. I mean, it was out by 10 cents one day, out another 10 cents— by out I mean more premium for the July contract. So, you know, basis is going to soften a little bit, I would imagine, but the July contract contract will stay strong and we just have to kind of see. And people are saying, well, that's just an indicator of stronger demand and we just don't see that stronger demand. We see flatter demand in ethanol and certainly as I mentioned previously, the demand for exports is just god-awful. I just don't get it. I just don't understand it with Ukraine out of the game. I don't get it.

Chris

Barron: Okay, I'm going to shift gears on you again here. Now we'll go right back to the report. Um, a two-sided question for you. Um, what, what is a surprise that would be bearish to the market, and what is a surprise that would be bullish to the market out of that report that would mean anything?

Pete

Meyer: To me, to me, a bullish surprise would be the same numbers we saw in the prospective plantings, which showed more beans and less corn. Personally, I've been at 90 and 90 or 90.2 and 90.2 since January or February as far as corn and soybeans are concerned. And at this point I have no reason to change it. Am I going to be a little bit high given what's happened in North Dakota? That could possibly be. But I mean, we had people talking about 6, 7, 7.5 million acres of prevent plant just 3 or 4 weeks ago. And I don't even, I'm not even close to that. I'm maybe at 4.5 million acres of prevent plant. You know, Dakota, the North Dakota farmers saw the board, saw what the stuff was worth, whether they had sunk cost or they didn't have sunk cost, they looked at their insurance price and said, you know what, I'm going to do everything I can to get it in.

I mean, we hear stories of North Dakota farmers replanting beans now this week. So, you know, it's one of those things. So what's, If we were to get a 91 million acre corn number, yeah, that's going to be bearish. But I don't think we get that high. I'm still kind of, I just didn't see any reason over these months to change. I was 90.2 and 90.2 going into the Prospective Planters Report and I'm going to stay there. I would expect numbers around 90 and 90. I think 90 and 90 are kind of, are kind of neutral numbers. Now, what we have seen this week, Chris, coming in here was that we saw very, very weak corn markets versus, on a ratio basis, versus soybeans. Could that be the market telegraphing saying, yeah, we expect more corn acres? Yeah, okay. So if we get a number, let's say below 89.5 or something like that in corn, that's probably going to add some support.

But the way I You know me for a long time, Chris, I like to listen to the markets while everybody is trying to talk to the markets. I try to listen to the markets in instances like this one. I see the corn price going down more relative to beans, that tells me, and in front of a report, that tells me A, there's probably more demand for soybeans, which there is, no question about that, but that's running into a little bit of trouble as well with the biofuels in Europe. But then we have, could there be more corn acres than people suggest? I don't know. It's hard, but I really don't expect much. I mean, 90 and 90, you know, I think when we talked to NAS after the report, I said, what do you feel the most confident in? They said the 180.5 combined. So, okay. Now, could we lose a million there given what happened in North Dakota? Sure.

We could be down at 179.5, but boy, It's, you know, prices, prices driving this market. Price drove the planters, so to speak.

Chris

Barron: So as we march into the next couple of weeks, you know, the, the report will be the report. There's always the flash in the pan, and then that's the news. And then after that, as we get closer to wrapping up here, what, what should producers be watching most carefully, like after that report, regardless of the up or down? I mean, usually it settles back and then you get the next news item one way or the— is there anything out there that you're like, pay attention to this, this is a big deal?

Pete

Meyer: There's a lot out there, but it's happening in Europe. And I mean, you know, what happened on Thursday when everything kind of collapsed there and beans were down big as well, and, you know, we're watching, given our clients in the biofuels business and especially in this renewable diesel space, you know, we're watching the soybean oil price. Soybean oil prices were over 80 cents just, just like 8 or 10 sessions ago, and they've had 7 down sessions in a row, and they're down in the mid-60s now. Now this is a price where the renewable diesel guy who's planning a plant or plans to open a plant within the next 6 to 12 months, he or she is now paying attention at this price. They like the price around 65. We have clients that bought a lot of soybean oil at 55 cents last year They have those hedges in their pockets and now they're willing to pay 65 cents given what happened in Ukraine.

So what happened to cause this? Well, it started with palm oil in Indonesia where palm oil just collapsed. And then behind it, then the sunflower seed oil started to go. And then behind that, then soybean oil started to go. What happened was is that the G7 on Thursday said, "You know what? Maybe countries ought to take a step back on this renewable fuel thing." and focus more on food pressure, on food inflationary pressure. I get that, but the thing with the G7 is that just over the last few years all they've been worried about is the environment and climate change, and now all of a sudden they change their tune. You can't do that. So, what we're watching is that what's going to happen in Europe as far as their biofuels mandates are concerned. We certainly hear that Germany is ready to pull the plug on it. I mean, really pull the plug on it.

And they're the largest renewable, the most aggressive renewable fuel country in Europe. If they pull the plug, this thing's going to go. I mean, it's going to go straight down. Now, it's going to go right in— now, I'm talking about the vegetable oil side. That's going to go straight into the hands of the renewable guys, because in the U.S., there's no chance. We stop the mandates, right? There's no chance that we get out of the ethanol mandate. There's no chance that the renewable diesel thing kind of stalls here. The oil companies and refining companies have invested way too much money in this, and the money is still flowing out of states like California, Washington, and Oregon. So I think that it plays into the hand.

What it does is it'll create kind of a bottom to it, but as far as the market fears are concerned and the market psychology, we're watching Europe, Germany specifically, the EU more generally to see what they're going to do here as far as their renewable fuel mandates are concerned because this is causing a big problem.

Chris

Barron: Interesting. So last time we talked, you, you were pretty comfortable if you put your farmer hat on being somewhere in that 50% sold knowing what we know now, or maybe a touch under that. Where are you at now if you put your farmer hat on?

Pete

Meyer: Uh, my farmer hat says that anything over $7 at this point is going to be a sale.

Chris

Barron: Yeah, if you can get $7 now, right?

Pete

Meyer: Now look, now look, you know, here's, here's the problem, right? And I hear this quite a bit, right? So my crop is I'm on the verge of a drought, my crop could fail, and the board keeps going down. Yeah, I get it. The point is, Chris, you know this as well as anybody and so do your listeners, the market doesn't give a you-know-what about your crop. The market is watching 800 other things. The market is watching what's going on in Europe. If Ukraine, we didn't think Ukraine was going to get anything out of that country just a few months ago. And from the 1st to the 15th of June, they exported 1.4 million metric tons of various stuff— sunflower oil, sunflower seeds, corn. It's remarkable. Could that number get to 2 and possibly 3 million tons that they're getting out of the country? I don't know. So the market is watching that.

The market is watching the renewable fuel— excuse me— the renewable fuel conversation in Europe. And the market is watching the dollar, and the market really doesn't care at this point because the funds have made their money. And if the funds think the inflation trade is over, the funds aren't going to catch a falling knife either.

Chris

Barron: They're gone.

Pete

Meyer: So what I'm saying, what I'm saying, right, they're not going to get back in at this point. There's no way. Well, I mean, I'm not— they can get in, but will they get in in a meaningful way? No. Now, the segment that's holding the most length at the moment is the index. The index money is sticky. It's going to stay there. That's fine. You may see some redemptions. You may see some money out of commodities. They might come out of Texas a little bit, but it's very, very sticky. It's not like the funds. The algos are going to trade the weather, so if we come out of Fourth of July and the weather looks bad, I think we can get a pop back to $7, but after that, boy, I'd be very, very careful. And as I said earlier, my downside is limited to $6, in my opinion, because I think that's really where there's a lot of demand.

So I know it's a very wide margin that I'm giving you, Chris, but I just, you know, I've been at dollar average price for $22.20 for a long time, and I just— there's like— there's no reason for me to change my, uh, acreage numbers. I just, I don't, I'm not one of these analysts that jumps, you know, at the, at the, uh, at the thought of the day, so to speak. With the soybeans, we don't do that.

Chris

Barron: Yeah, with the soybeans, what are your numbers? What's your range there?

Pete

Meyer: Well, the soybeans are interesting, right? Because the soybeans, I mean, we just made a new high here, uh, you know, a few weeks ago. Okay, they fell back to earth, but the soybeans are tight, and I think the soybeans will remain tight until such time we get a handle on the Brazilian crop. I, going into the May WASDE, I had Brazil at 150 million metric tons and people thought I was crazy and then the USDA comes in at 149. The reason I was at 150, Chris, and I remained at 150 is because I thought that was the potential of the Brazilian crop last year. Okay, they had a bad year, it went from 144 down to the 120 somewhere, I totally get it. But when the market looks at this stuff, they look at the potential and we all— and I've talked to other guys, Dan Basti, other analysts, and I've asked them after the fact, what was your potential number for Brazil last year?

And they all kind of agreed at that $145 to $150. Most of them said $150. So I knew that I was on the right track. So why wouldn't I start this year at $150? The problem now is that, you know, you have some weather issues in South America. That there is getting, there was some moisture, some recharging of the soil in the last couple of weeks in Mato Grosso. So we'll have to see, we're still months away from planting, but that's the soybean, the soybean market to me will remain tight until harvest or so when we're going to, we're going to see what Brazil looks like. Because if Brazil comes in at 150 and we produce, you know, maybe we have a 50, 51 or 51.5 bushel per acre yield this year, you're going to have a fair amount of soybeans on the market because China's demand is kind of flat.

But what we saw this year is for the last 4 months the USDA has had to cut or had to increase their exports. They increased it by 25, 25, 25, and then this month 30, and now we're still at 102% of that new number. So they're going to have to increase it again and the carryout just keeps going lower and lower. There's going to be some tightness before our harvest and before Brazil gets planted in the ground, in my opinion.

Chris

Barron: With your farmer hat on, then what's that range you're looking for?

Pete

Meyer: Price-wise? Yeah. Boy, I think we can make new highs in beans. I mean, if something goes wrong here, I think we can make new highs. If everything goes right, you know, but I, It's, you know, there's a lot of potential is what you're saying to the upside with them. Yeah, well, that's the thing. Like, I had, I had a webinar the other day with JP Morgan, and JP Morgan's been a client of ours for, for years and years and years, and a client of mine for years as well. I used to work at JP Morgan, and the analyst there said, you know, okay, I think I said corn, the highs are in, beans, I just have no confidence of— of the highs being set in beans just because of this, this tightness. And it gets tighter and tighter and tighter all the time. The U.S. balance sheet gets tighter and tighter and tighter.

And if we lose some acres, if I'm right, we don't plant 91, whatever the number was for the prospective planting, and we're down, let's say we're down 89.5, then it gets tighter and tighter and tighter again. So I I can see how we might be in acres to corn because when you talk to these guys from the Dakotas, you know, some of them that I talked to, they changed their maturity date 3 times before they went into plant beans. They just wanted the corn because the corn penciled in much, much better. Way better. Way better. Yeah. So, you know, that's going back to what are you watching the report, maybe, you know, 80, 90% 89.5 million acres of beans. That's going to scare some people with the exports the way they are. You know, the exports are going, they're going somewhere, they're going somewhere.

Chris

Barron: Yep. My final question, this is the final question, promise. If we head into a— I don't care. So if we head into a recession, the general economy, what does that spell for input costs for the farmers going into '23? Talk about a correlation there.

Pete

Meyer: We've already seen it with, uh, urea prices going way down, right? I, and, and I don't, I don't follow this because it's a little bit too granular for me, no pun intended. But, um, you know, when we, when we look at the relationship between Dec '23 corn and the price of urea, uh, that's for fall delivery for some places, you know, that, that number is the widest I, I that people who watch it have told me that's the widest they've ever seen it. So maybe the fertilizer market is now paying attention to recession fears and the corn market in Dec '23 is not paying attention. I mean, we're still around $6.50, I believe. I think that's where it is. A damn good price for corn. And maybe the fertilizer guys overplayed their hands, but we've also seen it now where Natural gas had a 9-handle on it a few weeks ago, and now it has a 6-handle.

You kind of saw it where the big fertilizer equities, like let's say CF, for example, that one day where natural gas collapsed, CF just skyrocketed, and the next day, CF and natural gas kind of hung around and was unchanged, CF plummeted. So I, you know, I, it leads me to believe that maybe some of these fertilizer guys overplayed their hands. Now I'm sure every farmer listening to this podcast thinks the fertilizer company overplayed their hand, right? So there's no love lost for the, for that company. But okay, for the fertilizer company, I get that. What we have to remember as well is going into '23 is that your seed cost has not been set yet, right? And the seed companies didn't really make a lot of money, a lot of money. They didn't participate in this rally. So the fertilizer companies did participate in it, the seed companies did not. And I'll just add this at the end, Chris.

Well, we had, you know, the fertilizer, the thought that we were running out of fertilizer, we weren't going to get enough fertilizer, that played into the hands here, played into the market as well. And we all know that most of the fertilizer sheds, if not all of the fertilizer sheds in the U.S. And now it is our— and then everybody said, well, Brazil's not going to get their fertilizer because they get it all from Russia. That's true, they do get it all from Russia, but we started to see wheat leak out from Russia a few months ago. We started to see, you know, now we see, um, certainly the Russians are trying to sell the Ukrainian corn and, uh, and wheat that they stole, but there are countries saying no, no, we're not going to take it. But But the wheat stuck out and the fertilizer stuck out.

And now whether we want to believe him or not, the Brazilian Ag Minister said 10 days ago, yeah, we got enough fertilizer for the '23 crop. And you would have never thought that 6 months ago. And that's playing into the market as well. If the Brazilians have enough fertilizer and the prices are this high, that could very well be why fertilizer prices are now starting to starting to fall and fall precipitously. When we look at stuff like urea, for sure.

Chris

Barron: Yeah, there was a red light flashing on food insecurity for a while there. Now that's all of a sudden quieted down because there's been other news and other things, so that hasn't been hitting things. But I—

Pete

Meyer: well, the food— I think in Europe, Chris, the food insecurity thing is still flashing, and that's why the G7 has said what they said about maybe we should pump the brakes on renewable now. If we get a setback here, there's no chance that they all of a sudden just kill the whole thing. But that's kind of what we're watching. If they drag their heels and prices start to, let's say, even out, or level off, I guess, is a better term. Then you're probably not going to see much out of the EU. But that's for watching it, because if they pull the plug, that's going to be a problem. That's going to be a problem. And what we have at the moment is that we have 15 new crush plants everywhere from North Dakota to Destrehan, Louisiana, sitting ready to go, but they're not going to be up and going probably until next year. We're going to have to rely on some export markets.

And if Brazil produces 150, then you could see some weakness in beans in the fall going into next year.

Chris

Barron: But we're going to use a lot with all that, all, you know, all that capacity. That's going to, going to pull a lot into—

Pete

Meyer: oh, there's no, there's no question. We believe that there's 500 million bushels of capacity if it, you know, which is about 20% higher, right? I mean, we crush about 2.2, 2.3 sometimes a little bit more. You know how crush facilities work, they have to, the weather has to be good, everything has to be going down. So if you believe the crush capacity in the U.S. is somewhere between 2.5 and 2.6 as we do, yeah, crush capacity goes over 3. Um, and then, and then, and then, and then the whole picture changes in '25. In our opinion, the whole picture changes because then we end up with the domestication of the U.S. soybean crop. Into the crushers. And then, if you're a member of a local soybean or a state soybean association, you should be worried about where you're going to sell the meal. Because we're going to absorb all the oil, we're not going to absorb all the meal for sure.

So that's really a question going out to '25. But yeah, that all of a sudden then we end up with 500 million more bushels of crush capacity and it couldn't come at a better time. Brazil produces 150, 150 million metric tons and the Chinese demand kind of stays flat, as we believe it does, around 100 million tons, Brazil could export 100 if they produce 150 and that would take care of all of China's demand and then we're kind of screwed. But this thing is actually coming at an opportune time and is the investment in the crush facilities lagging the investment in the in the plants to produce renewable diesel and sustainable aviation fuel? Yes, it is, but it's going to catch up here within the next couple years.

Chris

Barron: It's still a pretty big bright spot in the future. So that's, that's something to look, look to anyway.

Pete

Meyer: So a very bright spot, a very bright spot in our opinion. Sure. Very bright spot.

Chris

Barron: Well, hey, Pete, I really appreciate your wisdom, insight. I know you're driving. And so probably better let you pay attention to the road there too. You're going to be kind of driving across the Corn Belt this week, right?

Pete

Meyer: Yeah, we're going to, uh, my friend Nick Ehlers from Eastern Iowa and I typically go out to South Dakota to visit with Treg Krohn, and Treg lives in Gettysburg, which is right on the Missouri River, beautiful part of the country. So this is the week we go. We typically go before 4th of July. And, uh, you know, I don't think I'm going to see much in Ohio or Indiana. Yeah, it's dry. I get it. Uh, you know, parts of Central Illinois, it's dry there. I get it. But parts of central Illinois, we watch those weather maps and even though it's been in the mid-90s on a few days, the nighttime lows have been in the mid-60s. So as we all know, that's going to make a big difference. I think there's going to be a story in northwest Iowa for sure and then we want to see what that Red River Valley looks like in North Dakota. We'll try to get up into that area just to kind of kind of see.

But, you know, I've been in South Dakota, oh, I don't know, maybe 4 times over the last 6 or 7 years, and this would be the second year in a row. And Tred Cronin said to me, this is the first time I'm going to see green grass. I have never seen anything but brown grass, knee-high wheat, oats barely ankle high, you know, this time of year. And everything's very green out there. They got the moisture they wanted, they got it planted. The east, they got too much. Be a little bit of a story there. But as I said earlier, market really doesn't care about your local crop. The market is watching many, many moving parts and probably the most moving parts that I have seen in many, many years.

Chris

Barron: Yep, that's for sure. There's a lot going on. Uh, hey Pete, really appreciate your time and your energy and the stuff you do for ag. Thank you very much and thanks for being on.

Pete

Meyer: Thank you, Chris, and I wish, I wish all the listeners a successful, a successful summer, and we'll talk to you soon.

Chris

Barron: Yep, we'll get you back real soon. And again, hey, thanks everybody for listening, and we will catch you again next time on the Ag View Pitch.