Barn Talk - The Commodities Corner: Inside the Fascinating World of Commodity Markets w/John Greiner

Episode Date: April 14, 2023

Welcome to Barn Talk! What happens in the barn, stays in the barn, but not today! We’re letting it all out! Whenever there is a market update, That update comes from none other than Kat’s Grain. With the amount of volatility in the commodity markets, we thought, who better to help us help you understand how it all works than the King Kat himself, John Griener Welcome to Barn Talk!  Barn Talk Merch! 👇🏻 https://www.thislldo.co/  SUBSCRIBE TO THE PODCAST ➱ https://bit.ly/3a7r3nR   SUBSCRIBE TO THIS’LL DO FARM ➱ https://bit.ly/2X8g45c  SUBSCRIBE TO BARN TALK CLIPS ➱ https://bit.ly/3BlZnqq   LISTEN ON: SPOTIFY ➱ https://open.spotify.com/show/3icVr4KWq4eUDl7Oy60YMY  ITUNES ➱ https://podcasts.apple.com/us/podcast/barn-talk/id1574395049 Follow Behind The Scenes👇🏻 ● This’ll Do Farm Instagram ➱ https://bit.ly/30KPBNk   ● Barn Talk TikTok ➱ https://bit.ly/3qciekS   ● Sawyer’s Instagram  ➱ https://bit.ly/3BtX0n4   ● Tork’s Instagram ➱ https://bit.ly/3LGZJxS    ------------------------------- ***PLEASE NOTE*** Barn Talk is a significant break from the typical content viewers have come to expect from This’ll Do Farm. Please be advised that we will be exploring a wide variety of topics (some adult-themed) and our younger viewers (and their parents) should be advised that some topics will be for mature audiences only. ⚠NO FINANCIAL ADVICE / DISCLAIMER⚠  The Information discussed and shared on Barn Talk is provided for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or success for any particular purpose. The Information contained in or provided from or through this podcast is not intended to be and does not constitute financial advice, investment advice, trading advice, or any other advice. The Information on this podcast and provided from or through our content is general in nature and is not specific to you, the user or anyone else. You should not make any decision, financial, investment, trading or otherwise, based on any of the information presented on this podcast without undertaking independent due diligence and consultation with a professional, professional broker or financial advisory. Understand that you are using any and all Information available on or through this website at your own risk. RISK STATEMENT– The trading of Bitcoins, alternative cryptocurrencies, NFTs, individual stocks, etc. has potential rewards, and it also has potential risks involved. Trading may not be suitable for all people. Anyone wishing to invest should seek his or her own independent financial or professional advice. Learn more about your ad choices. Visit megaphone.fm/adchoices

All of the food we eat and much of the clothing we wear comes from plants and animals that are raised on farms. Farms are different in type, in size, and even in name. Welcome to Barn Talk. What happens in the barn stays at the barn. Until now, we're going to let it all out for you today. Look at that. I'm doing the intro. I don't usually, this is special. I don't usually get to do the intro. But today, we're going to talk something that's very important to all you farm people out there. We're going to talk about Marcus. No market update today, but we're going to talk about marketing, grain marketing.

And no better person to talk about that than the king cat of cat's grain. He is with us today, and he's going to give us the market update. Before we get into it, guys, you know the drill, pay the fee. If you get any value from the show, if you learned something, and if we made you laugh, shared out your friends, family, coworkers, team members, employees, whoever, the most of the more you guys share the show, the better guests we can have on, the more content we can create, the better content we create. And it's kind of the ticket to admission to watch or listen to the show. And also leave a review on Spotify or Apple. We're up to almost 700, five-star reviews on Spotify,

and we're up to 280, 290 on Apple. So thank you, thank you to all that have been doing that, and thank you to all that have been paying the fee. So without further ado, let's get into it. John Greiner, the guru of Katz Grain. Welcome to Barn Talk. Thanks for having me. How's it going? How's it going today? Well, it's been quiet. Corn's down, I think, nine or ten cents today.

Today's Thursday. So it's the last day of the trading week. Good Friday. There's no markets tomorrow. So it's quiet. When the markets are down, it's typically quiet. And then our quietest time of year would be coming into spring planning. So obviously in the fall of the year, everyone's on the combine.

or whatever, they need a semi, they need a truck, they need a bid, they need to know what's going on, so we're busy. But in planning, you don't need a grain merchandiser and you sure as hell don't need a semi. So, you know, it's just. So you literally, this is about one of the only times a year that you're ready to cruise into the weekend. April, May, June, like, which is a good time to be slow. Yep, yep, yep. But we don't have any, I mean, it's, where there's still grain moving, don't let me wrong, because this time of year, we will have end users, your, your, your processors, your, and some hog feeders, if they're short bot, they're pushing the bid if they didn't have their needs met. So we will, I mean, there's grain moving. There are times,

especially if it is an up day or something, but overall, it's a quieter time for us. Well, I just got to give a shout out to you, John, because you brought the goods today. Look at that. He brought both dad and I a bottle, a crown. And that is, that is something we've had, I think one other guest has brought us some whiskey or some bourbon. So shout out to you, John. Thank you for laying it on thick. So I was just sitting here crossing off all of the snarky questions because I had a whole bunch of them. And then you walked in with that, I'm like, oh, shit, I'm going to have to take.

Got to give him some. It's too early to crack it open today. So we can't crack the crown open. But if it was a little later that we were shooting this, maybe we pour one. But, yeah, we're going to have to have a whiskey night probably at some point. that might be i don't know how long we can record that yeah the recording quality might go down exponentially as the evening goes but it'd be fun for a while yeah and also shout out to john cat's grain is where we get all our all our market update numbers for all the commodity markets

it's all cats grain and john is the head honcho of that so that's a big shout out to you as well well thank you it's very timely information when we give it uh the problem for all you poor folks is that we don't always get the podcast out for a little while, but people really enjoy it. It's one of them things that we get a lot of people that grew up that have a connection to ag, but they don't live anywhere where WMT's playing or WHO's playing, and they love the market update because it's a connection back to their childhood or back to the Midwest, and it's just, it's really interesting that that has kind of turned into one of the segments that people really enjoy. And it's also a great, we get some really good questions from people about how markets work.

And that's part of the reason why that you're here. And since we're shouting out, we better be a shout out to think vaccinating because Mitch got us these really nice tublers. so any of you that don't know, Mitch Fink, he vaccinates pigs for us. And he does for a heck of a lot of people. And anyway, I told him it's a pretty tough, it's a pretty tall order to get us to give up our, this will do cups, but they're pretty sharp. So we said, all right, we'll give a shout out to you, Mitch. But the markets are kind of in limbo in the fact that we're right at the cuss,

or we're right at the end of the growing season in South America as far as the first round goes, and we're just getting started with planning here. So depending on the day, you're never quite sure what's going to drive the market that day. It could be news out of South America as far as they revised the crop, what they got for a crop or what they don't have for a crop, and then what the weather is or isn't here. So it's kind of a limbo period. Yeah, you're exactly right.

And what's knocked the markets the last two days is both sides are negative. Right. So obviously if you pull up, like on our website, we have a tab that says NOAA slash drought monitor. And on that tab, it's on the left hand side of the homepage at catscraign.com, I have links to the six to 10 day model, the 8 to 14 day, the 5, 7 day, Noah precept. maps. You can access the European models there. You can, once you click on that link, you can click on the country, click on the country that you want to see zoomed in on. And then it's one of the parameters, I think they call it. You click on accumulated precept. You can do temperature.

But really, it says Thursday. Really, we went into last weekend, the models were kind of cool, wet for the United States. EU model for Brazil was just kind of sketchy on rain. We come into Monday and it was at the 3rd of April. And it's like all of a sudden over a weekend. Yep. The U.S. model went above normal temps below precept. The EU model brought in rain now for Brazil. They're really especially watching Madagrosso is kind of in the north. Parina is in the south. Those are the two biggest corn growing countries, soybeans I believe too. But the The saffrina crop is what they call this second corn. And it, you know, you got to understand.

What's weird in Brazil is like totally opposite here. So 70% of the Brazil corn is grown in what they call this saffrina crop. Second corn crop. So actually 70% of their production has just been planted in the last couple weeks. And so the Brazilian farmer typically plants soybeans first. And then harvest that crop. They plant the beans roughly in February, harvest the crop, or January, February,

harvest the crop shortly previous to now, and plant this corn. And so right now is a major growing season for them, so we're watching their weather and obviously our planting. And so when you look at the crop insurance dates for really your southern and central corn belt, the first date you're supposed to, well, in order to have replant coverage,

the first day is much. Monday, April 10th, and for corn and soybeans both. And so now of a sudden, we come into this week and the markets are looking. It's warm and dry. We might actually be able to plant the first day that you're supposed to. And then that whole week is going to be warm and dry. So they haven't been very happy. And so the longs have been getting out.

The funds went from net long position a month ago, long 100,000 contracts. First of March. Then they just buried the market mostly. a handful of reasons, but now they're actually net short. And so it's been a rough week. So yeah, you're right. It just depends what they want to talk about day to day. But the two things are, we're bearish this week anyway. Yeah. And if it does hold and guys start and planning starts running a little ahead, that'll just add that much more pressure to it. Well, and we're building, we're talking that this week. But what's interesting is, you know, there's no trade tomorrow or there's no trade on

Friday. So we'll come in Monday and we'll have literally almost four days for those models. And those models to decide if they're going to change or not. Right. So even though we have a good week of planning next week, let's just say we do, if those weather models are cooler and wetter for the third or fourth week of April, we might rally into next week. They're always looking ahead. It's not what's going on today. It's always what is expected later. And that's not the corn and soybean market alone. It's hogs, cattle, U.S. stock market, everything. It's always what's ahead, not right now. Yeah. So let's go back a little bit.

Just talk about the origins of cat's grain and kind of what your guys' focus is today. So my mom, Katie, Griner, started the company in 2002. So it was somewhere in early 2001. She left her job at the Washington Journal and started working for another guy that was doing, was a small grain dealer, buying some grain direct from farmers and taking it to GPC. or ADM or whatever. And so she was like basically his secretary. Well, then he got into some financial issues

and lost his grain dealer's license. And so at the time, my parents, when I was growing up, didn't have any money. They didn't own where they lived. I mean, they didn't own any crop ground. And so my grandfather, well, when a mom's boss at the time lost his dealer license, she didn't have any money.

And you have to have, I think, a couple hundred thousand in assets to have a little. a grain dealer's license. So he deeded her a farm over in Loiza County. And so she was able to obtain a dealer's license then and basically took took up his business. And then I think it was sometime in 2003, I might not be exactly accurate, but sometimes shortly after 2003. I was in college at the time, all this was going down. I think Rob Brennaman called mom and said, hey, I need you to start buying me corn. Yeah. We're going to expand.

and we need corn and I want you to buy it all. So that's how that relationship started. And it's been strong for 20 ongoing 20 years now. But that's kind of how Katz grain started. And then I got out of school in May of 2006. I went to co-college and a business degree and started working for ADM shortly after I graduated as a grain merchandiser. and I think it was in October of 2007.

Mom called me up, and I had moved to three different locations within ADM by then, which was a good thing for a career standpoint. I was in Evansville, Indiana, buying grain for the Ohio River. I was in Winona, Minnesota buying grain on the Mississippi River, all for export, and then went into soybean processing in Mancato, Minnesota, and I was in charge of selling soybean meal to the dairy farmers in Wisconsin, and then hog producers up in Manitoba, Canada. And it was a good job.

But she called and she said, John, I'm getting bigger. I have one part timer, but that's not going to cut it. I need another full-time person. Do you want to come go in 50-50 partners? And I was like, well, obviously, first thing you're going to say is, what's it pay? And she goes, well, you know, I can match your ADM salary. But then after that, it just. whatever you make it just depends how we do yeah it just depends how we do and if we can continue

to grow and i and i was frustrated i was about your age soyer a little older but you know your buddies are getting married you're they're having bachelor parties you it's stuff you want to go to yeah but i'm six hours away maybe eight hours away and moving around a lot it's just frustrating especially if you're close with your family and your your friends back home so i was like you know what, let's do it. Why not? I want to move back home anyway, and this is a chance to be involved in agriculture and business at the same time. So that's kind of, and we've been at it since. That's awesome. That's an awesome story. And I like, this is one of the best, I don't know, for our basis here, we always talk about it. It's amazing here in Washington County because we got

all these hog feeders, and it's a good place to be. I mean, I think you made a good decision, I think, that you came back here and we're here where a lot of that business is done. So, um, so like we'll do a little fun question before we get in the nitty gritty, but did you, you said that your dad before we came on, he raised hogs and then back in the 90s, 80s somewhere in there. Yeah. Were you involved in any in agriculture at all when you were a kid? Yeah. So dad had a 40 sow farrowing house. Yep. And then he had Sal's out. outside. I don't know exactly how many, but I'd say at least another 40 in an outside building lot. And then it would have been I would, he would have done the A frame thing back

when I was much younger. But when I was, you know, old enough to help, say seven, eight years old through the time I was in ninth grade, he was farrowing. And they would sell feeder pigs, though. So that was the thing. We would combine my uncles on the grinder side were, involved with farrowing and we'd combine pigs every week and go to colonna and sell feeder pigs on wednesdays at 10 o'clock i think or 1030 and then if the sale went went well we'd be able to eat in the diner if it didn't go so well we were straight back home but yeah and then about that mid-90s by the time i got to be about ninth grade he converted into a nursery and um started and started custom feeding for ikelberger at that time and has been since yeah

A lot of people, I mean, that's something that's kind of been lost to history, but that clone of feeder pig sale, holy mother Mary, that was one of the biggest, that was one of the biggest hog, whatever you want to say it. It was one of the biggest feeder pig sales in the country. It was a big deal. And there are so many guys that raised feeder pigs and so take like Ikelberger Dave Eichelberger started out selling feeder pigs to the clona sale barn. and at that time, what's crazy about it is today you wouldn't even think about doing that. But at that time, everybody loaded up all these feeder pigs. You took them to the sale barn, unloaded them.

They put them all in there. But we didn't have the disease that we have today. And nobody thought about it. You would literally go to the guys that were finishing pigs would go to a sale barn, buy a lot of pigs, load them up, take them home, finish them. No problem. No biosecurity. No biosecurity whatsoever.

I mean, it was a whole different world back then. And I'm just thankful to have had that experience, you know. You know, so yeah, you're involved with the treating, you know, the castorating, vaccinating, and, you know, pulling those pigs. And yeah, so it was a good experience. But like you said, it's hard to imagine. You know, you run with the hogs. They take them through all the different.

They're shutting the doors and you go up to the office. You know, kids thought they were on top of the world. And we were. It was fun. It was the best. Quite a deal. quite a deal when you

when you came back and to some degree I mean to some degree this is still true today but when you came back and got started really for individual farmers that were nobody even knew what a marketing plan was

or very few did I would say was that do you think that's an accurate statement? I guess, you know, when I first came back, I didn't really think about it a whole lot. Our number one thing was trying to grow kind of our business. As far as marketing plan, I was not a commodity broker yet at that time. So we were just trying to do what we could to buy the bushels for Rob and then for Brennam and Pork. And then we took on JWV right away. And then us, Dean Cier. right away and these guys were talking to us about how their expansion plans back in 2008 through 2010 and so we're just all trying to think about you know a is there enough corn available

b can can you handle it can we and we're like yes you know bring out we can do this we can do this so as far as a marketing plan for the producers that's something i think we kind of developed into over time so in 2009 late in 2009 i got my broker's license and so that's something we do on the that I do on the side. Yeah. Raylan and my office and I are both commodity brokers, but that is separate from Katz Green. Right.

And so naturally from a broker point of view is where you wanna start talking with customers, producers about their hedging, their marketing plan. You know, be X percent sold by, you know, the end of March going into Newcrop, be X percent sold by the Fourth of July, you know. So those are things that kind of fit that story a little bit more, but yet on the Katzrain side,

I wanted to, as a young individual in my early mid-20s, wanted to be knowledgeable about what was going on. Because when a customer, a producer calls for a grain bid, I don't care if it's cat's grain or if it's, you know, exporter elevator or down to Ikelberg, I don't care. You know, the farmer's co-op. The farmer is going to want to ask, what's the market going to do? And even though that producer knows that you don't know, they don't want to hear, I don't know. And that's something a manager at ADM taught me when I first started. He goes, if I ever hear you say, I don't know, you are out of here. Yep.

He goes, I don't care if what you say is completely wrong. They are calling us because they want to know your opinion. They want to know what you think. And you will give it to them. And you need to know, and this guy, he ended up being a high up in 8 a.m, but he just said, you need to know what the exports are doing. You need to know what the supply and demand, the next USDA report. You need to know where the funds are at. You need to know the six to 10 day weather month. You need to know all these things every morning when they call in. So those, that's just

something that we try to do. And yeah, we try to help with the marketing plan. Yeah. But it, obviously with volatility comes more importance than things like that. So what's your, what's your, daily routine. So the markets start trading. What's your, what's your early morning routine? So I get up at five, three days a week to work out in the morning. But the first thing you do is get up at five, you know how it is. You kind of roll out at 515. First thing I do is grab my phone and read my, I usually have my morning news to my email by 515, 530. First thing I do is grab my phone and read my, I usually have my morning news to my email by 515, 530. First thing I do is read that. I get on I actually I use our website. I go and I look at the models. The models change but I think somewhere around 430 in the morning. I look at the new NOAA

map, the National Weather Service pre-sit maps. I go straight to the European model. Look at Brazil. I get all this in at least before 6 a.m. And then I take my some morning news and I send it out. I have an email distribution list. I try to send that out as early. as I can. And then I actually hit CNBC. I'm not a liberal news guy, but I am a conservative, but I believe that they try to run as even keel of a financial market news service as they can. And I respect them and the people they have it on the morning. I like to watch Squawk Box. even though it's not ag markets. You know, I hate to say it, but money flow by the funds, the money managers, the big dogs and, you know, running these hedge funds, that's what makes corn, soybeans, hogs, cattle go too high or give us good prices.

And when they decide to move that money out to back into equities or bonds or whatever, that stuff affects us. And so I like following the financial news. And it also gives you, I like in the evenings, once play with the kids a little bit, when it is time to wind down. I love watching mad money. I don't watch it every day, but I record it with Jim Kramer.

And what I learned from him, and again, it's not about trading individual stocks. What he gave me for the corn and soybean and commodity markets is just the psychology, knowing that it doesn't matter. what's happening today or tomorrow or even the next day. It's what they are looking out ahead. And the psychology of things. So I don't care what market is. If it goes up for five, six straight

days, we better have some new news. We better have some new news because otherwise it's built in. Built in, you know, is something that you got to learn. So I don't know. You just get the news, try to send it out. Yeah. Be ready. And the financial markets, are, they are very prone to herd mentality also because when a trend starts, people pile on, pile on, pile on. And usually by the time the last person's piling on, the smartest person in the herd is like looking around going, you know, I can make some money. It's time to get out of this and go to the next thing. Right. And then it's, it's a self-fulfilling prophecy. Right. And that, that mentality plays a lot into what we see.

So your morning is pretty much is, I'm going to get all the answers to the future questions I'm about to get phone calls on today. Well, then after that, yeah. Then the phone calls start coming. Yeah. Practice for the kids. Get them to school. Then eight o'clock's like the opening bell, you know, it's like the market opens at 8.30. But, you know, you have people that call every day, you know, which is great.

And then you got people that are only going to call when they already know they want to sell. Then you got in between, you know, you just you have a nice mixed bag, you know, and a cat's grain. our goal is to get you the best price for your corn, period. And then that depends on where you are logistically. And that's why Southeast Iowa is the best place to raise corn and soybeans is because we are within a trucking distance to so many different types of end users. You know, in the corn industry, we've got to be in the number one best place to be because we're 60 miles from corn processing to the north.

You know, corn processing to the east, corn processing to the eddyville in the west. You got ethanol at West Burlington. You got ethanol in Cedar Rapids. You know, then you got, so you got your ethanol. You got your corn processing. Obviously, we do have export markets in Muscatine and Burlington. You know, but the next biggest thing, obviously, is pork production, feed use. And you can't beat Washington County for that, Keukukuk County.

You know, so here we are. And so the farmer, you know, granted, you can look on our website and see all these things, but we have a lot of producers that don't want to look at their web. They just want to call us and say, hey, what can I get? Where's my best bid? Some don't have their own trucks. And so, you know, we know logistically, if you're in Williamsburg or Sigernie or this way, that way, I would say what's going to take cents per bushel to get from point A to point B. And I guess, yeah, so it makes it fun. Hey, real quick, we got to take a little break. because I got to tell you something real important. If you guys aren't watching or this will do farm YouTube channel, you're missing out.

It's just like this, only shorter and on the farm. Definitely go check it out if you haven't subscribed yet. Give us a like, give us a comment, let us know you came from Barn Talk, and with that being said, let's get back into the podcast.

One of the trends that have definitely helped basis in Southeast Iowa is, and a lot, well, just about all your pork producers have gone this route. A guy that I worked for when I was at Eichelberger's, they spent a lot of money adding grain capacity to their mill and speeding up how fast they could unload trucks. Right. And when talking about that, he said,

you know, the reason you do that is because, when grain moves for us, we don't care when we buy it. I mean, obviously we'd like to buy it for the best price we can. We just want the chance to buy it. And if we don't cut that grain off from going to the river, we don't get any chance to buy it. So when fall comes, we want room to get the grain in and get it unloaded as fast as we can

because that's when guys, they got to get rid of it. And I think a lot of people have done that. in the fact that growers around here, their goal is to keep that corn within the county because if it's gone, then you don't get the chance to buy it. Right. And we're obviously grinding a lot more corn.

I'd say double what we were, I want to say even seven or eight years ago in this county. And you're right, exactly right. But there's been a, you know, the, the feeders that we're buying for have put a tremendous amount of investment into, you know, scales on the farm obviously, but been able to dump,

trucks extremely fast, you know, even within up to 10 minutes in some cases. So that's huge. But it returns itself because by the pork producers doing that, they can buy grain cheaper. Yep. So it used to be in 2010, yes, freight was cheaper, but it used to be, you had to be within 8 to 10 cents of the processors. Right. Now we can buy grain for 20 cents under the processors. Because, of that speed and, you know, people want to deliver local anyway. So that's how it returns. Yeah, you invest money into a nice facility. You buy corn cheaper. You know, and the pork producers that we work with, they aren't worried about like you said, exactly like you said. They aren't worried about buying at the low, which would be perfect. Sure. They do that themselves.

They hedge themselves. When corn is low, they buy futures or they buy calls. They need to buy the cash when it's available. And then they can offset those hedges on the long side if they wish. Yeah, you can't feed a hedge. Well, you've got to physically at some point you have to physically own the physical bushels. Yeah, that's at the end of

the day. I wanted to go back just a little bit on the basics because we get a lot of questions of people that, like dad said, have ties to ag or we have people that don't have any ties to ag that really just don't understand commodity markets. So can you just give like a,

your best summary of like how the commodity markets work. How does the commodities work? Like how does the trading work? Absolutely. And so like if you go to our website and then on the left hand side, you click on cash bids, you'll see what the physical price for corn is that you can receive from each location. But how those prices are derived is off the Chicago Board of Trade.

And so we're just going to use corn for an example. So corn today is April 6th. So the bids for April delivery and May delivery go off May futures. So corn itself, the commodity corn, I believe has five trade months. So you got May, July, Sep, Dease. Yeah, you got May, July, September, Dees, oh, and then March. So we got five. So those trade every day on the Chicago Board of Trade.

And right now, May future. on the Chicago Board of Trade are at 650. Well, the cash price, say, at Brennam and Pork is 660. So that difference, the Brennam and Pork price of 660 and the Chicago Board of Trade May futures, which is the nearby month, 650 is a 10 cent difference. That 10 cent difference is called the basis. And right now, the cash basis is 10.

we'd call it the slang would be 10 over. So it's 10 over May futures, 10 over. Now, that's how the price is. So when we set that basis at the end of the day on our website, 660 cash, the board closed at 650, we set that basis at 10 over. Now, when the board opens, in this case, Monday at 8.30 a.m., we're going to go up and down with the market. So if the market's up $0.5, the cash bid goes up $0.5.

The market's down five, it goes down five. And so that trade is live. Even though it doesn't update live on our cash bid page, you just need to go to the home page and see what the market's doing and take plus or take minus. But that's how the commodity markets work. The futures contracts, so corn futures, the corn market, these are all the same terms.

If you ever hear the board, the term the board, the board is up five. That means corn is up five. Corn is up five or corn futures are up five. They are traded in 5,000 bushel contracts. So one contract, if you're trading on the Chicago Board of Trade, 5,000 bushels, anyone can buy and sell corn futures. So you have two types of traders.

You have speculators and you have hedgers. And those speculators and those hedgers can either be one of two things. They can either be long or they can be short. So what it means to be long is if you're buying, you want the market to go up or your position is for it to go up, or you can be short. And anyone can short corn futures or any commodity futures. So even though, like, let's just say,

let's just say one of my buddies, let's just call him Mike. My buddy Mike, he works at a bank, has absolutely nothing to do with farming. But let's just say him being around John and John says, we got an excellent planning season. You know, we got four million almost more acres. Corn's going down.

Let's say Mike says, John, you know what? I think, I'd see, you know, I think farmers are going to raise a huge crop. I want to short, I want to sell short corn futures. Well, he can do that. He can open up an account with me and he can short, even though he's not a farmer. He can sell corn.

So say he shorts December corn right now, for example, December futures. This would be like for your October, November, December bids would go off the December futures. December is seen as the new crop month. Mike could short December futures in here at 560. And if we have a big crop, he could buy them back at 460. So if he sells a contract, 5,000 bushel at 560, And then he offsets his position by buying it back. Then he would have a $1,000 profit on $5,000, which is $5,000.

Now, in order for banker Mike to do that, he needs to have in his account what they call the margin requirement. So in order to take a position long or short, you need to maintain what they call the minimum margin requirement. And in corn, it would be around $2,000. So he would need to have $2,000 in his account free and clear. So if he shorts it at $560 and it goes to $5.80, that's, well, 20 cents times 5,000 bushel. That's another $1,000. He needs to put into his account as a margin call because you got to maintain a free and clear two grand unless you want to get out.

Now, if he goes ahead and gets scared and gets knocked out at $5.80, well, he takes a 20 cent loss. He still has that $1,000 cash in there, though. That margin is not what it costs to take a position by your sell. It's just the cash you have to keep in there. And so that's kind of how nutshell commodity trading works. And it works same for soybeans. If you were to be long or short, I think you've got to maintain three grand in your account for a contract.

Hogs, I want to say, are somewhere around 1,500 a contract. Same thing with cattle. somewhere in that 13-14-100. Yeah, that's great. That was awesome. Just a few things like for people, the basics. Basis, it changes wherever you're located at, right? That's kind of the basis change and flows depending on where you are.

So the theme of this year's basis is where was the crop short? It was southern Washington County, Southern Keukuk County, kind of the southwestern Corn Belt, your Nebraska. your Kansas, really burn up. And we had a lot of crop insurance claims for our customers in kind of the Highway 92

and South and West. And so what's going on is these feed, you know, there's a lot of cattle feeders in your Kansas, Nebraska. There's no corn. And so they're having to export, basically import it from Iowa,

Illinois, Minnesota via rail. The basis becomes the transportation, cost to get it to come to them. Right. And so right now you literally have a basis. I don't have the exact figure, but where we got eddyville kind of in our western our western market for our draw area paying 35 over May futures for cash. Yeah. Kansas City rail, I want to say at one time it was $2 over. So corn in Kansas City is worth $2 over May futures. So you got your rail freight built in there, obviously. And so all the hot basis is in the Southwest Corn Belt.

Well, so Eddieville has to pay up a stronger basis. But yet where was the good crops? Cedar Rapids, Muscatine, and North. They're buying corn at under the board. Yeah. Because producers over by Muscatine and Cedar Rapids aren't going to truck corn all the way to Eddieville. Right. I mean, they just aren't.

So that's, it's a weird year. And historically this time, you know, corn this year's flown west for us. Historically, the best basis is in like your Cedar Rapids, your muscatine. And corn flows east. Towards the river. Yes, towards exactly. But it's not a typical year. No.

So, or last year was not. And then so future prices are all based off of what is going on on the landscape of what's going on in South America. and the conditions here at in our United States, all those markets, all those futures are based off of kind of what's happening, what's looking ahead, right? That's how the price is. Absolutely right. Supply and demand.

And basis runs on what's happening on the ground where you're at. Yep. Exactly right. A more localized supply is what drives the basis. And so like right now we have an over-the-board basis, which is not typical. But if you look out to like the new crop bids on our cash bids page, you'll see October 30 under, January of 2024, 20 under. Well, why?

We're not short out there yet. You know, maybe we will be, maybe we won't be. But the end user is not going to pay option, which means zero basis, or 10 over for those deferred months because we're not short yet. So, yeah, the board of trade says that new crop corn is worth $560. That's what December futures are. And then us as buyers can say, well, okay, it's $560 on December futures, but in our opinion, it's only worth $5.30. So we put a 30 under basis. And so I'm in kind of a, I'm in an interesting spot.

So like I, Kat's grain wants to get, number one goal and always will be to get the corn producer the best price for us corn. That's never going to change. But on the same side, we are originating corn for the pork producer. So we want everyone to, we want all business to thrive, obviously, in Washington, Keukuk counties, LeWiza County, whatever, Johnson counties. So yes, we are trying to set that basis as cheap as possible for the pork producer, but still originate, we have to originate those needs. Yeah, you got to wear two hats.

We just need to do the best we can. And everyone does. You know, and the corn producers out here, they, they, want the hog guys to stay in business. You know, so that's, it's a, and everyone's on an even keel. It's just that we get to see it, which is fun. It's awesome. So can you explain to people that might be confused on like what you do individually as a broker and what cat's grain does as a grain buyer? What are the differences there? So Katz grain is going to buy the physical corn. So Sawyer, if you call me and say, John, what can I get for

corn for May delivery? I'm going to look at all the bids. I'm going to say, looks to me like I can probably get you the best bid going to, let's just even say you're in Western Washington, let's say you over by Kyoto, you can probably get better bid going to Eddieville. So I'm going to quote you a price, and let's say you don't have your own truck. I can give you an off-the-farm price.

But there's times, most time, it's going to probably be going to one of our feeders, you know, 85% of the time. So John or Brittany or Ray Lynn or Katie, you know, is going to buy, you're going to say, John, I'm going to sell you a 5,000 bushel. So Kat's grain is going to write you a contract for 5,000 bushel, and then I'm going to put your name and your bushel amount

and where it's going on a truck list, and I'm going to have someone haul that corn. They're going to call you up in early May and say, Sawyer, I'm going to be there Wednesday and come pick it up. So that's Kat's Green. And then John at Katz Green's going to get the grain bids in at 1 or 2.30 in the afternoon. market closes at 120. I'm going to get the bids at 2.30. I'm going to slam them on our website as fast as I can. And hopefully have them on there by three. And that's my job. John at Katz Grain is also crop insurance agent.

So if you got questions on crop, and that's something we got into because it is directly tied to your marketing and the Chicago Board of Trade. And those are two things that we deal with. So, you know, when people were coming to us ever since I started in 07 through 15, 2015, they're coming in, you know, if corn goes to $7, well, for new crop, let's just say in 2008, well, corn's $7, here it is June. I don't have to forward sell because I have crop insurance. Wait, is that true? I really don't even know. So I was like, instead of asking, calling up, you know, different crop insurance agents here to help, they're not asking their crop insurance agents. They're asking me. And I'm like, I got to, we got to, we got to learn this. We have to, we have to learn this. So if you're going to learn it,

you might as well sell it. And so, which has been a good deal because it gave us the opportunity to hire, you know, a couple more people. I can focus more on the crop insurance stuff and the grain bids and, you know, the broker side of it. But that's something else so that we deal with and help you out with because the two are directly tied together. Yeah, that's important. I think let's touch on that because that's something that I don't think many people understand is me as a corn farmer as I sit there and I look at I'm putting I'm putting I'm putting I'm getting ready to put this crop in the ground but it's like counting your eggs before they hatch I see out there let's say we have a let's say we have a weather issue somewhere and futures price for corn to be

delivered off December contract starts getting up there the price starts going up and I'm like Well, holy cow, that's a really good price. I'd like to sell some of those bushels that I'm going to raise. The problem is, if I don't have crop insurance, if I sell that, basically, I'm looking to sell a crop that I don't have yet. But crop insurance enables you to do that in the fact that you have a certain amount of your crop that's guaranteed. explain to people how like how that works as far as sure absolutely so and that's a very very excellent um point to bring up in question so the spring price which is the average close of december futures over the month of february the spring price this year was 591 so whatever your aph is say 200 bushel your crops essentially were $1,200,000. Your crops essentially were $1,200,000.

an acre. Now, the most popular form of crop insurance is called RP or revenue protection. So you could choose to take out, insure a percentage of that revenue, that $1,200 an acre revenue. Now, and the most popular, I would just say, is anywhere from 70 to 80%. Okay. Now, what is going to, let's just say, like you said, let's just say December corn goes to $7. here right before the 4th of July. We haven't had any rain. You know, April, May, June. June turns out to be 100 degrees.

Dees goes to $7 and you say, man, I'd really like to sell some $7 corn. You know what? I'd like to sell 100 bushel to the acre of $7 corn. How am I, how is my RP, my revenue policy going to cover me if I don't have those bushels? And it's extremely simple. With RP or revenue protection, you're insurance. guarantee, you get the higher of either the spring price, 591, or the fall price, which would be the

close of December futures in October. Well, you're not going to know if you produce that corn until October. Right. So you're not going to have to buy out of that contract until October. So if December corn, the average in October is $8, well, yeah, if you got to pay $8 to buy out of a $7 contract, that's fine. Yep. But your revenue just went from 200 bushel the acre, your revenue guarantee, 200 bushel times $8, which is $1,600. And so if you insured 80% of that, you're going to have a higher indemnity.

Right. To cover that price difference. Yeah. So that's why in the heart of marketing, May, June, July, and the market goes, if the market goes up, and you want to get aggressive up to your insurance guarantee. that's how you have the safe, you know, go to bed at night knowing that if I have to buy out at eight bucks in October, my indemnity, my revenue guarantee is going to match that higher price. Really, they go hand in hand. I mean, to have a good marketing plan and if you are going to use

futures, you really need to have your crop insurance figured out and know where you are as far as your level of coverage. Because without that, you don't really know what level of, what percentage your crop you can sell and be covered without that. So that's a really important piece. And I, I don't know, today it gets talked about. I mean, the amount of, the amount of, the amount of, of articles written and news stories put out on ag radio about marketing plan, marketing plan, marketing plan. I mean, it's everywhere, but it's surprising how many people still don't have one. But what's interesting is amazing how many people, you know, throw out there, do this, do that. We know they don't. Do this. Do this.

us. They don't know anything. Follow us. Pay us. Follow us. No one knows. What I tell people is know one thing. Know your profit loss. Know your break even. Know your input costs. As long as you know your input cost to a T, then, and you always figure an APH, that's the only reason you carry crop insurance. So market your APH. Always use your average yield. So, So if your APH is 200 bushel and you know what, and if you get to the point where you can get 570 cash for new crop and you look at your costs per acre and you can make $250, you know, clear $200 an acre 250.

And if that's a 25% return on investment, you probably need to be marketing some grain. Yep. Now, you know, there is no Bible that says follow us this way. it needs to all because everyone's different if Sawyer's paying $300 cash rent but someone over here has their own ground paid for you know that makes a little bit more difficult so someone over here probably needs to buy up a little bit more insurance he might need to let's just say he does sell some corn ahead for break or a little bit under break even that's when he probably needs

to come in and maybe cover that with a call option so he can at least leave the window profitability open you know but but yet he can't afford to take a big loss either. So everyone's in a different situation. Everyone's got different yield histories, but it's no different marketing corn or soybeans, hogs, cattle. If you have a good ROI, return on investment,

one that you can live with, I don't care, if it's 10%, 25%, you need to ignore the talking heads, ignore what you hear on the radio, ag plus, talk, whatever. I don't care if they say corn's going to the moon. You market some grain. And it's all about just a step up basis.

Just try to step up your basis every time. You know, here we are. We're coming into the 23 crop. Yeah, I think guys should have 25% sold ahead. But if it's not at a profitable level at an APH, then, you know, then if you're going to make some sales, get to that level, then I would cover it with some calls maybe. because bottom line, no one knows.

Right. You know, we all know that if corn goes to $450 this fall, there's going to be someone that comes out and says, I told you to sell it all at $5.50. So it's like everyone has to have their own opinion. It is basically my grain market, marketing opinion. But I do market grain for people. I have a separate LLC that I have set up.

I do handle their bushels and make the cash sales for them, just done. I need to know what I like to know what your input costs are. I need to know how much on the farm storage you have, etc. But that's how I do. And I try to always make those sales in overbought markets. What's an overbought market?

Well, you can pull up a chart on our website where the futures prices are on our homepage. And you can click on an indicator called stochastics. And slow stochastics is a mathematical, it's a mathematical equation. where it's a little line that goes up and down. And any time those two lines, one's three day, one's 14 day, basically it just gauges the amount of days

and a set amount of time that we've been up versus down. And any time those lines get up above 80, both lines, that means the market's overbought. That means you've heard the term sell signal. So like when you have ag services out here saying, we're in a cell signal, all that is, all you're paying for is for someone to come out here and tell you, The market has been up, more days than down, and that we might need more bullish news to keep going.

But it's a very, I mean, it's just a good indicator. Anytime we're overbought to make a small incremental sale. You don't want to just, you know, sell 25% all in one day. You want to make lots of little sales, you know, and then try to step up your basis or your prices from there. But that's how I try to do it. I just try to sell a little bit into an overbought market. And if we keep going up, we're going to keep selling. Hey, this is a pretty good podcast, isn't it?

If you made it this far, you must think it's pretty good. I got a favor to ask you. Please, if you like the show, leave us a review on Spotify or Apple. Now, let's get back to it. Yeah. I don't, this might be a more difficult question to have answered, but I'm going to, we'll see whether we can get through it. another thing that has become, I think, more popular and maybe people's comfort level has gotten

better with it is traditionally farmers, we get this crop and we sell what we have to sell, so we need money, and then we put it in the bin and we sit on it. But if you're in a situation where and people that are buying grain historically, they sit there because they know come March, every farmer out there needs money. So they're going to have to sell stuff. Bills are coming. The bills are coming and they know it.

And so you've had this back and forth of, you know, what that bid's going to be. Nobody likes to be pushed to have to sell. But one of the tools that are out there is if I'm a farmer, if I've got the grain, if I have the physical grain and I got bills I got to pay, but I'm not happy with the price that the market's giving me today, what tools can you use to get cash now but have the ability to maybe make some upside on that crop sometime in the future? Sure. And so something like that's a perfect example of maybe using a call option

or call option strategy. You know, you can even simply just replace it with September futures if you want, but it just depends what your risk appetite is. Now, there's facilities out here that say, oh, you know, bring us your corn, price it later. Well, there's a couple problems with that. Your corn is sitting in someone else's bins

with no government protection on it, right? So I don't know. You know, anymore in this day and age, I don't know if that's a great thing. And there's an issue of that in the state of Iowa right now. I think that's one thing I would stay away from. But the safest way to do it would be to go ahead, sell it to your best bid, best price you can get, use that cash. And right now, let's just use $660 cash, for example.

Well, September futures, you know, everyone wants to wait until August, right? Because I want to have corn on hand when we have our $8 corn this summer. There's going to be a drought every year, just so you know. Yep. So which is fine. It happens, but not every. year, but that's the mentality. You can just simply sell corn for 660 and buy a September futures for 5. I think it's a 580.

You know, so we're, if you're using September futures and look in our cash, that'd be an 80 over sep basis. It's the market's, it's cash markets way of telling you your corn is worth more you basically in cash than it is you holding it at the bin it's worth more now than later that's one the simplest way to do it you know is just go ahead and sell your physical take 5,000 bushel time 660 35,000 and put take your 30 take your money and just put two grand into a trade account and own September for 80 cents cheaper that's going to get you through August to for the corn market to go up or whatever. I mean, if you take that same corn, leave it in the bin, let it, then you have damage

docks, you got weevils, all that. If the market drops, you're going to, you're losing money anyway. So you might as well sell it now. So that's one, that's one example. From a call option standpoint, I want to say like a $6 September call is probably 30 cents. You know, so that's a very simple set of floor type thing. Sell your 660 corn. Say, hey, John, buy me the September $6 call for 30 cents. And if, so you spend the 30 cents and if the market hits that, it triggers it. Well, if we're at $7 at the end of August, seven minus, give a dollar. Well, you cost you 30 cents.

So you have a true profit of 70. Yeah. So now your 660 cash turned into 730. You got the money when you needed it. Plus, you kept the opportunity to do better. You still have that upside protection. And if it didn't, you just blame John. If, then that's great.

If we're under six bucks on August 25th, then you lost your 30 cents, but you know what? Yeah. At least you sold your corn for 660. Right. And if we're under $6 September at the end of August, I don't even want to know what your cash price is. Probably $5.80. Right.

So yeah, you lost 30 cents, but you made 80 cents. But you might have lost way more than that if you would have helped corn. Plus interest. I mean, if you figure your money is actually worth something now. So four and a half cents a month is what you need to hold on corn right now. Yeah. So what are the biggest changes you've seen in the commodity business in the last, you know, a few years?

I mean, anything major? Just without a doubt. I mean, there's people out here doing their own trading on their phones. You know, it can probably be done cheaper, you know, but I still feel like there's a place in my, like being a broker, for example, for people to call and talk things through with. as far as, you know, grain marketing. You know, Kat's grain, we don't have a mobile accounting app yet. It's something that we've invested.

I think we've invested quite a bit of money into it. We haven't found that right person to finalize it yet. It's one of those things that it's something my goal is, but everyone wants it on their phone. I mean, that's the biggest thing. But, you know, on the same side, I don't know. It's something that I would just say that. Just everyone wanting everything on their phone.

On the phone right away. I mean, we email contracts out and everything, but that's my goal long term is to have someone to pull it up on their phone and be able to see all their contracts with Katz Crane. Yep. And that's something we'll get to eventually. All of the everything in. every part of our society technology has made it faster but also um i saw statistic and i'm sure the commodity

market is the same way that in the stock in the stock market and i i i don't even want to say what the percentage is because i'll get it wrong but a huge percentage of trading done today is actually not people physically trading. It's all algorithms trading. And I'm assuming the commodity markets are somewhat the same way. Oh, definitely. And I don't know the percentage either. Yeah, but it's, it's real because there's hedge funds out here using algorithms. Yeah. So is that or has that, in your opinion, has that speed of having information available, but also the technology of these algorithms trading, has that given us as producers more opportunity or less opportunity? Or do you think it doesn't really change anything? You know, I'm going to answer this honestly as more.

I think it's more opportunity. And even though it might be more emotionally distressful, ups and downs. I mean, obviously, if you're undersold and the market drops quickly, you know, that's rough on you. But it works the same way. What if you forward sold? And the market, say, December corn goes up 60, 70 cents in a matter of 48 hours. That's rough on you too. But as long as you don't panic.

I don't care what market didn't. Never panic. Have a level head. Take a deep breath. And, you know, let's just say you're 50, 40% sold on new crop around this 560 area. and in 30 days we're at 660, don't panic. Yep.

Don't panic. How is this opportunistic for you? Yep. Maybe I can go ahead and get up to 70% sold or hedged. Yep. And up that 560 up to, you know, now of a sudden I'm at $6 average or something, six, you know, hey, I'm going to farm again next year. I'm going to be okay.

Yeah, you'll never, you know, a lot of people have said this a million different ways, but you'll never go broke making a profit. And to be, a lot of people get upset at the profit they could have made. We all are that way. You know, it doesn't matter what we sell for, even if it's profitable. We worry an awful lot about what we could have had. Discipline. Maintain discipline.

Never look back. Learn maybe from a mistake, but never look back. Yeah. I mean, in a mistake, you never make a mistake. making, you know, if you know your bottom line and you sold at a profitable level, that was not a mistake. Right. So we just got to, you know, you can't look backwards. You know, you can always look back. You're going to run into something or fall in a hole. What's the most common mistake people make in marketing their crop? I would say getting too emotional. I don't think there's a finance,

I mean, sure, if someone panic, say, say the market drops, say corn drops. Uh, dollar here between now and fall. Very possible. Now let's just say someone just the mark, say we're in oversold, probably a buy signal, but sometimes you know what? We're at four, people are always the most bearish at the low and the most bullish at the high. Always. I don't care what market you're in. That would be if a financial mistake is if you just throw in the towel in an oversold market in the fall of the year, I ain't, I'm not real. own in it, not doing anything. I'm just, I'm done. That would, that would be a marketing mistake. But was that your question? I guess, no, yeah, that's great. No, that's great. You would know.

I mean, you got just, just don't get to a, that would be a, a marketing mistake, but just don't get, don't let your emotions get a hold of you. Just always be out here, producing corn, producing soybeans, producing livestock and make incremental sales at a profitable level and just do not look back and always look for next opportunity. What do you think in your in your crystal ball what do you think is the biggest unknown out there going in for this year's crop as we look to as really as we look to fall? It's it's obviously weather. I mean, demand's going to be there. You know, we need our we need our corn syrup, our starches. We need hog feed, you know, we there's countries out there that need our corn. I mean, usage is really not, yeah, it can go up and go down. But number one, unknown would be

supply. And that's our planting weather. That's our, it's not even, you know, it really comes down to do we get a last half July and a first half August rain? It's that simple. Do we get one or do we not? I'm more worried about in, in southeast Iowa, the last three years have taught me that I'm more worried about having too much rain instead of not. Yeah, that seems to be the... See, I don't know. That's a big difference, man. I live in southwestern Washington County where it's like, you know, people curse everyone north of town in the flat black dirt.

And it's like, you know, it's just comical. But because then in southern Washington County, you got the hills and it's drier and all you guys in the north. You hear it all. And it's funny. I'm on the very edge of the flat prairie. So you're right, though. in 2008 was the biggest flood ever right up there with 93 I think it was bigger so you saw on

the network news the funds the fund managers turned on ABC Fox CNN whatever saw Mississippi River Cedar River Cedar Rapids underwater number one world's largest corn processing plant Cedar Rapids underwater corn went to seven dollars yeah so you're right I mean we got a major snowpack in North Dakota. North Dakota is supposed to increase their corn acres by 27% this year. It was like a million. But, you know, they got a lot of snow to melt up there, man. Now, granted, they don't plant until first week of May, and it's first week of April. But so if that Red River, Missouri River, Mississippi, River's full of water, and let's just say we do turn off wet here late April, you might have an 08. It took corn to $7. So you never know. It could be a wet spring.

And like you said, too much rain on soybeans is way worse than none. You know, we've seen that the last two years with soybean yields. I'll throw this out. I might have said this. I might have said this another episode. I don't know if I do. I'm sorry for putting you all through this. But I know I haven't told you this.

I was a commodity classic. And I was sitting having lunch and I met this family from eastern Colorado. And they were there because they had the, they had the championship winning corn yield dry land corn yield in eastern Colorado. Do you know what it takes to win the dry land yield in Colorado? 74 bushels. I was like holy mother, but they get all their water from is it irrigated out there? Yeah. So, but last year their irrigated land, they were limited to six inches of water is all they got. So their irrigated land was. So their irrigated land was. a whole lot better than their dry land. But anyway, it's just amazing.

You know, we are to say that we're blessed to be where we are. Oh, yeah. You have no idea. And what's interesting is like we just had the acreage report there, March 31st. And I think I have this on my comments, maybe not, but it did anyway one time. But there's corn grown in every single state of the United States. I guess the only one they don't have registered. They got every single state on here except Hawaii and Alaska.

But every single state has corn in it. That's crazy. Yeah, you don't even think about it. Yeah. So Wyoming's down 10% this year on corn, I guess. Good place to be at. State of Washington, they're up 23%. They're going on.

Yeah. Yeah. Okay, here's the one that might be a little out of left field. A lot of talk lately about how we're going to trade, whether we're going to keep using the dollar. to trade oil and people talking about the bricks, Brazil, what is it, Brazil, Russia, India, China pack. Do you see if the idea of using a different denomination to trade around the world, do you see that affecting commodities at all?

Honestly, I feel like it's a little bit over my head. My first instinct was saying no. I don't see how that's going to, I don't see or foresee the dollar. This sounds to me like a political play against the United States and NATO. Yeah, a lot of people I've talked to, that gets a lot of play. But the problem is, anytime the Chinese have opened their financial markets, anybody in China has tried to get their money out. And so that tends to be a problem if you're trying to replace the dollar.

got a lot bigger things to worry about than headlines like that. I thought maybe you were going to go to Bitcoin or something like that and we're going to use Bitcoin, but I don't, whatever. Yeah, whatever. There's a lot of uncertainty. A lot of uncertainty and the thing is, for whatever reason, and I don't know why we're prone to this,

but we all are, bad news and talk of bad news travels like the finest made paper airplane and good news can't even make it to the trash can. You know, it's just we trade on worst case scenario, it seems like, a lot. I don't feel like, and I think the markets, the commodity market is the same way. They trade a lot. I feel like they trade. All markets.

Bad news, though. I mean, remember, you know, in COVID is when we started this last bowl market. Yep. And, you know, corn got down to $3 in May of 20. or whatever. Yeah. But I'll tell you what, it didn't take very long

and it was sniffing five. And it was like, guys were selling it 480. I'd tell you what, by May of 21, it was six. And it was the opposite to work. We all have such short memories.

Yep. We really do. And, but in 20 through 21, it didn't take much of a friendly topic to drive the price of corn and beans higher every day. And believe me,

I had, you know, I'm the same way. I sold some corn too cheap. Yep. And some beans too cheap. It is what it is, you know. And now it's the opposite. The funds are moving their money out of commodities. It appears that our commodity super cycle is retreating for now.

Feed grains are coming down. The fear of Ukraine, Russia is simmering. So now it feels the opposite. And it feels like every day the glass is half empty. I get it. I get it. But that's just part of the cycle we're in. And maybe it'll change, but we'll see.

And it can. And honestly, it's going to come down to the United States weather to dictate whether or not the inputs to fatten out a hog or beef. Those feed inputs are either going to go down and, you know, price of some things at the grocery store could come down a little bit. And our commodity super cycle in. for now, or the United States has a major weather problem and food input stay high and we still have to deal with this inflation talk for another year more. What's interesting about being in Washington County and being in the corn and soybean industry, I personally have this, and I think other people agree, it really comes down to the price of grain

that dictates almost everything, in my opinion. And that volatility and having that responsibility on the farm gives us rough nights, but I firmly believe gives us those opportunities. So even if, let's just say we do have this monster corn crop, let's just say we do. Corn this fall goes to $4. Let's blow the cost of production for, you know, many producers. Well, whatever.

You have until August of 24, to sell that crop. Okay. So if the price of Dece 24 goes down to 480, good luck getting your corn acres, man. Right. So that March 31st of 24 acres report will be, oh, well, the United States lost 7 million acres of corn or more. Guess what? Yep.

So just, you know, that gives us, the market always gives, even in bear markets, if this is the start of a new bear market in the corn. well, whatever. It always gives us, in bare markets, we usually get at least one, if not two opportunities might be in the heat of the summer to sell that crop that's in my bin or maybe I have it under, maybe I own call options on green. I had to move out of the field or I reowned it with July future.

It's going to give you an opportunity to sell it at a profitable level. Otherwise, we won't have the acres. I got a two-part question for you. And we're going to wrap it up out here. We're getting closer to the end. but are you overall bullish on American agriculture for the future? And if you are, is there anything that gives you, that makes you fearful of what could happen in American American agriculture? There's anything out there that you're like, this could play,

this could hurt us in the long run, this could have an effect on us in the future, whether it be veganism or whether it be too big food, whether it be whatever. So, Yeah, you know, that vegan thing and no, that's for the birds. Hell, I guarantee back in the 60s, we weren't here. But they were probably talking the same jazz back then, you know, so whatever. You can't let that liberal talk get to you at all. I would just say, yes, absolutely bullish American agriculture. Why do you think, why do you think Russia invaded Ukraine? You know, take a go to Google Maps. Look at our U.S. Corn Belt. You'll see where the top soil is. scroll over and look at Ukraine, eerily similar.

Zoom in. All row crop fields. That entire country, it's huge. All row crop fields. Why is Russia invading Ukraine? Land grab. It's all about agriculture.

And go to Russia and they don't have that. Well, they don't. The southeastern, I don't know, a 20th of that whole country looks farmable. The rest is cold mountains. So he absolutely bullish American.

Why do you think China's trying to get in bed with Brazil? because they know they're going to keep needing more and more and more. Well, hey, guess what? That gives us another opportunity because Brazil, their weather, you think ours is volatile? Their weather's crazy. You know, so it gives us opportunity for the markets to react

if they have weather issues down there, to sell our crops at higher levels. So, no, it's good. I mean, the one thing that scares me is just the same thing that's been going on since we were kids. Consolidation. it's going to happen and family farms

I think the best thing you can do is plan, estate plan, you know, plan for the future to keep it going because consolidation is always going to happen but now the American farmer

it's we're safe. It's awesome. How do people find you, John? Our website is Katz Green with a K K-A-T-S-G-R-A-I-N. catscrain.com. My email is John,

joh-h-n at catscrain with a k.com. You're on Twitter too. Katzgrain's on Twitter also. Oh, we have a Twitter, yep. Anytime I update my comments, I try to update once or twice a week. You know, I don't feel it's necessary

to do it every day. Just, you know, once every couple weeks, I'll put out some trade recommendations. If anyone's interested in open up an account, trade account, give me a call or phone numbers on the website at the top you know I like I said we cat's grain we try to get you the best price for your crop and we truly appreciate all of our customers we really appreciate our our hog producers I

mean man talk about where the you know where is the economy in Washington County it's an agriculture look at all the jobs look at all that look at all of everyone you talk to works for yep you know a pork or drives a truck or a feed truck or a fieldman or raising or it's just we've we've discussed this probably too many times but you know um there is no greater driver of economic development yeah in where we are southeast iowa than production agriculture and livestock production i mean it it literally has kept this small town thriving yeah i mean 100 percent um it's there's a lot of people that would like to fancy it as there's something that is sexier, you might say, but the truth of the matter is,

uh, yeah, it's, it's animal agriculture that, that feeds and clothes all of us and people are going to eat. Yeah. And that's right. And damn good food too. Yeah. I mean, there's, there's, there's people out here that, yeah, we all say all, you know, need brand. But you know what? They like hamburger and steaks and, and pork chops and bacon and solid. They love all that stuff. Most, most of them do anyway. Yeah. They might not have. admit it on TV. Well, John, we really appreciate. We appreciate you coming on.

We appreciate the weekly market updates that you provide us through your website, and we appreciate the crown. It was an absolute pleasure talking with you today. And be sure to go and check out catchgrain.com. If you guys got any interest in opening up an account, reach out to John. We really appreciate you guys tuning into this episode. Pay the fee. Share it out with your friends' family.

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