Market Plus: Ted Seifried

Market Plus: Ted Seifried


Howell: This is the
Friday, September 13, 2019 version of the
Market Plus segment. Joining us once again
is Ted Seifried. Ted, welcome back. Seifried: Hey, happy
Friday the 13th, Delaney. Howell: Yes, and it’s also
hate week in Iowa, Ted. Do you know what that is? Seifried: I don’t. Howell: It’s the Iowa and
Iowa State football game tomorrow. Seifried: Oh no, okay,
so I did know that. But that’s what
we call it? Hate week? Howell: Hate week, yes. Seifried: That’s
rather mean, isn’t it? Howell: It is a little
mean isn’t it, yeah. Iowans against Iowans. But, all that aside, we
promised during the main show that we would tackle
the dairy discussion. I know it’s not
necessarily your biggest forte but we have a
question here from Matt in Dyersville, Iowa saying,
what’s going on with milk? Did the market drive
enough producers out finally? And is this rally going to
be enough to pay for all the $250 per ton hay that
everyone is purchasing? Seifried: So that’s a
lot of questions there. Hi, Matt from Dyersville. So let’s talk about
the milk market. A lot of people are going
to say that the rally that we’re seeing in milk is
related to the better relations that we’re
having with China right now. I’m going to say that’s
not true at all really because China doesn’t have
much of an appetite for milk. They like to buy our whey
protein and that is for a feed ingredient
that they feed hogs. But with ASF they don’t
really have a huge need for that right now. So China aside, I think
what we need to look at is milk is following along
with cheddar cheese prices. Cheddar cheese prices are
the highest they’ve been since October 2014. And the milk that we
have in cold storage is relatively weak so we’re
not really building. So to answer one of his
questions there, yes I do think that we’ve gotten
to the point where we’ve slowed down production
enough that we are starting to give us a good
reason for better prices. Now, will that justify
higher hay prices? Yeah, I don’t know,
everybody has got to look at their input costs and
their breakeven and so on and so forth. I think the hay question
was more of a dig on why are hay prices so high. The question is are milk
prices going to continue to go higher? Well, getting into the
football season, and hate week, pizza demand,
cheese, yeah right. It sounds silly
but it’s true. Howell: Taco dip with
the Rotel and cheese. Seifried: All
of the above. We like that, right? Yeah, so I think
demand is good. Once we start getting into
October then we start seeing the components
start to weigh on things. But yeah I think there’s
more upside potential here for at least another
week or two for milk. Howell: What should dairy
producers be doing then? Seifried: You want to be,
obviously with this big rally you want to be
starting to lay off incrementally start
setting prices, price targets and start making
some sales I think. Howell: Ted, I know this
was one of your favorite questions so we’re going
to go ahead and ask it, kick it off here with Glen
in Bryan, Ohio, He said, USDA numbers came in
higher than the average analyst estimate
prior to the report. Is this deviation of
analysis greater than it has been in the past? Or is it just because of
the weather uncertainty? Or is it a difference
in the data modeling techniques? Seifried: Okay, Glen. So, first of all, being
one of the analysts that submits out trade guesses
to the USDA, we weren’t that far off. We were within a bushel
an acre for both corn and soybeans as far as what we
were guessing and that’s really quite good for
this time of year. But, when we talk about
difference in how we were coming to those yields,
each one of the analysts have different
ways of doing it. There are some
similarities between us but all of us kind of have
our own and mostly private ways of doing it but
then so does the USDA. We know what their formula
is but we don’t know some of the pieces of the
formula for the September report. It’s very important to
understand how the USDA does the September
WASDE report. And for corn we have ear
count but not ear weight. They’re going to use
their ear weight number. For soybeans we have pod
count but we don’t know what they’re going to use
an implied pod weight. So implied ear weight,
implied pod weight, we have no idea what they’re
going to imply that. We all have different
implied pod weights. And none of us I think
were expecting the USDA to use a record implied pod
weight for soybeans. We talked about it during
the show, in my book the late planted soybeans that
we have would suggest that pod weight would be down,
well not record, maybe not down but not record, even
with the lower pod counts. So that is where I would
disagree with the USDA. When I have my number
that would be the main disagreement that I
have with the USDA. And I think when the USDA
does start actually doing pod weights, which will be
hopefully next month, I think that means that
yield number is going to come down. So understanding the way
that the USDA does their yield estimates on the
September report and knowing that they do use
an actual pod count number but they use an implied
pod weight number for soybeans, I think we can
put our analytical spin on that and say, well if that
pod weight number starts coming down, even if the
pod count number comes up slightly, that
means a lower yield. So I think that is a big
part of what the market was talking about on
Friday and will continue to talk about
into next week. There’s a good chance that
soybean yield is going to come down further. And so I think that’s part
of the enthusiasm that we’re seeing with
soybeans right now. Howell: So with all of
that being said, do we reward the rallies that
we’re seeing in the soybean market? Or do you think that
producers should hold on to sell their new crop? Seifried: I have a price
range in mind that I would be waiting to sell my
soybeans in and that is $10.25, well actually
$10.15 to $10.45. Howell: And is that on
the futures or basis? Seifried: That’s
January futures. So yeah, that’s a pretty
sizeable rally, one that we haven’t really seen
in soybeans for a while because, again, soybeans
didn’t have that big of a spring rally, which really
they should have because that’s where we
lost all the acres. It wasn’t in corn. So yeah, I’m very
optimistic for soybean prices. And unless things
completely blow up with China and even then not
so much because we’re not doing a ton of business
with them anyway. But I think there’s
significant upside potential for soybeans and
I think soybeans are going to lead the way higher for
the grains going into the end of the calendar year
and possible into the early part of next year. My concern for grains as a
whole is what happens when we start talking about
acreage next year because if we’re going to plant
92 to 94 million acres of corn and 84 to 86 million
acres of soybeans and we have good crops next
year that’s a problem. So we need to be looking
for a harvest rally, if we get one, but I
think we will. That needs to be
opportunity, that needs to be seen as an opportunity
to make some sales in both corn and soybeans. But I would be a lot more
patient on making soybean sales than corn. Howell: Ted, what will be
the indication in your mind that we are in fact
having a rally and not just a couple of
days of upside? Seifried: Well, hindsight
is always 20/20 so if we’re up to my price
levels at $10.15 then I’ll say hey, we had a rally. But I will say what we
saw this week is very constructive. It changes the market
mentality of what we had at the end of the last
week which was this is never going to rally,
grains are never going to rally, it’s just going to
go down, down, down, down, down. Everybody was so darn
bearish at the end of last week. That mentality changed
a bit this week and the charts changed
a bit this week. So I think there is good
footing both on the basis of charts looking better,
fundamentals may be getting better, the
seasonal timeframe of which hey this is usually
around the time we start to put our harvest lows in
and start to see a bit of a bounce, the market make
up with the funds being rather short corn and
beans or were rather short corn and beans going
into the USDA report on Thursday compared to how
they had been long pretty much since the spring,
lots of different factors make it kind of suggest
that hey, now is the timeframe where we should
start to see some sort of a bounce. Again, we’ll be
news dependent. We’ll have to keep an eye
out and see what happens with South American
weather, trade deal, ethanol, so many different
things going on right now that we have to
keep an eye on. But, without any major
hiccups I do think now is the time where we start
to see a bit more of a bounce. Howell: One thing that
maybe was a little overshadowed this week too
besides not only South American weather but what
was going on in the PNW. We’ve got a question here
from Phil in Dresden, Ontario. He said, is the increased
soybean levels in the PNW the first sign that the
announcement from the Chinese news agency of
tariff peace on beans might be real? If it’s over, can we
expect November soybeans to take off? Or is it like a blind man
looking for a shadow of doubt? Seifried: Blind man —
hi, Phil, very poetic. I don’t know if I really
followed you there, Phil. But thank you
for the question. Again, lots of moving
pieces in that question. You really like the
complex five-part questions. Howell: Yes, I’m throwing
them all at you today. Seifried: Anyway, okay,
why are we moving beans to the Pacific Northwest? Yes, that was very much in
response to the idea that China would be buying,
making purchases before the next trade
meeting in October. And then on Thursday we
saw confirmation that they had bought at least 10
cargos or 600,000 metric tons of soybeans. So we’re going to need
that because they were buying them out of the
Pacific Northwest. And the idea is that
there’s going to be more. So, that explains that. Do we like the prospect
for November soybeans? Okay, I’m focusing my
attention to the January just because I want to see
the timeframe past or sort of into the late
December timeframe. But yeah, I think
November has room to run. Just keep in mind that we
have about a month left or a little bit less than a
month on that November contract being legitimate. So if you’re picking
contracts right now, if you’re not in something
already, I prefer to look at the January. But as we’ve been talking
about this entire show and this entire Market Plus
I think there’s pretty significant upside
potential for soybeans. I’ve been saying that
since basically June. I’ll say it again. Corn was the story of the
spring, soybeans could be and in my opinion now are
the story of the fall. Howell: So with all of
those factors added in when you look at the
grains, the livestock, dairy and softs, I think I
know your answer but I’m going to ask you —
Seifried: It’s going to be soybeans. Howell: What market are
you most bullish about? Seifried: Soybeans. Yes, because again we cut
acreage so dramatically and I’ve spent the last
four or five weeks, really all summer, but
intensively the last four or five weeks going
through soybean fields all over the place and I just
don’t see the soybean crop out there. And I don’t think that
we are going to add this major pod weight. We’re certainly not adding
a whole lot of pods in a lot of areas that we would
have still been say last year for example. I just don’t think that
soybean crop is there. And I think we’re going to
see ending stock levels to the point where if we do
get a trade deal with China we’re going to run
out of soybeans and I think the market
has to respect that. So trade deal or no trade
deal, even though things are feeling more like we
might get one, but trade deal or no trade deal
I think there’s a good reason to see soybeans
rally $1 to $1.50. I think we’re just too
cheap in soybeans based on what we know right
now at this second. Again, go back to July. We’re talking a billion
plus, 1.08 I believe billion bushel carryover,
now we’re talking a 640 and most of us believe
that number is going to go down because production is
still going to go lower because the pod
weights are too high. That’s without
a trade deal. That’s pretty friendly. And again, prices have not
reacted to that quite yet or at least not
enough in my opinion. Howell: The tables
have turned. Seifried: I’d say so. Howell: Ted Seifried,
thank you so much. Seifried: The pleasure’s
mine, Delaney. Howell: Join us again next
week when we’ll look at an industry seeing changes
blowing in the wind and Sue Martin will join us
at the Market to Market table. Until then, thanks for
watching, listening or reading. I’m Delaney Howell. Have a great week!

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