Market Plus: Naomi Blohm

8 days ago
Market analyst Naomi Blohm discusses the commodity markets with host Mike Pearson in a special web-only feature.

English subtitle

Pearson: This is the
Friday, August 11, 2017
version of the
Market Plus segment.
Joining us now
is Naomi Blohm.
Naomi, welcome back.
Blohm: Thank you.
Pearson: We are
excited to have you.
And we know we're excited
to have you because we
have a lot of
questions for you.
So let's just kick
it right off here.
And this is kind of a
theme that I think we've
touched on a couple of
times during the program.
We just want to get your
thoughts a little bit
more.
Matt in Amherst, Wisconsin
notes that it seems like
just about every area of
the country seems to be
having some production
issue, crop ratings
continue to slowly slide
down yet the USDA says
we'll have pretty much
trendline yields.
What is the real story?
Naomi, when you're
looking, when you're
talking to producers, when
you're pricing things in,
what yields are you
using in your head?
Blohm: Yeah.
The 165 number on corn I
think is totally where
we're going to end up
for nationwide yield.
In January I think we'll
be there, it might even be
a little bit less.
Heading into this report I
personally felt that the
USDA would be slow
to lower the yield.
I was looking though for a
two or three bushel drop,
not the aggressive -- and
I thought that would be
about it.
But the one bushel drop
was, well it is what it is
and we all don't agree
with it obviously.
So it will come, the truth
will come, it always
comes, it just takes the
USDA six months to a year.
Pearson: Yes, yes it does.
And soybeans, that 48 you
mentioned on the program,
is that kind of where
you'd feel we'd be sitting
today given we've
started harvest?
Blohm: Yeah, well what
floors me is when they are
so slow to admit the truth
in corn but yet to just
turn around and be like oh
it's a shoe-in that these
beans are there and
they're better than
trendline, I thought
they'd just keep it
unchanged at 48 and I
thought that would be a
perfect placeholder, it
would be appropriate, no
one would be
upset by that.
But here it is.
Pearson: A bushel and a
half higher across the
nation times what did
they say, 88 and change?
Because they left
harvested acres unchanged.
Did they adjust much on
corn harvested acres?
Blohm: No, nothing.
Pearson: No, nothing.
Okay, so it was really
just yield was all that
changed.
Blohm: Yes.
Pearson: Alright.
Now, we've got a question
here from Jake and we've
actually got a couple on
here, Naomi, since you are
up to speed, let's talk
cotton a little bit.
So Jake wants to know if
cotton has broken out
quite yet?
Have we seen a breakout?
And where do we sit today?
Blohm: Prior to the report
cotton had been trending
higher for about two
weeks, so similar to corn
and similar to soybeans,
stepping back and looking
at a year long picture it
was stuck in a pretty big
range.
On the USDA report they
increased demand and that
was really important and
very truthful, but they
made the production number
astronomical and it was in
the low 800 pounds a
barrel and now it's almost
like a 900 pound.
And that was the game
changer for that market,
such a large increase
in production.
So that is what made
ending stocks from a year
ago to this coming growing
season almost double.
And global
production is up.
And that part is
legitimate because India
is supposed to be planting
potentially 18% more
cotton acres this year,
China has had decent
production.
So I can buy the global
increase in production.
I'm not in tune enough
with cotton producers to
know if the production
increase is valid for that
large of an
increase or not.
But because of that number
that did make the cotton
market work lower,
substantially lower.
Could it drop a
little bit more?
Potentially but I don't
see it just falling out of
bed because thankfully
demand is so good around
the world right now.
Pearson: And now our next
question comes from Doyal
and he's in
Alma, Arkansas.
Look out a little bit
further to the December
contract.
He wants to know where
will December cotton
market prices be
before December comes?
As we get into harvest we
start to really assess
what this crop is.
What do you watch?
What are your benchmarks
in the cotton market?
Blohm: It's, again, just
like the corn and soybean
numbers, in a range.
I don't see us really
getting out of that range
too much right now.
A little bit more of a
slide but I don't think it
goes too much
more than that.
So I think we're going to
be stuck here for a little
bit.
Pearson: Not going to be
breaking down below 60?
Blohm: Based on
information that I know
this moment I would not
imagine that to happen.
Pearson: Okay, and if we
didn't do it on the report
by doubling ending stocks
then that gives you some
hope.
Blohm: Yes.
Pearson: Let's take a look
back at corn and soybean
country.
This question is from Matt
and Matt is in Mercer
County, Illinois.
He's asking, big down
market, will it help in
basis?
And what should guys be
looking for to go ahead
and lock some in
for fall delivery?
Blohm: Here's my fear, my
fear is that elevators
will blame the USDA and
take advantage of the
situation.
Pearson: Just let basis
stay unchanged and let the
prices fall.
Blohm: Now, the reality is
that there will be more
farmer selling coming up,
people needing to clean
out their bins.
I think it would be a
courteous thing for an
elevator to do as a
business owner who wants
to retain their business.
If you maybe increased
your basis a little bit
out of respect because
it's a hard time for
everybody and I think
going forward you should
want to do your best to
encourage the producers.
And I know that a lot of
elevators will do donuts
or things like that, but
it's going to be a hard
time here in the next
couple of months.
So you have your part
to stand solid for your
inspiring task in
agriculture, bring it all
back to the FFA creed and
step up and do something
to help your brothers out.
Pearson: Because the
banker is not going to
take donuts when that
operating note comes due.
I've tried.
Alright.
We've got another
question for you, Naomi.
This one is from EZ$ in
Northeast North Dakota,
he's on Twitter
@bankerfarmer1.
He wants to know, again,
North Dakota, what is the
acreage battle going to
look like in the spring?
Is there going to be one?
Blohm: For North and South
Dakota I think there
really could be one
because of the higher
prices that they're going
to be receiving for spring
wheat, especially in a
month or two when the
truth comes out about the
abandoned acres and what
the harvested acres
actually are going to be.
You'll see a price
spike higher.
So those two states will
have a fight for acres but
every place else I don't
think they're going to be
doing too much of
anything, just kind of
their same rotation or
we'll see where things end
up.
Pearson: Now, a little
mental game here, let's
say that August finishes
out relatively well, we
finished with 48 as a
national average bean
yield, let's say corn USDA
works us down to 167, so
we're still trading $3.30,
$3.50 cash corn and $10
beans, that's a pretty,
that's bigger than 2.4
isn't it?
Blohm: Yeah, actually yeah
for as far as the ratio.
Pearson: Yeah, the ratio.
I can't do that
math in my head.
Blohm: Right, and so that
would encourage more
soybeans at this
time for sure.
But again, when the truth
comes out about these
combines and what the corn
fields are actually going
to say you might get your
post-harvest rally that
could finally make things
where they ought to be.
Pearson: Alright.
Final question for you,
Marty up in Buxton, North
Dakota, @SatMonstor wants
to know, he says, new crop
bean exports have been
very slow so far.
When do you think they're
going to pick up the pace?
Blohm: Definitely at
harvest time here and
you're going to see it in
the coming weeks for sure
because the Chinese
demand is so strong.
The one hiccup of course
could be if we have any
issues with North Korea,
that's a game changer.
But, based on things I was
reading today, there was a
response in a Chinese like
newspaper or something, so
it's not from the
government but it's an
editorial comment that I
don't think would be put
out there unless there was
permission for it to get
out.
Pearson: Yeah, I don't
think there's a whole lot
of editorializing
allowed to happen.
Blohm: So the commentary
essentially was, they were
saying North Korea, don't
you dare do anything to
pick a fight with
the United States.
But they did say, United
States, if you pick a
fight with North
Korea watch out.
So they're doing their
part to try to help make
sure things are
stabilized in the region.
They've got people to feed
and I think you're going
to see the exports in
general pick up for pork.
Pearson: Into China, not
North Korea, into China.
Blohm: Yeah, into China
it's a strong thing so
demand is going to stay,
it's going to be strong.
Pearson: It's interesting
looking at a Cold War with
a country like
North Korea.
Who would have guessed
we'd be here in 2017?
Now, before we let you
go, Naomi, we do have a
question for you from a
student at Iowa State
University.
We encourage all of you
who are ag students of any
age to get out your phone,
shoot a little video and
send us your questions and
we will make sure we have
an analyst get it
answered for you.
So this week the question
is from Iowa State
University.
Naomi, here is the
question for you.
Erica: Why is it important
to have ag ed in schools?
Blohm: Awesome question.
Agriculture education in
the public school system,
even the parochial school
system would be nice, it
is so important because
when you have the
disconnect right now that
you do between consumer
and where their food
is coming from and the
misconception that is
there, if we could start
to clean that up in
general with kids in the
classroom in middle school
or high school that would
be tremendous.
I think it also puts more
value on the work that
farmers do and the
farming community.
Agriculture is still one
of the larger growing
segments of jobs and
there's so many different
things you can do within
agriculture that I think
-- people gotta eat, so
you've got to have people
in the industry who really
respect where it's coming
from.
In addition, I think about
all the valuable lessons
that I learned from my
days working in tobacco
fields, from my days just
doing anything I could to
help at my friend's farms
and things like that and
I'm the hugest fan in the
world of the FFA creed and
so when you have to force
your freshman class to
learn that it can
change lives forever.
I feel so strongly and
adamantly about that.
So ag in the classroom
needs to be right up there
with mathematics and
science and things like
that because it's life
lessons, it is life
lessons and it's the
future of the most
important thing that we
deal with every day.
Pearson: And for those
of us who learn best
hands-on, what a great way
to learn science and math
in a practical setting.
Blohm: Bingo.
Pearson: Well, Naomi
Blohm, always appreciate
your insights.
Thank you so much for
taking the time to join
us.
Blohm: Yeah, thank you.
Pearson: Be sure to join
us next week, we will be
doing all sorts of
interesting things here on
Market to Market.
We will be joined by John
Roach on the program and
we will also take a look
at how veterinarians are
stepping up in
rural America.
So with that folks, thanks
for watching or listening
to Market to Market and
Market Plus and be sure to
join us next week.