From the Field To Futures: Cash Grain Insights That Matter
Come here for all that Karl and Angie Setzer are paying attention to in the markets, with an audio only twist. From the Three Things Karl is watching each day, to our weekly cash grain conversation with Eduardo Vanin from Agrinvest and a lot of things in between, make this your new go-to listen.
From the Field To Futures: Cash Grain Insights That Matter
Episode Two: Safrinha Looms and Argentina Sells
Taking a look at the factors influencing grain prices this week. From the increased pace to Argentina farmer selling to the large expectations ahead of the safrinha harvest and most everything in between, we talk about what is likely to impact price in the days, weeks and months ahead.
All right, good morning, everyone. Welcome back. We had a holiday last week. And so we took the week off and I have no complaints over that on occasion. But I figure it's time to get back and get a good feel for what all is going on in the world, specifically South America and some of the things that we're seeing there. Eduardo and I touched base quick here this morning. Nick and I did too on, you know, just some of this stuff to talk about. Carl and I always do. He lives with me. He's stuck having to listen to my ideas all the time. so you can feel bad for him anytime you want to. But I thought, you know, what a nice way to kind of get back into the swing of things other than let's talk about what's happening with basis and grain movement, grain flow out of the area. We had talked, I think, a couple weeks ago about the slower pace to farmer selling or some of what had been reported as slower pace. Our friend Javier, I think, had said that, you know, deliveries had been big, but farmers weren't necessarily pricing as you would expect. That has shifted, right? And we're starting to see Argentina beans come into the world market to a certain extent and at least an increase in farmer selling there. Nick, let's start with you just because Argentina's had the big changes with the currency devaluation and the export tax exemption and some of these other things. Where are we at from a harvest-based standpoint? What are you seeing for farmer movement or hearing from a cash movement type standpoint? And then my last question, because I like to ask three in a row, quality. Are we hearing anything about quality? So just kind of fill us in on that side if you would.
SPEAKER_01:Yeah, so initially the, you know, the recent concerns have been the rains and really the harvest pace, but that'll pick up here, you know, end of the week. It looks like things mostly are clearing up. The rain's kind of moving out. It's been, you know, quite wet. Andre Rios, you're away and now that'll head over to... Rio Grande to Sewell. But no, I think the deliveries have been pretty good. All the early reports are generally good on yields. So I think we've taken our numbers up another million tons for both corn and beans here. Again, the summer was hot, but it looks like it didn't have as big of an impact. Some of that probably is attributed to the excellent planning conditions. There's a high correlation in Argentina between crop potential and conditions when it goes in. If it starts bad, it gets bad. So having said that, deliveries remain good. The industry itself is just under-hedged, under-sold. So they're going to have to price from a cash need perspective here by the end of June. Yesterday, Javier actually hosted Julian, and he covered quite a bit of this. So I check back on that. Julian's in the trade every day and probably one of the best cash traders in the market. So we are seeing volumes pick up. The one thing, though, is that the currency is getting pretty strong again. It's$11.80 or something this morning. And again, the takeaway is just the government views inflation as enemy number one. to 2.5 and 3. So anything that, you know, a weak currency devaluation that destabilized that is just, they're not going to put up with. So from that standpoint, you know, farmers are going to push back on pricing, whatever they can. And I think the one dynamic there is that You know, I think, you know, last week we've got, or last two weeks, you know, about two weeks ago, just on kind of the, we pointed out that April weather around the world was very good, but the, you know, the prices, corn and beans were both actually up on the month, which you don't usually see like a good four to five weeks of global weather and agriculture prices higher. So that kind of had us leaning a bit bearish. But I think for Argentina, they're probably in the cash market, there's not a lot of downside to their prices. You know, you're going to get into this kind of harvest push here in the next three weeks that you should see seasonal lows being put in between now and then, and then, you know, corn and prices should firm, you know, what they sell in, you know, they'll push obviously most of it into the export market, but there's a lot more investment going into animals on feed. You've got good margins when it comes to feeding. So really our Argentina's lows should be coming here in the near term.
SPEAKER_00:Excellent. Eduardo, what are you seeing? You know, we've seen bean movement pick up reasonably decently. China's come back to the market and they've been making some purchases here this week. But corn seems to be the market catching the most attention, I feel like, out of Brazil. And maybe I'm just feeling that way or I feel like that's part of why we're seeing the pressure on U.S. prices like we are. We've got Argentina that looks like they're going to increase their flow. And then, of course, the safrinha crop looks to be full and and you know farmer selling looks to be reasonable what are you seeing or what has been happening here over the last couple weeks that that you would say sort of in a nutshell when it comes to basis and grain movement um and you know what are what are your thoughts as we move ahead here you know similarly like what nick just discussed
SPEAKER_02:angie uh yes the brush is not good The last month we have the peak of the season prices in real per sec around Mato Grosso 55, 54 real per sec. And then now it's 48, for example, Goyas, which is the third state in terms of production. We had 57 real per sec and now we have 51. But we are around 15 days away from the harvest in Mato Grosso. In Goiás, we have some irrigate areas that are ready to harvest. And the ratio between soybean and corn tells the farmers in Brazil to sell corn. Then we have summer crop. and co-ops in the south of Brazil, they are trying to move the corn and they have one month. So we have a lot of corn in sport market and we have a very good crop, like you said. And then the producers, they are selling, not because they want, but because they need space, they need cash. Then at this level of price, flat price, And because of the exchange rate yesterday, not today, then we have a cheaper replacement cost for exporters. Then we have some move. Yes, exporter jumping in the market. And maybe this week or the next, Brazil will sell something, some more carables. Because in the last one month, it was very stalled in terms of trades, FOB, then Brazil. But in the end, Brazil is competitive. For July, but we have not many offers around the market, but we are competitive. For August and September, we are very competitive.
SPEAKER_00:Let's talk a little bit more just about the safrina crop itself. And obviously you're competitive into the export market, which is interesting. And probably part of the reason that you are seeing, right, the collapse and spreads to a certain extent, the U.S. commercial is very, very much aware, you know, that the market gets a bit, more competitive or a bit harder to trade into, especially with the trade and the tariff concerns, right? You know, it is one of those things where if you're worried about the uncertainty that comes from it, and Carl and I had talked about this with our customer call earlier this week, you know, you're just not seeing the deferred purchases put on necessarily in the U.S. market or around the world, honestly, you know, at this point in time. A little to do with the expectations that Safrina is going to flow, and we hadn't seen much in the But also, because of the trade uncertainty and things like that, with Brazil increasing domestic demand, ethanol has been strong. It's one of the things we've been talking about. Feed margins are good, like we talked about with Argentina. How much do you think will flow into the export channel today? Off the get go. I mean, are we going to see, you know, the transition because Brazil has what, 18 million to 20 million metric tons a month of logistical capacity? You could say it's probably bigger than that now. But, you know, how does that break down? Do you see beans continue to flow? China's been buying August beans, you know. So what does that look like, realistically speaking, you know, when it comes to Brazil corn into the global market and and how that'll, you know, impact things?
SPEAKER_02:Tradings in Brazil, they will keep moving beans to China. We have inverse. We have a very good carry in China. Then they will buy, for example, this week. It's very active so far. 30 cargoes traded. 13, 9 or 10 from Argentina, which is a surprise because it's very cheap. The discount is huge, 50 cents, if you compare July and August, which is not normal. The normal should be 30 cents this week because Brazilian beans are not so good in terms of soybean meal yield than 25 cents. But 50 cents is really good. So... China is very active, trade in Brazil, they are making money originating beans. So they will keep doing something, but they know they have to increase the ownership of corn because October, November, December, and Jan, they know they have to combine beans and corn to have a good volume. For example, now, Costco, I started the terminal incentives. So it's very big. So they need to move something and they need to jump into the market. And if it depends on the farmer selling Brazil, I don't think so. Farmers will keep selling at this level of a set price because of that. Our exchange rate is the key to see if Brazil will keep competitive for corn. But the point is, the consumers, they are very short. For example, Peru booked this week two cargo scumbles from Argentina for June. So it's very spot. South Korea, they are buying for August, I believe. So it's July shipment in South America or late July. June, July in PNW. So everybody's short and confident that we are going to see very active farmer selling in Argentina after the retenciones in July and then in Brazil and also in the West. But the point is everybody's short in Brazil. I have a doubt if farmers, they will keep selling at this level of price. So because of that, our exchange rate is the key.
SPEAKER_00:And
SPEAKER_01:adding to that too, what's kind of helped out in Argentina is the Paraguayan beans coming down in this little delay in harvest. You've got a lot of beans hitting right now. And farmers, you know, one of the reasons they don't want to price is You know, you're probably 10, 15 percent worse than a year ago for beans and you're kind of flat to a year ago in corn. So right now, corn is much better and sunflowers more profitable than both. So I
SPEAKER_00:mean, the combination just for to to help make it better. more clear clearer uh for the audience or the you know everyone that's kind of watching and also is watching corn and you know can't figure out how we just continue to puke like we do um but the reality is the the u.s commercial like we talked about you know they've been selling the heck out of the spread the speculator has been liquidating a lot of that has been driven by the fact that we have reasonable grain flow reasonable expectations of grain flow it's probably more clear to say it that way the belief or the the idea that We're going to have a ton of bushels flowing into the pipeline. And in reality, right now, we have a very adequately supplied or the idea that the pipeline is going to be very adequately supplied. It fits. I mean, the pressure in the futures is being driven, you know, by the increase in grain movement, you know, not only in the U.S. where the commercial has increased. the bulk of the crop owned, you know, the estimated 85% of old crop corn has been sold. But also now, as we see South American supplies work their way into the pipeline, and the world end user who is short is still waiting for things to get cheaper and, you know, some more competition that may or may not show up as we move ahead. Go ahead, Nick. For example...
SPEAKER_02:Oh, sorry. Sorry. For example... today we have a a tender in south america cargill uh perina and two shipments one um eta for september another for august and we have a very small inverse of three dollars per ton so the safrinha it's not that cheap uh comparing to the the old crop u.s because august Probably TNW sold again and for September should be Brazil, but only$3 per ton. It's not that big. For example, three months ago, it was$15 per ton.
SPEAKER_00:The US is competitive through December. in the export market. I mean, it's not like we just fall off a cliff by any means, but the worry over trade, you know, I think is one of those things. Nick, what were you going to say? Sorry.
SPEAKER_01:No, I was just going to say, and on the other side of that, I think the world buyer has been able to take a deep sigh of relief and, you know, the planting outlook in the U.S. improved and the South America is going to have an extra, you know, five, eight million tons of grain to push out at some point. So the world buyer has been able to step back here and not need to get out in front of it or have any incentive.
SPEAKER_00:One important thing to remember about the world buyer, too, is that a lot of them kind of got caught flat-footed to a certain extent, right? No one really anticipated the world corn market to be as tight as what it was initially, which is what had pushed us into the U.S. Go ahead,
SPEAKER_02:Eduardo. If we think about the new crop, for example, Safrania and the U.S. new crop in Argentina, imagine that it For example, if December moves close to$5 per bookshelf, and then we should have a lot of farmer selling. Because in Brazil, it's 31%. It's behind the average. In Argentina, around$25 or something,$27. DOS, I don't know, but should be very small, below 10%. For
SPEAKER_00:new crop? Oh, yeah. Yeah, yeah, yeah. There's a lot of new crop corn to be sold.
SPEAKER_02:We have a lot of corn... wild card should be china if because it's very dry uh nico could tell about that i could say something uh but the third of the the the area is not good and then they are seeding clouds or doing something that is possible but for me i just um take a look at this morning for me it's not it's very dry so We have a lot of supply that should comes in. We don't know when, but we have a lot.
SPEAKER_00:going, it's a perfect segue, because I was going to ask you, Nick, about, you had had a conversation with a cohort or someone from China yesterday that was of interest or was really interesting to you. And I was, I was going to ask, you know, would you like to touch on that? And then also, you know, while we're at it, maybe touch on a little bit of the weather issue that we may be or may not be seeing in China there, which we are, obviously, because it's super dry for May, but I never know what June's going to bring. So yeah, well, What are you seeing there? What are you hearing there? You know, and what is something we should be paying attention to on that side?
SPEAKER_01:Yeah, so, I mean, let's just start with the weather. So we've cut wheat here, and I'd expect there will be more coming. The thing to remember about making cuts to China is that, like, the tangible, here's an actionable item doesn't come until, like, they raise the TRQ deadline. six, 12 months from now. So, you know, the idea that you can trade this, you really can't. So, or get confirmation, you know, there were several articles last year where people came out and said, you know, this corn crop was so much worse. And, you know, three months later, the USDA is revising another 5 million tons higher. So just keep in mind, but what it was this year, that's really, it's just the heat. It was extremely hot in a couple of these critical areas that are big in the major wheat producers that, you know, and kind of talking hottest on, you know, modern era. And these are even irrigated areas that you're going to have losses. So the dryness hasn't been that big of a deal. And most of the, there's actually some, you know, it's gotten rains up to the main, go up into the Heilongjiang, you know, your main corn, even soybean producer, they're okay. Just, you know, let's see how the June develops. There's no reason really to cut corn yet. But you certainly will be losing a little bit of planting here and there, especially if there's heat in any of the pockets of dryness with that level of heat. So we'll keep updated, but call it 3% to 5% losses. And you could be moving closer to 10% if it pans out. One of the interesting dynamics, I think, and like you kind of saw it this week, and this will segue into China, but if you looked at earnings, you know, like look at like Tyson versus like ADM versus Bungie. And I think, you know, these farmers selling cheap at origin, you know, somebody like Bungie, you know, Brian, you know, crushing at origin has got a pretty nice margin and you've seen that in their earnings. And some of these other, you know, throughput businesses, feed businesses, you know, you know, destination businesses, I think the margins are going to be a lot more difficult. You know, your margins in China are going to be very, very thin everywhere. So, you know, your end user in the world is going to be very sensitive to prices. And your guide origin probably is going to mask that quite a bit because he's generally going to have pretty good margins and he's going to have a chance here to capture, to Eduardo's point, all of this farmer selling and there's going to be pushes on rallies. So, you know, I think... we have a real elasticity issue in ag where a rally is gonna be met with selling, but a rally is also gonna be met with an elastic buyer who's gonna take a step back rather quickly, led by China. And so that's kind of one of the points I think that's interesting is, you would say, oh, if China has this wheat problem, they'll have to replace it with corn. No, there could also just very simply be, they're gonna use less. and um so so it's not again it's not something to get bullish about it at all today you know if anything um the situation in russia looks better and for all the talk about ukraine and just how cold it was in early april and then the weather's gotten looks a lot better and now you've got this kind of wet pattern starting in spain into the eastern europe romania bulgaria that probably brings a lot of relief and maybe it stays cool and wet and that ends up being a different sort of problem, but definitely 180 degrees. So, but no, one thing I think that's interesting on China is the way it was put to me and I think is a very good contrast is essentially whatever they're doing in the US, China is now doing the opposite. So the US policies are generally moving in a more, supportive of the farmers, fiscal deficit spending, fiscal push out. China isn't doing that. This deflationary kind of spiral they were in that was a bad thing is sort of becoming maybe a bit of a competitive advantage. Their tourism is up almost one to one for how the U.S. is falling. People are stopping to shop. People are vacationing more. You know, you can't go buy a house right now. Well, you can, but it's not the same level of investment it was because it's not going to rise. You're sort of in that big deflationary spiral. But you've got all these savings sort of built up where you might take an extra trip. So I think the China dynamic is very interesting. from the standpoint that they're sort of in the exact opposite situation of the US. And you even look at like the earnings concept of that resilient consumer in the US versus that very non-resilient consumer, but who is starting to kind of do things again. So yeah, I think China is definitely worth watching, but I don't think it's the catalyst for anything that's gonna make our markets more interesting in the short term. So long way to say that. The biofuels, it's the way.
SPEAKER_02:We had to increase it now by diesel, whatever. Yeah.
SPEAKER_00:No, I think you're right. I think that's a good point. You know, and I think one of the things that we're hearing about out of China and the stimulus, which a lot of folks said that yesterday, you know, the market started out higher on Wednesday and a lot of it was because of tariff talk or negotiations in China. To me, I felt like it was more driven by the announcement of stimulus. And, you know, the one thing that is interesting about the China stimulus that they're throwing out there is most of it is just pushing money into the economy. It's not really doing designed to increase consumption by the consumer. It's just kind of designed to create more access. And maybe it results in more in the way of a trickle-down economic-style approach. Maybe we have development of new technology, science, whatever, that helps build employment, yada, yada. But I did think that was interesting to see, or at least the response was interesting in that regard.
SPEAKER_01:At this point, it's all been supply-side. And it continues to be. And I don't think China looks at the West right now from a prescriptive standpoint and says, we want that. Bring that on. So the other thing I think that's super interesting about China is, again, if you look at sort of the control, like the retaliatory measures they've taken, a lot of the playbook is the same as the U.S. in 2018. So they've seen it, analyzed it, adopted it, taken the time to get ready to implement it, there's massive trans-shipment building up. It takes a lot of pressure off the currency. I don't think there's any chance you have to worry about a Chinese devaluation anymore. If they can push it into Indonesia, Vietnam, Thailand, the Baht, the rupiah, they can start to do a lot of work. So I think China is far more measured in what their response is going to be. And to my takeaway from this whole conversation was just a very slow, steady as she goes, happy to sit on the other side of the uncertainty the U.S. is creating and just pursue a polar opposite policy path.
SPEAKER_00:I think that it makes sense. At least, yeah, I think what you see is what you get in that regard. And it does look like it. That's what's kind of interesting to me when Trump, I was just reading the headline, Trump says that China wants to make a deal very badly. And I don't know if there is eager necessarily. And that's what makes me nervous. But I guess we'll see how the weekend conversation goes for sure.
SPEAKER_01:One last thing is like, you know, the mindset of this China wants to make a deal is, you know, I think whether or not that's right, none of us are in the room. And I think, you know, we're going to have 17 hot takes every announcement. But, you know, China had, you know, the COVID. Then China had the COVID recovery that didn't happen, ended up actually kind of being worse, you know. And then you had the students coming home who don't have jobs. And so China, this is kind of their third wave. you know, kind of triple whammy now that's hit them. And it's probably the least bad of all three. And, you know, and think about that in perspective to the US where COVID ended up being this like absolute boondoggle for everybody. Because if you didn't have a job, you were given money anyways. And if you did have a job, great, it was even better. And then, you know, you had this massive inflationary kind of fiscal, you know, government supported push across all sectors, real terms of the economy. And now I'm not, you know, I think that's one thing that's different is, you know, China's here and steady as she goes and the U.S. is up here. And, you know, I think that the mentality of the populace is very different that way.
SPEAKER_00:It's almost like in China, you've got a little bit of their Lieutenant Dan moment. You call this the storm? You know what I mean? It's helping to push the nationalism to a certain extent. So it'll be interesting. I mean, the whole entire dynamic and all of the inner workings, because we haven't even touched on the geopolitical aspects that come into play with China and Russia and India and Pakistan and all of these other groups out there that you have to pay attention to. It definitely makes for, and we'll have plenty to talk about in the months ahead. That's for darn sure. Carl, anything that you want to ask or questions in your mind before we kind of try to do our closing thoughts or kind of wrap up the conversation this week?
SPEAKER_03:Eduardo, I got a question for you on Brazil. Anchor Consult was out yesterday, day before, and said that plantings in Brazil will increase 500,000 hectares this year. So give or take 1.2 million more acres. But then I saw, I believe it's Unum said that Brazil corn ethanol production will increase. They're looking for a 20% increase this year. So my question is, even if the bulk of those new acres would go into corn, is that enough to prevent Brazil's corn stocks from dropping with that added ethanol output?
SPEAKER_02:Yeah, this is a very good question. And my feeling is no, not. Because of course, we have now some farmers producers, they are surprised about the crop, the weather. Some places then we have some drought pockets, but we have, in the last month, Paraná and Mato Grosso do Sul have been good. So the crop is big. And we have no buyers at a reasonable price. Then we have the floor, which is the export parity. But it's a, every year we have that. this kind of sentiment. So, whoa, we are going to have a lot of corn coming in and we are going to see a lot of pressure, but in the last three years, producers, they hold the corn and the market in the end, it's on their hands. And the corn, the ethanol plants, they are not buying a lot of corn and carrion because of the interest rate. So they are preferring to, for example, the last week, one plant bought 120,000 tons in one, two days in the north of Mato Grosso, around five real per sec above the spot, around 50 cents per bushel. to deliver in January and payment in January because of the interest rate. So this is going to create a higher floor to Brazil during the, for example, I think from August onward, then probably at the end of the year, Jan, Feb, then we have a, a tight supply again, mainly in Mato Grosso.
SPEAKER_03:Okay,
SPEAKER_02:thank you. Okay, but there's another very important, if the crop is big and in the south of Brazil, we didn't have ethno plants. So if farmers hold here, for example, Paraná, and then we have the new crop coming, the soybean, then they will have a problem. They have to sell it, cooperatives. They don't have that space to hold corn, wheat, and soybean. We have two. Every year we have this, it's clear. Then we have the north of Brazil, which is another situation, and then they have the south. because we have no economic plans. And 80% of the export program, it's Santos and North. So the competition up North, it's fierce. Every year we had the, and more and more players trying to ownership corn. So in the end, I think Brazil will be very soon out of the game in terms of competition.
SPEAKER_03:Okay,
SPEAKER_02:thank
SPEAKER_03:you.
SPEAKER_01:Okay, Eduardo, what did you use for acres this year, hectares, for us, you know, total corn or safrania?
SPEAKER_02:You ask who? I have to check. I think 17 million hectares, something like that.
SPEAKER_01:Okay, we were looking at some yield stuff. I'll post it when Angie posts the video. It's been about eight years since we've had any significant surprises on Supremia yields to the upside. But prior to that, the potential for a big yield here is higher than I think the market. I think you see expectations moving higher. But prior to these last few years, you had a lot of variability in these safrania yields. And so we were looking at exactly this, but I'll post it in the chat. So,
SPEAKER_02:you know. Okay. What the size, what do you estimate for safrania? What's that? Safrania from this year?
SPEAKER_01:No, I think... What's your
SPEAKER_02:number for the prediction?
SPEAKER_01:Oh, I was saying, I think, you know, some of our models, the way we're playing with the yields here is they do have the potential for some six, you know, average six tons per hectare, which would be just
SPEAKER_02:massive. Yeah, yeah, yeah, yeah. I'm using the same. So that would be around 105 million tons. Yeah. It's a million tons more than last year. Yeah. Yeah.
SPEAKER_00:I was going to say, yeah, you're 10 million tons. That's a, it's a chunk of corn. It's 390 million bushels, 400 million bushels more supply availability just in the Safrina. Cause the first crop was also a
SPEAKER_02:little bit. Yeah.
SPEAKER_00:So you're probably creeping up on total crop of what? 132? 31.
SPEAKER_01:Yeah.
SPEAKER_00:So the USDA currently is at a 126. And so that's part of what is weighing heavily upon the market is the idea that, you know, we probably are looking at a six million metric ton, you know, size difference on the Brazil crop overall, you know, and that'll have some some roles. But it'll be interesting to see, as you're saying, Eduardo, you know, the actual flow of grain. And that's been an argument that we've had or something that we've reiterated over and over again, just because it shows up on a spreadsheet. doesn't mean that it shows up in the pipeline. You know, you're going to have the initial pressure and then you'll have the, you know, take it. I know what it's worth. I'm not going to give it away moment that everyone has once they put the grain in the bin, you know, and then you have the, okay, I will. Here you can have it, usually at the end of the marketing year. And that's where we're at. We're at the here you can have it point, it feels like, in a few different places. All right, as we wrap up the week, the conversation of the week, is there anything, a point that you would like to, or anything that you're watching currently, the three of you, that you think is important when it comes to global grain or anything with prices? And I'll let Eduardo, you can go. Well, you go first, sir. Anything that you have?
SPEAKER_02:Yeah, two things. One is Argentina very aggressive, selling soybean to China, and then crushing margin in Argentina is very good because the origination is very cheap. And Brazil is the opposite. We have lower soybean mill, the bottom of the last five years. The oil is not so good. The last round of biodiesel purchases was not good. Then Brazil, our crushing margin is very bad for July and August. If crushers in Brazil reduce the decretion, for example, for September and October, and then dissipate the maintenance, and then we should have more beans to sell to China, for example. This is one thing. How long? farmers in Argentina will sell cheap beans or cheap crushers or China. I think in short term for soybean bases and futures, I don't think so. It's weather. But the flat price in South America, this is very important.
SPEAKER_01:Yeah, so same here. Argentina is going to have a push. You know, I think that just the currency strength and the attitude towards these retentions, you know, if they go off in June, you'll probably see a bit more sales prior. Again, I think if you look at the government's sort of three kind of bad legs of business, high taxes, strong currency, high borrowing rates. The taxes are probably the one by the end of this year that can both do the most for the industry and are probably the least threatening from an inflation standpoint. So, you know, keep an eye on policy that impacts that. And then, you know, I think one thing just to watch in the US and, you know, we care a lot less about it. Everybody has equipment we plant very quick nowadays. But the spring weather is wet and it's setting up generally better. I saw an analysis. I'll put something out in the next week on it. And it's just it's not a great analysis because it kind of talks about the speed of planting. But a lot of times you plant fast in the U.S. when it's dry and that's not a good thing. You know, most places in the world wouldn't plant into the into dry ground. And so, you know, just because you plant quick and maybe you do get more corn acres doesn't, you know, usually means you're going to have marginal average yields at best, which is kind of what happens. So I think you're actually setting up pretty good in the U.S., even though people generally, you know, want to look for speed to be more of a reflection of, you know, at the end of the day, speed isn't a good reflection anymore because we can plant as fast as we need. Yeah. And the one other thing is just keep an eye on the wheat planting. I think Rio Grande has got a lot of rain coming. Buenos Aires is drying out just in time and north of it. So you probably could get 10 to 15% more area in Argentina. And- Sorry, Nico, 15% for wheat? 10 to 15% more, I think, if it all goes well, yeah. So the wheat outlook could be fairly positive.
SPEAKER_00:That'd be interesting.
SPEAKER_02:A lot of wheat coming. Oh, my gosh.
SPEAKER_00:There's a lot of wheat out of Argentina. After several years of not-
SPEAKER_02:Here's a question. If Dakotas keep drying like we haven't seen, U.S. farmers- they should plant more corn or more beans, assuming it's going to keep that way.
SPEAKER_00:Yeah, I feel like at this point in time, unless you've got your nitrogen booked as a U.S. farmer or are able to kind of access anhydrous or something like that, like we're seeing a spike in some fertilizer costs and some other things that may make it difficult to decide this late in the game that you want to plant corn. You know, but yeah, there's... There's a lot of talk in that, especially with, you know, the lower prices in wheat. You know, wheat at this point is probably the biggest hit to a bottom line out of everything. And that's saying something because 440 corn, 435 corn is exceptionally painful too. But I mean, in corn, you're probably talking 30, 40 cents a bushel below the cost of production currently in many places. And in wheat, you're talking a buck a buck and a half,$2 below, depending on the yields, you know, of course. And so, yeah, I think you may see some folks make some changes in spring wheat area overall if the weather gives them a challenge or anything like that.
SPEAKER_01:Would it be fair to say the bias in the West would probably be a little more pro-corn, especially with the weather set up?
SPEAKER_00:I would say Carl would probably be able to speak a little bit more educated, too, with his background being, you know, he's been talking to folks in Iowa and things like that. But yeah, I feel like in the West, you're going to see more corn leaning just because it's been quicker. They have access and can use anhydrous more in the way than what we can here in the Eastern. I mean, in Michigan, we don't use it hardly at all. We've kind of gotten rid of it over the last decade. But
SPEAKER_03:Carl, thoughts on that? You'll see more corn. I mean, Iowa's probably going to be up about 8% on acres. Year over year. So there's, you know, you're going to see another million, one million, two acres come out of Iowa this year more than likely. You know, corn acres are going to be up. The thing is, is we're, you know, there is, you know, like Nick said, the acres, but you got to remember, These farmers haven't had a lot of money to spend on anything but irrigation and tiling. They can spoon feed that crop out west pretty much the moisture they need. And with the amount of that, we're going to see some drought cut back. It's not going to be cut back totally. But I do think we take a little bit. of that risk out. But I do think there's more concern over weather going forward. And I don't think you're going to see the huge push for corn though. Because like Angie said, we just can't get the inputs in out there right
SPEAKER_01:now. One comment is just Texas. Last week you kind of You know, cotton should really lose here to a lot of sorghum, corn. You know, with all this rain, I think we've got four to five inches last kind of five weeks. And, you know, it should start drying up. So probably the situation down there is going to look a lot better. And especially there, you know, they last year had, you know, 80, 100 bushel acre wheat. You could be setting up for a really good wheat crop again. So that'll take a lot of the pressure off. But, you know, even these areas that then get the good moisture and the cotton, you know, who are we going to sell it to?
UNKNOWN:Yeah.
SPEAKER_00:It's going to be an interesting year, that's for sure. As we wrap it up
SPEAKER_01:today... Last one on that. Are you hearing anything on cotton? It looks fairly ideal. Anything? No,
SPEAKER_02:I don't have any, but the acreage is larger than... So it's increasing. But it's not profitable right now. Okay, got it.
SPEAKER_00:No one's making money growing cotton anymore. It doesn't matter where you are. That's... I guess at least misery loves company, right? In that regard. But all right, on that note, just to wrap it up today, we did get some headlines here while we were chatting and, you know, UK, US trade deal. Looks like UK is going to roll back tariffs on beef and ethanol imports from the US in a big way. US is going to roll back import tariffs for automobiles, also create some trade buffers for aluminum and steel and pharmaceuticals and a few other things, the 10% tariffs staying on. And so it's pretty clear that the Trump administration intends to keep the 10% blanket tariff on everyone. They are negotiating the reciprocal tariff rate, which is the 40, 50, 30, 20, whichever little number that they created, but the 10% staying on. And then it looks like we're negotiating other ways to help these countries avoid the additional semiconductor, steel and aluminum, copper, pharmaceutical, all the other things that are coming our way um here eventually per the administration so we'll continue to watch that next week we'll be back with an update on china trade talks and and look at i want to talk more about market share um it'll give us a little bit more insight we'll see how the first set of trade talks go and then maybe we can um see if we have to talk about no exports to china at all for the u.s or maybe some i don't know we'll see how the the weekend goes but i definitely will not be holding my breath that we come in on monday and all will be well um Usually we get escalations before we get resolutions multiple times. So we'll see. But with that, I appreciate everyone's time. Thanks for listening. And thank you guys for filling us in with all your super awesome thoughts. If anyone has any questions or anything like that, don't hesitate to reach out. And yeah, we'll be back next week. Have a good one. See you guys.