Ag Squawk | Davis Michaelsen | Markets Crawl Through The Pipe

Markets sell off hard across grains and livestock, and we walk through the closes while asking why a supposed weather market can still drop this fast. We also connect the crude oil plunge and Iran uncertainty to broader commodity volatility, then end with the week’s heat-driven forecast and a few offbeat history notes. 
• early technical difficulties and a quick solo format 
• corn, soybeans, wheat and the soybean complex closing lower 
• feeder cattle limit down and widespread livestock pressure 
• crude oil selloff and geopolitics as a volatility source 
• “broken glass” analogy for splintered conflict risk 
• whether the move is a healthy correction or technical damage 
• extreme heat warnings, storm risk and drought versus excess rain impacts 
• Ag PhD Field Day travel and broadcast plans 
• items of mild interest plus the bagpipes “Ag Injustice” 
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Futures Trading involves risk of loss and is not suitable for everyone. Past profits are not necessarily indicative of future results/profits. 

Transcript

Rough Start And Why It Matters

SPEAKER_00 0:13

Well, as we learned from the Shawshank Redemption, sometimes you just gotta crawl through the pipe. Today sort of felt like one of those days. We're actually gonna make pretty short work of this program. Grains were lower. Actually, all the markets were lower. Which ones you say? Well, that's super easy. Like I said, all of them. From behind the big blue, bodacious microphone of Ag Bull, your pal Davis Michelson here on Ag Squawk in the afternoon, Monday, July 27. I'm just it's it's just gonna be me. It's just gonna be me. I'll be honest with you. We had some technical difficulties here. I didn't want to waste any more time of the fantastic guest that I had lined up while we kind of tried to figure out where the wires go and all this sort of thing. Growing paints from uh from a fabulous new exciting show. This is just the way it goes. And not only did the markets have to crawl through the pipe, we crawled through the pipe a little bit ourselves here on the technical side, but we're sure glad, at least to give you the high points here and for more detail. And this is one of those reasons why it's it's more important than ever to have professional information behind you, to have information at your fingertips. I can give you the closes. I can give you some of the some of the ideas that I have about why the markets did what they did today. But at Agbol.com, we have more Agbol intel to share than we know what to do with. We can't keep it in. Go to AgBull.com, visit our premium side there. You can get text alerts. I mean, heck, there's people that you can call if you just want to talk to somebody about these markets, about about perhaps your plans and what you hope to get out of uh out of the future and how to get there. Agbull.com, or of course you can call 855-737 Farm, 855-737 Farm. And spoiler alert, if you uh happened to catch Wiesmeyer's perspectives from yesterday, he was talking with Tommy and they had a big announcement there. It looks like uh Wiesmeyer is gonna be gonna be participating in the premium side more than he has been in the in the uh past. He's been very generous with his time, but but he's got a lot of love to give, and so we'll we'll be finding more and more of his stuff over there on the premium side as well. So you've got me today, and we'll be we'll be talking about the markets, and I don't know. Am I gonna commit injustices upon myself? Am I interested in items of mild interest? I mean, I've got them put together here. I might as well be. Am I right? Well, let's talk about the tail of the tape first. I just want to walk through the way the markets acted today. I don't know, if if you were watching, it was a heck of a ride. Corn and soybean futures

Full Market Recap And Closing Prices

SPEAKER_00 3:13

shot lower at the opening bell. In fact, the entire soybean complex was lower to start the week. Winter wheat futures were only mildly lower. Meanwhile, livestock futures got the memo, posted sharp losses of their own. This was an early trade. All of this, like by I don't know, 9 30, 10 o'clock this morning, Central Time. I've been watching the markets on uh plus 500. As always, we use plus 500 T4 software every day for real-time quotes and more. That's uh plus 500, plus 500 for real-time quotes and a host of features. Rounding into the lunch hour, despite feigning a recovery at mid morning, corn and soybeans did continue lower, and they dragged wheat to extend its own losses. And then there's the cattles. Fat cattle were lower, feeder cattle futures were sharply lower with deferred contracts down the daily trading limit, and lean hogs around two bucks lower themselves. I mean, the the markets just couldn't go low enough fast enough this morning. I I thought we were trading weather. We've we're we're calling for extreme heat in the coming days and then cooler over the weekend, and then guess what? More extreme heat again. Now, there are some rumblings that the forecast is always wrong this time of year because of the way the models are set up or something like that. I read that, and so maybe not quite as high as some forecasters are expecting, but still 100 degrees, let's just call it when we go to Ag PhD Hefty Field Day. Uh that's later on this week, actually. I'll be traveling, Tommy's traveling tomorrow. I'm traveling Wednesday, and then we'll be there from the from the grounds at AgPHD Field Day. Actually, you could you could check it out. Agphd.com slash field day is where to get more information if you're going to be in uh the South Dakota area. The South Dakota area. It's a big area over by Sioux Falls, over by Sioux Falls, South Dakota. But I digress indeed. Let's go to the markets here and just run them down for you. We'll just start with corn. I mean, I've got the December down 14 and a quarter cents, and we uh wound up settling out at 474, actually down 13 and a quarter on the December. The March down 13.5, 489 and one half by the time they settled out. The Beaners, not much better. Down 39 and three-quarter cents. The close of the day at 12.13 and three quarters. It was just starting to feel like maybe 13 was in play. You know, and then we have have a down day like this, down overnight, and just all of a sudden we're at 12.13 and we're closer to 12 than we are to 13. The September contract is was down 40 and a half cents at 11.99 and three quarters. I call that a downside SAS close. Three quarters below 12. Yeah, downside SaaS close in the September soybeans. Uh, meal was lower, and let's just look, let's look at the the products by percentage here. I've got meal roughly three, maybe three and a quarter percent lower. And then the oil, similar deal, three, maybe three and a half, maybe a little better percent lower over to the winter wheats. We'll look at the December down 18 cents even on the Chicago, 677 and a half. The December KC wheat down 16 even at 745 and 12. And now over to the livestocks. We had limit down performances from the October, the NOVE, the JAN in the feeder cattles, the October feeder cattle down the limit, $10.75, $3.25 and 25 cents. This September did a little better, only down 9.52 and a half, 331.92 and a half. Over to the fat cattle, the October contract, 372 and a half lower today, 218.77 and one half, and then over to the lean hogs. They were lower as well, however, not quite as bad, uh, at least by by percentage, maybe. Well, although you get out to the dees, and yeah, that's uh I guess I'm gonna call hogs sharply lower as well. I was thinking hogs might be a bright spot for us, but here we go. The October down uh 122 and a half at 87.80 at settlement out to the dece. We're looking at, what are we looking at on the dece? Buck 77.5 lower at 78.55. Now, as I mentioned, uh we've I thought we were trading a weather market. And if you saw last Monday's show, maybe you remember me saying, I thought I had it figured. I thought we were gonna go lower across the board, and we had a pretty decent day. Brian Grady walked us through it last Monday. That was a week ago today. I was surprised that we were able to hold on at all after the way the markets finished last week. This week, I you know, I guess I hadn't given it another thought on Friday, thinking, oh, well, we'll be fine. It'll be more of the same. A few things have changed, and I mean, I don't want to give the crude oil more credit than is due. And I'm not sure

Crude Oil Plunge And Iran Risk

SPEAKER_00 8:27

if, you know, uh, what's the chicken and what's the egg here, but if I'm looking at the WTI crude oil futures, the September contract down $7.35 presently. I'm at uh oh well I'm at $3.10. So down $7.35 to uh $81.96. The October right around $0.80, down $5.45 presently, and the NOVE down $4.10. The further out you get, I mean, you go clear out to the July, you're down a buck 94, and it just sort of, you know, the pressure eases as you get further out into those deferred contracts. But still hovering around around 80, a hard down day in the crude oil markets. Now, of course, you've you've probably seen on the news more talk of ceasefire, more talk of talks. I don't know where this goes, folks. I'm I'm a little skeptical about the whole thing. I was talking to my wife about it over the weekend, and maybe I'm completely off. And maybe this is why we need to have experts come on so I can talk to them and bounce my goofy ideas off of them. But here's the way I see it. I think the original strategy was cut the head off the snake, and the either the Iranian people will rise up or the militant regime will implode. And uh usually that sort of thing kind of works. And it's you know, there's no such thing as as neat and tidy when it comes to this sort of thing, but but it is a way to go to minimize troops on the ground, to minimize you know, civilian casualties, just to to be done with it quickly, cut the head off the snake. I I get that, and I think that was the strategy, and I think that was the hope here. But I fear what has happened here, we had here in the house, two-story house, older house, we had a window fall out, like so the the the sill got all messed up, and and a window fell out in a big windstorm, hit the pavement down on the driveway, shattered, glass everywhere. This is a couple years ago, and I'm still finding little bits of glass in the lawn. Every time it rains, a little bit more kind of comes up, and I thought I had it all originally. I thought I picked it all up, all the shards of glass, but they went in every single direction. And I just wonder if that isn't what happened, rather than cutting off the head of the snake and the body dies, what we've done there is broken the window. And so now, all across Iran, all across the area surrounding the Strait of Hormuz, that vital shipping way. Perhaps we've got little shards of broken glass, little cells. Sometimes they call them splinter cells. This I kind of finally understand that term. Just guys out there kind of on their own. Who do you negotiate with in that scenario? Who do you talk to? Who who gets on the phone and says, okay, boys, that's it. Wrap it up. We're done. There's gonna be peace now. Stop, you know, stop hassling boats coming through the straits. Just stop. We're done. I don't think there's anybody there to do that. Maybe I'm completely wrong, but it feels like we're dealing with the broken glass in the yard kind of situation. Long explanation for why I just I don't see a scenario in which this is over. And that that means that volatility in crude oil will continue. Like, duh, right? Well, okay, fine. But if crude oil got into, you know, if we're facing scary weather and the grains are down so hard, double digits down, 40 cents down in some of these soybean contracts today, how much impact

Technical Damage Or Buying Opportunity

SPEAKER_00 12:12

did that crude oil trade have on these markets? If it had a big impact, well, look out. That may be okay for us. It may lead to opportunity because I mean really this is there we're dangerously close, if not beyond the point of doing some technical damage in the corn, in the soybeans, even in the wheat, especially if I'm looking over at the grain side. I don't know what sort of catalyst it takes, especially with that scary weather forecast looming before us. We know it's hot, we know it's extremely dry in some parts of the Western Belt. We know that there are some problems from too much rain early on. There should be at least enough fuel to keep the floor under these markets. There should at least be enough of a floor under the corn, soybeans, and wheat to keep us from doing this. Heck, even the even the cattle market. I don't know. It's a scary time. And the volatility, I guess my message on all of that, crude likely to remain volatile because relations with with Iran are likely to remain volatile. And if crude remains volatile, that means that there's the potential for eyes to go elsewhere beyond the traditional fundamentals. Were we not fighting with uh with Iran and with this on-again, off-again negotiation sort of a thing. What else have I got here in my notes? Yeah, November beans look like they okay. November beans did look a little toppy last week. I did have that in my notes. Bean oil, yep, already looked a little bit, a little sleepy-eyed late last week. So maybe after after a nice run up, this is just some selling. This is this is a healthy correction. I was asking uh Brian Hoops last week. At some point we got to make this market prove it before it's a real rally. Maybe this, maybe today is proving it. Maybe, maybe tomorrow we see some buying, maybe in the overnight, somebody comes in and gets excited about these markets at these levels like this. Cattle on feed report didn't help cattle, came in largely as expected, and the uh the lean hogs did did look oversold to me. So, I mean, it's more pressure than I would have would have predicted, I guess. But but maybe it kind of makes sense if you figure it in, you stir in the crude oil news with it as well, with hogs oversold, a a uh largely meh cattle on feed report, little toppiness in soybeans, soybean oil, little toppiness in corn, went a little too high, too fast, market wants to just take a breather. Maybe that's what it is, but man, what a move to the downside when you've got uh corn down double digits, wheat down double digits, soybeans, like I said, down 35-40 cents on the day. And then, of course, the feeder cattle limit down. I'm excited to see what happens tomorrow. Well, I don't know about excited. I'm anxious to see what happens tomorrow. And with that, I think I'm just gonna hop right on over to the weather forecast. Extreme heat continues today from the Central Plains to the lower Mississippi River Valley over southeast Montana and from Southern California into the southwest deserts. The other thing is there are others I talked

Extreme Heat Outlook And Travel Notes

SPEAKER_00 15:29

to Sean Haney on Friday with the wildfires in California. It's it's uh there's a lot of problems out there, and they don't all necessarily figure directly into grain trade. It's just, man, there's a lot of hardship going on. A lot of hardship. Extreme heat warnings remain in effect. Severe thunderstorms capable of strong to severe wind gusts and large hail are possible across the Great Lakes into the Ohio Valley into tonight. So there you go. Uh for here in KC, it's freaking hot. I'm just gonna tell you that right now. In fact, I'll look on my phone and just let you know. Right now, it's 3 18 Central Time. We got a bit of a late start, but you know, what are you gonna do? Hundred degrees. 100 degrees right now. Extreme heat warning conditions are expected to last until 7 a.m. Tuesday, July 28th. That's tomorrow. So maybe we get a break in the overnight. I think we got some showers forecast for later on this week, but then heating up again next week. And that's that's kind of the the story there on the weather. As I said, we will be up in the Sioux Falls, South Dakota area for Ag PhD field days. Really looking forward to that. Ummy and I are gonna broadcast on Thursday from there. We'll uh we'll do our taping there and have a have a darn good time doing it, I dare say. And uh you can find out more at Ag PhD.com slash field day. Some items of mild interest. Am I mildly interested? Mildly, just real quick. 1879, the first U.S. federal government agency, the Department of Foreign Affairs, was established, later renamed the

History Bites And The Ag Injustice

SPEAKER_00 17:05

Department of State. In 1940, the animated short A Wild Hare is released, introducing the character of Bugs Bunny, and the very first time he said, What's up, Dak? It was the first time that uh that line was used. And in fact, it was the first line that Bugs Bunny used. He said it to uh to Elmer Fudd. In 1970, the population of Cancun, Mexico You're never gonna guess this. In 1970, let me ask you, beloved viewer, what was the population of Cancun, Mexico? Can you guess? Can you guess? I bet you didn't get it. Three! Three! That was the population of Cancun in 1970. And now for yeah, you know what? I'll uh I'll do the Ag Injustice against myself here. I guess I don't have sound effects today either. Wow. I like them apples. Crazy day. Wait, maybe this button here. No, still not today's ag injustice. The let's see, this the first records of this instrument appeared around 1000 BC via a Hittite carving. However, the general consensus among scholars is that it was actually introduced to Scotland by the Romans at some point during or after their conquest of England in A.D. 43 through 410. Okay, so introduced to Scotland. Some would argue it's a uh it's more of a curse than a gift. Today's Ag in Justice, can you guess what instrument this is? And I did have a sound effect. You would you would get it right away. It's the bagpipes. We have the Hittites and then the Romans to thank for the bagpipes. I always thought it was Scotland. It's not their fault. They were given the bagpipes by uh by the Romans during their incursion. Let me just take a minute and say thanks to Trade the News. For if you behind the quotes, look to trade the news, trade the news. And may I, of course, as always, direct you to agbull.com, where you can dig deeper with Ag Bull

Sponsors Premium Plug And Tomorrow’s Guest

SPEAKER_00 19:05

Intel. Take the markets by the horns with Ag Bull. Visit AgBull.com. Or, of course, you can always dial 7 855 737 Farm. 855-737 Farm for the details. I'm all over the place. I don't know what's going on, but I'm sure glad. If you made it this far, why don't you why don't you go to Ag Bull? You won't have go to Agbull and go to the contacts page and just send us a little note. Hey Davis, I watched it all the way to the end. You stuck with me. You crawled through the Shawshank pipe with me. And I surely do appreciate it. I appreciate every one of you for uh for watching. Maybe not today, but every other day, sure. Yeah, you bet. We'll have I've got Chad Layman as my guest tomorrow. Illinois hog farmer, corn farmer, soybean farmer. He's got a tale to tell, and uh hopefully we've got everything fixed so we can bring him in with us. Otherwise, it's gonna be you and me, baby. You and me, baby. Thanks for watching. Jed will be back first thing in the morning to start your Tuesday. And like I said, then I'll be talking Chad Layman about hogs, corn, soybeans, and well, life. Maybe we'll talk about broken windows. I'll see you tomorrow for more Ag Squawk.