Market Plus: Naomi Blohm

Market Plus: Naomi Blohm


Howell: This is the
Friday, November 8, 2019 version of the
Market Plus segment. Joining us once
again is Naomi Blohm. Naomi, I’m sorry I had to
cut you off there right at the end of the program. We were talking about
the lean hog market. Blohm: Yes. So looking at things,
watching the support levels for prices, with
the fourth quarter production just being
so record large and our export market to China had
picked up but then we’ve kind of lost some of our
other traditional partners with Mexico, South Korea,
just not exporting as much as we normally
would to them. So we need to have more
exports to our traditional buyers, keep up with
that Chinese demand. But then what’s
interesting I was reading from Hightower this week
and he was saying that for first quarter production
next year and even into second quarter production
next year the production numbers are support
to come down. And I thought, well that
makes sense because those deferred prices are so
much higher and I had figured they were higher
just thinking of more demand and that’s why they
were up but it’s actually because production was
supposed to be down as we go into 2020. So that was something that
was new to me and I want to keep an eye
on that also. But those nearby contracts
continue to just waver in a sideways fashion because
they hope for this export market every week and
that’s all we can cling to right now. Howell: Was it lower
production value that was a significant amount? Blohm: I’m
trying to recall. I believe at the first
quarter production was supposed to be, I’ll have
to double check, but I feel like it was over 200
million pounds because it was quite significant and
it was one of the bigger drops in five years. So then going into the
second quarter it was like another big
drop like that. So I’ll try to remember to
tweet out what the actual numbers were. Howell: Okay, people can
find you on Twitter then. The other thing I wanted
to ask about this week, I don’t know if you saw the
headline, but China made a big purchase, I don’t know
what the number was, from Denmark. What do you make
of that this week? Blohm: Well, they’re
trying to make sure that they are not pinched to
buying from only one place. Canada, also that
announcement came that they were going to be able
to export to China again. So now they have
two more customers. That way the global prices
for hogs don’t have to just continue to go up
because they’re trying to say we’ll be buying from
everyone so prices from their perspective
hopefully don’t just ramp higher would
be my thought. Howell: That makes sense. Spread the wealth
out a little bit. Keeping with the idea, the
theme of livestock here, we’ve got a question from
Linda in South Dakota and I think you got at this
during the main program but I want to make sure we
hit that point home for her. She wants to know, are
there signs of increased cattle prices and a
positive sign through the spring? Blohm: Okay, so the cattle
prices, the demand has been stronger, the boxed
beef values have been really fantastic. So that is what had led
this price rally thus far. And we are absolutely
deserving to be of every price that we
are at right now. the only caution for the
rest of fourth quarter is that seasonally prices a
lot of times will slide lower for cattle in the
month of November and then also the futures price
right now is trading at a premium over the cash
price so that makes me a little cautious as well. Going forward into 2020
production is actually supposed to increase and
so that is something that makes me a little bit
cautious because we had been trading this less
production but now it’s supposed to increase. So the demand needs to
stay as strong as it is right now and we need to
see more export demand, which absolutely
could happen. So I had been really
bullish going into 2020 but now I’m getting a
little bit more cautious. I don’t think that prices
will fall apart by any means but we need some
more demand news to make prices rally. Howell: Okay, demand
news is what seems to be driving a lot of markets
including maybe the lack of demand in
the corn market. we’ve got a question here
from Tim in Northwest Iowa. He said, is there any hope
for the corn market with trade and exports or will
we have to rely on the local market such as feed
mills, ethanol, etcetera? Blohm: That’s something
I’ve been wondering also. I’m actually a little
surprised in a sense that our corn exports are as
slow as they are because the soybean and the wheat
are actually on target for USDA expectations. But as we know the corn
market has been suffering. So the dollar dropping
would sure help. Beyond that local markets. And I think that the basis
is showing that the demand is there in terms of
demand for feed, local ethanol demand and like we
talked about on the show ADM in Illinois clearly
wanting corn, that they’re willing to pay for drying,
and that’s a lot of places too we’re hearing that the
demand is strong that way. So we need that export
market to come up. If China would come in and
buy some more that would really be helpful. But they have so much
competition right now from South America. So I hate to say it but
maybe something will go bad for South America. That would help our
corn price go higher. Howell: And as you look
at the prices in South America, Argentina,
Brazil, obviously they’re our biggest competitor,
are we priced comparatively to
their corn markets? Blohm: We had been coming
down to get more equal and I’m not quite sure where
it’s at right now. Howell: That’s something
we’ll just have to wait and see. But it seems like if we’re
not priced comparatively to them that will
not help our exports. Blohm: Yeah, but I almost
thought I read that Brazil and Argentina were about
out of what they could export. So hopefully then some of
that business will come out way. And also remember that
we’re only two months into the calendar year as far
as the USDA calendar year goes so there is still
time for corn to catch up but it needs to
get going soon. Howell: Right because
this marketing year just started on
USDA’s calendar. Okay. Naomi, the other thing
I wanted to ask about tonight was weather
because this year has been so unusual. We got another snowfall
across Iowa, across some of the Plains and your
neck of the woods there in Wisconsin. What is this year’s
weather like for you guys up there? What are you hearing
from producers? Blohm: Yeah, so we’re on
our third snow already in Wisconsin and this one is
going to stick because it’s so cold and producers
are frustrated, just flat out frustrated. One of my clients, I had
tweeted out a picture this week, he’s harvesting corn
in it’s like a pontoon, the field was under water,
so it’s unfortunate. The one maybe good thing
is that with this colder weather our guys in
Wisconsin can maybe get into the field because the
field is now at the point where they can actually
drive into it but now we have 30% moisture on corn
so it’s the pickle of well do you want to harvest it
and then pay through the nose to dry it down or do
you want to try to let it sit out there and then
get to it as you can. So this is the year that
will not end and it continues to just be a
black eye for all of us. Howell: I hate to ask
this, but what do you think the likelihood is
that we’re still in the fields, we’re not
harvested, we’re well behind our five year
average on corn and soybeans, so that means
fall fieldwork probably not going to get done. Do you think we’re going
to repeat this same cycle? Weather is
unknown of course. But do you think we’re
going to repeat that into next year? Blohm: Based on what the
Farmer’s Almanac has just come out with I am scared
to say it seems like it might go that direction. And you hit the nail on
the head about the fall fieldwork. That was the other thing
that didn’t get done last year so when spring came
around it was an extra delay for producers on
top of the wet weather pattern. So you hope it changes,
you just really hope it changes. But with the rivers still
being so high and the snow pack that is already
starting to happen out West you hope it can
change, that’s all you can do. Howell: It’s a tough
situation, that’s for sure. Okay, so with all that
stuff being said, Naomi, it sets us up nicely here
for our last social media question coming to us from
Jamie wanting to know which crop should we plant
more of in 2020, corn or soybeans? And which one of the two
will have more profit potential given today’s
current prices? Blohm: That’s a
good question. That’s the first time I’ve
been asked that question so far because normally
yeah, with harvest wrapping up people are
already getting ready to go with their seed
purchases for the next year. And I almost say it’s
too soon to answer the question because we don’t
have enough pieces of the puzzle yet to know exactly
where we are right now with our balance sheets
because if the harvested acres come down and if the
yield comes down more that could really allow for a
nice price rally yet to come for both
corn and soybeans. And then if South America
has any weather issues it’s a whole new ballgame. So I don’t know that we
can answer that question quite yet. But also if you’re in a
situation where you know you’re going to be
planting corn and beans both, be thinking about
the pricing opportunities as they come because there
will be opportunities and a lot of times those best
sales are the ones earlier in the year. So don’t be complacent
even though you’re out still harvesting. Howell: It’s a weird year. Blohm: It is a horrible
year, just horrible. Howell; Naomi Blohm,
thank you so much. Blohm: Yeah,
thanks, Delaney. Howell: Join us again next
week when we’ll explore how one farmer prevailed
in a six-year battle with the U.S. government and Matt
Bennett 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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