Market Plus: Naomi Blohm (November 3, 2017)

Nov 3, 2017  | 14 min  | Ep4311 | Podcast


Pearson: This is the Friday, November 3, 2017 version of the Market Plus segment. Joining us now is Naomi Blohm. Naomi, welcome back.

Blohm: Thanks, Mike.

Pearson: Now, when we left the program you were pretty excited about all of the pork that is now available in the marketplace and you told me that you were making some pretty fancy new pork dishes. What's one of them?

Blohm: Well, I'm really into pork wontons right now and some pork tacos and so it's a great way if you are using either pork loin and you have leftovers or if you have pork shoulder you put in a crock pot and you are looking for new ways for leftovers. It's great, it's a hit with the kids, it's a totally new flavor so it's not like they're eating pork again, they don't know any different and the husband is happy because it's new food on the table. It takes a little more time with some of it, especially the wontons, but you can make them healthy and bake them. You're laughing. I'm going to bring some for you next time. I'm going to do it.

Pearson: We need to get this recipe up on Twitter.

Blohm: Yeah, I should do it.

Pearson: You absolutely should do it. So check out Naomi Blohm on Twitter. We'll get some recipes to keep this pork demand going. Now, Naomi, we've got a question here from Paul in Minnesota. Speaking of demand we need to get going, Paul wants to know is there a surplus corn yet from 2016? And then we know there's going to be some in 2017. And what are we going to do with it all?

Blohm: Yes, surplus. A lot of producers I think cried uncle right before harvest. I moved a lot of it that was in their bins. So that hit and was on piles. Now we have what has been a blessing is that harvest is so slow for corn right now. It has been a real blessing because in a lot of places some of those piles are able to get used up before the new piles are coming in. But what I thought was interesting was that I was on the phone with an ethanol plant in Wisconsin and just trying to figure out where's your demand, where's your basis, because I was going to relay it to a client. And he was really looking for corn, like yeah, and he said, well I just really want to get it booked before December. And I'm like you've got corn all around you. So it's getting used up and so it's moving, it's slowly moving. The demand is still there but you're not going to see your basis improve probably until spring, unfortunately. And that is why the corn market has been just stuck and if it can get a 20 cent rally that's going to be great but you're going to see more selling and then it's going to be stuck for another three months in a trading range. But it's moving. It's doing its best. But I don't think you're going to see producers sit on their crop for as long as they did --

Pearson: So you don't think so?

Blohm: I think they're going to be more willing to sell it throughout the winter and spring and not just hope for the higher prices later on. I think every rally is going to be sold.

Pearson: Okay. Because Paul had a second question, we've also got a question from Matt in Anamosa, Iowa, which I took a phone call here just the other day from a friend of mine asking what do I do with overflow corn? Yields are better than anticipated. So even if I was well sold figuring what I was going to get at the end of the day I'm sitting on more corn than I thought. At this point right now is binning it the best choice? Or do you just unload it even with a 50 to 60 cent basis and put the cash in your pocket?

Blohm: Every farmer is going to be a little different. If you can store it I would store it. I know I would if I was in that situation because if you're going to sell it you're going to get the absolute worst price right now because the futures are at the lowest that they are, your basis is the widest it's going to be and so not that your basis is going to overly improve as time goes on but maybe 15, 20 cents and 15, 20 cents in this marketplace is a big deal. Okay, so now let's say you're selling it in whatever capacity, either now or later, then you have to think about if you're going to reown it or if not. And so if it's another year like last year the calls didn't do much of anything. I look back and if you had bought a call option last year, like for a December option at this time last year you're paying like 24 cents.

Pearson: For December of '18?

Blohm: For December of '17. So I'm talking like I'm putting ourselves in a year ago from right now.

Pearson: Okay, so it was a year out, you were buying a year out call.

Blohm: Right. Anyway, the most that they made was 12 to 15 cents but that's if you got out at the high. So they just didn't do anything. So this is a year where risk management is going to be different. And it's going to be different strategies from a year ago where the best strategies for this year would be the ones actually that would involve the most risk. So it's a tricky environment because we aren’t in a situation where we kind of have the risk out there. So what we need to hope for is bad weather in South America.

Pearson: Yeah, La Nina has to kick in and give these markets a reason to rally.

Blohm: Yeah. But Chinese demand has been stronger. So there's a lot of little things that are building up and the more the market consolidates the bigger the break out is down the road. So we just need something to happen.

Pearson: Alright. Well, now we also had some excitement, really kind of the only spot of excitement on the grains this summer was in the spring wheat market. We've got a question here from Boyce up in Bismarck, North Dakota. Boyce wants to know, should spring wheat farmers be forward contracting new 2018 spring wheat now?

Blohm: No.

Pearson: No.

Blohm: Wait.

Pearson: Wait? What are your thoughts?

Blohm: Well, seasonally this is the time of year where a lot of prices are not at their best, by any means.

Pearson: But short crops have long tails, don't they, Naomi? Aren't we going to continue to sell off?

Blohm: We're still without the high quality wheat so there is going to be that demand for it down the road. So how much higher the marketplace rallies it's probably not necessarily going to be like last year because what would be the odds of another horrible drought? But here's my thought is that when I'm listening to other advisors out there on all the different shows and they're all so bearish and they're all saying price now, I step back and I think okay, the funds are the shortest they've ever been for corn and wheat, seasonally this is the worst time of year to price something so why are you telling people that it's the best time to do it right now? So I think wait and be patient. But we're not in a situation where we're looking for sky high prices, so when you see the profitable points there you've got to set the realistic targets and follow through on your plan and pull the trigger.

Pearson: Okay. So if you can forward contract wheat profitably today for 2018 it might be worth pulling the trigger. Otherwise wait. Do you anticipate acreage to grow for spring wheat given the excitement that we saw last year in the commodity?

Blohm: I am not sure. I've talked with producers in the Dakotas and a lot of them are liking corn.

Pearson: Oh really. Made the investment, we're growing corn, we're growing corn.

Blohm: Yep and on a lot of them plant the beans because North Dakota is the railway out to the Pacific Northwest. But of course maybe some will be more attracted to go into some of the spring wheat acres but again it's too soon. When I try to talk to people you almost feel like you're going to get slapped on the face through the phone by asking them those questions so far out because they're just trying to finish up harvest right now.

Pearson: Right, we've just got to put food on the table to get through Christmas.

Blohm: Right.

Pearson: Well, now we've got a question here from Roger in Kokomo, Indiana, @RogerGreeson on Twitter. He's asking, so we're talking North Dakota, he's asking is there a point at which these low prices cause an appreciable reduction in fringe row crop acres? And what would it be? And so five years ago that would have been North Dakota was row crop but they're not anymore. Kentucky, Southern Missouri, Kansas, all these growers trying to intrude on the I states' territory. What price level is going to get them out of the market?

Blohm: I don't know. That's a great, great question. What was interesting where I live in Wisconsin there's a lot of different somewhat specialty crops growing and we happen to have a pretty big like bird seed company so I'm seeing sunflower seeds grow, I'm seeing milo grow where I live, which is not normal. So I wonder if some of those specialty markets kind of come back or producers look for other things. But I don't know how low prices have to go. I think we're kind of there as far as --

Pearson: And the producers you're talking to outside the I states, $3.50 or $3 cash, that's not enough to get them to stop growing corn. They've made the investment, they're going to stick with it.

Blohm: I think so.

Pearson: Okay. Now, you mentioned milo so I'm going to jump around, I'm going to make the producers mad again this week. I want to jump down to Cindi in Kansas' question. Cindi is in Kansas and she's asking, as you mentioned milo, what are your thoughts on milo? Will it stay directly connected to the corn contract? The demand for milo seems good.

Blohm: And I don't know, I don't work enough with it. However, I do think that there has been more of a direct marketplace for milo in some instances and even an export marketplace.

Pearson: China was hot for milo there for a couple of years.

Blohm: So I don't know if it is going to stay that way or if milo can separate itself. I think it needs to differentiate itself as more of a specialty crop from a standpoint of maybe it ships better or something like that. I don't know is the answer. But it's something to watch.

Pearson: But they're growing it in Wisconsin now apparently.

Blohm: Yeah, and what was so funny is that they actually had a sign in the field, like lots of signs, this is milo and this is milo production for this particular brand of bird seed. And I was like, wow, milo in Wisconsin, I've never seen it before.

Pearson: And it's nice they partnered it up with kind of an educational session because not a lot of Wisconsinites see sunflowers or milo.

Blohm: That's the thing, they probably thought it was a field of weeds or something.

Pearson: They're going to go in there with their Roundup and just start spraying. So, Naomi, we've got another question for you and this one think outside the box, get crazy. You look at all kinds of different markets. Again, Bryan in Bald Bluff, Illinois. This is @BryanBoock. Bryan wants to know, he says, for one who knows nothing about wheat but enjoys gambling what is the best market to buy? Your spec purchase of the week for just, if I've got money that I'm happy to throw away what would you be buying?

Blohm: Crude oil on a setback. I think the crude oil market is going to be dynamic in 2018. There's just a lot of stuff happening and going on out there. As far as other spec trades I think the corn market for sure would be something that has a possibility.

Pearson: Bill in Cambridge, Ontario up in Canada wants to know, what is your analysis on the soybean meal market? He says, futures have been a little mercurial as of late.

Blohm: That's a great word.

Pearson: It's a great word, yes.

Blohm: That's like college prep word right there from high school English. Soybean meal, here's the thing with meal is that next week, we should have actually probably talked about this on the show, the anti-dumping duties with the Argentine soybean oil, that's all coming to a head next week. So if they continue to say stay away Argentina with your soybean oil, biodiesel, all of that, that puts more demand obviously here in the United States. So does our production go up? Yeah, probably, but then of course then we have this extra meal sitting around. So I don't know. I would say keep an eye on more so that next week with the anti-dumping because that will be a bigger thing. But we also have more hogs that we're feeding, we also have just the strong demand overseas.

Pearson: We've got our layers back after bird flu and everything.

Blohm: Yeah, so something to watch. There's a few factors going on there but I don't have a specific answer.

Pearson: Okay. And you don't see it given the increase in feed demand for hogs and birds and etcetera, you don't see meal going nuts because we should have this increase in production as we drive to meet this oil.

Blohm: Potentially, right.

Pearson: Potentially. Indonesia and Argentina, those are the two that we're looking at putting some tariffs on, correct?

Blohm: Yeah, Argentina, I didn't realize 90% of what they make for biodiesel comes to the United States.

Pearson: Wow.

Blohm: Yeah, so this is kind of a big deal.

Pearson: Yeah, a big deal. Okay, so stay tuned, we'll probably be talking about that in the future. Well, Naomi Blohm, thank you so much for taking the time to talk to us this week.

Blohm: Thanks for having me.

Pearson: We really appreciate it. Now, our drought continues on your questions for the basics of trading or trends in the marketplace. So join in and send us your questions in video form. You can direct message us on Twitter or send an email to for details. Naomi, thanks again for joining us.

Blohm: You're welcome.

Pearson: And folks, join us again next week when we'll see how North Dakota farmers handled the wicked weather cards they were dealt and Brian Roach will sit across from me here at the Market to Market table. Until then, thanks for watching or listening. I'm Mike Pearson. Have a great week. 

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