Luke Swenson of the Money Farm joins Michelle Rook on AgweekTV to discuss the November WASDE report and what it means for soybean markets and the future of soybeans, as well as what the report means for corn and wheat.



THE NOVEMBER WASDE REPORT WAS NEUTRAL TO EVEN FRIENDLY FOR SOYBEANS.

USDA LOWERED BEAN YIELD .3 BUSHELS AND PRODUCTION BY 23 MILLION. BUT LOWER EXPORTS RESULTED IN A 20 MILLION BUSHEL INCREASE IN CARRYOUT. ,

CORN YIELD WAS RAISED TO A RECORD 177 BUSHELS PER ACRE WHICH INCREASED PRODUCTION 43 MILLION BUSHELS, BUT ENDING STOCKS WERE TRIMMED SLIGHTLY WITH INCREASED CORN FOR ETHANOL.

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AND U.S. WHEAT ENDING STOCKS ARE STILL AT 14 YEAR LOWS AND GLOBAL STOCKS WERE LOWERED ANOTHER 1.4 MILLION METRIC TONS.

Joining us for analysis is Luke Swenson. Luke, probably the biggest surprise of the report was lower yield on soybeans, but it was kind of offset here by the slow export pace. Do you see that export pace continuing to be slow?

Luke Swenson: I THINK IT'S GOING TO SUSTAIN. I MEAN, EVERYONE WAS OBVIOUSLY LOOKING FOR THE INCREASE IN YIELD ON BEANS MORE SO THAN CORN, I THINK WE WERE EVEN LOOKING AT THE SAME. SO IT DIDN'T SURPRISE EVERYONE. IT MAKES SENSE THE WAY THEY JOCKEY AROUND NUMBERS.

LUKE, CHINA IS ABOUT, I DON'T KNOW, THIRTY SIX PERCENT BEHIND WHERE THEY WERE LAST YEAR FOR SOYBEAN EXPORTS AT THIS TIME. CAN WE GET CAUGHT UP?

Luke Swenson: THEY CAN, I THINK IT'S GOING TO NEED A, YOU'RE GOING TO NEED A PRODUCTION ISSUE IN SOUTH AMERICA FOR THEM TO COME IN AND BID FOR THAT, BECAUSE WHEN WE'RE LOOKING AT STOCKS WHERE WE ARE IT'S GOING TO BE HARD FOR THEM TO CLOSE THAT GAP. I MEAN, THE USDA HAD US DOWN TEN PERCENT AT THIS TIME AND WE'RE DOWN, IT'S LIKE YEAH, THIRTY FOUR. I DON'T THINK THEY'RE GOING TO NECESSARILY CLOSE IT, BUT THE QUESTION IS, WE'RE SETTING RECORD CRUSH PACES HERE, YOU'VE GOT NEW PLANTS COMING UP IN THE NEXT TWO YEARS EVERYWHERE. I THINK WE'RE DOMESTICALLY GOING TO BE A LEADER, AND CHINA'S GOING TO SUPPORT, MORE THAN THE OTHER WAY AROUND.

SPECIFICALLY ON CORN, WE DID HAVE RECORD YIELDS, 177 BUSHELS PER ACRE, BUT IT WAS OFFSET BY ETHANOL DEMAND.

Luke Swenson: OVERALL STOCKS IN THE U.S. ARE LOW, MARGINS ARE HIGH. THESE GUYS CAN KEEP BIDDING FUTURES WELL ABOVE WHERE THEY ARE, AND THEY CAN KEEP CHASING IT DOWN FOR THE TIME BEING. SO UNLESS YOU REALLY SEE ENERGY FALLING OFF AS A WHOLE, I MEAN NATURAL GAS FINALLY PULLED BACK, SO THAT MIGHT HELP FERTILIZER A LITTLE BIT. BUT ON THE LONG RUN, CRUDE OIL IS UP AT EIGHTY, THE ECONOMY'S RUNNING, WE'RE IN GREAT SHAPE.

WELL AND CORN IS GOING TO HAVE TO BID FOR SOME ACRES HERE.

Luke Swenson: ONE THING WE'RE PAYING ATTENTION TO, WE'RE ACTUALLY SHORT BEANS AGAINST CORN JUST BECAUSE WE THINK ACRES ARE REALLY GOING TO SURPRISE GOING FORWARD. AND WE THINK THE MARKET'S ALREADY REALLY SHIFTING TO PAY ATTENTION TO TWENTY TWO THERE.

CASH BASIS IS DOING ALL THE WORK HERE. HOW HIGH DO YOU THINK WE'RE GOING TO SEE PRICES GO THEN?

Luke Swenson: I THINK, WE'VE BEEN TELLING OUR GUYS IT'S GOING TO BE A BASIS-LED SALES MARKET. WE'RE NOT GOING TO BE LOOKING AT FUTURES REALLY IN SELLING, IT'S GOING TO BE BASIS LED ON STRATEGIC OPPORTUNITIES. YOU'VE GOT BULLISH GROWERS WITH A LOT OF CASH IN THEIR POCKETS, SITTING ON BINS IN A SITUATION THAT THEY HAVEN'T BEEN IN A DECADE. THEY CAN AFFORD TO SIT BACK IN THIS INFLATIONARY MARKET THEY'RE GOING TO LET IT WORK, I THINK.

SO CORN IS ALSO GETTING SOME HELP FROM THE WHEAT MARKET, WHICH HAS BEEN SURGING AND A LOT OF THAT IS DUE TO THESE TIGHT GLOBAL SUPPLIES, AND WE GOT MORE CONFIRMATION OF THAT IN THE REPORT. SO DO YOU CONTINUE TO SEE US CRACKING OUT THESE CONTRACT HIGH AREAS?

Luke Swenson: I REMEMBER THE LAST TIME, I THINK IT WAS 11.18 THAT WE HIT A FEW YEARS AGO. I MEAN, WE HIT 11.18 AND I BELIEVE WE WERE DOWN LIKE 45 CENTS BY THE END OF THE DAY. I MEAN, THERE'S NOTHING IN THAT MARKET, IT'S SO THIN. SET YOU TARGETS OUT THERE AND FORGET ABOUT THEM. IF THEY GET HIT, BE HAPPY, DON'T TRY AND PICK THE TOP PENNY ON THIS THING., BECAUSE IT CAN COME AND GO BEFORE YOU EVEN HAVE A CHANCE TO REACT.

IT IS GOING TO BE A VERY INTERESTING WINTER.

YES IT WILL.

ALL RIGHT, THANKS SO MUCH FOR YOUR ANALYSIS, LUKE SWENSON JOINING US FROM THE MONEY FARM.