Market Plus: Naomi Blohm

Jun 29, 2018  | 11 min  | Ep4345 | Podcast

Podcast

Howell: This is the Friday, June 29, 2018 version of the Market Plus segment. Joining us now is Naomi Blohm. Naomi, welcome back.

Blohm: Thanks, Delaney.

Howell: We touched on the feeder cattle markets a little bit during the main program but I wanted to make sure we hit on it again because we had a great limit up day here. What are you looking for, for the next level of resistance with August feeders after having such a strong day?

Blohm: Yeah, we had an awesome day today with that limit up move and prices actually were able to finish through a short-term resistance level. And so now on the charts if we don't have anything go goofy next week with the trade issues it actually points to upside potential that we saw back in February. So I think there is some more upside there. The demand continues to be all right. I think it's a good market for now and of all of the yuckiness that we've been dealing with the cattle market is a bright note, it really is.

Howell: It's a bright note and I think that's what producers need to hear, some sort of bright note coming. With that being said, when we look at the third and fourth quarters, we're heading into the third quarter now, the wall of flesh is of course this elusive thing that we all should be worried about, or I don't know maybe we shouldn't. But what should producers be thinking at home?

Blohm: Well, in terms of cattle market, so we have the supply and demand pretty much equal. So what you need to be watching is if demand suddenly falters and so then you want to have some sort of a hedge protection in place in case demand fails, otherwise supplies continue to be plentiful, that's a story that we've told over and over and over again and that market is supportive for now looking forward.

Howell: With the summer months or summer grilling season kind of coming to a curb here, will we continue to be able to I guess literally eat through the supplies that we have domestically?

Blohm: And I would say yes. I remember a few years back when we were asked the same question and people were saying oh the consumer is going to cut back on beef demand, but they never did, they never did. I think that we'll continue to see that. The only thing that would change that is if energy prices skyrocket higher or if suddenly we have something go terribly wrong with the economy and in my opinion that would be years hopefully down the road, hopefully. Otherwise I think beef demand looks fantastic.

Howell: Well, you gave me a great segway here to talk about energy and more specifically oil prices. We had great strength this week. Where do you see the oil markets heading?

Blohm: 80, which I have thought since Christmastime. I think technically we were able to finally push through some resistance areas on charts this week and the demand in the U.S. is fantastic. We saw a draw down in supplies this week and I think you're going to see that market still stay supported to 80. Now, 80 is going to be a big, big, big, big resistance area, psychologically as far as it being $80 crude oil along with chart resistance and President Trump is meeting with President Putin in the middle of July now and they're going to be talking about Syria, which is oil, that's what they're going to be talking about. So there is a lot to come yet with OPEC and will they or not do production cuts as anticipated and global demand and things like that. So once we get to that $80 mark it's going to be anyone's guess as far as if it could continue higher or if we see a setback at that point. So be very alert in terms of the next few weeks for crude oil.

Howell: Do you have any insight into what that July 16th meeting will be or what they're going to be discussing? Syria and oil, but anything more detailed than that?

Blohm: Part of me would be wondering just in terms of keeping relations up because that way President Trump would have a door open to Russia where China was trying to get to that door first. And so President Trump is meeting him off at the head. And that goes into production for grains, it goes into production for oil so it's a head spinning game in a sense of what's happening right now. But it really revolves back and comes back to commodities.

Howell: Absolutely. Before we talk about trade and tariff stuff a little bit more in depth I want to talk about spraying and all this wet weather that we've been having. You mentioned that you have been talking to producers that were nervous now about not being able to get in the fields and get spraying. What have you been hearing?

Blohm: So from various parts of Wisconsin and Iowa and Minnesota they're having a hard time getting the beans sprayed because it has just been so wet. And so now I'm definitely not an agronomist so if I get this a little bit wrong please give me some grace and forgiveness. But my understanding from my clients is there's not just the dicamba debate and deadline but for other types of spraying we have reached a point where you have to somehow change the chemistry of what you spray or how it is sprayed and how it is applied and so it makes it trickier to get those beans sprayed. And as you know if you have weeds growing up in your fields and they're going to be canopying over the beans that eventually could potentially take yield off of the soybeans. And of all the years that I've been driving back and forth between Des Moines and where I live in Wisconsin this was the worst that I've seen the fields look. It was horrid for soybeans. The corn, phenomenal. The soybeans looked horrible because of the weeds. And so I would think that the window is closing in on how much they can spray and what they can spray. And I'm very curious to see the corn roots, #showmeyourroots is what I want to see some Twitter pictures on just to see how shallow they are, or maybe how deep they are. And it's going to be such a variety this year. And with the high heat that we have coming in the next week to two weeks it's a critical time for the production for the corn and the beans.

Howell: It really is. And with the beans and all the weeds that you've been seeing in the bean fields, concerns that we might see lower yields this summer because of that problem?

Blohm: That would ultimately be what could happen and that of course we won't know until harvest. So that might be a surprise out there. And this year the crop ratings are ultimately phenomenal so we're pricing in these great yields and who knows what is really out there.

Howell: Talking about crop progress reports, how much weight are you giving to those reports?

Blohm: My opinion was very strong last year that they were the gospel and then we were proven otherwise. And that could be a combination of better hybrids and things like that. So right now we have perfect crops and so we're pricing in perfection. And so I'm like, well this crop can't get any bigger than what it is right now because 180 bushel corn is what they've got priced in and probably soybeans I would think maybe in the upper 40s, low 50s, I haven't heard any numbers yet because it's obviously too soon. But I think that these crop progress reports, as hard as the people work to put them together, unfortunately maybe don't have the same merit or tone that they used to.

Howell: Okay. Let's take a couple of social media questions here. We'll start here with Richard in Belle Eagle, Tennessee. I believe he sent it in via Facebook. He said, in a year where the futures markets seem to be driven by political winds rather than nature's, how can market direction be divined?

Blohm: Like I said earlier on the show, this is historic and unprecedented and just when you feel like you have things figured out for how markets should work and how things come into the balance together, when you have this uncertainty hanging over you it's frustrating and it's hard and marketing has taken a whole new turn again. And so now more than ever we have to go in with a balanced approach with thinking what could make this market suddenly move higher and what am I going to do about that in terms of my farm, what am I going to do for cash sales and on the flip side trade wars continue and progress and things become bleak, have a plan in step for what that would mean for your prices for your farm as well. So it's a balanced approach more than anything because this is uncharted territory.

Howell: It absolutely is. And working with clients and farmers, what have been their thoughts? I'm sure a lot of them are nervous and concerned about what is going to happen. But what have they been doing to get ready for this?

Blohm: The frustration is the most that I've heard in my 17 years in doing this and it's hard to deal with when you're working with that. The other thing that gets tricky is when you're feeling so helpless that you don't know what to do then you do nothing and that's even a bigger risk as well because then you have full risk on the table. So do your best obviously to stay on top of this and be prepared in case there's more downside potential. I would think we get some sort of a weather bounce here sooner than later or hopefully we can get this trade information turned around and gone to the upside, but this the hardest times that I've been having to do with marketing in this industry.

Howell: And you and I'm sure all of the other analysts that we've had on the program take this very seriously. I wanted to make sure that we touch on the fact that you yourself have sent letters to President Trump because you're so concerned about your clients.

Blohm: Yeah. I was frustrated and I used my words appropriately and I sent two letters on behalf of the farmers.

Howell: And you welcomed him here on the show with us and unfortunately he didn't come.

Blohm: I did. I said, President Trump, come onto the show. I'm like, if you needed to reach your constituents this is the show to do it at and these are the people who love the country the most.

Howell: Absolutely. Just a couple of other quick questions here, Naomi. This is not an easy subject to talk about and we appreciate you being here on the show with us. Steve in Findlay, Ohio wants to know, when will the tariff threat be put to bed? That's a tough question to answer.

Blohm: It is a tough question. Here's -- the answer is I don't know and I read a magazine a couple of years back called The Washingtonian and that's back when I lived in Maryland, they had a story about President Trump before he was anything to do with politics,  it was just who is this guy Donald Trump. But what they were relating in the article is that he doesn't care how long it takes to do a deal, finish a deal, how many lawsuits it takes because he'll wait it out. So that is the only bit of information that I have and it seems like that's maybe the path that we're going down now but you can't do that to America's Heartland. So hopefully the message will be received and things progress sooner than later.

Howell: I hate to end it on a down note, Naomi, but again we appreciate you being here and we appreciate what you've been doing for the farmers.

Blohm: Thank you, Delaney. Thanks for having me.

Howell: Join us again next week when we explore new shipping concepts with an aging infrastructure system. And Angie Setzer will sit across from me at the Market to Market table. Until then, thanks for watching, listening or reading. I’m Delaney Howell. Have a great week!

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