This Year's American Wheat Harvest Has Been Awful

key commodities or key industries. But it really does seem like in some areas, I don't know if luck is the right word, but there are some areas where things are contributing to shortages that do seem like sort of like bad luck and not necessarily related to the economic cycle directly. But here's the thing, So, yes, I agree with you, but it feels like that bad luck just

keeps continuing, right. It feels like we've had a number of specifically commodities at this point in time where we talk about, oh, a perfect storm of factors have come together to drive coffee prices higher, or wheat prices higher, or soybean prices higher or whatever. And it's always sort of different factors. Some of them have an underlying thing

in common, which would be the weather. But it just seems to keep happening, and I guess, yeah, it's weird, and I guess it makes me wonder whether or not there's something structural at play, like maybe when it comes to certain commodities, something about the market is just less

resilient than it. You know, you're toetally right. I think back to we probably had a number of episodes where like the perfect storm in this so the perfect storm and lumber, the perfect storm at the ports, and it's like, if you keep having perfect storms over and over, right, maybe they're just normal storms, and be they might reveal so thing underlying that maybe about the market or about the underlying good that it doesn't take much to wind

up in a perfect storm, because perfect storms aren't supposed to happen all the time exactly. It pains me to quote to lab but maybe there's a sort of anti fragile thing happening here. But I think I think we should dig into this, right and I think we should look at a specific crop or commodity that has experienced a perfect storm last year, And we talked about it back then, and I think the title of the episode was actually a perfect storm for this particular crop with

the heat. And now fast forward to two and it's even more of a perfect storm. You still have bad weather, you still have subpar yields on crops, and now you also have what's happening in Ukraine and Russia which is also eaten into the global market. So it's even more

of a perfect storm perfect or storm. Clear is that plantings of wheat in the US and so just basically the pace of new crop plantings has been really dismal in which does not pretend good things for the wheat supply, does not pretend good things for food inflation and food shortages to ease dramatically. So we're going to dig into what's going on. So we're gonna return with uh, a guest we've spoken to last year with the original perfect storm in the space, we're gonna be speaking with Angie

sets Her. She is the co founder of Conscious r I, which helps farmers manage their risk, hedge and so forth. And so Angie, thank you so much for coming back on Odd Lots, Thanks for having me. We're just talking about how long it's been. It was just late last fall, but I'm pretty sure it's been a decade, uh, if not more. UM in the egg space. Currently, it's what

it feels like. Last fall feels like a really long time ago objectively, so we just uh time we had you back, so uh planting for wheat, they're really dismal, right, yeah, so spring wheat. So it's important to kind of one of the fun things that I love about my job is to be able to kind of educate or or kind of give you insight into all of the wonderful

classes of wheat um. And So in Kansas City, in the southern Plains, the Kansas City wheats what we call it um it it the southern plains grows hard red winter wheat. And then in the eastern corn belt, so east of the Mississippi down to the Gulf of Mexico up into Michigan where I am, we grow soft red

winter wheat and soft white winter wheats. So we actually have farmers plant in the fall um on the soft red winter wheat side in the eastern corn belt here, specifically here in Michigan and in some of the states in the Great Lakes areas, they had a poor planting progress or poor planting weather. Um last fall, we just weren't able to get the swaybeans off in time to

get the wheat in in time. Winter kind of came on a little early, so we saw a pretty significant reduction in our acreage here um in Michigan and in some surrounding states. In the southern plains, they're dealing with the drought. So we can get to that later. But yes, in the spring and wheat belt, which is actually the most important because that's kind of where we really had leaned heavily on a year ago, was okay, we we can manage through. You know this of course before the

Russia Ukraine situation and some of these other things. You know, we can really manage through with a tighter wheat crop if we can make sure that the spring wheat crop looks good. But we obviously had a major drought in the Canadian prairies and into the spring wheat areas of the United States. So spring wheats grown in Montana, North Dakota,

parts of South Dakota, and uh western um Minnesota. And so if if you look at a summary of rainfall um leading up to about the first of April one planting season would kick off, they had stayed um incredibly dry. So in a you know, cruel twist of irony. We started the year concern that we were going to see continued drought development, and we had been so exceptionally dry for so long we were nervous about what would take place.

So you know, in true mother nature form over what's taken place the last couple of years, she brought all of the rain that you would want to have seen in the six months prior in about six weeks time. And so yeah, we've seen UM record UH delays and planting, specifically in in North Dakota and in Minnesota. Most of them we feel UM should be close to have being able to catch up prior to final planting final insurance

planting dates the middle of this week. UM. There was a lot of progress that has taken place, although it took place in in less than ideal conditions and and so some farmers are are crossing their fingers and holding their breath that uh, we're we're able to see that crop come up and and get a normal year of production. So this is a really good reminder that there are different types of wheat that are planted at different times of the year and in different parts of the country.

Can you give us an idea of what yields actually look like on some of those crops at the moment. And my understanding is that the U. S Department of Agriculture also grades the crops, you know, give some like excellent designations or poor designations. What does it actually look like right now? How bad is it out? Yeah, So the softwad wheat belt, like I said, the eastern region of the country, we're doing pretty good. Um. Things look good.

We continue to get reasonable rain, the wheat crops starting to head out, um, and you want to see some continued rain, um, you know, for the next couple of few weeks here until we get closer to harvest. Here in Michigan, we're the last ones in the Software wheat belt to to roll with harvest and that usually takes place the week after the fourth of July. So the Software wheat crop is used for cakes, doughnuts. You know, we like to say that we're the fun crop. Um.

It's used for the fun stuff. Um. And the hard read w crop is is really where a lot of the condition ratings because the spring wheat crop is is just getting planted, so we haven't had a chance yet to to see what those look like. But the hard red winter wheat crop UM in in the southern plains is one of the worst rated crops um on record. Um. As a result, the U. S d A has has lowered yield expectations, you know, with with acreage and yield

expectations as is and the expected abandonment. So basically what you could see farmers do is is they could come into spring and recognize that the stand of their crop is is poor um and that the potential for the crop is is below average, and they can then transition into a different crop. They may choose to um, switch to corn, maybe milo, maybe soybeans, depending on how planting is going, something of that nature. Uh, sorghum. So yeah, so we'll call it milow or sorghum, depending on where

you're at in the country. Um. So that's the that's one of those fun Uh here in the industry we call it milo, but yeah, it's sorghum. Um. They may switch over that. Especially store gum is a very drought tolerant crop. So if they're in the western portions of Kansas and parts of Texas that haven't seen the amount of rain that they had hoped for the Oklahoma Panhandle, um,

you know, you could see that transition take place. Um. But yeah, so the crop is is one of the worst rated on records the us D as a result, you know, has come in um with yields that are are well below average ten ten bushels are so preake or below average expected in that hard red um winter wheat crop area. Then as a result, we're looking at one of the smallest um us winter wheat crops hard

red winter wheat crops specifically since the sixties. Um. So we just keep you know, the hits keep coming, so to speak. Now we're just getting started in harvest. And so wheat is one of those things where a wheat trader will tell you that it takes a lot to kill wheat, like after a nuclear bomb where to drop you would have cockroaches and wheat, you know what I mean,

Like you just it's it's very difficult to kill wheat. Now, it may not average yield by is what you're hoping for, but you may get surprised when you get out into harvest. And so we'll get a much better feel, um for for what all we're seeing from a production standpoint here over the next three to four weeks as harvest starts to progress to the north in the hard wheat belt

and and then the soft wheat belt. UM. But for now it does look to be one of the smaller crops that we've seen here in the US UM and quite some time. Can you just put a few like numbers on this, like what is you know, like I sort of I don't know the best way to aggregate it, but total volume, total acreage or total number of bushels what we would normally be looking for. How big a part of the market it is, and then what the shortfall is going to be if we're really having like

one of the worst uh planting seasons, one of the lowest. Yeah, yeah, I mean we're gonna want to pull up and and see. You know. One of the benefits about the the hard read winter wheat crop it it gets a lot of conversation here um in the you know, and it gets a lot of attention from the world market. Everyone tries to pay attention, especially considering it it does set the stage. One of the things that we have seen is the U s d A has anticipated thanks to the increase

in price and and the tight available supply. So you've seen the cash market or at least our export offers really kind of outpaced the rest of the world, so they have reduced export demand as a result, just because we're more expensive. But to take it into you know, kind of consideration there as to what you're looking at in the world wheat crop or the world wheat supply, you know, compared to maybe where we were in two thousand twenty even you know, production was about one point

eight three billion bushels. We're expecting it to come in around one point seven three this year versus so I mean, you're you're talking a hundred million bushel reduction and overall wheat production, but you're seeing ending stocks, you know, deplete substantially.

For a short period of time there between about two thousand fifteen into two thousand eighteen, you know, we saw hard read winter weak trade below four dollars, you know, more than once, and so that really kind of created this environment in which the farmers that traditionally would grow wheat looked other crops, especially you know, speaking of milo

or sorghum. You saw this continue, this big increase in Chinese sorghum demand, and so you saw a lot of folks really just kind of transition away so you saw people transition away, you saw plantings getting smaller. You know, as we worked our way into two thousand one, you know, you saw a reduction in in area harvested. You see another reduction in area harvested this year, especially because of

the increase in band an abandonment. You know. But one of the things that we're seeing is when you break it down per class, that's when you know the noticeable reduction and supply becomes clear. You know, at one point, hard red winter wheat was flirting with you know, above five million, close to a billion bushell carry out. That's huge, that's that's considered burdensome. Now this year they're expecting carry out to be around three hundred and sixty million bushels.

So it definitely is very evident. And as a result, you're seeing the farmer and the commercial elevators in those regions become very protective of the supply that they have

on hand. And really, we we kind of joke in the US wheat industry, like the our job is to keep our wheat expensive enough to where maybe it doesn't fly off the shelves into the global market, um simply so we can make sure that we have enough at home to to manage our feed use if we were to run into a production issue down the road, another production issue down the road at this rate. So this was kind of going to be my next question. So what typically happens in a tight market for a specific crop?

Do you see farmers start to attempt to grow other things like storkam which you already mentioned, And does the US tend to try to keep those goods at home or those commodities at home rather than export them, And what other options are available to farmers and the industry to try to offset a bad harvest. Yeah, um, so we'll see that. We we tend to see it in the cash market. So I always I'm a cash trader.

I'm a physical trader. You know. My job is to to get bushels from the farmers that I work with that produced them to the end users that need them, you know. And so I I live in the cash market every day. And I will tell you the cash market is is king no matter how you slice it. Whatever the cash market is doing is it will eventually transition into futures and in some way, shape or form or at the very least, the cash prices is gravity,

especially in wheat. So, but if we do run into a situation where we have a question regarding what production looks like, you know, one of the first steps that you see is, as I indicated before, everyone kind of pulls their arms and legs inside the vehicle. Okay, we we we wait, you don't you try to assess the market. You let someone um other than you potentially put on a couple of trades or make a couple of trades to get a good feel as to what the actual

cash value is. So futures can trade um one price uh and depending on what the local supply and demand is or what the regional supply and demand is in a in a specific location surrounding a specific end user, you know you'll see a basis, which is that difference between cash price and future Sometimes it trades as at

a premium, some times it trades at a negative. But so what you'll tend to see is is one of the first things that happens is the folks that tend to traditionally do the selling, whether that's an elevator or a farmer. If a crop scare comes about, we stop selling. Like that's just human nature, right. If you don't know what you're going to have going forward, you stop selling. So then the market's job becomes getting it to a

high enough value to where it entices a pickup and selling. So, whether that's a enticing a farmer to liquidate his or her bushels at a certain price, maybe it's a you know, the farmer has an eight dollar target order in mind, or something of that nature. You know, whatever it will take to get to those values to really kind of entice the farmer or entice the elevator. So there's a whole host of things you'll have to be able to offset or or you know, provide in in the market

price itself, you know. And so that's what you'll see is is folks will start to discuss the basis is increasing and that spreads are you know, spreads are tightening. So the other thing is is that spreads will no longer incentivize you holding the product out of the pipeline. You know, they're going to punish you for doing so.

So traditionally, in the commercial elevator business, you know, you see what we call carry um or contain go and you know, if you're your fancy, we just call it carry because we're not you know, so you'll see you typically we see carry i e. The market isn't paying you, we're providing you incentive to keep it out of the pipeline. The opposite comes true if if it looks like you're

going to have a short crop. So one of the things that we pay attention to, you know, not only is basis whether or not the end user is paying more or less yesterday, but what are the spreads doing, because that will give us an insight into whether or not you could see supply come into the pipeline. And so yeah, I mean the first big step that has taken as you just stop selling, which is what we saw take place in India right like, the concerns started

to develop that we were selling too much. We were uncertain as to what we were going to have come into play for new crop, and so the government said weld on, you know, we're going to take some time now. They did it through measures that you know or are seeing in a more government centric UM agricultural production system, whereas in the US, UM traders tend to to uh manage their own reduction and market exposure, you know, i e.

They make their bids really or their offers really expensive. Um, the end users may firm up bids, you know, things of that nature. But um, we just kind of become we start to play chicken, you could say, Um, when it comes to purchase and sales. What is the shape of the futures curve right now? I mean we know that a lot of uh, at least you know, up

until very recently. I can't remember the last time I look, but all around the world, whether we're talking about egg or metals or energy commodities, we have seen this sort of like front month, uh, you know, high premium in the front month. What is the shape now of the wheat futurest curve? And what is it indicating? That's the ironic part um. You know, you pull up the shape of the wheat futures curve um, and we saw it go. I mean, I don't know how much attention folks paid

to to what the market had done here. Um. Upon the news of the invasion, we saw some pretty substantial inversions um or backwardation developed to where you saw the July dece you know, go to a two dollar inverse. I mean just something that was just absolutely obscene, something

that we had never seen. Um, happened before. And as a result, it kind of lou um a lot of elevators out of the market because they they right, like so that I was gonna I was gonna ask like their business must be premised on the idea that like you know, you hold, they hold right, or they hold they hold grain, and if you hold it, you know it's grain is priced more valuable in a few months or a year or whatever it is, and you get some sort of I guess, as you said, carry, But

it's got to be a terrible business in the opposite when there's such a premium currently. Yeah, yeah, And and that's what you saw. You saw wheat elevators of flour mills, you know, they just basically withdrew bids. So the farmer was very frustrated in the sense that the board was rallying twelve fifty dollars for Chicago wheat and the end

users and processors with drew bids. As a result, you know, of of the cash market again going back to the cash market just basically being destroyed um by that move in futures, you saw a lot of activity, You saw a lot of folks sleeve. You've seen the spread zone wine. So ironically, you know, a lot of folks are talking about how wheat is the most bullish commodity out there, you know, it's the one thing that we tend to

hear the most about. But when you look at the spreads, they're they're painting substantial carry or what has traditionally been solid carry um for the last several years, at least out into the march board um, you know, when you're looking at the Chicago crop um, and even out into the march board when you're you're looking at the Kansas City crop um, and so you know, there there's carry,

there is incentive to hold the crop. But I think that's more to do with the fact that the global pipeline, or our export business, or our delivery system, you know, simply couldn't handle all of the wheat coming off at harvest time, you know. And you could say the opposite is true and corn and soybeans, where they're pretty heavily

inverted old crop um to new crop um. Just you know, especially I think considering the fact that for wheat, the new crop year starts on Wednesday, So for wheat um, we have a June to June, and so we're basically ending up. We know what we we did for for old prop we have an idea of of what will be left over at the end of the year. And now we're we're facing you know, a new crop coming in full bins. Hopefully even with a smaller crop, you know, you're still going to have a lot to take off,

um you know, early on in the season. And so that markets providing some incentive and and providing um, you know, end users elevators, flour mills, you know, a way of of capturing some incentive to to keep that stuff out of the pipeline, and that's helping to keep basis firm

for the farmer. So what happens to sort of end user prices in this type of scenario, So for instance, the hard red wheat that we use for bread and things like that, do bread makers, does the price of bread immediately go up because the spot price the input cost goes up or is there some sort of hedging activity where they might have, you know, um forward, purchased their wheat needs a year before at a lower price.

Like how much of it actually feeds through into consumer goods and the things that we eat on a day to day basis Yeah. On the plus side, you know, the cost of wheat for a flour miller is actually a very small I think it's less than a it's less than a third of the cost of the overall loaf of bread. Um. You know, all of the other factors come into play, the transportation and the staffing, the equipment, that, this, that and the other thing, and so it really isn't

a direct correlation. Of course, during times of inflation, all other costs are increasing, so it's easy to say, Okay, well the cost of wheat is up x per cent, so obviously the cost of bread needs to go up as well. But that's not necessarily the case. Now you are seeing folks that didn't hedge. You know, traditionally you'll see the majority of your wheat users in the United States at the very least have a very um deep and very experienced trading desk. So they're not just sitting there.

You know, what was me, I didn't realize the price of wheat was going up. They're able to hedge, you know, they're able to make their purchase says, book their basis levels, maybe trade their futures. They may own options against certain market moves and things of that nature, you know. So there's somewhat isolated. Um. But when you know, Russia invaded and you saw the market just surge um limit higher day after day after day, you did see them stop.

You know, they were looking at you know, as a wheat miller, um, you know, not a flower end user. The wheat miller was looking at making a substantial amount of purchases in the July and and looking down the barrel of a dollar fifty, you know, in version. And so there was a lot of frustration for folks that you just simply saw them step out, um step away from the market, you know. And and so in times of extreme volatility and concern, we have seen that happen. Now,

obviously it can't last long term, um, you know. And for that reason, a lot of these folks have have managed to to hedge some of their risk, or at the very least are are insulated from a good portion of it. But it gets concerning, um, you know, when you see big moves like that, and in extremely volatile prices, you know, you start to worry about who your your end user is or how they're protecting there there there risk.

So I want to sort of ask you about what Tracy and I were discussing in the intro, which is is there some underlying frailty that's been exposed in the U s AD market or the AG market overall. I mean, we talked about this idea. It's like, Okay, we can talk about perfect storms and this crazy weather that we've got such that we had two years of drought and then we got six months of rain all in six

weeks and so forth. And so obviously in any macro environment that is going to rea havoc when the weather's uh that unpredictable. But is there so thing else that's being exposed here in your view, like if you sort of zoom out the fact that we've seen such volatility, such high prices and so forth, that is really just like cannot be sort of explained by bad luck or perfect storm. Yeah, uh yeah, I think, you know, to

a certain extent. I think one of the things that we've seen, um, you know, really kind of become crystal clear here as of late, is is the idea that um, you know, we've we've transitioned from you know, what the US used to be the bread basket of the world, um, and when we we ran into ethanol, and when we had the drought in twelve and prices ran up, and you know, I think the agricultural UM folks, the higher ups, the elevators and you know your A, B, C, D

S and grain and your you know, your egg input suppliers and your your equipment suppliers and some of these things started to recognize that there was a huge amount of opportunity um around the world for far better margin than they could ever achieve in the in the United States. And you saw this massive expansion and and uh, you know, the globalization of our our food supply, which is great. We need it to happen. We we have to have

it happen, UM. But I think you know, one of the reasons that we're running into this situation, you know, with with your your Middle Eastern countries and your your North African countries, and the concern over what takes place, UM, you know there is is because they were so heavily reliant upon one supplier. UM. You know, over sixty of their purchases were made from Ukraine, which is great, but it's not great when something happens in the supply. Now granted you we haven't had a lot of just wars

just break out randomly in our our food producers. So maybe you know, you didn't expect that to take place, but you know, I would say one of the things that this has really kind of put a spotlight on is, you know, for one, what it is that China is doing. And I don't think that even can be answered. You know, part of the reason that spurred all of this was the substantial move by China to to really kind of increase their government stockpiles. You know, there are exports increased.

You know, gosh, you can't even say how how big their exports increased, because we went from basically what was zero to twenty eight million metric ton of of corn imports,

you know, last year from China. You know, they're looking to to import twenty three million metric tonue, I mean, and and prior to that baseline, you know, max was was a handful you know, a few metric ton and so that that really changed the global pipeline and I think it kind of put um highlighted the power that China has when it comes to global logistics and global pipelines and global demand and all of these things, you know, And I would say that's That's probably one of the

biggest is that you know, prior to this excessive, exceptional increase in Chinese demand, and we were actually talking about burden some stocks. I mean in the head of the fall of two thousand twenty, you know, going into late twenty before every was really paying attention to grains. You know, we were looking at the potential of a three billion bushel corn carry out, which is almost three times what some folks are expecting for this year's carry out. You know,

we were talking carry out yep. So when we were done at the end of every year, we have enough left over to get us into new crop production. So my entire life is always revolving around what are ending stocks or carry out, what is that going to look like, how much are we gonna have left over at the end of next year, what does that mean for for a new crop production and demand? And then what will we have left over at the end of that year? Um. And that's simply what we pay attention to in grains.

But yeah, so prior to that big increase in Chinese demand, you know, we were kind of worried about what we would be looking at, you know globally. Um, when it came to burdens own burdens some stocks. Now of course you saw you know, major production issues in Brazil back to back. You know, Larnina looks like it's poised to to make a third appearance, and that tends to read havoc on South American weather. Um, it tends to cause droughts in the southern planes, you know, things of that nature.

But I would say, you know, probably one of the biggest things that this market move is is trying to spotlight on, is is just you know, how vulnerable we are in the free market to to someone kind of stepping in and and taking I don't want to say more than their share, because it's an inadequate statement, you know, to use, but you know, we're somewhat vulnerable to to some folks just kind of stepping in and saying, you know, hey,

we'll take this. It's cheap, we're gonna take all of it, thank you, and then other countries saying we want to avoid that person coming in or those folks coming in and taking everything, so we're going to restrict our our exports. So we just really saw this whole entire flip, you know, in in global availability, you know, due to the fact that China really kind of stepped in and started soaking up every piece, every kernel of feed grade and they

could get you know, around the world. Yeah, this is something we actually recorded a whole episode on this with Scott Irwin. I think it was one of the episodes that we did, yeah, about China buying up and building up its stockpiles. But so, I guess a natural question here is what can countries do in order to ease this kind of tight supply. So we've already seen a

cutback on exports. I've seen some talk about things like subsidies for farmers, but there seems to be debate over whether or not those could actually make the problem even worse because people would be incentivized to just not grow anything. Um. And this is sort of a classic criticism of subsidies. But what exactly could be done here? What sort of

policies would help? Um? I think it's so hard. I mean it really outside of of improving weather or incentivizing you know, and maybe that is through through subsidies or something of that nature, you know, which we've seen. I mean, we've we've helped farmers with crop insurance. It's been one of the things that that we've seen as of late is is, you know, some conversation about whether or not crop insurance hinders the farmer or incentivizes the farmer not

to plant. You know, one of the things that would point out in that conversation is the current crop insurance support price for December twenty two corn is a dollar thirty dollar forty below where the market is currently trading. So the market is going to incentivize a continuation of planting. That's going to be the market's job, even if that

crop insurance prices is below. So helping provide that safety net via crop insurance or something of that nature to where as long as the producers is putting in um a good faith effort to to get that crop planted and a good faith effort to make sure that they're they're doing all that they can to try to produce is large of a crop as what they possibly can. You know, I think that would help around the world for a lot of folks, And I think you're seeing

countries introduce that. You saw China um basically credit the turn of their winter wheat crop to the millions of dollars that they poured into farmers in certain provinces to make sure that they were fertilizing and using fun decide and doing everything they could to kind of maximize production. To me, I think the market is going to do its job as long as mother nature cooperates. Um. You know.

I think one of the things that you know you're seeing right now is you're you're seeing December twenty three corn trading near six fifty. You know, you're seeing crop prices for for next year's harvest eighteen months from now. Um, you know, trading at at relatively high levels. Wheat for next year at a eleven dollars and fourteen cents, you know. So I think the market will do the job to

incentivize I think you'll see some continued expansions in South America. UM. I think you'll, you know, as as long as farmers are continue to be incentivized here in the US, you're going to see them, you know, roll past final planting dates of whether allows it and some of these other things, because the market price says, you know, you should be planting. Um.

And so I think that's the main thing. Just providing a safe place to land if there were to be a major weather issue is probably one of the best things they could do. Can you talk a little bit about what's happening on the input cost side UM with your client? Of course, a big story of last year has been the surge and the cost of fertilizer UM, although there was it was actually Bloomberg story yesterday about

actually a significant pullback in the last month. But what are the different input costs or the primary input costs for your clients and what do you see happening there. Has there been any sort of like stabilization improvement, et cetera. Yeah, I think one of the biggest things we've seen is everyone kind of breathed a sigh of relief in the sense that there was a real concern that we were

going to have shortages. UM. No one that I've seen or heard from across the country is has really run into a situation where if a farmer needed a fertilizer, you know, of of of a certain type, that he or she couldn't get ahold of it. Prices have increased exponentially. Of course, in that UM their record high. They they have stayed well elevated beyond when a lot of folks

thought that they would UM. So that's created some concern, but you've also seen, as we talked about before, you know, the car market basically has rallied almost two dollars fallen off a bit as as of late, but it had rallied, um, you know, a dollar after the the invasion um and another dollar after the Planning Intentions report. So you saw a pretty substantial increase in the amount of money that the farmer can get out of an acre of corn.

You know, you can multiply seven dollars and in thirty cents times anywhere between a hundred and fifty to two hundred, to get a good feel for what a revenue, um, what kind of revenue of farmer is looking at. So there is room now obviously that's gross revenue, and there all of the costs that continue to pile up, you know, really kind of put us in a situation to where we're working harder, we're laying out way more cash than we ever have before for the same hope of the

same margin. And so that's one of the things that it feels as though the cash outlay being as high as what it was and being increased as much as what it was, has put us in a situation to where there's far more stress this early in the marketing year to make sure that the farmer gets it right. You know. Obviously they don't want to sell too soon and and miss out on a major rally if we were to see some sort of drought developer or something

like that. But they don't want to not sell and watch the market fall back to crop insurance or lower, you know. And and so it's it's put us in a pretty tight situation here where we've we've outlaid a more cash than we ever have before and and created you know, far more worry than we ever have either as well. Huh, So what should we be watching for in terms of signs of improvement? Like what are some

things are indicators that we should keep our eye on. Well, we really want to watch what the weather does here for the next four to six weeks, specifically for corn

and for wheat. You know, but wheat harvest is gonna get started or has started in Texas, is going to get started, and so we'll want to see, you know, really kind of pay attention or at least I'll be paying attention to to what those cash markets look like, what takes place, you know, what the reports are you know, from a yield standpoint, but from from from someone on

the outside looking in. The biggest thing that that I would recommend, you know, really kind of paying attention to is obviously what developments we see in the Rush Ukraine situation. You know, where we've we've never seen it to where we have upboards of sixty five million metric ton potentially you know, sitting in countries that you know habit but may not be looking to ship it or may not be able to ship it into the global market. So if we see a shift in that, things will change.

If we see these humanitarian corridors open, if we see some rollbacks you know potentially on the sanctions that Russia's asking for something of that nature, you know, that's going to have a huge influence on global supply. The other thing is obviously whether through the month of June into July we want to see decent rain, not too heavy, and warm temperatures, you know, but not too warm. So it's that's gonna be the hard part is watching that. And then the other thing to really kind of pay

attention to is going to be our shipment pace. In my opinion, you know, when it comes to export sales. The bulk of our export business currently for for corn and as it stands, you know, recently for for swayabeans has been to China. But we're starting to see, you know, this week was huge for corn shipments swaybeing shipments were a little bit below average, but sales paces dropped off substantially.

So the question now becomes, do you see China slow down on on what they're taking and could that result in you know, a potential reduction and export outlook and an increase in overall supply because China is unable to to take the bustles that they you know, had already purchased. So those will be the main factors that we're watching here over that here six weeks. So I just want to like pivot to one other topic before we go. And you know, you talked about how you're in the

cash market. Your job is to connect consumers of actual grains with producers of actual grains, and you know, Tracy and I recently did an interview with Matt piet who's the CEO of Arrived Logistics, and we talked about, like, you know, the the sort of exponentially complicated world of trucking and freight, and there's all different kinds of products that exist, all different types of destinations. It's a really

hard problem. And of course, you know, moving a truckload of saying computers or couches or phones is going to be different than moving a truckload of wheat because it's different handling and different temperature and so forth. And I'm sure as if you could talk a little bit about that market of the physical moving of wheat, how that works, and like what are what makes it difficult and like what are the sort of opportunities there in terms of

how could improve Yeah, um, I it is. It is probably my favorite part of the job, but is the most um the part of the job that makes me pull my hair out the most. And so yeah, you know, wheat movement, a lot of of wheat movement, you know, for us locally here in Michigan is done via truck and so you know, one of the things that you really kind of look at is trying to make sure that you know, from a farmer's standpoint, you know, not a lot of farmers are sitting around their bins waiting

for a truck to show up. And so one of the biggest struggles that we have, obviously is communication between truckers and and and where they're looking to load, you know, an understanding or a follow through of of what dumped where. You know, especially now that prices are increasing as they are, you know, you're looking at a pretty substantial price tag on you know, moving eighteen dollars soy beans a thousand bushel,

you know, a thousand bushel at a crack. You know, you're basically, I I tell my customers to make sure they're keeping track of everyone that loads, who it is, license plates, everything, you know, basically ask for a deposit of their firstborn child because you're you're shipping you know, eighteen thousand dollars worth of wheat with a thousand busheal load,

I mean you your soy beans? Excuse me. You know, you've got to recognize what is going out from a cash standpoint, and so there's always a real concern that you're gonna lose a load. You know, that you're gonna run into a situation where someone maybe loads something, says they're taking it to one end user and it just

you know, you just can't track it down. And if you don't have the right the right information regarding who loaded it, where it was supposed to go, you know, when it was loaded and when it should have been there. And then the follow through of making sure that a pond delivery you received the ticke it, you know, or have a copy of the ticket that is as good as money. That that a ticket, you know, it's a receipt of delivery, you know, is saying this is mine,

I delivered it. This is that money belongs to me, you know. And so all of these things have become incredibly difficult and as a result, have made it you know, to where potentials, you know, the farmers opportunities may be a little bit more limited in the sense that because of the inability to track or because of the inability to feel comfortable with with you know, loading something or getting someone in there to properly load you know, you may not have them do uh, they may not go

into that certain market or something of that nature. And so, yeah, there's a lot of moving pieces with grain and feed, especially feed. You know, you cattle still eat on Christmas, you know. So these sorts of things in fraid have been you know, very difficult to kind of pin down. And one of the things that we've been trying to work on, is you know, how can you get established to where you can utilize technology to let you know when the truck is is around the corner because the

driver forgot to call. These types of things automatically bloat a ticket upon delivery, so you have access to it and no one it will be settled, you know. And so it's been a work in progress for part of the reason for all of the reasons that you stated earlier, in the sense that it's just not it's not a when a happens b takes place because in great movement,

you know, a lot of different things can happen. You can have a load rejected, you could have you'd miss a dump time or a loading time, and so a different truck has to come in or something of that nature. And so it's still very much a work in progress.

But it's one of those situations where if you could find the system to crack that, um, you know, you would be you would be a hero, just simply because of all of the complications that come from uh, you know, not being able to to really nail down that that freight component. Cattle still eat on Christmas would be a really great I might have the write one. Andrew said, sir, it's always great to have you on the show. Thank you so much for coming back. I really appreciate it.

Thank you for having me. I enjoy the heck out of it. Thanks Aie. That was so much. Yeah, it's so crazy that, like, after years of drought, that we get that the farmers got like a half a year's rain in a in a matter of leaks. Yeah. I mean, one thing I would say is that if this kind of volatility and weather patterns keeps continuing, then it would seem that there's a fundamental change that has taken place

when it comes to the weather. The other thing that I thought was interesting was Angie's suggestion of China being this massive buyer that sort of contributed to an overall level of tightness in the market that makes it maybe may be less able to deal with shorter term changes in particular hearts or crops. Yeah, you just don't have much much slack at all. And then you know, thinking

about like, so, okay, what is that. Yes, weather is always volatile, right, I mean farmers have been dealing with volatile rather weather for you know, since the history of farming. But then you know, you sort of think about, Okay, there really were a lot of unusual things that happened

in the last two years. One of them was the sort of emergence of China as this sort of like buyer of everything and trying to trying to grab all the grains it can, and you sort of wonder like whether there are some similarities between what's going on in grain and what we see in like retail, where it's really hard to forecast and it's really hard to know what is a sustainable trend versus something that was distinct to the last two years that's not going to persist.

The agricultural bullet. Agricultural bullet, Yeah, that's affecting what bulls actually eat, cattle who have to eat on Christmas. I'm just gonna keep going, Okay, um, you should write that song. I will, I will for sure. Okay, alright, Well, I mean it sounds like per Angie. One of the things to look out for is obviously what's happening in Russia and Ukraine, but also weather for the next four to six weeks. So everyone, uh, you know, state glued to

your various meteorology apps. I guess it's it's always weather in the end, I mean in the end, right, Like that really is like what this market is all about. Because if yeah, yeah we need we need dome dome agriculture, that probably okay, shall we leave it there? Leave it there? Alright? This has been another episode of the All Thoughts Podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe Why Isn't All? You can

follow me on Twitter at the Stalwart. Follow our guest Angie set Her. She's on Twitter at Goddess of Grain. Follow our producer Kerman Rodriguez at Kerman armand followed the Bloomberg head of podcast, Francesca Leavi at Francesca Today, and check out all of our podcas casts at Bloomberg, into the handle at podcasts. Thanks for listening.