1 00:00:10,720 --> 00:00:15,000 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,040 --> 00:00:19,840 Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. So, Tracy, obviously, 3 00:00:20,000 --> 00:00:23,159 Speaker 1: we've been talking about inflation a lot lately, but I 4 00:00:23,160 --> 00:00:28,080 Speaker 1: think there's like one category of inflation, or one category 5 00:00:28,280 --> 00:00:32,080 Speaker 1: of goods inflation that really sort of like hits people, 6 00:00:32,280 --> 00:00:38,800 Speaker 1: resonates with people emotionally more than others. It's mayonnaise obviously. Yeah, 7 00:00:38,840 --> 00:00:41,600 Speaker 1: so I wrote that article about mayonnaise specifically, but it 8 00:00:41,640 --> 00:00:44,400 Speaker 1: has to be food inflation, Like this is the one 9 00:00:44,440 --> 00:00:47,400 Speaker 1: thing that sort of strikes fear into everyone's hearts. And 10 00:00:47,440 --> 00:00:51,080 Speaker 1: it's probably where people are where you start thinking about 11 00:00:51,120 --> 00:00:54,520 Speaker 1: inflation expectations the most. It's people who are actually going 12 00:00:54,560 --> 00:00:56,840 Speaker 1: to the grocery store, who are looking at the price 13 00:00:56,880 --> 00:01:00,320 Speaker 1: of coffee or a banana or something like that, and 14 00:01:00,560 --> 00:01:02,920 Speaker 1: they can see on a day to day basis whether 15 00:01:03,040 --> 00:01:06,679 Speaker 1: or not it's going up. Yeah, exactly. So it's like 16 00:01:06,720 --> 00:01:09,600 Speaker 1: we could talk about like CPI and aggregant and oh 17 00:01:09,720 --> 00:01:12,520 Speaker 1: big portion of that is say like used cars, but 18 00:01:12,600 --> 00:01:15,679 Speaker 1: how often do you buy a used car? For most people, 19 00:01:15,920 --> 00:01:18,200 Speaker 1: that's like a pretty rare purchase, so you don't like 20 00:01:18,480 --> 00:01:20,880 Speaker 1: see it in your face you see it in the 21 00:01:20,920 --> 00:01:24,880 Speaker 1: grocery store. Everyone sees it who goes shopping, whether it's 22 00:01:24,920 --> 00:01:27,600 Speaker 1: the price of milk, whether it's the price of vegetables, 23 00:01:27,640 --> 00:01:29,920 Speaker 1: the price of meat. For the most part, it's got 24 00:01:30,000 --> 00:01:32,160 Speaker 1: many of these items have gone up significantly in the 25 00:01:32,240 --> 00:01:34,880 Speaker 1: last year. And of course the thought of like, okay, 26 00:01:35,080 --> 00:01:38,360 Speaker 1: the rise it costs like literally feed your family is 27 00:01:38,480 --> 00:01:41,119 Speaker 1: a pretty big deal. Like it's about is sort of 28 00:01:41,480 --> 00:01:43,319 Speaker 1: you know, if you're thinking about, like, well, what forms 29 00:01:43,360 --> 00:01:47,280 Speaker 1: your view of inflation, that that is probably gasoline prices 30 00:01:47,600 --> 00:01:49,680 Speaker 1: for people who don't live in a big city are 31 00:01:49,720 --> 00:01:52,680 Speaker 1: probably like they're the two big ones, food and gas. 32 00:01:52,680 --> 00:01:55,960 Speaker 1: But food, I mean, there's something about it. It's almost 33 00:01:55,960 --> 00:01:59,480 Speaker 1: like it's tied to modern civilization as well, right, because 34 00:01:59,480 --> 00:02:02,280 Speaker 1: you're not supposed to think about how the supermarket works. 35 00:02:02,400 --> 00:02:05,639 Speaker 1: You're not supposed to think about how, you know, the food, 36 00:02:05,680 --> 00:02:08,200 Speaker 1: the vegetables, the meat or whatever get from the farm 37 00:02:08,240 --> 00:02:11,160 Speaker 1: to your table. You're not supposed to think about supply chains. 38 00:02:11,440 --> 00:02:14,120 Speaker 1: But when you start thinking about them, it's usually in 39 00:02:14,120 --> 00:02:17,519 Speaker 1: a really negative and worrying way, and that's when things 40 00:02:17,639 --> 00:02:20,519 Speaker 1: kind of start to fall apart. So I don't know, 41 00:02:20,560 --> 00:02:22,400 Speaker 1: I feel like the modern supermarket is sort of at 42 00:02:22,400 --> 00:02:25,640 Speaker 1: the heart of the way we live nowadays, so when 43 00:02:25,680 --> 00:02:29,200 Speaker 1: things go badly there, people start to freak out. It 44 00:02:29,320 --> 00:02:30,920 Speaker 1: kind of feels like a big theme of a lot 45 00:02:30,960 --> 00:02:33,760 Speaker 1: of our episodes lately is like we wish we didn't 46 00:02:33,760 --> 00:02:35,560 Speaker 1: have to talk about these things, and it's a bad 47 00:02:35,600 --> 00:02:40,280 Speaker 1: sign that we are. But anyway, so food inflation not great, 48 00:02:40,440 --> 00:02:44,000 Speaker 1: and food prices have gone up considerably over the last year, 49 00:02:44,760 --> 00:02:47,840 Speaker 1: and there are very reasons for this. But one thing 50 00:02:47,880 --> 00:02:50,040 Speaker 1: that we've really seen over the last year, and we 51 00:02:50,080 --> 00:02:54,079 Speaker 1: did one episode on it in the early Scott ran 52 00:02:54,160 --> 00:02:57,520 Speaker 1: over the University of Illinois is grains. And of course 53 00:02:57,560 --> 00:03:01,200 Speaker 1: grains are consumed by humans, but they're also by animals, 54 00:03:01,240 --> 00:03:03,919 Speaker 1: so the higher grain prices feeds into higher meat and 55 00:03:04,000 --> 00:03:07,200 Speaker 1: dairy prices and so forth. And one of the interesting 56 00:03:07,240 --> 00:03:10,960 Speaker 1: things about grains, I think historically, or soft commodities in general, 57 00:03:11,040 --> 00:03:14,760 Speaker 1: agricultural commodities, is that they often seem like of the 58 00:03:14,800 --> 00:03:20,120 Speaker 1: commodity complex, more disconnected sometimes from the macros. So you 59 00:03:20,160 --> 00:03:24,640 Speaker 1: can like grains maybe affected by drought or other conditions, 60 00:03:25,000 --> 00:03:27,440 Speaker 1: whereas something like you know, copper might just be like 61 00:03:27,480 --> 00:03:30,040 Speaker 1: a reflection or oil might be reflection of the macro 62 00:03:30,120 --> 00:03:33,920 Speaker 1: economy boom or bust. Grains and other soft commodities, they 63 00:03:33,960 --> 00:03:36,760 Speaker 1: might have more idiosyncratic factors like what was the weather 64 00:03:36,800 --> 00:03:39,400 Speaker 1: in Brazil like? Or what was the weather in Iowa like? 65 00:03:39,920 --> 00:03:42,280 Speaker 1: And so it's kind of like a it's a niche 66 00:03:42,400 --> 00:03:44,520 Speaker 1: that sort of. I think a lot of people don't 67 00:03:44,600 --> 00:03:46,640 Speaker 1: spend a lot if you're not in it, don't a 68 00:03:46,680 --> 00:03:50,560 Speaker 1: lot spend a lot of time like think about specifically. Yeah, 69 00:03:50,600 --> 00:03:53,040 Speaker 1: I think that's right. I mean I think rarely does 70 00:03:53,080 --> 00:03:55,280 Speaker 1: the price wheat go up because g d P is 71 00:03:55,320 --> 00:03:59,160 Speaker 1: at like four or five or something like that. Yeah, exactly, 72 00:03:59,160 --> 00:04:02,200 Speaker 1: So a recovery could obviously increase the price of gasoline 73 00:04:02,360 --> 00:04:05,720 Speaker 1: or copper, but usually we don't really associate the price 74 00:04:05,760 --> 00:04:08,600 Speaker 1: of like, yeah, wheat or corn with the cycle. That 75 00:04:08,720 --> 00:04:12,640 Speaker 1: being said, right now, we are seeing this boom in grains, 76 00:04:12,680 --> 00:04:17,040 Speaker 1: particularly wheat, so we corn, and soy or as they 77 00:04:17,080 --> 00:04:19,599 Speaker 1: call them in the industry, beans. They're all up a 78 00:04:19,600 --> 00:04:22,640 Speaker 1: lot from the last year. Corn and beans have actually 79 00:04:22,640 --> 00:04:24,560 Speaker 1: come off their highs a little bit. They're not up, 80 00:04:24,600 --> 00:04:27,160 Speaker 1: but wheat is very high. So there's a lot of 81 00:04:27,520 --> 00:04:29,320 Speaker 1: to get into it. There's a lot of stuff going 82 00:04:29,360 --> 00:04:31,520 Speaker 1: on at this space. I'm very excited we're going to 83 00:04:31,520 --> 00:04:34,719 Speaker 1: be talking about wheat, corn and beans. That sounds great. 84 00:04:34,760 --> 00:04:37,479 Speaker 1: I mean, this kind of falls into our category of 85 00:04:37,520 --> 00:04:40,800 Speaker 1: getting really really micro and niche this year. But also 86 00:04:41,160 --> 00:04:43,800 Speaker 1: it's kind of a weird one because on the one hand, 87 00:04:43,839 --> 00:04:46,320 Speaker 1: these are all individual markets, but on the other hand, 88 00:04:46,560 --> 00:04:49,480 Speaker 1: they do have one or two things in common. You know. 89 00:04:49,720 --> 00:04:51,880 Speaker 1: One thing is the weather, which you already mentioned, and 90 00:04:51,920 --> 00:04:54,040 Speaker 1: that's played into a lot of the issues that we've 91 00:04:54,080 --> 00:04:58,480 Speaker 1: seen recently. And the other is fertilizer. And I know, yeah, 92 00:04:58,839 --> 00:05:01,680 Speaker 1: I don't know much about fertilizer, but the one thing 93 00:05:01,720 --> 00:05:03,880 Speaker 1: I do know about it um only because I lived 94 00:05:03,880 --> 00:05:06,839 Speaker 1: in Abu Dhabi for a while. But most people think 95 00:05:06,839 --> 00:05:10,320 Speaker 1: of it as like cow poop, you know, just the 96 00:05:10,400 --> 00:05:13,359 Speaker 1: stuff that you get from somewhere, organic material that you 97 00:05:13,400 --> 00:05:17,279 Speaker 1: put on your farmland and things grow. But it's actually 98 00:05:17,279 --> 00:05:21,400 Speaker 1: the product of a really intense chemical process. And it 99 00:05:21,440 --> 00:05:23,960 Speaker 1: feels to me like the weird thing about fertilizer is 100 00:05:24,560 --> 00:05:27,520 Speaker 1: it's this big chemical process with an actual supply chain, 101 00:05:27,560 --> 00:05:29,440 Speaker 1: but at the same time, it doesn't really have the 102 00:05:29,480 --> 00:05:33,640 Speaker 1: same infrastructure as other commodities like oil and gas. And 103 00:05:33,680 --> 00:05:35,960 Speaker 1: I think this is probably a year when we've really 104 00:05:36,000 --> 00:05:38,800 Speaker 1: felt that. So that's the one thing I know about fertilizers, 105 00:05:38,839 --> 00:05:42,679 Speaker 1: and I'm interested to talk more about it. And because 106 00:05:42,720 --> 00:05:46,400 Speaker 1: fertilizer is connected to energy, and because energy is connected 107 00:05:46,440 --> 00:05:49,000 Speaker 1: to everything else, this is the one way very clearly 108 00:05:49,040 --> 00:05:52,440 Speaker 1: in which the macro cycle impacting grains. All right, let's 109 00:05:52,440 --> 00:05:55,000 Speaker 1: get to it. I am very excited about our guest. 110 00:05:55,360 --> 00:05:58,480 Speaker 1: We're gonna be speaking about all things grains with Angie Setser. 111 00:05:59,080 --> 00:06:01,520 Speaker 1: She is a co found of Conscious r o I, 112 00:06:01,600 --> 00:06:04,520 Speaker 1: which is a new company that consults on all kinds 113 00:06:04,520 --> 00:06:08,279 Speaker 1: of things grains for farmers, investors, and so on. Previous 114 00:06:08,320 --> 00:06:11,320 Speaker 1: to that, she was the vice president of grain at 115 00:06:11,360 --> 00:06:14,680 Speaker 1: a Citizens Elevator in Michigan for ten years. So a 116 00:06:14,839 --> 00:06:19,039 Speaker 1: true grain veteran. Uh, Angie, thank you so much for 117 00:06:19,360 --> 00:06:22,000 Speaker 1: coming out odd lots, Thanks for having me. I'm excited 118 00:06:22,040 --> 00:06:24,520 Speaker 1: to be here. But can I ask a really embarrassing 119 00:06:24,600 --> 00:06:27,680 Speaker 1: question to start? Of course, the more embarrassing the better. 120 00:06:27,760 --> 00:06:30,400 Speaker 1: Let's break that ice. So I lived in Illinois for 121 00:06:30,440 --> 00:06:33,640 Speaker 1: a while, the south of Chicago. I lived in the Midwest. 122 00:06:33,680 --> 00:06:37,560 Speaker 1: There were a lot of cornfields and other farms around me, 123 00:06:37,640 --> 00:06:42,640 Speaker 1: and stuff you used to work for Citizens elevator. How 124 00:06:42,640 --> 00:06:44,880 Speaker 1: does a grain elevator work? Again, I drove by them 125 00:06:44,880 --> 00:06:46,480 Speaker 1: on the way to school all the time as a 126 00:06:46,560 --> 00:06:49,440 Speaker 1: kid from like age two to twelve, and I actually 127 00:06:49,520 --> 00:06:52,520 Speaker 1: don't know really like why what the how elevators work? Well? 128 00:06:52,560 --> 00:06:56,960 Speaker 1: That means they're working right right idea. You never had 129 00:06:56,960 --> 00:06:58,440 Speaker 1: to learn, so you never had to worry about it. 130 00:06:58,480 --> 00:07:01,320 Speaker 1: But yeah, I mean a grain elevator. Really the entire 131 00:07:01,440 --> 00:07:04,599 Speaker 1: beginning of the industry was we had this massive amount 132 00:07:04,640 --> 00:07:07,320 Speaker 1: of harvest that came off one time of year, right like, 133 00:07:07,400 --> 00:07:11,280 Speaker 1: so the farmers spent all year long producing this crop 134 00:07:11,440 --> 00:07:15,200 Speaker 1: and it had to go somewhere. And traditionally, the demand 135 00:07:15,280 --> 00:07:18,560 Speaker 1: sector obviously is set up to handle all of the 136 00:07:18,600 --> 00:07:22,080 Speaker 1: harvest coming off. It needs to be kind of rationed 137 00:07:22,080 --> 00:07:24,400 Speaker 1: out throughout the year, if you will. And so that 138 00:07:24,560 --> 00:07:27,080 Speaker 1: was why a grain elevator started, as we needed to 139 00:07:27,120 --> 00:07:29,720 Speaker 1: have a place locally for the farmers to be able 140 00:07:29,720 --> 00:07:32,280 Speaker 1: to harvest their crops, bring them in, and then it 141 00:07:32,320 --> 00:07:35,000 Speaker 1: was the elevator's job to kind of work throughout the 142 00:07:35,080 --> 00:07:38,000 Speaker 1: year to kind of put the grain out into the 143 00:07:38,040 --> 00:07:42,120 Speaker 1: demand structure, whether that was export, whether that was feeding 144 00:07:42,360 --> 00:07:45,960 Speaker 1: uh animals or you know. Now in the last fifteen 145 00:07:46,040 --> 00:07:50,560 Speaker 1: years or so, renewable fuels or by ethanol, biodiesel, whatever, 146 00:07:50,880 --> 00:07:53,080 Speaker 1: and so a grain elevator's job really is just to 147 00:07:53,640 --> 00:07:56,680 Speaker 1: help facilitate the harvest, take the grains in at harvest time. 148 00:07:56,920 --> 00:07:59,560 Speaker 1: My job, as as the vice president of grain at 149 00:07:59,560 --> 00:08:02,480 Speaker 1: the elevator or was to hedge that use the futures 150 00:08:02,520 --> 00:08:04,800 Speaker 1: market to kind of offset my future's risk, and then 151 00:08:04,880 --> 00:08:08,680 Speaker 1: trade the spreads in the market structure that carry we 152 00:08:08,840 --> 00:08:12,320 Speaker 1: say carry or inversions and grain as opposed to you 153 00:08:12,360 --> 00:08:15,960 Speaker 1: know those fancy fun cantango and backwardation like we're just 154 00:08:16,160 --> 00:08:18,880 Speaker 1: very simple, I guess, but you know, the monitor what 155 00:08:18,920 --> 00:08:21,280 Speaker 1: the spreads are doing, and trade the basis which is 156 00:08:21,320 --> 00:08:23,960 Speaker 1: the difference between the cash price and futures. You know. 157 00:08:24,040 --> 00:08:26,800 Speaker 1: As responsible for being in charge with trading with the 158 00:08:26,840 --> 00:08:29,920 Speaker 1: elevators handling, you know, I was a basis traders what 159 00:08:30,040 --> 00:08:32,559 Speaker 1: that was called. But like I said, my job was 160 00:08:32,640 --> 00:08:35,359 Speaker 1: to take in the grain at harvest time, help facilitate 161 00:08:35,360 --> 00:08:38,000 Speaker 1: that harvest for my customers, and then spend the rest 162 00:08:38,040 --> 00:08:40,440 Speaker 1: of the year kind of putting it out into the 163 00:08:40,440 --> 00:08:43,520 Speaker 1: market structure depending on you know, where the demand was 164 00:08:43,720 --> 00:08:46,760 Speaker 1: most present and where the market opportunities were the best 165 00:08:46,840 --> 00:08:49,839 Speaker 1: and and then hopefully get it empty or or get 166 00:08:49,840 --> 00:08:52,000 Speaker 1: everything kind of put away to do it all over 167 00:08:52,040 --> 00:08:55,800 Speaker 1: again the following year. So I have another really basic 168 00:08:56,000 --> 00:08:58,800 Speaker 1: um question. But you know, Joe laid out the sort 169 00:08:58,840 --> 00:09:03,400 Speaker 1: of trio of cash grain, so corn, soybeans, and wheat. 170 00:09:04,080 --> 00:09:07,600 Speaker 1: What is it that those three have in common? Like 171 00:09:07,720 --> 00:09:11,600 Speaker 1: what makes them a unified market? Um? Or like why 172 00:09:11,720 --> 00:09:14,120 Speaker 1: do we talk about them as a trio? And then secondly, 173 00:09:14,760 --> 00:09:18,160 Speaker 1: are most people in this space would they be involved 174 00:09:18,200 --> 00:09:20,360 Speaker 1: in all three of those at any one time or 175 00:09:20,360 --> 00:09:25,920 Speaker 1: would you specialize in one market in particular? It really depends, um. 176 00:09:25,960 --> 00:09:28,400 Speaker 1: I think the reason that we talk about them as 177 00:09:28,400 --> 00:09:31,360 Speaker 1: a trio is because they they are the most actively traded. 178 00:09:31,559 --> 00:09:34,600 Speaker 1: They were the cornerstone to a certain extent of the 179 00:09:34,720 --> 00:09:38,520 Speaker 1: Chicago Board of Trade, and so we see this sort 180 00:09:38,559 --> 00:09:42,480 Speaker 1: of there the I don't know, the top three produced crops, 181 00:09:42,559 --> 00:09:44,640 Speaker 1: I guess you could say, and the ones with the 182 00:09:44,679 --> 00:09:48,440 Speaker 1: bulk of the demand and supply structure around the world, 183 00:09:48,559 --> 00:09:50,280 Speaker 1: And so I feel like they just kind of all 184 00:09:50,280 --> 00:09:52,840 Speaker 1: get lumped in with one another. They tend to trade 185 00:09:53,120 --> 00:09:57,240 Speaker 1: um within a certain level of of a ratio, especially 186 00:09:57,280 --> 00:10:01,359 Speaker 1: corn and wheat, when really it depends on where you're located. 187 00:10:01,679 --> 00:10:04,280 Speaker 1: You know, for instance, an elevator in Iowa, where they 188 00:10:04,280 --> 00:10:06,920 Speaker 1: do not grow hardly any wheat. They grow some, but 189 00:10:07,000 --> 00:10:08,840 Speaker 1: not a lot out there. You know, they're not going 190 00:10:08,880 --> 00:10:11,880 Speaker 1: to focus on wheat at all, whereas someone in in 191 00:10:11,960 --> 00:10:13,319 Speaker 1: our neck of the woods, in my neck of the 192 00:10:13,320 --> 00:10:15,880 Speaker 1: woods in Michigan, you know, wheat is one of the 193 00:10:15,920 --> 00:10:19,120 Speaker 1: top three in the rotation, and therefore you need to 194 00:10:19,160 --> 00:10:21,679 Speaker 1: have an understanding of how that wheat market works. There 195 00:10:21,720 --> 00:10:24,560 Speaker 1: are people that are are specialized traders. You know. I 196 00:10:24,640 --> 00:10:27,800 Speaker 1: have friends that they're one and only job is to 197 00:10:27,880 --> 00:10:31,280 Speaker 1: trade wheat in the Pacific Northwest, and so they trade 198 00:10:31,360 --> 00:10:34,160 Speaker 1: white wheat, soft soft white wheat. I mean, wheat is 199 00:10:34,480 --> 00:10:36,360 Speaker 1: one of those things where we say wheat as though 200 00:10:36,400 --> 00:10:40,360 Speaker 1: it's under this big umbrella. But there's five different classes 201 00:10:40,600 --> 00:10:44,240 Speaker 1: of of wheats, and so yeah, there are some specialized traders. 202 00:10:44,559 --> 00:10:46,400 Speaker 1: You know, some folks you start to talk about wheat 203 00:10:46,400 --> 00:10:49,080 Speaker 1: and they completely glaze over. Others you start to talk 204 00:10:49,080 --> 00:10:51,240 Speaker 1: about wheat and they get all excited, like, oh, did 205 00:10:51,240 --> 00:10:53,840 Speaker 1: you see what's going on with You know VSR, which 206 00:10:53,880 --> 00:10:56,800 Speaker 1: is a variable storage rate that Semi introduced a few 207 00:10:56,840 --> 00:10:59,360 Speaker 1: years back, and you know some of these other things, 208 00:10:59,400 --> 00:11:02,360 Speaker 1: and so it really just depends on where the person 209 00:11:02,440 --> 00:11:06,360 Speaker 1: is located and what their specific job is as to 210 00:11:06,400 --> 00:11:09,120 Speaker 1: whether or not they're they're really kind of specialized. But 211 00:11:09,280 --> 00:11:13,040 Speaker 1: I would say from an overall standpoint that why they 212 00:11:13,120 --> 00:11:15,640 Speaker 1: kind of just get lumped in together is that they 213 00:11:15,679 --> 00:11:18,200 Speaker 1: are the most actively traded, and I think they're the 214 00:11:18,200 --> 00:11:22,200 Speaker 1: market that you see the majority of that outside interest in, 215 00:11:22,480 --> 00:11:25,040 Speaker 1: and they just kind of have somehow become, you know, 216 00:11:25,120 --> 00:11:28,920 Speaker 1: by proxy, their representatives of all things egg, even though 217 00:11:28,960 --> 00:11:32,800 Speaker 1: there's a whole slew of other crops that that people handle, cotton, sorghum, 218 00:11:32,800 --> 00:11:36,160 Speaker 1: you know, potatoes, vegetables, all of these other things, but corn, 219 00:11:36,200 --> 00:11:38,120 Speaker 1: wheat and beans tend to be the the end all 220 00:11:38,160 --> 00:11:42,280 Speaker 1: and be all of of agriculture. Then, honestly, how I'm 221 00:11:42,320 --> 00:11:44,920 Speaker 1: not sure, but I think most of that is simply 222 00:11:44,960 --> 00:11:49,200 Speaker 1: because of the cbot and where that started. So I 223 00:11:49,200 --> 00:11:51,160 Speaker 1: want to get into soon like what's going on in 224 00:11:51,160 --> 00:11:53,360 Speaker 1: the market. But one other sort of I don't know 225 00:11:53,360 --> 00:11:57,240 Speaker 1: if the market structure question is how much fungibility is 226 00:11:57,280 --> 00:12:01,480 Speaker 1: there in farmland that allows armors to say, switch up 227 00:12:01,559 --> 00:12:07,320 Speaker 1: space in a given year, reallocating between one grain versus another, 228 00:12:07,400 --> 00:12:10,400 Speaker 1: depending on conditions, Let's say the price of soy or 229 00:12:10,440 --> 00:12:13,000 Speaker 1: in this case, these days, wheat prices are very high. 230 00:12:13,160 --> 00:12:17,559 Speaker 1: To what degree can typical farm or pivot and reallocate 231 00:12:17,600 --> 00:12:20,080 Speaker 1: acreage to one of the other. Much of that just 232 00:12:20,160 --> 00:12:22,080 Speaker 1: depends on the crop and what's going on from a 233 00:12:22,080 --> 00:12:25,840 Speaker 1: weather situation. Let's say winter wheat right now, so specifically 234 00:12:25,920 --> 00:12:29,199 Speaker 1: Chicago and Kansas City wheats are are your wheats that 235 00:12:29,240 --> 00:12:32,760 Speaker 1: are planted in the fall, And so right now for us, 236 00:12:32,800 --> 00:12:35,920 Speaker 1: for instance, in Michigan, the weather has been less than 237 00:12:36,000 --> 00:12:38,640 Speaker 1: ideal throughout much of October. You know, we had one 238 00:12:38,679 --> 00:12:42,240 Speaker 1: of the top fifteen wettest October's on record, and that 239 00:12:42,320 --> 00:12:46,400 Speaker 1: really doesn't necessarily facilitate getting that wheat crop planted. You 240 00:12:46,440 --> 00:12:49,040 Speaker 1: can't really get a wheat crop mut it in. And 241 00:12:49,080 --> 00:12:52,080 Speaker 1: now we're expecting snow this weekend, and some of those thinks. 242 00:12:52,120 --> 00:12:54,480 Speaker 1: So I may have had some customers that were intending 243 00:12:54,520 --> 00:12:57,000 Speaker 1: on increasing their wheat acres due to the high costs 244 00:12:57,080 --> 00:12:59,719 Speaker 1: or high value of of wheat for next year. Now 245 00:12:59,720 --> 00:13:03,080 Speaker 1: we're with eight dollar week on in July two for Chicago, 246 00:13:03,600 --> 00:13:05,839 Speaker 1: and so they would have had this desire perhaps to 247 00:13:05,920 --> 00:13:09,680 Speaker 1: increase their weet acres by ten something of that nature. 248 00:13:10,120 --> 00:13:12,240 Speaker 1: But if they weren't able to get it planted prior 249 00:13:12,320 --> 00:13:14,480 Speaker 1: to the start of October when the weather really went 250 00:13:14,559 --> 00:13:17,160 Speaker 1: sideways on us, they're not going to you know, the 251 00:13:17,240 --> 00:13:19,560 Speaker 1: same could be said for corn in the spring. If 252 00:13:19,600 --> 00:13:22,240 Speaker 1: if we miss that window of opportunity for planting or 253 00:13:22,280 --> 00:13:24,240 Speaker 1: something of that nature, then they may be forced into 254 00:13:24,240 --> 00:13:27,160 Speaker 1: planning soybeans. You know. For now, I would say though, 255 00:13:27,160 --> 00:13:29,600 Speaker 1: that it's it's kind of a toss up for most 256 00:13:29,640 --> 00:13:32,720 Speaker 1: growers going into the new crop year, going into next spring, 257 00:13:33,040 --> 00:13:35,040 Speaker 1: you know, whereas if they are able to get the 258 00:13:35,080 --> 00:13:38,400 Speaker 1: crop off, they're looking at different opportunities when it comes 259 00:13:38,440 --> 00:13:40,920 Speaker 1: to you know, returns on investment and some of these 260 00:13:40,920 --> 00:13:43,960 Speaker 1: other things. They may be able to switch up their rotation. 261 00:13:44,160 --> 00:13:47,200 Speaker 1: But for most farmers, what they will tell you is 262 00:13:47,280 --> 00:13:50,960 Speaker 1: that it's very rotationally driven. It's best for the soil 263 00:13:51,000 --> 00:13:53,679 Speaker 1: to kind of keep in mind soil weed control, pest control, 264 00:13:53,720 --> 00:13:55,960 Speaker 1: all of these things, to kind of say, okay, well, 265 00:13:56,200 --> 00:13:58,400 Speaker 1: we grew corn last year, we're probably gonna switch to 266 00:13:58,480 --> 00:14:01,320 Speaker 1: beans this year. Michigan here, like I said, we have 267 00:14:01,640 --> 00:14:03,760 Speaker 1: a three crop rotation, and so a lot of times 268 00:14:03,800 --> 00:14:06,600 Speaker 1: you'll see corn the following year beans and then wheat 269 00:14:06,640 --> 00:14:09,240 Speaker 1: planted in the fall after that bean crop, and then 270 00:14:09,280 --> 00:14:11,440 Speaker 1: corn again the following year, and so for a lot 271 00:14:11,520 --> 00:14:14,680 Speaker 1: of those folks out there, they'll stick to that rotation. 272 00:14:14,840 --> 00:14:17,880 Speaker 1: But if mother nature says something different, like what we 273 00:14:17,920 --> 00:14:20,720 Speaker 1: saw in two thousand nineteen where we just literally could 274 00:14:20,720 --> 00:14:23,600 Speaker 1: not get the crop planted until the middle of June, 275 00:14:24,000 --> 00:14:25,600 Speaker 1: for a lot of folks at that point they may 276 00:14:25,640 --> 00:14:28,440 Speaker 1: have switched over into soybeans or or something different. And 277 00:14:28,520 --> 00:14:31,480 Speaker 1: so for the most part, there there are a lot 278 00:14:31,560 --> 00:14:33,720 Speaker 1: of ways that farmers can kind of change their mind 279 00:14:33,840 --> 00:14:38,160 Speaker 1: or maybe reevaluate what they intend to plant, but for 280 00:14:38,200 --> 00:14:40,640 Speaker 1: the most part, they tend to keep it in line 281 00:14:40,680 --> 00:14:43,320 Speaker 1: with with what their local market structure asks for, with 282 00:14:43,360 --> 00:14:46,280 Speaker 1: what their soil is asking for. And you know what 283 00:14:46,320 --> 00:14:49,280 Speaker 1: they've done from a traditional standpoint, maybe for the last 284 00:14:49,320 --> 00:15:08,600 Speaker 1: several years. So why don't we go ahead and talk 285 00:15:08,640 --> 00:15:12,400 Speaker 1: about what's going on in prices? So a big run 286 00:15:12,480 --> 00:15:16,720 Speaker 1: up in wheat, soybeans have dropped from um, a pretty 287 00:15:16,880 --> 00:15:19,640 Speaker 1: big spike over the past year or so, and corn 288 00:15:20,000 --> 00:15:24,440 Speaker 1: doing relatively better than soy but not that great. What 289 00:15:24,560 --> 00:15:28,920 Speaker 1: exactly is going on? A ton of things? It's amazing, Um, 290 00:15:28,960 --> 00:15:32,080 Speaker 1: you know what's taken place here and thinking back over 291 00:15:32,120 --> 00:15:35,760 Speaker 1: the last fourteen fifteen months, and so that's one of 292 00:15:35,760 --> 00:15:37,560 Speaker 1: the biggest things I'd say is you almost have to 293 00:15:37,600 --> 00:15:40,840 Speaker 1: start from the beginning, right, Uh, this September two thousand 294 00:15:40,840 --> 00:15:44,240 Speaker 1: and twenty, So a year ago September, we saw these 295 00:15:44,400 --> 00:15:47,480 Speaker 1: massive ending stock estimates from the U. S d A. 296 00:15:47,760 --> 00:15:49,520 Speaker 1: We we thought we were going to be flirting with 297 00:15:49,560 --> 00:15:51,480 Speaker 1: a three billion bush will carry out. And so to 298 00:15:51,520 --> 00:15:55,120 Speaker 1: put that the perspective for corn, you know, a tight 299 00:15:55,320 --> 00:15:58,240 Speaker 1: or a pipeline minimum where we say that we're we're 300 00:15:58,280 --> 00:16:00,680 Speaker 1: at the low end of supplies is around it alien bushel. 301 00:16:00,720 --> 00:16:03,480 Speaker 1: And so last September we were expecting three times what 302 00:16:03,520 --> 00:16:07,240 Speaker 1: would be a minimum pipeline amount. It was burdensome, was 303 00:16:07,280 --> 00:16:10,200 Speaker 1: the words being used quite often. Then the same could 304 00:16:10,200 --> 00:16:13,040 Speaker 1: be said for soybeans. We were expecting close to a 305 00:16:13,080 --> 00:16:16,320 Speaker 1: billion bushel worth of carry out and insteps China, and 306 00:16:16,480 --> 00:16:20,080 Speaker 1: all of a sudden we get this conversation of a 307 00:16:20,200 --> 00:16:24,960 Speaker 1: China stockpiling, cheap prices, trade war phase one and all 308 00:16:24,960 --> 00:16:26,960 Speaker 1: of these things, and so China steps in and just 309 00:16:27,000 --> 00:16:31,120 Speaker 1: starts buying in a way that we had never seen before. Honestly, 310 00:16:31,160 --> 00:16:33,040 Speaker 1: I mean, it was it was like someone had flipped 311 00:16:33,080 --> 00:16:35,640 Speaker 1: a switch. It didn't matter what prices were doing, it 312 00:16:35,640 --> 00:16:38,040 Speaker 1: didn't matter what it would cost to get there. They 313 00:16:38,040 --> 00:16:40,640 Speaker 1: were just told to buy, and they were buying, you know. 314 00:16:40,680 --> 00:16:44,120 Speaker 1: And and so that started really kind of the sudden turn, 315 00:16:44,520 --> 00:16:47,000 Speaker 1: and we had what you would call a bullish response 316 00:16:47,000 --> 00:16:50,440 Speaker 1: to a Barish report. And that was the first sign 317 00:16:50,560 --> 00:16:53,200 Speaker 1: that things were probably going to be quite different. And 318 00:16:53,320 --> 00:16:55,720 Speaker 1: you know, around about a year ago, I remember it, 319 00:16:55,800 --> 00:16:58,080 Speaker 1: right around Thanksgiving time was when we started to talk 320 00:16:58,080 --> 00:17:01,240 Speaker 1: about the inflation, you know, and what was gonna happen 321 00:17:01,320 --> 00:17:04,560 Speaker 1: from an inflation trade standpoint, and suddenly the macro side 322 00:17:04,600 --> 00:17:08,159 Speaker 1: of of everything came back into focus, um, which was 323 00:17:08,200 --> 00:17:10,080 Speaker 1: the first time we had seen any sort of macro 324 00:17:10,240 --> 00:17:13,800 Speaker 1: conversation I'd say two thou eighteen. We probably flirted with 325 00:17:13,880 --> 00:17:16,640 Speaker 1: it for a minute, but really, you know, we're we're 326 00:17:16,640 --> 00:17:20,240 Speaker 1: talking two thousand eight, two thousand nine type inflationary conversations 327 00:17:20,280 --> 00:17:23,760 Speaker 1: obviously when you look at inflation data. And so we 328 00:17:23,840 --> 00:17:28,320 Speaker 1: had this sort of combination of significant increases in demand 329 00:17:28,640 --> 00:17:31,560 Speaker 1: via China and then suddenly the U s d A 330 00:17:31,840 --> 00:17:37,240 Speaker 1: was like, oops, we we overestimated last year's crop pretty substantially, 331 00:17:37,520 --> 00:17:40,920 Speaker 1: and we started to see this reduction in overall supply, 332 00:17:41,160 --> 00:17:43,880 Speaker 1: and so you could say that it was a perfect 333 00:17:43,920 --> 00:17:46,520 Speaker 1: storm of bullishness. I mean it just you had the 334 00:17:46,560 --> 00:17:49,399 Speaker 1: inflation really putting the gas to the fire, and then 335 00:17:49,440 --> 00:17:51,359 Speaker 1: you had these supply and demand so like as you 336 00:17:51,400 --> 00:17:52,879 Speaker 1: were saying at the start of the show, you know, 337 00:17:52,920 --> 00:17:55,480 Speaker 1: we tend to just focus on what's weather doing. You know, 338 00:17:55,520 --> 00:17:57,679 Speaker 1: what are we going to use for exports? And and 339 00:17:57,760 --> 00:17:59,639 Speaker 1: most of the time folks don't even care what's going 340 00:17:59,680 --> 00:18:02,200 Speaker 1: on in grains because we just kind of trade back 341 00:18:02,200 --> 00:18:04,600 Speaker 1: and forth, maybe get some seasonal rallies here or there, 342 00:18:04,680 --> 00:18:06,680 Speaker 1: but from an overall standpoint, we never have to worry 343 00:18:06,680 --> 00:18:09,399 Speaker 1: about running out or any of this. Well, China, like 344 00:18:09,440 --> 00:18:13,000 Speaker 1: I said, stepped in and bought well beyond what you 345 00:18:13,000 --> 00:18:15,640 Speaker 1: would traditionally see them take in from a corn standpoint, 346 00:18:15,720 --> 00:18:18,280 Speaker 1: especially soybeans were a bit of a surprise, but then 347 00:18:18,320 --> 00:18:21,040 Speaker 1: you saw them really come in and and buy that corn. 348 00:18:21,440 --> 00:18:24,119 Speaker 1: But in addition to that, then you had these Brazilian issues. 349 00:18:24,160 --> 00:18:27,159 Speaker 1: You started with a low or a slow start to monsoon, 350 00:18:27,240 --> 00:18:29,360 Speaker 1: no moisture in Brazil, so they were unable to really 351 00:18:29,400 --> 00:18:32,480 Speaker 1: get the crop planted and tell around January when traditionally 352 00:18:32,480 --> 00:18:34,240 Speaker 1: you like to see the bulk of the crop planet 353 00:18:34,280 --> 00:18:39,720 Speaker 1: October November. That had major implications on the US export window. UH. 354 00:18:39,760 --> 00:18:42,760 Speaker 1: And export window traditionally closes for soybeans around the first 355 00:18:42,760 --> 00:18:46,560 Speaker 1: part of January, you know, into February. Last year or 356 00:18:46,640 --> 00:18:48,680 Speaker 1: at the start of this year, we were exporting beans 357 00:18:48,720 --> 00:18:52,000 Speaker 1: to China into March because Brazil's crop wasn't ready to 358 00:18:52,040 --> 00:18:55,240 Speaker 1: make its way into the export pipeline. That slow start 359 00:18:55,280 --> 00:18:58,720 Speaker 1: to their soybean crop hurt or slowed their ability to 360 00:18:58,720 --> 00:19:01,520 Speaker 1: get their corn crop planted. Put that corn crop, you know, 361 00:19:01,640 --> 00:19:05,639 Speaker 1: into that important window of production falling right when the 362 00:19:05,720 --> 00:19:08,600 Speaker 1: dry period starts, so the mansunal moisture and Brazil tends 363 00:19:08,640 --> 00:19:11,360 Speaker 1: to shut off last part of April into May, so 364 00:19:11,400 --> 00:19:13,520 Speaker 1: that's when the majority of the corn crop was trying 365 00:19:13,600 --> 00:19:16,879 Speaker 1: to mature. You know, we had this this amazing uh 366 00:19:16,920 --> 00:19:19,080 Speaker 1: if you can call it, that drought and Brazil take 367 00:19:19,119 --> 00:19:22,800 Speaker 1: place and really just take their second crop corn production 368 00:19:22,840 --> 00:19:25,520 Speaker 1: expectations from around a hundred and twenty million metric ton 369 00:19:25,880 --> 00:19:28,560 Speaker 1: down to eighty five. So we had these just this 370 00:19:29,240 --> 00:19:32,080 Speaker 1: wild series of events that made it a feel as 371 00:19:32,080 --> 00:19:34,080 Speaker 1: though we were never going to see corn and soybeans 372 00:19:34,400 --> 00:19:38,400 Speaker 1: go down again, only to actually have a pretty reasonable 373 00:19:38,440 --> 00:19:42,800 Speaker 1: production season. In the US. We actually are looking at 374 00:19:42,840 --> 00:19:45,760 Speaker 1: probably having a record large soybean crop. We're gonna be 375 00:19:45,800 --> 00:19:49,520 Speaker 1: flirting with a record yield and corn and so that's 376 00:19:49,520 --> 00:19:52,240 Speaker 1: helped kind of stabilize some of that supply and taken 377 00:19:52,280 --> 00:19:55,239 Speaker 1: some of that story away, but poor wheats still on 378 00:19:55,280 --> 00:19:57,399 Speaker 1: that track. We didn't get the memo that we were 379 00:19:57,440 --> 00:20:00,879 Speaker 1: supposed to calm down because we had auction shortages. We 380 00:20:00,920 --> 00:20:03,159 Speaker 1: had this massive drought in the Canadian prairies and in 381 00:20:03,200 --> 00:20:06,080 Speaker 1: the northern portion of the US where spring wheed is grown, 382 00:20:06,400 --> 00:20:09,520 Speaker 1: so production there was off substantially. And then of course 383 00:20:09,560 --> 00:20:11,480 Speaker 1: we have this fall weather here where we could be 384 00:20:11,480 --> 00:20:15,160 Speaker 1: looking at another reduction in production, specifically in the soft 385 00:20:15,160 --> 00:20:17,880 Speaker 1: red wheat area, the Chicago weeed area. And then there's 386 00:20:17,960 --> 00:20:20,320 Speaker 1: questions as to what the heck is going on in Russia. 387 00:20:20,480 --> 00:20:24,040 Speaker 1: The Russia is obviously continuing to limit what they're exporting. 388 00:20:24,080 --> 00:20:28,240 Speaker 1: You're seeing some continued food inflation stories. The the industry 389 00:20:28,280 --> 00:20:30,679 Speaker 1: itself is changing there. What you used to see was 390 00:20:30,720 --> 00:20:34,440 Speaker 1: the farmer having to force supplies into the market structure 391 00:20:34,520 --> 00:20:36,760 Speaker 1: as they were harvesting. Similar what we had talked about 392 00:20:36,760 --> 00:20:39,840 Speaker 1: earlier with the U S Elevator. Now they're building space, 393 00:20:39,920 --> 00:20:43,000 Speaker 1: they're keeping the crops closer to home. They're finding that 394 00:20:43,000 --> 00:20:46,000 Speaker 1: that gives them some power, and so that's really changing 395 00:20:46,000 --> 00:20:50,120 Speaker 1: what we're seeing from the overall global supply and demand situation. 396 00:20:50,640 --> 00:20:53,520 Speaker 1: And there's a million different little stories that you could 397 00:20:53,520 --> 00:20:56,080 Speaker 1: point to in any one day that would be either 398 00:20:56,160 --> 00:20:59,359 Speaker 1: bullish or bearish price. And right now, with that inflation 399 00:20:59,520 --> 00:21:03,359 Speaker 1: under that we're seeing, or that inflationary support, it's keeping 400 00:21:03,400 --> 00:21:07,360 Speaker 1: prices supported even if the fundamental story, especially for like soybeans, 401 00:21:07,800 --> 00:21:11,120 Speaker 1: isn't as bullish as what it was six months ago. 402 00:21:11,800 --> 00:21:14,240 Speaker 1: That was great, and I think that was like this 403 00:21:14,359 --> 00:21:17,119 Speaker 1: sort of like perfect storm of all the things you 404 00:21:17,240 --> 00:21:21,760 Speaker 1: described at the planting conditions and the Chinese buying and 405 00:21:21,800 --> 00:21:24,679 Speaker 1: the issues in Brazil, the issues in Canada, and you 406 00:21:24,800 --> 00:21:27,119 Speaker 1: really see how it all comes together. I want to 407 00:21:27,200 --> 00:21:29,520 Speaker 1: drill down a little bit more, and I think you 408 00:21:29,640 --> 00:21:32,399 Speaker 1: sort of um drove home a little bit what we 409 00:21:32,400 --> 00:21:34,879 Speaker 1: were talking about in the beginning, which that normally we 410 00:21:35,000 --> 00:21:38,760 Speaker 1: don't think of grains as being part of the macro 411 00:21:39,040 --> 00:21:41,040 Speaker 1: cycle the same way we do with other commodities. But 412 00:21:41,119 --> 00:21:43,640 Speaker 1: this time we're getting both at once. We're getting these 413 00:21:43,640 --> 00:21:47,840 Speaker 1: sort of unusual things with the conditions globally and the 414 00:21:47,840 --> 00:21:50,840 Speaker 1: macro considerations. I want to get into some of the macro. 415 00:21:51,359 --> 00:21:54,200 Speaker 1: One thing I'm just curious about is like farm labor. 416 00:21:54,440 --> 00:21:57,119 Speaker 1: How challenged are we talk about it with all different 417 00:21:57,160 --> 00:22:01,000 Speaker 1: industries we hear about all the time. Howell our farmers 418 00:22:01,200 --> 00:22:04,000 Speaker 1: right now from a hiring perspective, and how much our 419 00:22:04,080 --> 00:22:07,080 Speaker 1: labor markets putting stress on farmers. They're definitely, I mean 420 00:22:07,119 --> 00:22:09,520 Speaker 1: that tends to be a common issue that we have 421 00:22:09,600 --> 00:22:13,919 Speaker 1: an agriculture Even before this whole entire conversation about employment 422 00:22:13,960 --> 00:22:17,000 Speaker 1: and you know, and and struggles with finding folks, we 423 00:22:17,080 --> 00:22:19,320 Speaker 1: always tend to I mean it, let's be honest, Like 424 00:22:19,359 --> 00:22:22,000 Speaker 1: agriculture is not the most glamorous industry to work in, 425 00:22:22,119 --> 00:22:24,639 Speaker 1: especially when it comes to corn, soybeans, wheat, some of 426 00:22:24,640 --> 00:22:27,040 Speaker 1: those things. You know, the majority of the year, you 427 00:22:27,080 --> 00:22:30,879 Speaker 1: don't necessarily need to work an exceptional amount of hours 428 00:22:30,920 --> 00:22:34,040 Speaker 1: if you're just you know, row cropping. But then those 429 00:22:34,080 --> 00:22:36,439 Speaker 1: two or three months out of the year, these folks 430 00:22:36,440 --> 00:22:38,720 Speaker 1: are working almost twenty four hours a day, seven days 431 00:22:38,720 --> 00:22:41,320 Speaker 1: a week. And and no one who doesn't have a 432 00:22:41,359 --> 00:22:44,399 Speaker 1: solid investment or you know, as I like to put it, 433 00:22:44,480 --> 00:22:46,080 Speaker 1: mud in their blood, you know what I mean, they're 434 00:22:46,119 --> 00:22:50,000 Speaker 1: not passionate about the agriculture side of things. You know, 435 00:22:50,040 --> 00:22:51,800 Speaker 1: no one's going to be excited about doing that. And 436 00:22:51,880 --> 00:22:54,280 Speaker 1: so one of the things that we're somewhat fortunate in 437 00:22:54,840 --> 00:22:58,000 Speaker 1: and in my portion of agriculture, this isn't the same 438 00:22:58,040 --> 00:23:01,520 Speaker 1: for vegetable producers and folks the labor intensive crop, but 439 00:23:01,640 --> 00:23:05,720 Speaker 1: in corn, soybeans, and wheat, technology and the expansion of 440 00:23:05,760 --> 00:23:09,560 Speaker 1: technology and the expansion of equipment. The bigger the equipment, 441 00:23:09,600 --> 00:23:12,280 Speaker 1: the easier it is for one guy or gal to 442 00:23:12,280 --> 00:23:16,000 Speaker 1: to harvest. You know, we've we've expanded the size of 443 00:23:16,000 --> 00:23:18,359 Speaker 1: of grain carts in the field to where you know, 444 00:23:18,440 --> 00:23:20,760 Speaker 1: they can the combine can put a thousand bushels of 445 00:23:20,920 --> 00:23:22,720 Speaker 1: corn on a cart before it has to go to 446 00:23:22,760 --> 00:23:24,679 Speaker 1: the semi. You know. One of the biggest things that 447 00:23:24,720 --> 00:23:27,240 Speaker 1: we're really struggling with, and I think everyone can agree 448 00:23:27,520 --> 00:23:30,200 Speaker 1: throughout this the industry. You know, one of the things 449 00:23:30,200 --> 00:23:32,560 Speaker 1: that we're really struggling with, when it comes down to it, 450 00:23:32,359 --> 00:23:36,200 Speaker 1: is is trucker's and and truck labor. They're being able 451 00:23:36,240 --> 00:23:38,639 Speaker 1: to move it from point A to point B. You know, 452 00:23:38,640 --> 00:23:40,520 Speaker 1: and as a result of a lot of the customers 453 00:23:40,520 --> 00:23:43,520 Speaker 1: that I'm working with, we may be evaluating or re evaluating. 454 00:23:43,840 --> 00:23:46,520 Speaker 1: You know, where we would traditionally send soybeans into the 455 00:23:46,560 --> 00:23:50,000 Speaker 1: export hub that is Toledo at the fall, we may 456 00:23:50,040 --> 00:23:52,960 Speaker 1: instead take a lesser price to go into the beam 457 00:23:53,040 --> 00:23:55,680 Speaker 1: crusher to the north. There's something of that nature where 458 00:23:55,720 --> 00:23:58,200 Speaker 1: you know, you can make three trips a day versus 459 00:23:58,200 --> 00:24:00,320 Speaker 1: trying to make one just simply because you don't have 460 00:24:00,320 --> 00:24:02,600 Speaker 1: the amount of trukers that you you used to, and 461 00:24:02,680 --> 00:24:05,040 Speaker 1: so it's it's been one of those things. I think 462 00:24:05,080 --> 00:24:08,760 Speaker 1: the biggest sector that that will continue to be impacted 463 00:24:08,760 --> 00:24:11,800 Speaker 1: on the employment side especially will be those elevators, those 464 00:24:11,800 --> 00:24:15,119 Speaker 1: commercial setups, just simply because it's hard to find someone 465 00:24:15,280 --> 00:24:17,680 Speaker 1: that is willing to work the long hours that are 466 00:24:17,680 --> 00:24:19,760 Speaker 1: needed to run that elevator and to work with the 467 00:24:19,800 --> 00:24:22,080 Speaker 1: several different farmers that come in. And it's it's not 468 00:24:22,119 --> 00:24:24,919 Speaker 1: the most glamorous job at all, but it's definitely an 469 00:24:24,920 --> 00:24:28,200 Speaker 1: important one. But at the same time, even with costs 470 00:24:28,200 --> 00:24:30,920 Speaker 1: going up and all of these other things, the elevator 471 00:24:31,000 --> 00:24:33,560 Speaker 1: or the commercial unless they're an end user, unless they're 472 00:24:33,560 --> 00:24:36,480 Speaker 1: an ethanol plant or an exporter, or something of that nature. 473 00:24:36,800 --> 00:24:39,840 Speaker 1: They're getting squeezed as well because their margins aren't getting 474 00:24:40,480 --> 00:24:43,159 Speaker 1: that much better or good enough to where they can 475 00:24:43,200 --> 00:24:46,840 Speaker 1: really kind of incentivize with higher pay to their employees. 476 00:24:47,240 --> 00:24:49,320 Speaker 1: And so that's where you're starting to see some of 477 00:24:49,359 --> 00:24:52,320 Speaker 1: that real squeeze come in. Is is the groups that 478 00:24:52,359 --> 00:24:54,840 Speaker 1: are trying to facilitate that harvest, you know, I eat 479 00:24:54,880 --> 00:24:58,040 Speaker 1: those commercial elevators or those that are trying to move 480 00:24:58,520 --> 00:25:01,280 Speaker 1: the bushels, you know, like try ers or or someone 481 00:25:01,280 --> 00:25:04,960 Speaker 1: of that nature. Well, so this is something that I 482 00:25:05,000 --> 00:25:07,800 Speaker 1: want to ask you, but what exactly are the input 483 00:25:07,840 --> 00:25:10,840 Speaker 1: costs that go into farming these types of grains? So, 484 00:25:11,000 --> 00:25:14,359 Speaker 1: you know, you just discussed labor. I imagine equipment is 485 00:25:14,600 --> 00:25:16,760 Speaker 1: a big part of it. Uh. We talked a bit 486 00:25:16,800 --> 00:25:19,960 Speaker 1: about fertilizer at the intro, But like, what are actually 487 00:25:20,040 --> 00:25:24,439 Speaker 1: the things that go into producing these different types of 488 00:25:24,480 --> 00:25:29,320 Speaker 1: grains and how have those various components been impacting the 489 00:25:29,359 --> 00:25:33,480 Speaker 1: price recently. There's a ton of of input costs that 490 00:25:33,520 --> 00:25:35,520 Speaker 1: you could take into consideration. Where you have to take 491 00:25:35,520 --> 00:25:38,480 Speaker 1: into consideration, you know, I think the biggest one for 492 00:25:38,520 --> 00:25:40,960 Speaker 1: a lot of folks is land and we've seen land 493 00:25:41,000 --> 00:25:43,960 Speaker 1: values obviously going up. The old line they're not making 494 00:25:44,000 --> 00:25:47,280 Speaker 1: any more of it is definitely true, right, And so 495 00:25:47,320 --> 00:25:49,840 Speaker 1: you've seen land costs go up exponentially. We're starting to 496 00:25:49,840 --> 00:25:52,640 Speaker 1: see urban sprawl impact that you know, in my neck 497 00:25:52,680 --> 00:25:54,919 Speaker 1: the woods they lived just outside of the Lansing area, 498 00:25:55,320 --> 00:25:57,520 Speaker 1: and the amount of farm fields that have went into 499 00:25:57,560 --> 00:26:00,960 Speaker 1: subdivisions over the last five years is really satively astounding, 500 00:26:01,400 --> 00:26:03,800 Speaker 1: you know. And and with prices lower, margins tight, a 501 00:26:03,840 --> 00:26:07,760 Speaker 1: farmer can't necessarily compete with a developer when it comes 502 00:26:07,800 --> 00:26:11,320 Speaker 1: to purchasing some of these land uh pieces that come 503 00:26:11,400 --> 00:26:14,719 Speaker 1: up for sale. So it's a land uh costs. Obviously, 504 00:26:14,880 --> 00:26:17,160 Speaker 1: there is the cost of living that a farmer has 505 00:26:17,160 --> 00:26:21,640 Speaker 1: to take into consideration if they are full time farmer, healthcare, 506 00:26:21,680 --> 00:26:24,800 Speaker 1: you know, the cell phone, the new pickup, the all 507 00:26:24,840 --> 00:26:26,720 Speaker 1: of these things, you know kind of come into play. 508 00:26:26,760 --> 00:26:29,000 Speaker 1: And then when it comes to actually producing the crop, 509 00:26:29,359 --> 00:26:33,600 Speaker 1: you're obviously looking at fertilizer, chemicals, seed, you know, your 510 00:26:33,640 --> 00:26:38,040 Speaker 1: equipment costs continue to grow exponentially. You know, all of 511 00:26:38,080 --> 00:26:40,400 Speaker 1: these things kind of come into play. And so there's 512 00:26:40,400 --> 00:26:42,720 Speaker 1: always been that old line that the you know, the 513 00:26:42,760 --> 00:26:47,480 Speaker 1: farmer buys retail and sells wholesale and we're definitely seeing 514 00:26:47,520 --> 00:26:50,800 Speaker 1: that at this point is everything that that we need 515 00:26:50,840 --> 00:26:53,800 Speaker 1: to produce the crop has gone up and value and 516 00:26:53,920 --> 00:26:56,359 Speaker 1: obviously the futures values and the price that the farmer 517 00:26:56,440 --> 00:26:58,920 Speaker 1: is getting for selling his or her crop has gone 518 00:26:59,000 --> 00:27:01,800 Speaker 1: up as well, but they're definitely not matching one to one. 519 00:27:02,119 --> 00:27:06,080 Speaker 1: You know, there was a sweet spot there probably sometime 520 00:27:06,160 --> 00:27:08,960 Speaker 1: in March maybe that we had hit where the price 521 00:27:09,040 --> 00:27:11,720 Speaker 1: going up had matched the cost of inputs going up. 522 00:27:11,760 --> 00:27:14,200 Speaker 1: And and now we're starting to see inputs stay elevated. 523 00:27:14,600 --> 00:27:17,200 Speaker 1: Uh well, values come down a bit. And so yeah, 524 00:27:17,240 --> 00:27:20,280 Speaker 1: I mean there's you name it, the farmer. It probably 525 00:27:20,320 --> 00:27:23,120 Speaker 1: touches it in some way, shape or form in order 526 00:27:23,200 --> 00:27:26,040 Speaker 1: to to have that business and bring the crop to 527 00:27:26,240 --> 00:27:30,800 Speaker 1: the pipeline. So one of the things that's very timely. 528 00:27:30,920 --> 00:27:34,200 Speaker 1: Right now, we're recording this one day November eight. It 529 00:27:34,200 --> 00:27:35,800 Speaker 1: will be out in a couple of days. We don't 530 00:27:35,800 --> 00:27:39,080 Speaker 1: know what's gonna change by then, but there's a significant 531 00:27:39,119 --> 00:27:42,600 Speaker 1: strike a deer impairing production. And I have to assume, 532 00:27:42,640 --> 00:27:45,600 Speaker 1: and I don't know anything specifically about this, my gut 533 00:27:45,720 --> 00:27:49,040 Speaker 1: is because of everything these days that tractors and parts 534 00:27:49,040 --> 00:27:52,359 Speaker 1: for repairing tractors were not an abundant supply even before 535 00:27:52,440 --> 00:27:54,480 Speaker 1: the strike, because I'm just sort of assuming that every 536 00:27:54,560 --> 00:27:57,640 Speaker 1: part of the supply change is stressed. How much anxiety 537 00:27:57,840 --> 00:28:02,200 Speaker 1: is this causing. Is the causing farmers and worries about 538 00:28:02,840 --> 00:28:08,000 Speaker 1: production of new farming equipment. It's definitely something that's that's 539 00:28:08,080 --> 00:28:10,480 Speaker 1: on the radar, I think as we I think the 540 00:28:10,520 --> 00:28:13,160 Speaker 1: anxiety was much higher at the start of harvest because 541 00:28:13,160 --> 00:28:15,520 Speaker 1: there were some true concerns over what would happen if 542 00:28:15,560 --> 00:28:17,919 Speaker 1: you had a breakdown and needed a part and you 543 00:28:17,920 --> 00:28:20,040 Speaker 1: were unable to get it. You know, as we're wrapping 544 00:28:20,080 --> 00:28:22,439 Speaker 1: up harvest here, we're we're expected to be around nine 545 00:28:22,960 --> 00:28:26,560 Speaker 1: complete on sweeping harvest and complete on corn, so we're 546 00:28:26,840 --> 00:28:29,560 Speaker 1: we're into that final stretch, and so much of that 547 00:28:29,640 --> 00:28:32,439 Speaker 1: anxiety is kind of started to back off a little bit. 548 00:28:32,480 --> 00:28:34,119 Speaker 1: I mean, at the start of harvest, there were some 549 00:28:34,160 --> 00:28:37,600 Speaker 1: real concerns. I had growers that were needing to drive 550 00:28:38,040 --> 00:28:40,760 Speaker 1: you know, five, six, seven, eight hours to grab apart 551 00:28:40,840 --> 00:28:43,720 Speaker 1: at a dealership that maybe wasn't local in the state 552 00:28:43,800 --> 00:28:45,880 Speaker 1: or anywhere to be found in the state, you know, 553 00:28:45,920 --> 00:28:48,200 Speaker 1: And and so there was some real concern over what 554 00:28:48,320 --> 00:28:51,760 Speaker 1: happens if I suffer catastrophic breakdown. You know, what am 555 00:28:51,760 --> 00:28:53,400 Speaker 1: I going to do? How are they going to make 556 00:28:53,440 --> 00:28:56,120 Speaker 1: sure that I'm able to get back and and rolling again? 557 00:28:56,160 --> 00:28:58,400 Speaker 1: Because that's that's the biggest thing. We get a tiny 558 00:28:58,400 --> 00:29:01,040 Speaker 1: window of opportunity to get the cross off, and if 559 00:29:01,080 --> 00:29:04,520 Speaker 1: you're unable to do so, unable to get that crop 560 00:29:04,560 --> 00:29:06,760 Speaker 1: off because of a piece of equipment or a lack 561 00:29:06,800 --> 00:29:08,840 Speaker 1: of a part or something of that nature, you know, 562 00:29:08,920 --> 00:29:11,160 Speaker 1: that's that's something that keeps you up at night, just 563 00:29:11,280 --> 00:29:14,560 Speaker 1: that concern. And so, having made it to the bulk 564 00:29:14,600 --> 00:29:16,600 Speaker 1: of the tail end of harvest without much in the 565 00:29:16,600 --> 00:29:22,640 Speaker 1: way of absolute shutdowns, you know across the industry, we're 566 00:29:22,680 --> 00:29:25,640 Speaker 1: breathing a little easier, but it's definitely something that's going 567 00:29:25,680 --> 00:29:28,400 Speaker 1: to cause great concern. You've seen an exponential increase in 568 00:29:28,600 --> 00:29:32,080 Speaker 1: used equipment costs and other things, and so that's going 569 00:29:32,160 --> 00:29:36,080 Speaker 1: to make some folks think twice before. Perhaps. I think 570 00:29:36,120 --> 00:29:38,080 Speaker 1: we're getting to that tipping point when I say that 571 00:29:38,120 --> 00:29:41,080 Speaker 1: folks think twice before trading in an old piece of 572 00:29:41,120 --> 00:29:43,200 Speaker 1: equipment for a new one or something of that nature. 573 00:29:43,240 --> 00:29:44,600 Speaker 1: I think you're going to start to see some of 574 00:29:44,640 --> 00:29:47,760 Speaker 1: the same things that you're seeing in the auto industry, 575 00:29:47,880 --> 00:29:50,000 Speaker 1: you know, kind of start to take place a little 576 00:29:50,000 --> 00:29:52,920 Speaker 1: bit when it comes to equipment. You know, most farmers 577 00:29:53,040 --> 00:29:56,200 Speaker 1: right now have the bulk of their equipment needs covered. 578 00:29:56,240 --> 00:29:59,719 Speaker 1: Would they like to upgrade, potentially, sure, But are they 579 00:29:59,760 --> 00:30:01,960 Speaker 1: going to think twice about it, you know before they 580 00:30:01,960 --> 00:30:04,600 Speaker 1: just dive in head first and and and make a 581 00:30:04,680 --> 00:30:07,520 Speaker 1: purchase that they may not need to be making. You know, yes, 582 00:30:07,600 --> 00:30:10,160 Speaker 1: they're gonna start to really kind of re evaluate some 583 00:30:10,240 --> 00:30:13,280 Speaker 1: of the demand that they have surrounding these pieces of equipment. 584 00:30:13,600 --> 00:30:15,920 Speaker 1: And so I think you'll see eventually a point where 585 00:30:15,920 --> 00:30:17,920 Speaker 1: we hit a bit in the way of an impasse. 586 00:30:18,320 --> 00:30:20,719 Speaker 1: But you know, we'll see what happens. If the supply 587 00:30:20,800 --> 00:30:22,880 Speaker 1: chain can kind of get back up and and running, 588 00:30:23,000 --> 00:30:25,520 Speaker 1: you know, then they won't. I've seen a lot of 589 00:30:25,560 --> 00:30:28,640 Speaker 1: folks talking about switching away from deer into other types 590 00:30:28,680 --> 00:30:33,960 Speaker 1: of equipment. But the supply chain disruption is across everything, 591 00:30:34,320 --> 00:30:35,960 Speaker 1: and so it's not just a dear thing. It's not 592 00:30:36,040 --> 00:30:39,040 Speaker 1: just a case thing. It's not just a New Holland thing, 593 00:30:39,160 --> 00:30:41,080 Speaker 1: you know, and I think the farmers are aware of that. 594 00:30:41,560 --> 00:30:43,400 Speaker 1: It goes back to the housing industry. You know, like 595 00:30:43,440 --> 00:30:45,440 Speaker 1: a lot of folks would love to to maybe move 596 00:30:45,480 --> 00:30:47,520 Speaker 1: to a new house and maybe they can sell their 597 00:30:47,600 --> 00:30:50,800 Speaker 1: house for an exceptional profit and they're they're well ahead, 598 00:30:50,800 --> 00:30:52,800 Speaker 1: but they can't find a new house. And so it's 599 00:30:52,840 --> 00:30:55,240 Speaker 1: the same thing, you know in equipment is you could 600 00:30:55,240 --> 00:30:57,280 Speaker 1: get rid of whatever piece of equipment that you have, 601 00:30:57,520 --> 00:30:59,800 Speaker 1: but can you replace it, and if you can, what 602 00:31:00,080 --> 00:31:02,040 Speaker 1: that replacement costs look like. And so there's a lot 603 00:31:02,080 --> 00:31:04,920 Speaker 1: of tough decisions kind of being made, or folks are 604 00:31:04,920 --> 00:31:07,480 Speaker 1: thinking twice about maybe making some of these changes that 605 00:31:07,520 --> 00:31:10,960 Speaker 1: they would have made otherwise because of the disruption that 606 00:31:10,960 --> 00:31:14,560 Speaker 1: we're seeing in the cost increases. And so it's not 607 00:31:14,680 --> 00:31:17,800 Speaker 1: a requirement to upgrade to a new combine every year, 608 00:31:17,880 --> 00:31:19,960 Speaker 1: and so these guys will probably sit tight for a 609 00:31:20,000 --> 00:31:23,560 Speaker 1: little bit and see what happens. But it definitely remains concerning, 610 00:31:23,840 --> 00:31:26,760 Speaker 1: you know, just as in any other portion of you know, 611 00:31:26,800 --> 00:31:29,200 Speaker 1: the demand the demand structure out there, Like if I 612 00:31:29,240 --> 00:31:31,080 Speaker 1: go to the store next tomorrow, is they're going to 613 00:31:31,080 --> 00:31:33,520 Speaker 1: be toilet paper, you know, And it's the same except 614 00:31:33,560 --> 00:31:36,280 Speaker 1: for now it's if I need a new belt to 615 00:31:36,440 --> 00:31:39,680 Speaker 1: keep my piece of equipment running, will it be there? Um? 616 00:31:39,720 --> 00:31:42,360 Speaker 1: And so I think you are seeing some additional you know, 617 00:31:42,480 --> 00:31:45,080 Speaker 1: purchases instead of that, well, I can go to the 618 00:31:45,080 --> 00:31:47,000 Speaker 1: store tomorrow and it will be there. You know, you're 619 00:31:47,000 --> 00:31:49,720 Speaker 1: seeing the same in agriculture, to where I'm going to 620 00:31:49,800 --> 00:31:51,680 Speaker 1: make sure that I have it on hand so I 621 00:31:51,720 --> 00:32:10,840 Speaker 1: don't have to worry about that. So just before we 622 00:32:10,880 --> 00:32:13,240 Speaker 1: move off deer and equipment, you know, we're talking about 623 00:32:13,240 --> 00:32:16,160 Speaker 1: the strike and maybe farmers wanting to have more parts 624 00:32:16,360 --> 00:32:20,400 Speaker 1: or equipment on hand. One other longer standing issue that 625 00:32:20,880 --> 00:32:24,240 Speaker 1: regarding deer I know is, and I've seen articles about this, 626 00:32:24,880 --> 00:32:28,360 Speaker 1: is right to repair and this idea that like tractors 627 00:32:28,680 --> 00:32:32,480 Speaker 1: and combines, like cars are getting more and more high tech, 628 00:32:32,520 --> 00:32:34,640 Speaker 1: and there are more pieces of software than they are 629 00:32:34,680 --> 00:32:38,200 Speaker 1: just pieces of metal and parts put together, and that 630 00:32:38,280 --> 00:32:40,520 Speaker 1: this is a sort of anxiety that there becomes a 631 00:32:40,600 --> 00:32:43,720 Speaker 1: sort of lock in where the farmer becomes very dependent 632 00:32:44,200 --> 00:32:47,400 Speaker 1: on the vendor of the or on the equipment manufacturer. 633 00:32:47,920 --> 00:32:50,520 Speaker 1: How much is this something that people talk about and 634 00:32:50,560 --> 00:32:54,560 Speaker 1: trying to weather through law or something else, trying to 635 00:32:54,640 --> 00:32:56,880 Speaker 1: change it such that the owner of the piece of 636 00:32:56,920 --> 00:33:00,120 Speaker 1: equipment is not as perpetually dependent on the man you 637 00:33:00,240 --> 00:33:04,080 Speaker 1: facture for permanent ability to repair their own goods. It's 638 00:33:04,120 --> 00:33:07,480 Speaker 1: a huge deal I mean, it's definitely something that that 639 00:33:08,360 --> 00:33:11,840 Speaker 1: folks are cogniitive and and they're they're fighting every day, 640 00:33:12,280 --> 00:33:14,520 Speaker 1: you know, to a certain extent, I would say, you know, 641 00:33:14,600 --> 00:33:16,600 Speaker 1: those of us in agriculture are just kind of so 642 00:33:16,720 --> 00:33:18,280 Speaker 1: used to being like, well, it is what it is, 643 00:33:18,520 --> 00:33:22,840 Speaker 1: you know, and so they aren't necessarily um standing up 644 00:33:22,920 --> 00:33:25,080 Speaker 1: or or fighting. You know, there may be relying on 645 00:33:25,120 --> 00:33:26,960 Speaker 1: other people to kind of fight the good fight, and 646 00:33:26,960 --> 00:33:29,760 Speaker 1: then they're standing in the background saying, yeah, what he said, 647 00:33:29,920 --> 00:33:32,480 Speaker 1: you know, to a certain extent um, but it's definitely 648 00:33:32,520 --> 00:33:34,360 Speaker 1: something that's huge and something that we need to be 649 00:33:34,400 --> 00:33:37,160 Speaker 1: aware of and paying attention to. And and you know, 650 00:33:37,200 --> 00:33:40,160 Speaker 1: it plays a role, you know, and it's a beautiful thing. 651 00:33:40,240 --> 00:33:44,200 Speaker 1: You know. It's technology is has made it to where 652 00:33:44,600 --> 00:33:48,280 Speaker 1: we don't have some of those concerns over employees and 653 00:33:48,600 --> 00:33:50,520 Speaker 1: things of that nature because we're able to kind of 654 00:33:50,560 --> 00:33:54,520 Speaker 1: do more with with less people. But it's definitely concerning 655 00:33:54,520 --> 00:33:56,520 Speaker 1: when you know, you do have growers that are ready 656 00:33:56,520 --> 00:33:59,200 Speaker 1: to start planting the crop, and maybe because this piece 657 00:33:59,200 --> 00:34:02,000 Speaker 1: of equipment is not properly communicating with this piece of equipment, 658 00:34:02,000 --> 00:34:04,880 Speaker 1: they're shut down for sometimes days at a time, and 659 00:34:04,880 --> 00:34:06,880 Speaker 1: and Honestly, a lot of the folks that are are 660 00:34:06,880 --> 00:34:10,200 Speaker 1: tasked with fixing these things locally may not have the 661 00:34:10,320 --> 00:34:13,040 Speaker 1: level of education or understanding of what they're working with 662 00:34:13,120 --> 00:34:15,680 Speaker 1: in order to do so quickly, you know, in a 663 00:34:15,719 --> 00:34:18,120 Speaker 1: time that they need to. And so it's definitely something 664 00:34:18,160 --> 00:34:20,440 Speaker 1: that is a major factor, and it is only going 665 00:34:20,520 --> 00:34:23,359 Speaker 1: to continue to be a factor in the industry as 666 00:34:23,400 --> 00:34:26,600 Speaker 1: we kind of continue to to you know, add in 667 00:34:26,640 --> 00:34:29,440 Speaker 1: that that technology and and we say it's for our 668 00:34:29,440 --> 00:34:31,320 Speaker 1: own good, and in a lot of ways that it 669 00:34:31,480 --> 00:34:34,279 Speaker 1: definitely is. But it still can cause some of these 670 00:34:34,320 --> 00:34:37,440 Speaker 1: pretty major issues that that can slow up production or 671 00:34:37,440 --> 00:34:40,919 Speaker 1: slow up harvest or or whatever. And it's something that 672 00:34:41,320 --> 00:34:45,239 Speaker 1: we hope to see remedied in a cooperative manner, like 673 00:34:45,280 --> 00:34:49,000 Speaker 1: we understand the reason behind it in some circumstances. But 674 00:34:49,080 --> 00:34:51,040 Speaker 1: at the same time, you know, there really should be 675 00:34:51,080 --> 00:34:53,359 Speaker 1: some ways that we can kind of bypass or make 676 00:34:53,400 --> 00:34:56,399 Speaker 1: sure that it doesn't shut folks down for for days 677 00:34:56,440 --> 00:34:58,560 Speaker 1: at a time, you know, in those instances that that 678 00:34:58,600 --> 00:35:02,399 Speaker 1: takes place. I have a related question, but just going 679 00:35:02,440 --> 00:35:05,080 Speaker 1: back to the input costs that we were discussing, if 680 00:35:05,120 --> 00:35:09,280 Speaker 1: everything is going up, then you know, presumably the farmers 681 00:35:09,320 --> 00:35:12,080 Speaker 1: can pass some of the costs on to customers, But 682 00:35:12,200 --> 00:35:15,600 Speaker 1: is there anything they can do to try to offset 683 00:35:16,160 --> 00:35:19,680 Speaker 1: those expenses to reduce their own costs? Like, are there 684 00:35:20,040 --> 00:35:24,520 Speaker 1: different production techniques to be more efficient? Um, presumably you 685 00:35:24,520 --> 00:35:27,160 Speaker 1: can you know, try to rotate into crops with a 686 00:35:27,239 --> 00:35:30,680 Speaker 1: higher yield or a better return and things like that. 687 00:35:30,719 --> 00:35:32,520 Speaker 1: Is there anything that you're seeing now that people are 688 00:35:32,560 --> 00:35:36,080 Speaker 1: trying to do? Yeah, Yeah, I mean I think you're 689 00:35:36,200 --> 00:35:40,160 Speaker 1: you're seeing some real growth in in the understanding of 690 00:35:40,400 --> 00:35:44,400 Speaker 1: agronomic influences in producing a crop. We've seen some folks 691 00:35:44,400 --> 00:35:46,080 Speaker 1: over the last few years, you know, when you talk 692 00:35:46,120 --> 00:35:49,600 Speaker 1: about fertilizers and and you know kind of some of 693 00:35:49,640 --> 00:35:52,480 Speaker 1: that input side of things, you've got you know, NP 694 00:35:52,640 --> 00:35:57,719 Speaker 1: and K that you know, really kind of ore important components, 695 00:35:57,760 --> 00:35:59,799 Speaker 1: you know what I mean, You've got your nitrogen and 696 00:36:00,040 --> 00:36:02,520 Speaker 1: your phosphates and your potassium, and you have all these 697 00:36:02,560 --> 00:36:05,160 Speaker 1: different things and so P and K or your phosphates 698 00:36:05,160 --> 00:36:07,200 Speaker 1: and potassium. And over the last few years, they've been 699 00:36:07,239 --> 00:36:11,239 Speaker 1: relatively cheap comparatively speaking, we've had reasonable supply, and we've 700 00:36:11,239 --> 00:36:13,759 Speaker 1: had the ability to kind of use them and and 701 00:36:13,800 --> 00:36:18,880 Speaker 1: really invest in increasing these yields via these these inputs 702 00:36:18,920 --> 00:36:21,799 Speaker 1: and these components, and so some growers are telling me 703 00:36:21,840 --> 00:36:24,440 Speaker 1: this year they're spending some extra money on soil sampling, 704 00:36:24,760 --> 00:36:27,480 Speaker 1: perhaps are going even further into the soil sampling than 705 00:36:27,480 --> 00:36:29,919 Speaker 1: what they were traditionally do, going more into a grid 706 00:36:30,000 --> 00:36:33,160 Speaker 1: sort of standpoint to where they're seeing every portion of 707 00:36:33,200 --> 00:36:35,680 Speaker 1: the field to to see where they may have the 708 00:36:35,760 --> 00:36:39,080 Speaker 1: ability to skip um some of these inputs P and 709 00:36:39,160 --> 00:36:43,759 Speaker 1: K specifically, they can't necessarily avoid using nitrogen, but some 710 00:36:43,840 --> 00:36:46,439 Speaker 1: of these cost savings that they're seeing elsewhere, they're going 711 00:36:46,480 --> 00:36:50,680 Speaker 1: to to spend on utilizing some some other forms of 712 00:36:50,760 --> 00:36:53,400 Speaker 1: nitrogen or having access to it. You know. One of 713 00:36:53,440 --> 00:36:55,239 Speaker 1: the things that we've seen that's very different than what 714 00:36:55,239 --> 00:36:57,279 Speaker 1: we saw in two thousand eight and two thousand nine 715 00:36:57,880 --> 00:37:00,239 Speaker 1: because a lot of growers now have the ability to 716 00:37:00,400 --> 00:37:03,759 Speaker 1: store these inputs that they may need well ahead of 717 00:37:03,800 --> 00:37:07,400 Speaker 1: what traditionally would be the spring season. And so for 718 00:37:07,440 --> 00:37:10,200 Speaker 1: a lot of folks, they may have actually purchased and 719 00:37:10,320 --> 00:37:13,680 Speaker 1: took possession, you know, late summer on some of their 720 00:37:13,719 --> 00:37:16,279 Speaker 1: fertilizers and some of the other things that they may 721 00:37:16,320 --> 00:37:18,480 Speaker 1: need in order to produce the crop. And so that 722 00:37:18,560 --> 00:37:21,000 Speaker 1: helps them to avoid some of these pinches that we're 723 00:37:21,000 --> 00:37:24,000 Speaker 1: seeing that took place, you know, after the big hurricane 724 00:37:24,040 --> 00:37:26,839 Speaker 1: hit the Gulf, and after China decided they were going 725 00:37:26,880 --> 00:37:30,440 Speaker 1: to restrict you know, phosphate exports and Russia stepped in, 726 00:37:30,520 --> 00:37:32,160 Speaker 1: and you know some of these other things that have 727 00:37:32,239 --> 00:37:35,000 Speaker 1: taken place that have happened and and really ramped up 728 00:37:35,040 --> 00:37:37,440 Speaker 1: prices here over the last couple three months. Some of 729 00:37:37,480 --> 00:37:40,759 Speaker 1: these guys haven't necessarily seen that big brunt. You know. 730 00:37:40,800 --> 00:37:43,719 Speaker 1: In addition to that, we have some regenerative forms and 731 00:37:43,800 --> 00:37:47,120 Speaker 1: agriculture where we are using continuous cover and some of 732 00:37:47,120 --> 00:37:49,640 Speaker 1: these other things that we're doing that are actually helping 733 00:37:49,640 --> 00:37:53,120 Speaker 1: the soil produce their own its own nitrogen or helping 734 00:37:53,120 --> 00:37:55,200 Speaker 1: it to better handle, you know, if we run into 735 00:37:55,239 --> 00:37:58,200 Speaker 1: drought situations or some of these other things. And so 736 00:37:58,920 --> 00:38:01,719 Speaker 1: from an overall stand point, you know, it's easy to 737 00:38:01,760 --> 00:38:03,279 Speaker 1: think that, oh, well, the farmer goes out and he 738 00:38:03,360 --> 00:38:05,440 Speaker 1: just sticks the crop in and if it rains, then 739 00:38:05,440 --> 00:38:07,400 Speaker 1: we have a crop, and if it doesn't then oh no. 740 00:38:07,960 --> 00:38:10,759 Speaker 1: But the reality is that these guys are are and 741 00:38:11,000 --> 00:38:16,480 Speaker 1: guys and gals are investing heavily into all forms of technology, 742 00:38:17,040 --> 00:38:19,520 Speaker 1: you know when it comes to crop production, and are 743 00:38:19,600 --> 00:38:23,120 Speaker 1: are looking at you know, variable rate technology where the 744 00:38:23,200 --> 00:38:25,879 Speaker 1: soil dictates what they apply, and and some of these 745 00:38:25,880 --> 00:38:28,000 Speaker 1: other things that are really kind of helping them to 746 00:38:28,680 --> 00:38:33,040 Speaker 1: you know, potentially reduce their demand when the costs increase 747 00:38:33,520 --> 00:38:36,279 Speaker 1: enough to where it's it's harmful to margin, you know, 748 00:38:36,360 --> 00:38:39,239 Speaker 1: to kind of stay as it is or to do 749 00:38:39,280 --> 00:38:41,520 Speaker 1: everything as they've always done. And so that's one of 750 00:38:41,560 --> 00:38:44,000 Speaker 1: the things that that we we aren't talking about much, 751 00:38:44,400 --> 00:38:47,279 Speaker 1: you know, is the fact that the farmer is so 752 00:38:47,400 --> 00:38:50,040 Speaker 1: used to to being somewhat flexible in what he or 753 00:38:50,120 --> 00:38:52,759 Speaker 1: she does when it comes to their production techniques that 754 00:38:52,800 --> 00:38:55,200 Speaker 1: they're looking at every single way that they can in 755 00:38:55,280 --> 00:38:57,520 Speaker 1: order to kind of reduce some of those costs, reduce 756 00:38:57,600 --> 00:39:00,080 Speaker 1: maybe some of the demand on the input side, and 757 00:39:00,160 --> 00:39:04,040 Speaker 1: really work to continue to facilitate producing you know, large 758 00:39:04,040 --> 00:39:08,319 Speaker 1: crops via the technology that they're able to use. You know, 759 00:39:08,360 --> 00:39:11,080 Speaker 1: we we touched on this at the beginning, but you know, 760 00:39:11,120 --> 00:39:13,960 Speaker 1: I'm thinking about you in your you know, your day 761 00:39:14,000 --> 00:39:19,120 Speaker 1: to day job, advising farmers and helping them to anticipate things. 762 00:39:19,280 --> 00:39:21,920 Speaker 1: Let's talk a little bit more about fertilizer because again, 763 00:39:21,920 --> 00:39:26,120 Speaker 1: fertilizer prices, as we know, highly a function of energy prices, 764 00:39:26,160 --> 00:39:29,000 Speaker 1: It makes it a very macro story. Fertilizer prices are 765 00:39:29,160 --> 00:39:32,560 Speaker 1: through the roof. And so when farmers I think about margins, 766 00:39:32,600 --> 00:39:37,000 Speaker 1: obviously fertilizers important. What are you telling clients about fertilizer 767 00:39:37,080 --> 00:39:39,799 Speaker 1: and how how are they impacting margins? What are you 768 00:39:39,840 --> 00:39:42,279 Speaker 1: anticipating them to do, and what are the knock on 769 00:39:42,360 --> 00:39:46,680 Speaker 1: effects to actual growing from this recent search? Yeah, well, 770 00:39:46,920 --> 00:39:49,000 Speaker 1: I mean I'm I am letting the farmer talk to 771 00:39:49,000 --> 00:39:51,200 Speaker 1: me on what the he or she is seeing when 772 00:39:51,239 --> 00:39:54,600 Speaker 1: it comes to inputs, because they are such an it 773 00:39:54,680 --> 00:39:58,160 Speaker 1: is such an individualized approach, you know, the different farmers. 774 00:39:58,400 --> 00:40:01,960 Speaker 1: You know, there isn't all in passing sort of prescription 775 00:40:02,000 --> 00:40:04,280 Speaker 1: when it comes to growing your crops. So different soil 776 00:40:04,360 --> 00:40:07,600 Speaker 1: types and and and different farm types and and different 777 00:40:07,600 --> 00:40:11,120 Speaker 1: crops kind of utilize different um inputs, especially when it 778 00:40:11,120 --> 00:40:13,239 Speaker 1: comes to fertilizer and things of that nature. And so 779 00:40:13,560 --> 00:40:15,799 Speaker 1: the conversations that we've been having have been more on 780 00:40:16,160 --> 00:40:18,400 Speaker 1: what are you seeing from a cost standpoint? Have you 781 00:40:18,440 --> 00:40:20,239 Speaker 1: booked it? Did you not book it? Are you looking 782 00:40:20,280 --> 00:40:23,040 Speaker 1: at booking next year? You know? What what are your 783 00:40:23,080 --> 00:40:25,520 Speaker 1: thoughts on that? And I would say the majority of 784 00:40:25,560 --> 00:40:27,879 Speaker 1: the growers that I work with, have in some way, 785 00:40:27,880 --> 00:40:32,239 Speaker 1: shape or form spoken for booked, taken possession of. You know, 786 00:40:32,280 --> 00:40:36,120 Speaker 1: are looking at having those fertilizer costs locked in, and 787 00:40:36,160 --> 00:40:38,239 Speaker 1: so we take a look at, okay, based on your 788 00:40:38,680 --> 00:40:42,200 Speaker 1: general production history, what you typically can intend to produce 789 00:40:42,239 --> 00:40:45,600 Speaker 1: on that crop, based on your costs, where you've seen increases. 790 00:40:45,680 --> 00:40:48,160 Speaker 1: You know, seed costs are up about five percent. You know, 791 00:40:48,200 --> 00:40:52,680 Speaker 1: fertilizers where that huge increases is coming from. And I 792 00:40:52,680 --> 00:40:55,480 Speaker 1: would say that there's a huge push of a story 793 00:40:55,520 --> 00:40:57,400 Speaker 1: that farmers aren't going to produce or we're going to 794 00:40:57,440 --> 00:41:00,839 Speaker 1: reduce the production because of these costs. So I would 795 00:41:00,880 --> 00:41:03,200 Speaker 1: say all of the growers that I have talked to 796 00:41:03,280 --> 00:41:06,840 Speaker 1: that have actually sat down and looked through uh a 797 00:41:06,920 --> 00:41:10,160 Speaker 1: return on investment projection or looked through a cost analysis 798 00:41:10,200 --> 00:41:12,640 Speaker 1: on what they're they're seeing from an increased versus a 799 00:41:12,719 --> 00:41:15,839 Speaker 1: year ago, and what they're expecting to produce, and where 800 00:41:15,840 --> 00:41:18,600 Speaker 1: the current crop prices are and all of these things, 801 00:41:18,880 --> 00:41:22,719 Speaker 1: they're still capable of booking a relatively reasonable margin. You know, 802 00:41:22,760 --> 00:41:25,120 Speaker 1: in some cases, especially for the growers who may have 803 00:41:25,200 --> 00:41:28,120 Speaker 1: booked their inputs early, let's say August time frame or 804 00:41:28,160 --> 00:41:30,720 Speaker 1: something of that nature, and are looking at five fifty 805 00:41:30,800 --> 00:41:34,000 Speaker 1: December twenty two futures, they're actually looking at the potential 806 00:41:34,040 --> 00:41:37,000 Speaker 1: of having a better margin on new crop than where 807 00:41:37,000 --> 00:41:39,680 Speaker 1: they were at a year ago when looking ahead. And 808 00:41:39,760 --> 00:41:43,800 Speaker 1: so we're just having a conversation about taking a realistic 809 00:41:43,800 --> 00:41:46,960 Speaker 1: approach to what you need to utilize from an input standpoint, 810 00:41:47,040 --> 00:41:49,719 Speaker 1: making sure that you know, the biggest question that we 811 00:41:49,760 --> 00:41:51,359 Speaker 1: have are the biggest concern that we have is whether 812 00:41:51,440 --> 00:41:53,200 Speaker 1: or not will be able to get our hands on 813 00:41:53,600 --> 00:41:56,120 Speaker 1: the inputs, the fertilizer and things of that nature. And 814 00:41:56,480 --> 00:42:00,279 Speaker 1: so luckily for us, we still have four months to 815 00:42:00,400 --> 00:42:02,680 Speaker 1: kind of hope and pray, because I think that's the 816 00:42:02,719 --> 00:42:05,319 Speaker 1: point we're at in this supply chain disruption now is 817 00:42:05,320 --> 00:42:07,879 Speaker 1: just simply hoping and praying that it corrects itself at 818 00:42:07,920 --> 00:42:11,160 Speaker 1: some point. But we do have some time for those 819 00:42:11,200 --> 00:42:14,360 Speaker 1: that haven't taken it in or taken actual possession. We 820 00:42:14,400 --> 00:42:16,279 Speaker 1: do have some time to hopefully see some of that 821 00:42:16,320 --> 00:42:18,279 Speaker 1: production catch up and folks to kind of get their 822 00:42:18,280 --> 00:42:20,400 Speaker 1: wits about them in the industry. You know, one of 823 00:42:20,440 --> 00:42:21,960 Speaker 1: the things that we are seeing is if you look 824 00:42:22,000 --> 00:42:24,160 Speaker 1: at a fertilizer chart from O A into oh nine, 825 00:42:24,520 --> 00:42:27,440 Speaker 1: you know, we saw this peak sort of happened in November, 826 00:42:27,800 --> 00:42:30,560 Speaker 1: and it was a straight fall free fall from there. 827 00:42:30,719 --> 00:42:34,320 Speaker 1: Now with everything that's happening macro and everything that's happening 828 00:42:34,360 --> 00:42:38,520 Speaker 1: with China Russia, you know, we we fought the fertilizer 829 00:42:38,560 --> 00:42:41,440 Speaker 1: industry in the US, fought against imports on one of 830 00:42:41,480 --> 00:42:44,920 Speaker 1: the larger you know, suppliers of of fertilizer, and so 831 00:42:45,000 --> 00:42:47,920 Speaker 1: that kind of restricted some of that supply, you know, 832 00:42:48,000 --> 00:42:51,360 Speaker 1: coming in and things of that nature. We don't anticipate 833 00:42:51,400 --> 00:42:54,000 Speaker 1: this sort of free fall, you know, obviously, and a 834 00:42:54,040 --> 00:42:55,960 Speaker 1: lot of that's going to depend on what happens from 835 00:42:55,960 --> 00:42:58,840 Speaker 1: a macro standpoint. If if the global economy starts to 836 00:42:58,880 --> 00:43:03,200 Speaker 1: cool and maybe retract, then obviously everything changes and energies 837 00:43:03,239 --> 00:43:06,680 Speaker 1: and everything changes value wise. But for the most part, 838 00:43:06,760 --> 00:43:09,480 Speaker 1: you know, one of the things that is unfortunate when 839 00:43:09,480 --> 00:43:12,600 Speaker 1: it comes to corn, soybeans, and wheat production is there's 840 00:43:12,680 --> 00:43:14,680 Speaker 1: never been in the history of the world the time 841 00:43:14,719 --> 00:43:17,800 Speaker 1: where the market stopped and said to the farmer, mr farmer, 842 00:43:17,840 --> 00:43:20,839 Speaker 1: are you making money here? It really doesn't care. And 843 00:43:20,920 --> 00:43:23,880 Speaker 1: so one of the things that we we really have 844 00:43:24,000 --> 00:43:27,719 Speaker 1: to to keep in mind is is farming is from 845 00:43:27,719 --> 00:43:33,360 Speaker 1: a supply standpoint, is not as elastic as other industries. 846 00:43:33,440 --> 00:43:36,120 Speaker 1: You can't just you know, let the ground go fallow 847 00:43:36,160 --> 00:43:38,640 Speaker 1: for two months and then plant a crop in August 848 00:43:38,760 --> 00:43:40,200 Speaker 1: or something of that nature, you know what I mean, 849 00:43:40,280 --> 00:43:42,719 Speaker 1: Like we're we're kind of locked in. You you have 850 00:43:42,840 --> 00:43:44,600 Speaker 1: to do it. You're gonna do it, and you're going 851 00:43:44,640 --> 00:43:46,959 Speaker 1: to figure out how to make it work. Now, mother 852 00:43:47,040 --> 00:43:48,680 Speaker 1: nature tends to have the final say, and some of 853 00:43:48,719 --> 00:43:51,959 Speaker 1: these other factors that play obviously a play a role. 854 00:43:52,280 --> 00:43:54,399 Speaker 1: But from an overall standpoint, for the growers that I'm 855 00:43:54,440 --> 00:43:57,040 Speaker 1: talking to right now, the majority of them are keeping 856 00:43:57,560 --> 00:44:00,600 Speaker 1: in line with what would be their normal rotaneation. Maybe 857 00:44:00,600 --> 00:44:03,240 Speaker 1: they've made some changes. They're going to grow soybeans instead 858 00:44:03,239 --> 00:44:05,959 Speaker 1: of corn on some ground that you know is less 859 00:44:05,960 --> 00:44:09,160 Speaker 1: productive when it comes to corn, and maybe it needs 860 00:44:09,200 --> 00:44:11,879 Speaker 1: more fertilizers or something of that nature. But from an 861 00:44:11,880 --> 00:44:15,239 Speaker 1: overall standpoint, talking with the folks that I'm talking to, 862 00:44:15,920 --> 00:44:18,400 Speaker 1: they're just going to kind of keep on and and 863 00:44:18,640 --> 00:44:21,920 Speaker 1: the farmer is an eternal optimist. He or she wouldn't 864 00:44:21,960 --> 00:44:24,640 Speaker 1: be in the industry if they weren't overly optimistic about 865 00:44:24,920 --> 00:44:27,680 Speaker 1: potential and things of that nature. And so for the 866 00:44:27,719 --> 00:44:29,719 Speaker 1: majority of the folks, that I talked to, They're just 867 00:44:29,719 --> 00:44:32,120 Speaker 1: going to stay the course and and do everything they 868 00:44:32,160 --> 00:44:35,920 Speaker 1: can to produce a good, high quality crop, and when 869 00:44:35,960 --> 00:44:37,680 Speaker 1: all of is sudden done, they hope that they make 870 00:44:37,719 --> 00:44:40,919 Speaker 1: money doing it. So I was going to ask you 871 00:44:41,000 --> 00:44:44,120 Speaker 1: what it would take to bring the market into equilibrium, 872 00:44:44,160 --> 00:44:47,600 Speaker 1: but then I realized, like, what actually is equilibrium in 873 00:44:47,640 --> 00:44:51,360 Speaker 1: this context, Like what would you or the average farmer 874 00:44:51,480 --> 00:44:54,960 Speaker 1: consider to be like a market that is roughly in balance, 875 00:44:56,120 --> 00:44:58,880 Speaker 1: It would be you know, similar to the production costs 876 00:44:58,880 --> 00:45:02,319 Speaker 1: we saw a year ago with around a four five 877 00:45:02,440 --> 00:45:06,279 Speaker 1: to four fifty futures value in corn specifically, you know, 878 00:45:06,360 --> 00:45:09,120 Speaker 1: that's kind of a sweet spot. Everyone was really excited 879 00:45:09,160 --> 00:45:11,719 Speaker 1: when we saw the turnaround from you know, that three 880 00:45:11,760 --> 00:45:15,920 Speaker 1: dollar COVID low to you know, breaking above four dollars 881 00:45:15,920 --> 00:45:19,440 Speaker 1: and actually sustaining the move towards four fifty. It was 882 00:45:19,560 --> 00:45:21,760 Speaker 1: as we saw the market start to move towards five 883 00:45:21,880 --> 00:45:24,719 Speaker 1: and then six and then closer to seven, you know, 884 00:45:24,760 --> 00:45:28,560 Speaker 1: speaking corn prices specifically, where folks started to say, oh no, 885 00:45:28,560 --> 00:45:32,400 Speaker 1: now we're now we're really working our way towards unintended consequences. 886 00:45:32,520 --> 00:45:34,520 Speaker 1: And so most folks that I talked to would tell 887 00:45:34,560 --> 00:45:37,440 Speaker 1: you could you give us last year's cost of production 888 00:45:37,560 --> 00:45:41,080 Speaker 1: with like a four to four fifty futures price, and 889 00:45:41,080 --> 00:45:43,400 Speaker 1: and that would be a nice sweet spot, and you know, 890 00:45:43,480 --> 00:45:46,080 Speaker 1: we're we might get to see it. It It might happen 891 00:45:46,120 --> 00:45:48,319 Speaker 1: for like a day as things pass and we go 892 00:45:48,400 --> 00:45:50,640 Speaker 1: back the other way, you know. And and that's just 893 00:45:50,680 --> 00:45:53,600 Speaker 1: something that we've grown accustomed to in the industry, is 894 00:45:53,640 --> 00:45:56,319 Speaker 1: that there there really isn't equilibrium, and if it's there, 895 00:45:56,360 --> 00:45:59,320 Speaker 1: it doesn't last long. I'm starting to realize, like there's 896 00:45:59,360 --> 00:46:03,040 Speaker 1: not many agriculture tourists like I can like sort of 897 00:46:03,080 --> 00:46:05,279 Speaker 1: like pretend maybe like in a week, like oh, I 898 00:46:05,440 --> 00:46:08,600 Speaker 1: say something smart about supply and demand on copper. I 899 00:46:08,640 --> 00:46:11,239 Speaker 1: really feel like it would take me a year, a 900 00:46:11,360 --> 00:46:14,120 Speaker 1: year years before I could even pretend to say something 901 00:46:14,200 --> 00:46:17,000 Speaker 1: smart about grains, because they're just, as you say, so 902 00:46:17,120 --> 00:46:20,600 Speaker 1: many moving parts, and the idea of equilibrium is almost 903 00:46:20,600 --> 00:46:24,239 Speaker 1: like a nonsensical idea whether they're just so many different variables. 904 00:46:24,280 --> 00:46:27,279 Speaker 1: And I'm really starting to appreciate in this conversation why 905 00:46:27,360 --> 00:46:31,080 Speaker 1: it feels like the grains conversations so separated from other markets. 906 00:46:31,400 --> 00:46:33,160 Speaker 1: I want to ask you, though, you know you're talking 907 00:46:33,160 --> 00:46:36,600 Speaker 1: about like the higher fertilizer prices. You don't really expect 908 00:46:36,640 --> 00:46:39,960 Speaker 1: them to have a big supply impact on grains because again, 909 00:46:40,239 --> 00:46:41,800 Speaker 1: they're going to find a way to make it work. 910 00:46:41,920 --> 00:46:45,120 Speaker 1: So far there still is room for margin. Maybe it'll 911 00:46:45,160 --> 00:46:49,719 Speaker 1: come down, etcetera. What about them for the consumer of grains? 912 00:46:49,840 --> 00:46:52,239 Speaker 1: And I'm thinking, you know, obviously people are concerned about 913 00:46:52,239 --> 00:46:56,400 Speaker 1: meat prices and so obviously a big consumer of corn 914 00:46:56,560 --> 00:46:59,839 Speaker 1: and soy. I don't know if animals corn and soy. 915 00:47:00,360 --> 00:47:03,520 Speaker 1: They oh they do. If corn prices get too expensive 916 00:47:03,520 --> 00:47:05,799 Speaker 1: and wheats cheap, you'll see it flip flop. But right now, 917 00:47:05,840 --> 00:47:09,480 Speaker 1: obviously that's not happening. It's the opposite. I didn't interesting, 918 00:47:09,560 --> 00:47:12,400 Speaker 1: So what happened? Well, how are they How are the 919 00:47:12,600 --> 00:47:16,359 Speaker 1: end buyers of the grands reacting? And I know that's 920 00:47:16,400 --> 00:47:19,359 Speaker 1: sort of like they have their carriage costs because and 921 00:47:19,640 --> 00:47:22,080 Speaker 1: dairy cows, you know, they have to I read something 922 00:47:22,160 --> 00:47:24,600 Speaker 1: that because they have to feed them for a lot longer, 923 00:47:24,680 --> 00:47:28,560 Speaker 1: they might allocate away from dairy. But what is the 924 00:47:28,640 --> 00:47:33,759 Speaker 1: ramification of these elevated prices on on the maat farmers. Yeah, 925 00:47:33,840 --> 00:47:36,000 Speaker 1: I would say the biggest thing that you see or 926 00:47:36,040 --> 00:47:38,640 Speaker 1: what the biggest ramification will be and this is kind 927 00:47:38,680 --> 00:47:40,600 Speaker 1: of a dual component, or I'll give you a dual 928 00:47:40,680 --> 00:47:43,000 Speaker 1: answer to it. But you know, one of the lines 929 00:47:43,040 --> 00:47:45,640 Speaker 1: in the industry has always been you feed cheap corn 930 00:47:45,680 --> 00:47:48,319 Speaker 1: with the scoop shovel, you feed expensive corn with a 931 00:47:48,320 --> 00:47:50,640 Speaker 1: tea spoon. And so one of the things that you're 932 00:47:50,640 --> 00:47:53,040 Speaker 1: going to see is some folks will start to to 933 00:47:53,120 --> 00:47:56,760 Speaker 1: really kind of move away from feeding a lot of corn. Now, obviously, 934 00:47:56,960 --> 00:47:59,279 Speaker 1: you have to feed your animal, and so that's that's 935 00:47:59,320 --> 00:48:02,279 Speaker 1: their number one. And you know, animal stewardship and making 936 00:48:02,280 --> 00:48:04,799 Speaker 1: sure that they have a healthy, high quality product to 937 00:48:04,880 --> 00:48:09,080 Speaker 1: offer into the global pipeline is the most important. And 938 00:48:09,560 --> 00:48:12,120 Speaker 1: you know, and not to use too many cliches, but 939 00:48:12,160 --> 00:48:14,200 Speaker 1: a lot of times cattle producers will tell you that 940 00:48:14,239 --> 00:48:16,560 Speaker 1: every year is a million million dollar year. It's just 941 00:48:16,600 --> 00:48:18,359 Speaker 1: a matter of if it's a red or a black one. 942 00:48:18,840 --> 00:48:21,120 Speaker 1: And I just say, by the way, we could do 943 00:48:21,160 --> 00:48:24,400 Speaker 1: a whole episode on farmer cliches, and I think Tracy 944 00:48:24,400 --> 00:48:27,080 Speaker 1: and I would really, really And I've enjoyed all of 945 00:48:27,120 --> 00:48:30,799 Speaker 1: these ones because more the more the mirror, I enjoy 946 00:48:30,800 --> 00:48:32,920 Speaker 1: all the anyway, keep a million of them. That's just 947 00:48:33,239 --> 00:48:35,840 Speaker 1: we all have something that we can say, but really 948 00:48:35,840 --> 00:48:38,000 Speaker 1: when it comes down to it is is you know, 949 00:48:38,080 --> 00:48:40,360 Speaker 1: as a as a cattle feeder, as a hog feeder, 950 00:48:40,400 --> 00:48:43,120 Speaker 1: as a poultry feeder, whatever that may be. You know, 951 00:48:43,120 --> 00:48:45,960 Speaker 1: a dairy farmer, they will do whatever it takes in 952 00:48:46,040 --> 00:48:49,040 Speaker 1: order to keep their animals healthy, happy, and well fed. 953 00:48:49,280 --> 00:48:51,920 Speaker 1: But they will look at alternatives. They will look at 954 00:48:51,920 --> 00:48:54,319 Speaker 1: ways that we can up or you know, kind of 955 00:48:54,400 --> 00:48:57,040 Speaker 1: change the ration of of what they're feeding. And that 956 00:48:57,239 --> 00:49:01,000 Speaker 1: the ration is obviously the components of what they feed, 957 00:49:01,040 --> 00:49:04,520 Speaker 1: whether that's distillers grain, which is a byproduct of ethanol. Alright, well, 958 00:49:04,520 --> 00:49:07,520 Speaker 1: ethanol production right now, because of the the energy markets, 959 00:49:07,560 --> 00:49:11,280 Speaker 1: ethanol production has set a record in the last two weeks. 960 00:49:11,320 --> 00:49:14,960 Speaker 1: We are producing a huge amount of ethanol, and so 961 00:49:15,000 --> 00:49:17,280 Speaker 1: as a result, every time we produce a gallon of ethanol, 962 00:49:17,360 --> 00:49:20,200 Speaker 1: we're producing several pounds of distillers grain, which is a 963 00:49:20,280 --> 00:49:23,160 Speaker 1: high energy cattle feed, and so we are kind of 964 00:49:23,200 --> 00:49:25,440 Speaker 1: maybe we're increasing the amount of corn we're using for 965 00:49:25,480 --> 00:49:28,240 Speaker 1: ethanol in the short term, but we're offsetting that corn, 966 00:49:28,400 --> 00:49:32,239 Speaker 1: those corn needs by producing a larger amount of distillers 967 00:49:32,239 --> 00:49:34,560 Speaker 1: that can be sold into the countryside and fed. And 968 00:49:34,640 --> 00:49:37,279 Speaker 1: so there's going to be a lot of sort of 969 00:49:37,320 --> 00:49:40,040 Speaker 1: give and take and trying to find, you know, what's 970 00:49:40,040 --> 00:49:42,279 Speaker 1: a cheap source of energy, what is a cheap source 971 00:49:42,320 --> 00:49:44,839 Speaker 1: of protein. We're also crushing a lot of soybeans due 972 00:49:44,840 --> 00:49:47,600 Speaker 1: to renewable diesel in the increase in and soy oil 973 00:49:47,600 --> 00:49:50,160 Speaker 1: demand and vegetable oils from around the world, and so 974 00:49:50,200 --> 00:49:52,800 Speaker 1: as a result, when you crush soybeans, you also produce 975 00:49:52,880 --> 00:49:55,920 Speaker 1: several pounds of soybean meal, which is a high protein 976 00:49:56,400 --> 00:49:58,880 Speaker 1: feed source for the animals. And so we are seeing 977 00:49:58,960 --> 00:50:01,120 Speaker 1: some give and take and some you know, sort of 978 00:50:01,400 --> 00:50:05,680 Speaker 1: ebbs and flows of the overall supply versus demand structure 979 00:50:05,840 --> 00:50:10,120 Speaker 1: in the market. Obviously, high feed costs will spill over 980 00:50:10,400 --> 00:50:14,560 Speaker 1: into production and the desire to expand production. And one 981 00:50:14,560 --> 00:50:16,760 Speaker 1: of the industries that will see that happen the most 982 00:50:16,800 --> 00:50:19,439 Speaker 1: in is going to be beef, simply because it takes 983 00:50:19,440 --> 00:50:22,280 Speaker 1: about eighteen months to get an animal from birth to 984 00:50:22,280 --> 00:50:25,800 Speaker 1: too ready to be harvested, so to speak, and ready 985 00:50:25,800 --> 00:50:28,840 Speaker 1: to move into into the grocery store near you, you 986 00:50:28,880 --> 00:50:30,920 Speaker 1: know what I mean, And and so it takes an 987 00:50:30,920 --> 00:50:33,200 Speaker 1: exceptional amount of time. So if you see high feed 988 00:50:33,200 --> 00:50:38,200 Speaker 1: costs start to discourage folks from breeding, cattle in order 989 00:50:38,200 --> 00:50:40,879 Speaker 1: to feed or fatten to put into the pipeline, which 990 00:50:40,880 --> 00:50:42,920 Speaker 1: we've seen. We saw, you know, a year and a 991 00:50:42,920 --> 00:50:45,160 Speaker 1: half ago, you know, sort of this move that instead 992 00:50:45,160 --> 00:50:48,120 Speaker 1: of retaining heifers and and breeding them to have more 993 00:50:48,160 --> 00:50:51,239 Speaker 1: beef cattle, we moved them into the pipeline because it 994 00:50:51,280 --> 00:50:54,480 Speaker 1: wasn't cost effective to to continue to feed them or 995 00:50:54,520 --> 00:50:58,400 Speaker 1: to put more mouths you know, on the in the feedlot. 996 00:50:58,520 --> 00:51:00,600 Speaker 1: And so as a result, we're seeing at in in 997 00:51:00,680 --> 00:51:03,160 Speaker 1: higher beef costs. We've seen cash cattle work their way 998 00:51:03,560 --> 00:51:07,080 Speaker 1: up towards one thirty, which is is you know, considerably high. 999 00:51:07,120 --> 00:51:09,480 Speaker 1: It was only a year ago that we were below 1000 00:51:09,520 --> 00:51:12,000 Speaker 1: a dollar a pound, and so you've seen some of 1001 00:51:12,040 --> 00:51:14,840 Speaker 1: that happen. Hogs have seen a huge burst to the 1002 00:51:14,920 --> 00:51:17,319 Speaker 1: upside because of what we thought would be some continued 1003 00:51:18,040 --> 00:51:21,160 Speaker 1: Chinese demand. Again that hogs have kind of been the 1004 00:51:21,440 --> 00:51:23,680 Speaker 1: canary in the coal mine to a certain extent because 1005 00:51:23,719 --> 00:51:26,400 Speaker 1: that huge increase in Chinese demand because of the loss 1006 00:51:26,400 --> 00:51:29,759 Speaker 1: of the Chinese herd, and and then since the recovery 1007 00:51:29,800 --> 00:51:32,640 Speaker 1: that happened a year ago, you know, it's kind of 1008 00:51:32,840 --> 00:51:35,680 Speaker 1: hurt the hog values. Now hogs are a six to 1009 00:51:35,760 --> 00:51:38,040 Speaker 1: eight month to a year, they are much quicker sort 1010 00:51:38,080 --> 00:51:40,400 Speaker 1: of turn them off, shut you know, turn them on, 1011 00:51:40,480 --> 00:51:43,759 Speaker 1: shut them off, sort of of market structure. Same can 1012 00:51:43,840 --> 00:51:47,759 Speaker 1: be said for poultry, and so you'll see the high 1013 00:51:47,840 --> 00:51:52,160 Speaker 1: feed costs try to carry over into the the value 1014 00:51:52,200 --> 00:51:55,000 Speaker 1: of meat at the grocery store. But again just going 1015 00:51:55,080 --> 00:51:57,960 Speaker 1: back to like crop production. You know, honestly no one 1016 00:51:58,000 --> 00:52:00,360 Speaker 1: stops and asks the cattle feed or what it cost 1017 00:52:00,480 --> 00:52:04,200 Speaker 1: to produce that that head of beef. We don't really 1018 00:52:04,239 --> 00:52:06,680 Speaker 1: notice that there's been an issue or that there's been 1019 00:52:07,040 --> 00:52:09,120 Speaker 1: you know, this high feed cost kind of carried over 1020 00:52:09,520 --> 00:52:11,160 Speaker 1: until it gets harder to find the beef at the 1021 00:52:11,160 --> 00:52:14,480 Speaker 1: grocery store. It costs you, you know, eight dollars a 1022 00:52:14,480 --> 00:52:17,359 Speaker 1: pound for a steak or something of that nature. And 1023 00:52:17,440 --> 00:52:20,640 Speaker 1: so we'll see it, but it's not necessarily something that 1024 00:52:20,719 --> 00:52:24,120 Speaker 1: you'll see the feeder maintain a solid level of margin 1025 00:52:24,239 --> 00:52:26,440 Speaker 1: or anything of that nature. They just have to kind 1026 00:52:26,480 --> 00:52:29,279 Speaker 1: of absorb it and hope, again, just like the road 1027 00:52:29,320 --> 00:52:31,840 Speaker 1: crop producer, that when they get to the end of everything, 1028 00:52:31,880 --> 00:52:34,280 Speaker 1: that they were able to eat out some sort of profit. 1029 00:52:36,400 --> 00:52:39,600 Speaker 1: Angie I, there was so much we just learned from 1030 00:52:39,600 --> 00:52:42,879 Speaker 1: you in the last hour your your twitter bio says 1031 00:52:42,880 --> 00:52:46,399 Speaker 1: you're a cash grain super nerd, and you totally lived 1032 00:52:46,480 --> 00:52:50,440 Speaker 1: up to the hype of your yourself description. That was fantastic. 1033 00:52:50,760 --> 00:52:53,399 Speaker 1: I learned a ton and really appreciate you coming on 1034 00:52:53,400 --> 00:52:55,520 Speaker 1: odd Luck. Thank you so much for having me. I 1035 00:52:55,800 --> 00:52:58,399 Speaker 1: had a blast. This is fun. Absolutely, that was great. 1036 00:52:58,440 --> 00:53:11,040 Speaker 1: Andrew fancy as we were good. Okay, the number of 1037 00:53:11,160 --> 00:53:15,480 Speaker 1: moving parts in like the grain conversation, it really sort 1038 00:53:15,520 --> 00:53:18,080 Speaker 1: of blows my mind. Yeah. I mean, not only are 1039 00:53:18,080 --> 00:53:21,040 Speaker 1: you talking about different types of grains, but like each 1040 00:53:21,040 --> 00:53:23,280 Speaker 1: one of them seems to be affected by different things, 1041 00:53:23,320 --> 00:53:25,719 Speaker 1: like even a different type of fertilizer and then a 1042 00:53:25,760 --> 00:53:28,800 Speaker 1: different type of weather pattern, and then you know, different 1043 00:53:28,800 --> 00:53:33,879 Speaker 1: types of grains feed into different types of well feedstock 1044 00:53:34,040 --> 00:53:37,600 Speaker 1: for cows and chickens and pigs and things like that. 1045 00:53:38,000 --> 00:53:40,600 Speaker 1: There's a lot going on. But Atie was really great 1046 00:53:40,640 --> 00:53:43,000 Speaker 1: at breaking down like all these different things at the 1047 00:53:43,040 --> 00:53:45,279 Speaker 1: same time. No, it's great. You know, it's something I 1048 00:53:45,360 --> 00:53:48,600 Speaker 1: thought about. Another thing that sort of makes the grain 1049 00:53:48,719 --> 00:53:53,520 Speaker 1: market interesting is um. I guess the seasonality of plantings 1050 00:53:53,680 --> 00:53:56,279 Speaker 1: is probably like another you know, there's not oil season, right, 1051 00:53:56,320 --> 00:53:58,360 Speaker 1: I mean, I don't know, maybe there is a little 1052 00:53:58,360 --> 00:54:01,320 Speaker 1: bit of seasonality in some places with like industrial commodities, 1053 00:54:01,320 --> 00:54:04,600 Speaker 1: but by large, you know, it's like if there's oil somewhere, 1054 00:54:05,400 --> 00:54:08,919 Speaker 1: you're taking out of the ground two seven any time 1055 00:54:08,960 --> 00:54:11,000 Speaker 1: a year, or if there's coppers somewhere, you're taking it 1056 00:54:11,040 --> 00:54:13,799 Speaker 1: out of the ground all the time. I do think 1057 00:54:13,840 --> 00:54:16,040 Speaker 1: like with grains, it's obvious like you could have like 1058 00:54:16,120 --> 00:54:19,560 Speaker 1: high fertilizer across right now, but if like the growing 1059 00:54:19,600 --> 00:54:22,279 Speaker 1: season was a couple of months ago, then maybe it 1060 00:54:22,320 --> 00:54:25,200 Speaker 1: doesn't have a big effect. I would say, like, this 1061 00:54:25,280 --> 00:54:28,200 Speaker 1: doesn't feel like an area for like macro tourists to 1062 00:54:28,280 --> 00:54:31,360 Speaker 1: like start trading graind Like I would advise people to 1063 00:54:31,440 --> 00:54:34,680 Speaker 1: like be really careful if say, like you were like, 1064 00:54:34,680 --> 00:54:36,800 Speaker 1: oh I want to I want to start trading corn 1065 00:54:36,880 --> 00:54:40,239 Speaker 1: or whatever, because like the number of like variables that 1066 00:54:40,320 --> 00:54:43,440 Speaker 1: like go into well, yeah, this time of year is 1067 00:54:43,520 --> 00:54:46,080 Speaker 1: not when the you know the conditions but you know 1068 00:54:46,280 --> 00:54:48,840 Speaker 1: three three weeks ago, or the weather like at the 1069 00:54:48,880 --> 00:54:51,799 Speaker 1: beginning of October, whatever it is, it seemed like to 1070 00:54:51,800 --> 00:54:56,879 Speaker 1: make it really intimidating for an outsider. Well even the professionals, 1071 00:54:57,080 --> 00:55:00,000 Speaker 1: I mean struggle to forecast a lot of these things, right, 1072 00:55:00,000 --> 00:55:02,600 Speaker 1: and and you mentioned, um, the what was it the 1073 00:55:02,680 --> 00:55:06,799 Speaker 1: agricultural department like underestimating or I can't remember that, was 1074 00:55:06,800 --> 00:55:10,600 Speaker 1: it underestimating or overestimating the initial corn harvest last year 1075 00:55:10,680 --> 00:55:14,759 Speaker 1: overestimating and then it came in smaller than expected. So like, 1076 00:55:14,840 --> 00:55:18,600 Speaker 1: even the people who do this every day, day in 1077 00:55:18,719 --> 00:55:21,799 Speaker 1: and day out, can get things very wrong, much like 1078 00:55:21,920 --> 00:55:26,560 Speaker 1: financial journalists. And it really makes me appreciate that we 1079 00:55:26,600 --> 00:55:29,279 Speaker 1: have food, I mean obviously like that, like because all 1080 00:55:29,320 --> 00:55:33,280 Speaker 1: these things go into it. And granted there is food 1081 00:55:33,360 --> 00:55:37,480 Speaker 1: inflation right now, there are not widespread food shortages, but 1082 00:55:37,600 --> 00:55:40,839 Speaker 1: given the complexity of all of this, I am I'm 1083 00:55:40,920 --> 00:55:46,400 Speaker 1: grateful once again for the farmers of America. Well, it 1084 00:55:46,480 --> 00:55:49,160 Speaker 1: kind of reminds me like just in the intro of 1085 00:55:49,400 --> 00:55:52,839 Speaker 1: supermarkets being like the foundation of modern society, there's just 1086 00:55:52,880 --> 00:55:56,600 Speaker 1: such an enormous mismatch between like the day to day 1087 00:55:56,760 --> 00:56:01,879 Speaker 1: immediacy that a supermarket demands versus these sort of like 1088 00:56:02,280 --> 00:56:07,400 Speaker 1: eternal seasonal nature of actually growing food and the idea 1089 00:56:07,440 --> 00:56:10,400 Speaker 1: that you have to plan everything out, you have to 1090 00:56:10,440 --> 00:56:13,480 Speaker 1: wait for the right season to actually plant things, and 1091 00:56:13,520 --> 00:56:16,000 Speaker 1: then of course you have to wait for them to 1092 00:56:16,120 --> 00:56:18,799 Speaker 1: grow until you can harvest them or slaughter them if 1093 00:56:18,840 --> 00:56:21,520 Speaker 1: they're animals. It just seems like such a mismatch between 1094 00:56:21,920 --> 00:56:25,200 Speaker 1: the time it takes to actually do that and the 1095 00:56:25,239 --> 00:56:28,359 Speaker 1: time frame that people demand that their vegetables or their 1096 00:56:28,360 --> 00:56:31,440 Speaker 1: meat or whatever actually shows up on the shelves in 1097 00:56:31,480 --> 00:56:35,000 Speaker 1: their local grocery store. I like that. Andie said that 1098 00:56:35,080 --> 00:56:38,880 Speaker 1: one of the perhaps solutions for high fertilizer costs is 1099 00:56:38,920 --> 00:56:41,839 Speaker 1: prayer that like, you know, there's always so much like 1100 00:56:42,080 --> 00:56:43,600 Speaker 1: you know, if there's like a literally you know, it's 1101 00:56:43,600 --> 00:56:46,520 Speaker 1: one thing to say, like, okay, the price rations the 1102 00:56:46,560 --> 00:56:49,719 Speaker 1: market or whatever, but you know, there hasn't actually been 1103 00:56:49,800 --> 00:56:53,080 Speaker 1: I guess, a real physical shortage where a farmer who 1104 00:56:53,120 --> 00:56:55,880 Speaker 1: needs fertilizer like can't get it, at least according to 1105 00:56:56,120 --> 00:56:58,880 Speaker 1: at least that is my takeaway from Andie's but that 1106 00:56:59,000 --> 00:57:02,200 Speaker 1: could in theory at a happened at some point, and 1107 00:57:02,200 --> 00:57:04,120 Speaker 1: she's like, yeah, maybe we just have to pray that 1108 00:57:04,239 --> 00:57:06,640 Speaker 1: sometime in the next three or four months the market 1109 00:57:06,719 --> 00:57:10,319 Speaker 1: sort of balances out. But maybe so maybe that'll be 1110 00:57:10,360 --> 00:57:13,239 Speaker 1: one Maybe that'll be one solution to the to the 1111 00:57:13,600 --> 00:57:16,720 Speaker 1: to the issue. Well, it would certainly be a sort 1112 00:57:16,760 --> 00:57:19,440 Speaker 1: of like time honored technique. I guess praying to the 1113 00:57:19,440 --> 00:57:24,200 Speaker 1: gods harvest Okay, yeah, that's exactly right. Farmers have been 1114 00:57:24,200 --> 00:57:27,400 Speaker 1: doing that for a few for a long time, I think, yeah, 1115 00:57:27,600 --> 00:57:29,800 Speaker 1: all right, this is getting weird. Um, shall we leave 1116 00:57:29,840 --> 00:57:32,520 Speaker 1: it here? Let's leave it there, all right. This has 1117 00:57:32,560 --> 00:57:36,000 Speaker 1: been another episode of the ad Thoughts Podcast. I'm Tracy Alloway. 1118 00:57:36,120 --> 00:57:38,760 Speaker 1: You can follow me on Twitter at Tracy Alloway. And 1119 00:57:38,800 --> 00:57:41,960 Speaker 1: I'm Joe Wisenthal. You can follow me on Twitter at 1120 00:57:42,000 --> 00:57:45,360 Speaker 1: the Stalwark. Follow our guest Angie sets Her. She is 1121 00:57:45,480 --> 00:57:49,560 Speaker 1: at Goddess of Grain. Follow our producer Laura Carlson. She's 1122 00:57:49,680 --> 00:57:53,000 Speaker 1: at Laura. I'm Carlson. Followed the Bloomberg head of podcast, 1123 00:57:53,080 --> 00:57:57,120 Speaker 1: Francesca Levi at Francesca Today. And check out all of 1124 00:57:57,160 --> 00:58:01,760 Speaker 1: our podcast at Bloomberg under the handle podcasts. Thanks for listening.