Turmoil and Opportunities in Minnesota Grain Marketing
Good day and welcome to the University of Minnesota Extension CropCast. I'm one of your host Dave Nicolai with the University of Minnesota. I am an extension educator in field crops. I'm here today with my co host Doctor. Seth Nave.
Speaker 1:Seth is extension soybean specialist here at the University of Minnesota and Seth it's been a little while since we've been together here on CropCast, what have you been up to? Can you tell the folks a little bit about your activities and then we'll lead into our guest.
Speaker 2:Yeah, you can blame it all on me. I have been traveling quite a bit. I've been overseas quite a bit since in the last two or three months. And so we've made trips to North Asia Last Fall. And then I was in Southeast Asia and Indonesia A Couple Weeks ago, and now I'm headed back to Thailand next week.
Speaker 2:So basically, we're really reintroducing soybeans and soybean meal into some of these markets that haven't been buying a lot of U. S. Soybeans or soybean meal. And so really servicing those markets and helping those buyers feel comfortable about purchasing, continuing their existing purchases, as well as look at some new opportunities as we get some more meal coming into some of those countries. So I'm kind of the science guy.
Speaker 2:I just am there to talk about the quality of the soybeans and how that differs by production environment. And, you know, basically I'm here to tell them that, you know, these northern soybeans with lower protein are definitely not as bad as they think they are. And in many cases, they offer some good value proposition for feed millers and integrators and end users of our soybeans. So, yeah, happy to be back, and I'm happy to be back in the studio with you, Dave. And we've got a good one coming up here today.
Speaker 2:So if we get a chance at the very end, we might come around and talk a little bit more about this trade stuff, but we wanna make sure and hear from our guests first.
Speaker 1:Okay, our guest today, we're privileged to have with us Ed Usset, University of Minnesota, our grain marketing specialist here with University of Minnesota Extension. And Ed, we've been talking obviously just a little bit here now on terms of trade and opportunities but welcome, good to have you in.
Speaker 3:Thank you for having me back.
Speaker 1:Super, super. Well one of the things that we wanted to talk about today is obviously people are thinking spring here Ed, we've got most of the snow melted across Minnesota although we're getting some what I call March snowstorms that are coming through. But nonetheless, the calendar pages will churn. April is next month, people are gonna think really about getting that crop into the ground. And with that, they also have to think about some of that crop they might have from last year.
Speaker 1:So what are some things that you are recommending for people to consider in terms of old crop that they might have in terms of corn, soybeans, etcetera? And then we'll segue and we'll talk about this next year's crop.
Speaker 3:Okay. Well, thank you, David, for the thoughts there, the question. Pertaining to old crop, I've been saying this, since harvest for corn and soybeans. I'm looking for rallies to sell. Now I wasn't much into it in October, November, but things started to heat up in late December and into January, first half February.
Speaker 3:And at that time, I was saying, you know, I'm I'm looking for a rally to sell, and I think we're here. Mid February, tariff talk took us lower. February was a bad time. I'm looking at May corn futures, declined something like 65¢ in a two week period last last, February. We've got some of that back, not much.
Speaker 3:Basis has improved a little bit. That's helped a bit. We're looking for rally we're still looking for rallies to sell. Here we are in in mid March. I can tell you the history will tell you that April, May, June is often a good time to get something done.
Speaker 3:So do I think we're gonna see better opportunities in the April, May, June period? Yes, I do. And be ready to get something done on old crop at that time.
Speaker 1:Is there a limit, I think you've mentioned this before in terms of a calendar date, an end date when you really want to have things, you know, marketed, moved out or if not even on the market but even physically too, you know, in terms of things that they need to keep in mind.
Speaker 3:Well, like to quote the eleventh commandment of green marketing and by the way, I didn't make this came from our our late great predecessor at the University of Minnesota, doctor Stan Stevens. He was the first one I ever heard him, talk about the eleventh commandment of grain marketing, but it is this, thou shall not hold unpriced corn or soybeans in the bin after July 1. Now I'm putting a bright line on one date. It seems unfair, and it's not always true. Sometimes summer can be a good time to hold grain.
Speaker 3:But, I've got a character that I I use to illustrate this. His name is Hank Holder. And, Hank holds his unpriced grain right up until a week before harvest of the following year. Then he has to sell to make room for the next crop. Hank is getting killed.
Speaker 3:Even though even though one out of five years, he beats everyone. It's the other four out of five years we don't wanna talk about. And a lot of things going on. It's just the it's as simple as this. Grain seasonal grain patterns on cash prices are, well established, and they can they've been this way for as long as it follows the production cycle.
Speaker 3:Cash prices tend to be lowest at harvest. They tend to be highest in late spring, early summer, and then we begin this transition back to the low harvest price. And if you're holding grain beyond July 1, you're riding the wrong end of that curve.
Speaker 1:So in in context with this, this is the same if whether it's corn or soybeans, you would treat them both the same in terms of that eleventh commandment deadline?
Speaker 3:Yes, I would. Yes, I would. You could make the argument soybeans seem to hold on a little bit longer. Soybeans are more volatile. They've had some incredible July and August.
Speaker 3:Corn has too for that matter. But it's funny that exceptional year mass over the three or four where you're getting killed. And and, you know, I've I've been talking a lot about Hank and this eleventh commandment this year because there were a lot of sinners last year, and it cost them dearly. And it cost them dearly the year before. Hank has had Hank is, in a real slump.
Speaker 3:He has not won in a while. He's probably long overdue, but he's having
Speaker 2:a hard go. Well, I think if you look at, you know, just based on the overall prices, you know, I think there's a different, we're in a different environment today, right? So depending on Hank's, you know, his overall balance sheets, I mean he might be forced into doing some things differently this kind of an environment, think moving things a little bit more. And so that definitely, you've seen this over time, haven't you, with different the, you know, the fluidity of the market and of of cash in the market is it really changes farmers' behaviors, doesn't it? How they're Yeah.
Speaker 2:How they're selling their grain?
Speaker 3:Yes. It does. And and this past year has been a very difficult year for grain producers. By the way, livestock and dairy, doing okay, but grain producers have had a tough year. My colleagues at the Center for Farm Financial Management just two weeks ago wrapped up, you know, put a put a final bow on the 2,000, 24 crop at production profitability.
Speaker 3:And I haven't seen the numbers yet. I think a press release will be forthcoming soon. But I think I I overheard him say that it was the worst year, for crop producers in twenty years. Now I don't know if that's based on return on assets, total I I don't know what measure they were looking at, but that's what stuck in my head, the worst in twenty years.
Speaker 2:So I I have another follow-up question to Dave's, you know, corn and soybean. Obviously, as an agronomist, I'm very interested in this idea of, you know, market pushing farmers in terms of their spring intentions for corn versus soybeans. And I've been watching this corn and soybean price ratio, and it's held pretty steadily at really low, what I would call low levels, right?
Speaker 3:So soybeans
Speaker 2:have been priced really low relative to corn, but it seems like it's pretty consistent. I don't I haven't actually seen a chart for that price ratio, but just when I'm just spotting those charts, it seems like we're at two two point two to one for the last several months. So is that an opportunity? Are there are first, are there farmers that are holding soybeans thinking that they've been underpriced? And second, is there an opportunity for one of these or the other?
Speaker 2:Or are you, basically looking at them together?
Speaker 3:Well, there's a lot of corn and soybeans out there. However, I will note that quite a bit of grain, corn and soybeans moved in the first, six, eight weeks of the year, at least through mid February, and the proof for that was in the basis. I was amazed at how poor the basis was throughout Minnesota in January and, February. I saw the soybean crushers in Mankato and Fairmont bidding 50 under for soybeans. You know, a year ago, they might have been at option price, 50¢ better.
Speaker 3:Now why are they why is the basis so low? There's only one reason. The buyers are finding it easy to get corn and soybeans. I saw it at ethanol plants too bidding 35 under for corn. That that's a crazy low basis for an ethanol plant, but the grain is moving.
Speaker 3:This corn versus soybean, it certainly favors, corn right now. USDA had its February outlook come out here a month ago and, indicated as much something like they're expecting two and a half million more corn acres or was it three and a half million? I'm sorry. I think it was three and a half million more corn acres. I can't argue with that.
Speaker 3:And as a matter of fact, I wouldn't be surprised if it's even a little bit better.
Speaker 1:Take that a little bit farther and think about this fall then. If that comes to fruition and we do end up with that many more corn acres, you know obviously probably soybeans and a lot of these people will still have a rotation and stay with that. What are some things that you recommend that they think about from a forward pricing standpoint for the crop that is not it's going to be planted, know, this spring. But what about fall? How would you market ahead thinking about that and if we have typical you know weather and good corn production, we have hybrids out here that can produce very very good corn yields and so forth.
Speaker 1:What are some things that you recommend that they do in terms of a marketing perspective?
Speaker 3:Okay. Just like old crop, I want people to, pay attention in the late spring and early summer. Pay attention for looking for rallies in new crop prices, opportunities to sell. But here's the most interesting thing that I and now I'm talking fundamentals now because we're talking about three and a half million more corn acres, and that sounds bearish. It sounds like, oh, we're gonna kill this corn market.
Speaker 3:USDA put out a a balance sheet for the 02/2025 crop in that, outlook conference. They added, you know, three three and a half million more corn acres. They assumed a record corn yield in The US, and corn ending stocks still did not get to 2,000,000,000 bushels. And it was pretty amazing. And you think we we think of this 2,000,000,000 bushels, and I think we've thought of it as for too long.
Speaker 3:But for the last decade, if we have more than 2,000,000 bushels, we hang crepe, you know, there's been a death in the family. You know? It's in the the corn market can't go anywhere. For less than 2,000,000,000 bushels, things can get interesting. Even with all those new acres, even with a record, yield assumption, we're not over 2,000,000,000 bushels in carryout.
Speaker 3:So I I'm not gonna, pound this bearish drum on corn, or or pound it too hard. Still look for opportunities to sell. I wouldn't chase it today. You know, new crop, December corn this morning was somewhere around 4 and a half dollars, $4.55 a bushel. I wouldn't chase that.
Speaker 3:But look for an we had a recent high at $4.80 in mid February. Get me back to that level and take a good hard look. So it it sounds to me like you feel,
Speaker 2:and it it seems like the indication is, that the market is pretty mature and pretty capable of managing these planting expectations and managing acres and giving the right signals to farmers. Think we were back like 2013 or something like that, or 'seven, I can't remember the years now. We way overshot intentions. Farmers changed up their operations and then we had way too much corn, I think, that year. And it seemed like that was kind of a one off year where the market just did not send the right signals and we ended up getting really backwards on everything.
Speaker 2:But since then, it seems like everything's kind of plugged along and it seems like we've had this pretty consistent, pretty consistent request from the market that says, we need a few more acres of corn. And maybe that's what this 3,000,000 acre is, and maybe that's exactly what they're saying, and maybe that's why this corn soybean price ratio has been relatively consistent, is that the market feels like they're gonna get what they want out of the farmers.
Speaker 3:Yeah. It it we're gonna get more corn acres for a for a simple it's not it's not because the, corn price is so good relative to production costs. I think by my estimates, the opportunity for new crop sales today are are well below production costs for corn. The problem with soybeans is the new crop prices are way, way, way below production costs. So one is bad, one is real bad.
Speaker 3:So you go with the the lesser of two evils.
Speaker 2:Yeah. Lose money one way or lose a lot Yeah. Lot of money the other way.
Speaker 1:So I'm going back to Seth, what are you doing about those fall soybean prices in terms of opportunities and marketing and so forth? You've been overseas, have you found customers for us in terms of soybeans? What can we look forward to in terms of that and then sorry Ed, you can chime in here too as well, we have with our talk about our crush plants but what's going to happen on the horizon here and what should people be mindful of watching in terms of and certainly, you know, there's breakeven costs. But let's talk a little bit about the demand and what are the factors here.
Speaker 2:Yeah, definitely want Ed to chime in on some of this. I just maybe give you a little history is that I work with some northern states on helping promote shipments off the PNW. Because we have a really efficient channel to ship soybeans and now increasingly meal off of the West Coast Of The US. And it really is an efficient route to Asia, all over Asia. Cuts about half the time shipping time down for those ships to get over.
Speaker 2:The challenge that we have in the Upper Midwest is that our soybeans, basically the exact draw area that these soybeans go to the Pacific Northwest is also the area where we have lower, have had traditionally lower protein soybeans. So there's a lot going on with basically the end result is if you buy a boatload of soybeans from the PNW versus the Gulf Of Mexico, that's that shipload of soybeans from the PNW will probably have at least one percentage point lower protein than the one at the Gulf. And so those international purchasers, if they're selling their beans or their meal or their feed based on a protein basis, they're reluctant. And they won't want to, they really are reticent to purchase those. And so because I did a lot of work on amino acids going back thirty years now in soybeans, I've become, by default, because nobody else is doing it, the resident expert on kind of amino acid balance in soybeans.
Speaker 2:And so we work with nutritionists, and we talk to folks and we explain the fact that protein really is not a good indicator for the value of that soybean to that end user. So unfortunately, you know, the market is a little bit broken in that we're trading based on tons of grain at certain that meets certain thresholds. And, you know, we've got grades, and then we also have maybe protein might be built into a contract. Protein's very easy to measure. It's an easy way to make the trade, but it isn't functionally very important for either the buyer or the seller.
Speaker 2:So it's kind of an artificial thing. So we're trying to break that down. So the big challenge that we have right now is we're trying to, you know, we're in a dynamic market. One is that this north to south gradient in The US protein is actually decreasing over time. So the Minnesota soybeans and North Dakota, South Dakota soybeans aren't as bad, even on a protein level, as we thought they were.
Speaker 2:Next, we've got a lot of processing coming online, so there's a lot more meal going to be available. So we're meeting with, you know, one of our real focuses is meeting with buyers and saying, hey, there's going be meal available. You know? And so I think those pieces are really where we're at. And then the part that we can't even deal with is related to the trade and tariff issues.
Speaker 2:And we expect that there's going to be some reshuffling of the whole soybean market from China to Brazil. But, you know, we did this back in 'eighteen, and so we'll probably do the same thing. And I think the market's pretty adept of moving those soybeans to different markets to meet, you know, the buyers' pricing demands. And those ships can go about anywhere, and so we'll probably just see some jacking for our whole soybeans as they go overseas. So anyway, whole bunch there, but I'm interested in Ed's thoughts in terms of where he thinks this, you know, the overall trade is going with what we know now relative to supply and demand especially, and how he sees The US position in this, both kind of a short term and a long term position, especially relative to the big guys.
Speaker 2:We have Brazil as a competitor and China as our main purchaser. Well, before I
Speaker 3:get into that, I just have to comment, Seth, because I've heard you talk about protein and the amino acid balance and this protein quantity versus protein quality. And I think we've talked about this before. Early in my career, I was a wheat buyer for a flour mill. We've been having that argument for fifty years in the world of flour milling. That is you had but protein is a big factor.
Speaker 3:Gluten is essentially protein. You need more protein for products that rise, breads and so on. But protein quantity is not the same as protein quality. Not every 14 protein hard red spring wheat is the same, and millers work very hard trying to find the areas that are producing good protein quality. It's just it was fun for me to discover a common language between soybeans and wheat.
Speaker 3:Concerning demand, we're on the outs with China. They're doing all they can to move their purchases to South America, primarily Brazil, but argent Argentina, Paraguay also. We have been expanding incredibly our soybean processing capacity domestically. By my count, there have been 11 major expansions or new crush capacity built in The US in the past two years and 11 more opened or expansions. And just keep in mind, there's only 60 plants before that started, so it's a big percentage increase.
Speaker 3:Another five or six on the way in the next two years. If I may speak in skiers' terms, we we the industry might have gotten out over its skis here. The demand for this is all being driven by the anticipation of high demand for renewable diesel, and it is growing. We've got mandates. We've got tax, incentives at the state level, at the federal level.
Speaker 3:But the problem is, these these mandates, they add up to a big increase in demand. The problem is that supply is even bigger. We've we've outrun that demand base. So we're kinda getting hit on both ends in the soybean market. It's why it's, struggling right now.
Speaker 3:The exports are struggling. The domestic market is struggling. It's great that, groups are overseas working on building markets. It's the right thing to do, but it takes time. These things just don't show up, overnight.
Speaker 3:It's a big issue.
Speaker 1:Well, certainly, you know, we're talking about about China. They have opportunities to purchase, some of their outside needs for soybeans in a number of different market areas across the world. And I think that always plays into, and and you see that continuing. Is correct?
Speaker 3:Yes. Although, really, if you wanna talk about major soybean producing countries, it's Brazil, excuse me, The United States, Argentina, and then it drops off quickly. Paraguay is a remarkably productive little country that's sort of like the five or six very productive counties in Southern Minnesota. It's not large, but they produce a lot. Canada and, even over in Russia and Ukraine, they're producing modestly more soybeans every year, but they're minor players.
Speaker 3:The top three, the US, Brazil, Argentina, I believe, were 90% of the soybean production.
Speaker 2:Yeah. In fact, one of the trips I was on this, this spring is actually to Brazil. On the other side of this, I was over in Mato Grosso looking at the supply side of this thing. And so we spent a week over there talking with farmers and traveling around. And we're in an area that, you know, twenty five years ago would have been a frontier area.
Speaker 2:But today, it's all soybeans, as far as you can see. And those farmers that are there are not they don't complain about logistics. They don't complain about the market and ports and supply and finding finding, you know, lime or fertilizers. They make it work. They just make it work.
Speaker 2:And so one of the farmers that I was with, he actually is a consultant for other farmers as well. And so he's helping farmers that are building new operations. And I said, well, where are those? Are you helping them find stuff that's kind of on a road or near a railway or have a port access or anything? He said, no.
Speaker 2:We move everybody out as far as we can. We help them build roads. We want, the money is all in breaking new land out on the edge of the frontier so that they can have the future for themselves. And it just shows me that there's, you know, there's really no limit to what, I mean, there is a limit, but the limit is there's a very high ceiling on where they can go in Brazil. There's a lot of upside opportunity for them to produce more.
Speaker 2:And giving the Chinese an opening to just help them with their infrastructure and support a lot of their big investments is a real disservice to our farmers. I think we're really shooting ourselves in the foot for the, you know, for the foreseeable future. Because the Brazilians are going to be able to produce soybeans at a price underneath what we can do. And so it's just going to put a bottom, it's going to put a top on our prices, and we're just going to really have a hard time. We're going to have a hard time.
Speaker 2:We used to, I think that we used to look at these weather factors, especially local weather or regional weather in The US. And I think those days are going to be done. There's enough production there. They're going to swallow up a lot of those regional and local weather effects, and we're just going to have to deal with these things. So I'm a pretty rosy guy here.
Speaker 2:But remember, I'm a production person only and I own a single soybean, so I don't have a dog in this fight.
Speaker 1:I want to key in on that, We mentioned before on corn, know, and say one of your goals in the December market you know is at $4.80 price. Given what Seth just talked about, we oftentimes hear about South American weather. So going forward this next cropping season should our Upper Midwest and Minnesota farmers watch more carefully the weather impacts because there's different terms of production in Brazil and in Argentina. And as far as watching that market in the forward pricing opportunities more so than to be all caught up in a hold that the tariff will there be a China, will there not be you know back and forth. These are the things the weather is gonna be there no matter what.
Speaker 1:What are some things to think about there from a weather standpoint and then finally my leap here is what is that target price this fall in soybeans that you think people should really watch and be attracted to just like we talked about in corn? What's what's that goal price, so to speak?
Speaker 3:Well, I don't know if I have a quick answer to that one. We're we're so far away from production costs. I wanna comment just a little bit on what Seth said. The amazing thing about Brazil is they are expanding acres every year. And we how can they do that?
Speaker 3:They're finding more acres, and there doesn't appear to be an end to that in the short term or even the medium term. They're finding, you know, two, three, four percent more acres every year and they're still expanding. And their yields are very good. Their yields have and soybeans have caught up to The US, essentially. Weather patterns.
Speaker 3:So weather's always gonna be a player here. And yet, I know year years ago, out of Iowa State, Alwyn Taylor, a meteorologist there, made made the comment once and I explored it with him. Weather, droughts are less common in South America. Something to do with weather patterns. He's not saying they don't exist.
Speaker 3:Argentina had a terrible drought a few years ago. But in Brazil, they're just less common. They can have bad crops. Mhmm. But butt kicking droughts like we have here in The US on occasion, 02/2012, '80 '8, '80 '3, they happen.
Speaker 3:And that that frankly, I expect them to happen again. We we have a history there. They don't hit Brazil as hard, and and I'm not sure if I can put a finger on that. But weather wise, can't do it. Price wise, we're looking at November soybeans now, just over $10 a bushel.
Speaker 3:That's new crop soybeans. That means that the listeners here are looking at new crop bids somewhere around 9 and a half dollars cash. I figure that's about, $3 below production costs. That's a that's a bitter pill to swallow. You gotta get me over $11 on the November contract for me to price before harvest and we're a dollar away from that, almost a dollar away.
Speaker 1:Well, you don't wanna be sleeping at the switch, so to speak. You wanna be tracking that or working with somebody that can help Absolutely. And if you see those opportunities, it's one of those things like, you know, like, well, I'm sorry I didn't do it then. You don't wanna be sorry, you really wanna be timely Yeah. In in this situation and and back into that particular area.
Speaker 3:It'll it'll be a tough sale to make even at a dollar higher. It'll be
Speaker 2:a tough sale to make and you're not gonna make it because you expect to big make big money on it. You're going to make it because it might be better than what you see at harvest. Yeah. I'm really sorry to jump around here, but I really gotta get back to this weather thing because there's one other point I I'd really like to impress upon people about the weather in South America. Ed Ed brought up a really important point about droughts, and it's really important in Argentina, in through Paraguay, Uruguay, then Southern part of Brazil, which is the historical soybean production area.
Speaker 2:But now that soybeans have moved into the Center West, this Mato Grosso area that we talk about and beyond outside of outside of Mato Grosso. That's a tropical environment. So where I was at, they get 200 centimeters of rainfall during their their soybean production time. So that's two meters. So that's 70, I just looked it up, I think 78 inches of water.
Speaker 3:I think that might be enough.
Speaker 2:So they're not going to be short of water. Yeah. But what they do have that's really, I was specifically going down to Brazil to see is how they can harvest these soybeans in this tropical environment. This is the safrinha soybeans that are harvested before corn. So it's double cropping soybeans and corn.
Speaker 2:So essentially, you're harvesting the soybeans in the middle of the summer, but it's also their rainy period, the middle of their rainy period. So it's hot and humid. It rains an inch every day, around 11:00, and then the combines go to the field. As soon as things dry out enough, the beans come in at 18 to 22% moisture and they go through a dryer. Everything gets dried, every soybean gets dried, so you can imagine the challenges you have with operating machinery in the mud, you have muddy roads, you have wet soybeans that is not, you know, out of the ordinary.
Speaker 2:It's every soybean comes in wet and needs dried. But they deal with it and that's built into their system. So yes, it seems like a crazy challenge that they would have, but they've figured out how to do it, and it's just part of their standard operating procedure, and they can do it. So I look at this, all the increasing soybean production area in Brazil, I tend to think it's more immune to weather facts weather effects than than the the historical area, so the new acres coming on. So it it should lead us to less and less impacts of weather over time.
Speaker 2:Plus we have more acres and there's more broader geography. On the other hand, there is the corn side of this, is that they are trying to produce corn after soybeans. And so how that weather comes in during the summer, if they get really long extended periods of rainfall and they can't get their corn planted, then that's a problem on the corn side. So there's a lot more challenges for them on the corn side. But I asked the guys down there, I said, where's your money coming from?
Speaker 2:They said, it's all soybeans. We don't really care about corn. And that was different than what I had heard before. I thought corn was driving this thing. The soybean market still drives it, and the farmers down there, we actually toured an ethanol plant where they're making ethanol, grain ethanol, just like we do here in The US, corn ethanol from the grain like we do in The US.
Speaker 2:Not because it can compete with sugarcane ethanol, but because they need a place for their corn to go. So it's again, I'm Mr. Cherry here on the soybean side, but I just wanted to round out that conversation with some of my own, some of the things I saw on the ground.
Speaker 1:You know, one last item I just wanted to mention a little bit about corn demand, and you talked about ending corn stocks. In terms of that, know we have obviously a lot of our corn production so forth even on a seasonal basis, we're trying year round on the ethanol side. But any comments Ed about, you know the cattle market has been very good in sort of the demand and also selling corn into Mexico. Are is there enough opportunities to get those ending corn stocks down to keep the price up?
Speaker 3:Yeah. We've we've got great, feed demand here in The US. Corn exports to Mexico are huge. Dave, I like to tell this, just to illustrate how much corn we sell to Mexico. This last year, I think listeners know what a 100 car unit train looks like.
Speaker 3:We sell to Mexico the equivalent of seven one hundred car unit trains crossing the border every day for three hundred and sixty five days a year. That's how much corn is moving to Mexico. And, they are considering retaliatory tariffs. Not good news. By the way, corn exports have been very, very good for the last couple of months.
Speaker 3:But here, we've somehow we've avoided the tariff talk, which is nice. I need a little reprieve from tariff talk. But part of what's driving corn exports is the threat of tariffs coming on. You've got a lot of buyers throughout the world saying, you know what? Let's get a book now before we put on our 10%, twenty %, thirty % retaliatory, tariff.
Speaker 3:The EU is gonna slap on a a tariff on US corn imports starting April 1, twenty '5 percent. I believe it's 25%. Canada has enacted a 25% tariff on US ethanol, and they are our number one destination for ethanol exports. So demand has been good. Export feed demand has been good based on, you know, a good great cattle market.
Speaker 3:I was in South Eastern South Dakota in December. Yeah. I was in cattle country. And, I I don't I've never described cattlemen as giddy, but they were they were borderline giddy. They were things were so good.
Speaker 3:The hog market's pretty good right now. Dairy's doing well. That side is good. Ethanol, excuse me. Export demand is being boosted by this cloud of tariffs that might come.
Speaker 3:So you get a lot of buyers saying, get it get it bought now before it's enacted. So things look good for corn right now, and the, carryouts look decent. We've got the possibilities of doing well.
Speaker 2:I can't let this go. I wanna know what your thoughts are about short and long term opportunities to expand domestic demand for corn and soybean. Is there is there room to increase our beef herds and and swine and and poultry over time? I mean these things are not fast. There's permitting problems.
Speaker 2:There's there's, you know, the the pure cash and economics of it. What do you what do you think? If if soybean meal really dips based on, you know, a number of factors that we've already talked about and corn stays low, it should really push these industries pretty hard. And it should give a pretty strong signal that there's a lot of long term opportunity for for livestock.
Speaker 3:Yeah. These these things expand slowly. But, I think of soybean meal prices. And, I've had a lot of people asking me about that because there's gonna be there there already is a large increase in meal production sort of becoming the byproduct of oil production. The hog and poultry producers in particular, the the big users of meal, I I think they're gonna be happy.
Speaker 3:I think meal prices are gonna be very reasonable relative to the entire feed cost, for a time. Relative to the total feed cost, that meal portion is gonna be pressed lower, Already is. Yeah. I I see some expansion, but doesn't happen quickly. These things take time.
Speaker 2:Yeah. I I think about the production side, but then I just just occurred to me that we've got this whole question about slaughter and how we get all these animals slaughtered. And there, we could be getting ourselves in a jam in that side of it too, is that we may have trouble building enough processing facilities for these animals in order to get things through. So very good. Thank you for for appeasing me on or my my questions on this.
Speaker 2:Very interesting stuff.
Speaker 1:Well, we are approaching the conclusion of our our podcast. Ed, is there anything that we didn't touch on? Things something that you would like to bring up for the audience?
Speaker 3:Just on the policy side, USDA Farm Service Agency here a day or two ago has, has released $10,000,000,000 in direct payments to eligible ag producers. This is the emergency commodity assistance program, ECAP. $10,000,000,000 is nothing to sneeze at. It's something like $43 an acre for corn producers, thirty dollars an acre for soybean producers, thirty one dollars an acre for wheat producers. I think a lot of listeners are gonna welcome that.
Speaker 1:Okay. Very good. Anything else, Seth, that you would like to make a comment on at this point in time?
Speaker 2:No. This has been really fun.
Speaker 1:Well, super. Well, Ed, really appreciate you, taking the opportunity to visit with us and Seth, we really appreciate that you are able to work this podcast in amongst all of your trips and so forth. They're very valuable and opportunities going overseas so I think the timing is really good. And so I guess the bottom line Ed is to keep watching these markets and don't be afraid to, so to speak, take an marketing opportunity, don't always just wait for the next step to go higher.
Speaker 3:Yeah. Look for rallies to sell. I've said for some while for for a while and David, you and I will be waiting for Seth to bring us back t shirts from Thailand. Very good.
Speaker 1:Alright, well thank you very much. Well, our guest today has been Ed Usset, University of Minnesota grain marketing specialist here at University of Minnesota Extension and along with my cohost Seth Nave, University of Minnesota soybean specialist in Extension. My name is Dave Nicolai, I'm a University of Minnesota Extension educator in field crops. This has been the University of Minnesota CropCast and thanks for listening.
