 I think we'll go ahead and get started. Good afternoon. My name is Dave Ripplinger, Bioenergy Economic Specialist with NDSU Extension, and the moderator, organizer of the monthly egg market situation and outlook webinar series with NDSU Extension Agri-Business. We'll follow the same framework as we have for a few years now. We'll have a series of presentations and questions at the end. Feel free to use the Q&A tool or the chat tool, and we'll get to your questions at that time. With that, I'll kick it over to Brian Parment with a look at the world of finance, egg finance, and egg econ. All right. Thanks, Dave. So the big story kind of been prevailing through the macro economy, and it's been trickling through the ag sectors, too, is what's been going on within inflation and the Fed's combating of inflation via the federal funds rate and how that's impacting interest rates. And so today, I'm going to go through, again, some of these variables and factors that the Fed looks at so that maybe as you are reading the news, looking at different things, you can have a gauge yourselves on what the Fed looks at and how they may react to some of the information that comes out. And when you're asking, are they going to increase rates further? Are they going to start decreasing rates, et cetera, et cetera? Those questions, I know, come to mind, because I know that's impacting things like equipment purchases, land purchases, the cost of carry when you're storing grain. Interest obviously impacts that, the cost to your operating node and everything else. So obviously, interest rates having such a big impact, especially as they increase on agriculture and agricultural lending. And so I'm going to cover a couple of the three of the big data points that the Federal Reserve looks at when they're making their decision on what to do with interest rates and the federal funds rate. So the April inflation report, which came out in the April jobs report, came out last week, and consumer inflation, basically overall inflation, they call it, was about 4.9%, which was the lowest it had been in about a year, so almost 5%. However, core inflation was at 5.5%. So like I was saying in this chart, consumer inflation was 4.9%. Core inflation, 5.5%, that's right here. And the big difference, again, is the difference between core inflation, you lose food and energy from it due to the variability in food and energy. And the reason in this case that consumer inflation, overall inflation, that is, was below core is because energy prices have declined quite a bit, and that's considered an overall, but not so much in the core. And I will say that the Fed tends to watch this core inflation number more closely than the overall inflation number. Again, not that food and energy do not matter. They're just more volatile, more likely to increase or decrease at a rapid pace. So it doesn't give the Fed as good of an indication of what's going on month over month or how persistent or how sticky is inflation at the time. And then wholesale inflation, that's your producer price indexes, that's up the line, and the chain was 2.3%. Then the jobs report came out the same week, showed a slowdown in hiring, but a slowdown from really strong hiring, and the labor supply, this was their words in the news, very tight, with unemployment around 3.4%, which was the lowest since 1969. So even though you have a slowdown in hiring, there's so many open jobs and so essentially so few people looking for that the unemployment rate stays around 3.4%. And again, unemployment, along with inflation, unemployment is another big number that the Federal Reserve looks at when they're trying to make decisions on what to do with the interest rate. And then the Fed's target for inflation is 2%. And again, 5.5% core inflation and 5% overall is still more than double the inflation target that the Fed has set. So then when we look at this, I wanted to just show a chart on what's happened with inflation, that's the red line, core inflation, purple, and then the federal funds target rate. And you can see what they've been doing in each one of these steps has been a rate increase. And since the rates have been increasing last year, we've seen the inflation number come down and that core inflation number come down quite a bit, but nowhere near that 2% target, which is right here, that first line above zero, that's where the target needs to be before the Fed probably starts rethinking its course in general. And just talking about what has actually happened in terms of the rate increases, March of last year, it was at basically 0.2, 0 to 0.25%. And from there, it started increasing. So from March to May, gone from a quarter of a percent to a half a percent to five to five and a quarter. So based essentially a 5% increase in the federal funds rate in a year, which is one of the fastest paces really ever, and yet you'd have to go back to the 80s to see anything like that happen. And here's what's happened to fixed rate mortgages since that rate increase. And I wanted to show it here. So you start back in 2022. Okay, so June of 2022, the Fed had just kind of started increasing rates back here. It really hadn't had a massive impact on interest rates. They were around 5% back in March, more like four. But that last fall is when mortgage rates started increasing at a pretty, pretty rapid clip, peaking last November at just over 7%. And here in 2023, for the most part, just below with a brief period, but right around 6.25%, getting close to 6.5% now compared to where they were. About a year ago, they were more like, like I said, around 5% or so on the 30 year. The one thing, and this brings me to a point that I wanted to make on that. So we look at inflation as a number. And you say, well, the Federal Reserve keeps increasing rates and inflation is coming down, but it's not coming down as fast as we'd like. And one of the things the Federal Reserve looks at is unemployment, like I said. And why that's important is, for lack of a better way to say it, unemployed people or folks who are worried about losing their job, perhaps because maybe their company's doing layoffs, they didn't get unemployed, but they're concerned about it. Don't go out and spend a lot of money. And if folks, you know, pair their spending down quite a bit, that helps stop inflation. Well, here's one of the things that's happened. The US population growth rate, and I want to tie this into the unemployment rate pretty quick. The US population growth rate since 1948 has done nothing but go down. When you had the baby boom generation, it was around one and three quarters percent. That trend has gone down, down, down. And here we are to this last year, and the growth rates around, you know, half a percent or less than half a percentage point. With a brief spike in 2020, because evidently something happened there, and there was some babies born. Now you look at the labor force participation rate. Women entered the workforce in the 60s and 70s. Labor force participation rate went all the way up to 67 percent, kind of hung out there for the better part of 20 years, and then started declining, rapidly declining after 2010. And then you get to, then you had COVID, this big, this big drop right here at 2020. And then it kind of rebounded some. So what did we have happen? Well, people started retiring, namely that baby boom generation, which was as a percentage largest generation of all time in the US. In fact, the millennials were on par with the baby boom generation, but as a percentage of the US millennials were much smaller. And so then you see what happened with COVID. The labor force participation rate was up around 63 percent. And then it dropped a couple of percentage points, even when the recovery happened. Essentially people who left didn't come back to work. They just either, they decided maybe they were going to retire and just decided, you know what, I'm not going to deal with these, whatever the protocols are, I'm going to retire now. The other thing that happened, two income families figured out how to exist on one income due to child care being hard to come by, things like that. They didn't come back to the workforce and they still have it. And so the labor force participation rate is the lowest it's been since about the 70s, the earlier 70s when, again, women were coming into the workforce. So we have a very slow population growth rate. Our labor force participation rates the lowest it's been in over 45 years. Okay. And so then when you have, you look at this total job openings that are non-farm, yes, they've come down since the Fed has started hiking rates some in 2022, but it's still higher than it's been in recorded history in terms of total number of jobs. This is the level in thousands. So you got 10 would be, you know, 10 million job openings. And I realize you got qualification issues on who's qualified for what, but if you take it in aggregate, that's a lot of job openings for a, and explains partially why this unemployment rate stays so low. So the point to that is, is the Fed is hiking rates and thinking that people are going to curb their spending because the labor supply is exceeding labor demand as companies do layoffs. Well, that's just not happening in this case. You know, and it's kind of a rarity that that's actually occurred that there are just simply more job openings than there are people to fill them. So even though companies pare down, you don't have this fear of being unemployed for long or losing your job. So people aren't changing their spending habits necessarily. So it's having a harder time having an impact on inflation. And I show this to show, here's the US unemployment rate versus the federal funds rate. And typically as that federal funds rate goes up, the red line, you see that blue line, which is the unemployment rate go up behind it. You know, after the federal funds rate goes up, you see unemployment go up, federal funds rate goes up, unemployment goes up. Well, in this case, it hasn't really happened. But there again, we haven't had in many, many, many decades, a situation where unemployment was this low for the reasons that there are right now. And so it just isn't having that big impact that it would have had maybe 20, 30 years ago, when folks were having a more difficult time finding a job or when losing a job many, many weeks or months on unemployment. Now that doesn't necessarily mean the case. And so, and I guess it goes back to the big point is that when the Fed is increasing the federal funds rate, what they're trying to do is change spending behavior to help curb inflation. And if it's not impacting somebody's job, which is one of the big areas that it does or large enough people group people's jobs, it's just not having the magnitude of the intended consequence. And Frayn actually has some really nice charts that he showed me a week ago about this on the number of job openings per unemployed person or per job seeker. And it's really astounding and it explains a lot why what's going on here. And then finally, the other one that kind of gets looked at is housing prices. And it's not necessarily that the Fed is sitting there pouring over housing prices and worrying about it. It's just that it's also an indicator for our folks changing their behavior are things becoming is our interest rates becoming prohibitive and slowing down folks and buying certain items and housing is really well tracked. And it's a big ticket item where interest rates are certainly going to have an impact if anywhere it's going to be there because of how big it changes the nominal payment how much of an impact it can have. So that's something that's watched and really housing prices have stayed, they were going up extremely fast since 2020. I mean, you can see the line here and this is an index, but they basically held even for the most part over the last year or so. So it hasn't, I mean, it's definitely slow to some degree the increase in housing prices, but it hasn't negatively affected them yet. So maybe some folks who were going to buy or have exited and basically started changing some of their decision making on moving with these interest rates, we just can't afford it. But it hasn't really had the negative impact on housing prices that other rate increases in the past have had because again, the unemployment factor folks aren't really losing their jobs. And so they're not changing their behavior as much as they would have many years ago. And then we look at new housing starts to that's another one, this is new home construction. And we know the price of materials has been high due to inflation. And then of course, the interest rate, if you're taking a construction loan and all these other factors that go into it, new housing starts have come down, but they're still as high as they were before the pandemic. So you see what happened in the pandemic. I mean, you go back, you go to here and new housing starts, yeah, they're obviously off of 2022, but that was that was a new record high. And interest rates were at a historic low. So it has had an impact. But again, we're talking about curbing inflation, not just modestly reducing new housing starts here. So I guess I guess a lot of that is to say that while it has had an impact and we can see it with inflation coming down to a degree, it just hasn't had the big overwhelming impact that it would have had maybe several decades ago because of the labor supply right now being in such a labor a job seekers market, so to speak, to the point that that folks just aren't as worried about losing their job and aren't making those tough decisions that they would have had to make in the past. And so finally, I just, you know, to end with, if you're looking at these numbers and you're wondering, are the is the Fed in its June meeting going to increase rates another quarter of a percent, our interest rates going to continue to go up, are they going to stay up? I'll just leave you with this core inflation is one number to look at. If you're if you're trying to see where it was and where it's going, are they going to increase rates? Well, look at that core inflation number. Is it coming down? If it is, is it coming down fast enough? Or obviously, is it going up unemployment? Another metric that's looked at heavily is the unemployment rate staying low, you know, and for or is it going up and causing a lot of people to change their behaviors. And then to a degree, the housing market, because that's an indicator of the cost of big ticket items and how those are being impacted. Note what I did not put in this presentation is the stock market. The Fed is not necessarily out there to make sure that the stock market stays at a certain level with how they make their decisions on interest rates. That's not really a key factor in their decision making. So someone saying, well, if they increased rates another half a percent, it's going to drop the stock market such and such a percent. I don't think that that's nearly as big a factor as many would like to believe. It's more about these other indicators here and in their attempt to stabilize prices. And I guess the last thing I'll say on that don't necessarily expect that just because inflation gets down to around that two to three percent level that they're going to drop rates. Because I don't think that they will, to be honest with you, I think they're going to keep them where they are until they have a reason to drop them. That the U.S. is heading to a big recession or something like that, because they were so low for so long. One of the concerns folks had was, does the Fed have the tools anymore if interest rates are so low to actually help minimize the risk of a recession or a depression or anything like that? Well, not really if interest rates are already at historic lows. So if things, if the rates stay around federal funds rate stays around five, say five and a half percent or something like that and interest rates are six and a half to seven and things are clipping along nicely, I don't think the Fed is just going to say, okay, they've been high enough for long enough. We're just going to start dropping them out of the blue. That isn't going to happen. There's going to have to be some reason or something happened to cause that reduction in interest rates. So with that, the latest and greatest on interest rates in the Fed and I concluding my portion of the presentation. All right, let me get started here. Yep. And I will turn it over to Fray Nolson who's going to give us a riveting grain market outlook. All right. All right. Let me share my screen now. So good afternoon, everybody. Again, Fray Nolson. I'm the crop economist, marketing specialist with NDSU Extension. This is my contact information. I usually try and encourage you if you do have questions later on or you're thinking something, think of something along the way you want to visit about or you want me to try and help clarify, I'd be happy to do that. So I'm going to do several things today. I do want to kind of set the stage here. There are, right now in the markets, there's a few key issues that are in the news that are impacting market psychology, kind of the attitude and the perception that people have about what prices will be in the future. The first to update on some information, the Black Sea grain corridor agreement, that agreement between Russia, Ukraine, Turkey and the United Nations that had been put in place several months ago, a little over a year ago now, was actually extended for another two months. So May 18th was the deadline for the agreement that was in place. They've essentially kicked the can down the road one more time, allowed about two more months for some renegotiation. The key sticking point was Russia has really been pushing very hard for removal of a few key restrictions that West, the United States, Europe and other Western countries have put on restrictive, basically restrictive trade for Russia. And they're trying very hard to get some of that stuff removed to make it easier to be able to sell their grain and their fertilizer products. So we'll wait to see. The issue is still kind of hanging out there, but we've got two months to be able to worry about it. Second thing, which I'll go through in a few minutes, is that the May WASDE report, the World Agricultural Supply Demand Estimates, were released last Friday. They are projecting a record U.S. corn and soybean crop. So total production of corn and soybeans would be at new record levels. This is essentially confirming the estimates that were in the marketplace. So based on the system that USDA uses to prepare this May report, which is the first time we saw information for the 2023 production year, i.e. the 2324 marketing year, the crop we're planting now. The methodology is they use the information from the Perspective Plantings Report in March and they use trend line yields. You take those two, you multiply them out. That's how you get the estimate for total production. So not a real big shock value, but just basically confirmation that USDA is looking at some numbers similar to what private forecasters are saying. And I'll talk about that in just a minute in more detail. Another thing I'm going to show you some maps later on and some tables for U.S. corn and soybean planting progress is either normal or well ahead of normal for this time of year. So again, and I'll talk more in detail about that, but not only we're looking at a trend line yield, which would be an average yield adjusted for technology, but potentially if the weather maintains and we have a good growing year, we might have above average yields, which again would put additional downward pressure on pricing. Hard red winter wheat conditions, primarily that Kansas, Oklahoma, Texas, Colorado, is in poor condition. We're starting to get some more reports from the winter wheat tour. I'll give you a little bit of information and update on what we have so far. However, just as a caution, the soft red winter wheat crop, which is primarily southern Illinois, Missouri, parts of Kentucky, also into actually into Wisconsin and Michigan, that soft red winter wheat crop is actually in pretty good to above average conditions. So the winter wheat crop, which is larger by bushels, has really been the focus, but the soft red winter wheat is partially offsetting that. So when we look at total wheat production, the verdict is still out. And finally, especially in the corn market, corn, as I talked about earlier, corn exports have been relatively weak all season long. I mean, all winter long, they've been well behind the pace we had last year. And to add fuel to the fire here, recently China has canceled several ocean vessels of US wheat, or US destination wheat. And this isn't unusual for the Chinese to do that. Basically, what's happening is there's a penalty to cancel that fee. Well, the prices have dropped far enough that they can pay the penalty, go back into the marketplace and repurchase the corn at a cheaper rate. And so we're starting to see some of that happen, which means that our total US export volume may not be as large as what we had first intended. Again, all of these things with larger production and potentially a little bit weaker demand is causing the markets to be in a pretty heavy downward shift right now. So let's do a very quick recap on the WASDE report. Again, these are the forecast for ending stocks for corn, for corn, soybeans, and all wheat, all the classes of wheat blended together. As I usually do, the top row is what the trade was expecting. So these are the private analysts and forecasters that put together their own numbers and what they think the ending stocks or the amount of grain we're going to have in the bin just before harvest will be. So the blue line on top is the average trade estimate. The black line towards the bottom, the bolded line is the information USDA presented last month. And of course, the red line on the very bottom, it would be the numbers that we got last Friday. So typically, I want to compare the blue line, blue row, excuse me, to the red row, saying this is what we expected to see versus what we actually saw. So this would be ending stocks for old crop. If you notice my title up here, I'll get my little cursor going. This would be for old crop grain, so be the 2223 marketing year. Now for wheat, there was no changes. And again, because of the averages, the average was looking for a slight increase in wheat ending stocks. We didn't get that. We basically had the same number for old crop corn. The trade was expecting a slight increase above last month's number. The increase is a little bit larger than we'd expected. All of that change from last month to this month was because of a reduction of about 75 million bushels of wheat, excuse me, of corn exports. So based upon the current export pace, some of these more recent cancellations, the USDA forecasts are starting now to reflect that slowing demand for U.S. corn exports. And as a result, if we don't sell it, we'll have it in inventory. That inventory can then be used next year if we need to. Finally, on the soybean column, relatively minor changes. There's just a small little tweak in the amount of soybeans imported. And again, I can't explain all the details behind that, but it was just a very, very minor adjustment. And so I would say that the USDA numbers came in basically identical to what the trade was expecting. Now, if we shift to new crop, notice the titles have changed here. Now, I flipped the numbers. So here's the new crop numbers for the 23-24 ending stocks. So as I mentioned earlier, May is the first month that USDA actually puts formal forecasts together for production and consumption of the new crop, the crop we're planting right now. So these are basically all estimates. They're forecast. The one number that we do have as a survey-based information, of course, is the forecast for planted acreage, which came from the farmer's survey in March. So very quickly, let's compare the row on top in green, which is our trade estimates versus the row on the bottom in red. I apologize for those that are colorblind. Red and green don't always mix very well for some folks. But if you look at compare those, oops, wait a minute, what happened here? These should be, what did I do? Oh, I am sorry. I copied the wrong numbers. I don't have the information for new crop and old crop. The numbers are the same. I apologize. The summary of it, I will correct this as we posted on the web. The summary for new crop is that for all of the major crops, corn, soybeans and all wheat, ending stocks are forecast to increase. So they're going to be higher levels for 2023 than we saw in 2024. Now, most of those numbers came in pretty close to what the trade is expecting with the exception of corn. The corn number for ending stocks, what USDA is forecasting versus the trade estimates were a little bit higher than what the trade was expecting. So I apologize for the error in preparing my materials. We did get a minor adjustment, minor tweaks to what's going on in South America right now. Most of the Brazilian soybean crop has been harvested. A large portion are essentially all of the first crop corn in Brazil has been harvested. Second crop corn is pretty much finished planting right now. We'll have to wait to see how the second crop corn develops as we go through the rest of the summer. For Argentina, we're still wrapping up the soybean and corn harvest in Argentina, trying to put the kind of the wrap on the final numbers. The trade is expecting an additional decrease in Argentine soybeans as well as corn. And that's really coming out of some of the private analysts out of South America. I don't think USDA was quite ready to lower those numbers, but I do expect them to come down as we get into June. I think the June report, USDA will adjust their forecast for Argentine corn and soybean production to be more in line with what we're seeing from the private estimates. So even though they didn't make a lot of changes right now, I do expect a few more changes coming in the June report. So let me shift gears a little bit and talk about corn planting progress. So every Monday we get an estimate of the planting progress as well as crop conditions now starting pretty soon. For the major crops we have in the United States and it's by state. Now this is planting progress and I just want to highlight a couple states. There's actually 18 corn states that are monitored every week so we can monitor and see how things are progressing as we move forward. So this information is from last Monday. It was actually collected over the weekend and summarized. It was reported on Monday morning or excuse me, Monday afternoon. I guess a couple key points I want to make. The states highlighted in blue at the very top, Iowa and Illinois, if you notice where they are, the blue meaning May 14th, this is 2023, both Iowa and Illinois are 86 to 84 percent planted as of last week versus the five year average of being anywhere from 72 to 63 percent planted. So the really big corn states of Iowa and Illinois are well ahead of their normal planting progress. When we look at some of the other major states and the numbers that I have in little parentheses behind each of the states is the number of acres that are planted. It's not necessarily production but the number of acres seeded. So Iowa has the most corn acres seeded, Illinois is number two, Nebraska is number three, etc. When we look at the states that are highlighted in black, they're very, very close to their normal pace. So there's a large portion of kind of that central and western corn belt that's pretty much on normal pace versus you get central and eastern portion of the corn belt and they're well ahead of the normal pace. And of course we have what I would call the outlier, which is North Dakota. We're well behind what our five year average is. We're very similar to what the pace was this time last year, which again was exceptionally slow because of the wet cold spring we had last year. Now some of the things as I think most farmers are finding out, soil moisture conditions are not as dry or excuse me, not as wet this spring as they were last spring. So with crossing my fingers, hopefully we'll be able to catch up on some of that planting progress. The reason I'm bringing this up and pointing it out specifically is that I don't want people to get this backyard syndrome that just because it's really slow and planting progress is well behind in my area, you know, I get this common question as well, don't the markets know that we're behind? And the short answer is yes, they do know that you guys are behind, but this is an isolated problem to North Dakota, parts of Minnesota, Northern Minnesota, a few parts in South Dakota as well as Montana. So it's really a Northern Plains problem. It's not necessarily a core central corn belt problem. If we look at soybeans, a very similar story. So we get our number one and number two soybean states of Iowa and Illinois, well ahead of the normal planting pace. So they're getting the soybeans in the ground early crop conditions haven't been forecast yet because it really isn't out of the ground. But at least there's this expectation that we may get average yields or even possibly above average yields, depending on what's going on. We move into the kind of the next tier down for acreage when we look at Minnesota, Missouri, Nebraska, again, heavy soybean states, they're either at pace or well ahead of normal planting pace for soybeans. Then we get to North Dakota, which is again, the red one, okay, that that we're well behind where we typically are. Now again, that's a relatively small number. So it wouldn't take much of a surge in planting and planting progress to be able to catch up to the five year average, but we are starting kind of behind the gun and behind normal pace. The last one I just want to touch on is spring wheat. Obviously, we're still trying to put spring wheat in the ground. We made some of the substantial progress I know in Western and Central North Dakota this last week. So I do expect the information we get on coming Monday next Monday to be better, but we are still well behind and really the only region that is near normal pace is Idaho, but that Idaho region plants very, very little few acres of spring wheat. A lot of its winter wheat or white wheat, they have very little hard red spring wheat. So again, the soybean planting progress nationally is obviously behind what we would like to see. So how do we put this into perspective? I also want to show the soil moisture conditions because I'm going to show you the winter wheat ratings here in just a minute and talk and then end up my discussion with what's happening within the Kansas wheat tour, the winter wheat tour, give you an update on what's going on. So this is a map of soil, estimated soil moisture conditions, basically based on water holding capacity from a joint effort between NASA that does the satellite imagery, as well as USDA that tries to ground truth and correlate the satellite imagery along with what they're getting from soil-based or actual observation-based calibration systems. So they've been doing this for quite a while. I think they're zeroing in on some information that will be very, very useful as we move forward in time. So I don't want to put a lot of pressure on these numbers or this information, but it does give you a very quick visualization. So if you look at something with a dark green or a blue, if you look at the scaling on the far right hand side, the soil moisture conditions, it looks like it's towards the upper end of normal or excessive. By the time you get into the blue areas, there gets to be typically saturated soils. If you look at the lighter green or the pale green, and then you get into the yellows and the oranges and the reds, those are well below normal soil moisture conditions. Now, this is an estimate for the top three feet, about the top meter of soil. So think of that as the normal soil, the root depth within the soil. So our drought monitor map typically shows the amount of soil moisture in the full soil profile. And then there's some other drought, like the Polymer Drought Index, which is a variation of this, looks at more of a surface moisture conditions rather than looking specifically at that soil depth or at the, excuse me, the root depth. Now, you can see that we really have kind of two separations and it tends to be this border between the runs from the central plains and back into the Corn Belt. So we look at the core Corn Belt states of Iowa, Illinois, Indiana, even into Ohio, Kentucky, Missouri. This central and eastern Corn Belt is got adequate to possibly saturated soils. And even as we get into southern Minnesota, some very, very good soil moisture conditions, again, planting progress is well ahead of normal. Then you get into the central plains area. Now, North Dakota, because of the rains that we've had over the last, this last spring and some of the snowfall, that soil moisture, at least within the top three feet has been recharged. But as you get south into Nebraska and then into Kansas and also into the panhandle of Texas and Oklahoma, things change a bit. The reason that Western Kansas is that pale green is because they did have some rain showers that came through actually some pretty significant rain showers came through a little over a week ago. And so some of that soil moisture now is being reflected in this map. So the areas that we really need to be concerned about now, in particular, even with corn and soybean planting, if you think about Kansas, it's really eastern Kansas is where most of the corn and soybeans are central Kansas is that transition zone, just like North Dakota is. And by the time you get out to Western Kansas, most of that is irrigated corn and also dryland wheat. So let's talk just a little bit now about my last slide, which is the Kansas wheat tour. So it's going on right now. Today is the last day. It's actually a three day tour, primarily Kansas, but it does touch Northern Oklahoma and Southwest Nebraska. So it does kind of loop across the border just a little bit to get some samples around just around the borders of Kansas as well. So the results from day one, again, it's a three day trial, a three day tour, will get the information today and then they'll put out their final official forecast based on what they have seen and observed and measured. So day one, the weighted average for the day one route was about 20, almost 30 bushels per acre, 29.8. Relative to last year's estimate, which again was somewhat hampered or hindered by some drought conditions in western Kansas as well, was actually about 10 bushels higher. So notice last year at this time, they were forecasting 39.5 bushel average for that particular route on day one versus about 29.8 today. So about a 10 bushel reduction per acre for that year day one route. When we look at day two route, the stuff from yesterday, slightly different part of the state, a 27.5 bushel per acre estimate as a weighted average yield versus last year's number at 37. Again, about a 10 bushel spread between what we saw last year versus what we're picking up in the survey this year. We'll have to wait to see what day three shows us and what the final numbers are. But I suspect I'm guessing based on the initial findings here in day one and day two, that we're probably looking at about a 10 bushel differential from last year to this year. So if we translate that into USDA's forecasts, again, this would, this comes from the May production estimates, which were released the same day as the WASDE. So currently USDA is forecasting at the average Kansas wheat yield to be 29 bushels per acre versus last year, the number they reported was 37 bushels per acre. So that's about an eight bushel spread. Now, the thing, the reason I'm bringing this up is even though we're getting new news and confirmation essentially that yes, that Kansas wheat crop is in tough condition, that it's going to be a very low yield that we're not going to have as many bushels of hard red winter wheat as we first expected. A lot of this information has already been kind of baked into or considered by the market is already embedded in that. We might get a little bit of an additional bump, an additional support, I guess lifting of prices, because it's a little lower than what the USDA numbers had. But again, a lot of this information is already embedded in the futures markets that we see today. So as we move forward, we're going to have to have some additional information to try and get us put some more lift back in the market. We've had quite a bit of a retracement now in corn, soybeans and wheat over the last week or so. I know that there's some farmers getting very concerned not only about new crop pricing, but also about catching up on some old crop inventory sales. So I'm really, I guess my best guess right now, if I were to forecast and look forward, I do think we're going to start finding a bottom here. I think we'll have some temporary lows. We'll likely rebuild a little bit off of these marks off of the prices we're seeing today, but it's going to take a little bit. And as long as we continue to have good weather and the expectation for very large production numbers coming out of the U.S. again this year, I'm afraid that the path of least resistance is still lower as we go through on our pricing. So with that, I will, I am finished. I will stop sharing here and give Tim Petrie the floor and let him continue. Good afternoon, everybody. Tim Petrie, the in extension livestock marketing economist. Today, I'm just going to give you a quick update of some market classes of cattle and then talk a little bit about summer grazing since we have had some moisture. I'm not going to spend a lot of time in history here because I've talked about that before. Again, all my charts, the green line is 2020, the purple line 2021, the blue line last year, and the red line, what we're going to focus on is this year and then the red squares this year's futures and then the orange next year's futures. So we've seen nice improvement in fed cattle started off there around 160 and actually we hit an all-time record weekly high there a couple of weeks ago at 180, 44. I backed off a little bit. And I think in some respects that it has some good news with it, even though it backed off a little bit in that we're looking at a more normal seasonal trend the last two years we were just up up up throughout the year trying to catch up after oven so on. So the normal seasonal patterns for fed cattle to go up in April down into June and August as the futures. So there in the red bars and then pick up at the end of the end of the year. And so it looks like a normal seasonal pattern, meaning that there aren't black swan events affecting us like it happened before. We are at record levels our previous record high fed cattle for the year was 2014 back when we had low numbers and following up on that on January 1st of this year our cattle numbers, beefbound numbers are even a little bit below where they were in 2014. So we've had a lower calf crop and that's positive for prices and then again those gold are even higher next year. But we've been ahead of the record high in 2014 the entire year so quite likely we'll set it again the USDA and the recent WASD's predicting 166.50 for this year and then for next year 172.25. So the two biggest things that affect feeder cattle are fed cattle and particularly those futures when those calves or feeder cattle will hit the market which would be now more the at least for calves in particular the the gold line up there and so the two things that would affect it would be that and then corn and grain has already talked about corn for and how that affects will affect feeder cattle and that the big takeaway there is we're projecting a record high corn crop which would tend to be lower prices which would be supported to feeder cattle. So go look at the calves again half prices have just marched ahead the entire year up there and again a week ago although not at weekly high records are above the average the last record high average was in 2014 again when we had the cyclic low cow herd and now a little bit below that again back to our season again calf prices usually go up into April and then just maybe back off a little bit on our pretty level until we get to the fall when they go down again that blue arrow in the bottom right hand chart there October 15th is all is about the low there but we're at at levels that we haven't seen since the beginning of 2014 or or so and and but but because we started off lower and the you know the record high was 250 we're probably going to end the year at least a little bit below record high but still at good levels go to the heavier weight yearling cattle again the same thing we've just been marched up and up and up as fed cattle went up and as corn has went down we have that opposite relationship changed corn since that's a bushel 10 cents a bushel change feeder cattle buck in the opposite direction and so corn has been going down and we have fewer numbers we're going to have the even fewer calves to sell this year than we had last year so we moved to those fall futures for feeder cattle are up there September that today was right up at the 237 I think went when it closed there and again that would at least those prices that higher at record high levels we started off lower the all-time record I average was 208 we're certainly going to be close to that well I'm going to talk a little bit about summer grazing that so just keep those fall futures up there at those levels in mind that are up there at 1 238 and the big question is then you just saw the calf chart calf prices up you know around 260 or whatever and and so they are expensive so how will that work in a summer grazing program well then keep in mind that also the fall futures are fairly high and so here we do have on our website a summer grazing budget that you can use and we have an example there but on the excel spreadsheet so you can put your numbers on the right hand side to compute yours just a couple of key things there towards the buck I'm not going to go through all those costs you can put in your own number of acres it takes per head and your cash rent or what you could rent it for your opportunity cost or whatever and on down those costs put on and concentrate on those blue circle numbers for the beginning calf value of 550 pound steer calf I use 260 how did I get that well I went to last week's market report for the markets reported by USDA in North Dakota and you see in that blue circle there in the middle there were a wide range in places 236 up to 263 with about a 255 average so I went to just towards the top of that kind of being conservative there at at 260 in per calves and then like down a little bit to the left I use 225 for a projected price for September a kin that's very conservative because of September futures today closed at 237 you know $12 higher but given my example here then we have a the next blue circle break even of about 208 again well below what the futures market is now and so but with with those examples would give us about a $134 per head profit however if you go down I didn't circle it but if you have a 10% lower price where that next red arrow down is you would lose money so with that you know there is risk in the market the corn isn't completely planted yet and the long way from that and remember that relationship so I think that price risk management is still something we can should consider especially on a seasonal basis thing like summer grazing because you sell all the cattle on September 15th or whatever you're at the mercy of the market then and then we have you know the economy and you know you know what's weather going to do it's still dry and the rest of North Dakota Respirin pension really dried down and and the Kansas on down into Texas and so on the economy and geopolitics all things that could cause risk and volatility so you know there are a number of things that again the futures market is up at good levels there 237 in September and see if you can use and are used to using the futures or options market you can do that you could do a video auction a lot of interest more so than ever in a livestock risk protection insurance from USDA so I pulled just last night's offering from the LRP and and so this was good until nine this morning a new one will come out this afternoon at 4 30 and one advantage of course of LRP is that you can do any number of futures markets 50 000 pounds but here you could do one head or five 10 15 20 whatever number that you want and you pick the weight so left circled in green is the highest coverage price offered for September 13th delivery mid-summer mid-September when the cattle will probably come off pastures the USDA was offering a price of 231 and and well right to the to the left of that then their expected ending value was 233 which on the bottom yesterday September futures closed at 233.95 but they're up $3 today at 237 so when this comes out this afternoon we're going to see even higher coverage prices or lower premiums or both so we could lock in 231.20 yesterday for a five dollar 100 weight premium and then they offer prices at two dollar increments down 229 227 and so on that lowers the premium one thing I just went down and I picked the lowest offering for September of 233.20 and and the reason I did that is because again back to that break even price of 208 at least based on my estimates there that lowest offering would still be above our break even price so again the key here is is if you're a producer getting into talking through your lender or if you're a lender discussing this you know with with producers to decide what you want to do and how much risk you are and how much premium you want to pay but you know we'll have even on the bottom side there are probably a couple more dollars higher for about the same premium today with the offering and so again a summer grazing looks profitable and you've got to have the the grass however and again I know it's dry in places and so with that I'm going to stop sharing and turn it over to Ron. For the interest in the interest of time I'm just going to go right into this spreadsheet. This spreadsheet is a prevent plant decision tool and we've updated it with with the new rules that have been in effect for a couple years here now as far as haying and grazing go it's on the extension website very easy to find you just go to egg hub go to farm management and scroll down to the bottom there's a tile where you click on it before I get into it with this excel spreadsheet you have to have excel on your computer to run it the tab on the bottom you can flip over and look at the final planting dates for your county we're getting to the point of getting close to there might be we're surpassed some canola final planting dates in certain counties and we're getting close to the final planting date for corn in some parts of the in some parts of the state and so the prevent plant situation doesn't look as bad as we thought it was going to be but here's a decision tool if there's certain areas that that are getting close you may want to decide on what to do here as with any decision tool garbage in garbage out all the yellow cells you can change and the other ones are protected let's just have this example here where we're going to have spring wheat and it's getting kind of late we have a choice of whatever crop we're talking about and this is whatever crop that's actually paid on your insurance history you may have wanted to plant spring wheat but you may have some corn history and then you would put the corn crop here but let's for example let's say it's spring wheat aph is 50 we have our choice of coverage levels whatever coverage level you had for your insurance and prevent plant coverage is free it's it's it's it's automatically included in your premium but you can buy it up the coverage the free coverage is 60 percent for most crops 55 percent for corn 50 percent for dry beans that's a percentage of your normal um normal identity if you want to buy it up you can buy up five percent and in this program here we have an option to buy it up yes or no and we'll for this example we'll just keep it at yes and the program pulls in the the price price for wheat this year and it calculates the indemnity payment then the question is if you're going to plant a cover crop are you going to use this for seed or grain for your own use or for sale and this is not allowed if you say yes in this box it'll reduce your indemnity by 65 percent okay if you say no you're not going to use it for seed or grain then it leaves that if you have a cover crop you can enter your expenses here whatever they may be and it totals them down here this next box here uh this this is it include any great hay or grazing value of your own use you are allowed but crop insurance as a rma has allowed you to hay and graze any thing any cover crop on your pp acres for your own use you also are allowed to sell hay from your from this or or rent it out for grazing whatever dollars you get from from that hay or grazing you should put in here for a proper analysis and it will be added actually subtracted from your indemnity here at attitude your indemnity here i should say if you do sell some seed or grain from that and you have chosen to reduce your indemnity it maybe there's a point where you can sell it and be better off you would put any number here uh you would just add that in then what it's comparing to is if a crop is actually planted there okay now we have soybeans here an example but let's say you want to plant wheat you can choose wheat down at this bottom block and it will it'll be just you would just choose it to plant later but let's say for this example you're just going to plant soybeans you figure it's too late for wheat your aph is 30 you enter that in whatever kind of policy you have whether it be revenue yield or aph um you enter your uh coverage level whatever it was for whether you chose um and um also it pulls in the the price and the prices are pretty good this year for coverage 1376 for soybeans then you need to make some guesses here what will the futures price be this is for the harvest price option let's just put in three 1350 how many days late are you going to plant it let's just put in five days late now i'm going to scroll down to the bottom here to read the fine print um uh where you enter the number of days uh that you're going to plant late it does vary by crop for canola it's reduced by one percent per day for the first five days and then two percent per day for the next 10 days okay for most crops it's reduced by one percent per day for the next 25 days lentils so or so sunflowers for the next 25 days um late planting for peas and lentils uh 20 days 20 days for sunflowers 15 days for for other crops just read the fine print down here and decide what you want to do for that um let's just assume that your your yield will probably reduce some for planting late 26 bushels then the guess is what's the market price going to be just put in 13 you multiply that out you get 338 and then you put in uh you put in your costs for that crop uh you do not need to include your sunk costs such as such as land rent machine redeemer depreciation that's cost you're going to have to pay regardless so this is all added up here so basically you just take this 154 subtract 169 and you actually actually get um $14.79 as a negative number then you need to read the fine print again the positive number indicates it's a greater return uh per acre from from pp than from seeding if it's a negative number which it shows here based on the numbers you put in uh it shows it's a loss from pp relative to planting the crop probably a best guess would be to plant some soybeans very close there for minus $14 an acre this next chart here shows that 26 bushels and then it just assumes if you've got a lesser yield or a greater yield from that what the numbers would calculate out to be the next one shows a chart here um that shows you this basically illustrates that table so there's our there's our prevent plant decision tool i wanted to demonstrate that there may be some situations now in the next in next week or so people might want to make decisions on whether they want to keep planting or if it's too wet so with that uh any questions just please contact me well you you i'm sure you have my contact information and uh with that i'll turn it over to uh david rippler great thanks ron uh so i'm gonna provide some some additional comments about renewable natural gas pretty sure i've talked about this at least one time in the last year so uh but it's a little bit more timely with some developments here in the region uh so just some background what renewable natural gas is so r and g is methane uh chemically it's methane but it's produced uh using an anaerobic digester and manure typically or some other feedstock so oftentimes you'll see folks throwing in uh straw stover uh even uh even sometimes props depending on how they want to adjust their mix for different purposes um but anything that you put into a digester the bacteria is going to work on it and produce methane and other things and that methane when cleaned up is referred to as renewable natural gas uh up until recently uh we've seen a lot of digesters on dairy farms across the united states really because of manure management the environmental issues uh concerned with that uh and and you know doing the economics which i have done pretty regularly over the last five years ten years usually it's a break even proposition and then maybe made enticing with uh some usda programs but now the the economics have really changed with some some carbon policy the reason i kind of brought this up today is there's now a large project uh in north dakota up in pembina county bathgate uh where they are making a major investment in a renewable natural gas facility when i look at this uh this project to me that really is the driver there's other benefits because of it uh but this existing uh farmer feedlot operation is going to add the capacity to uh feed 1500 excuse me 15 000 head of cattle so it's very large on slatted floors uh and that manure is going to go to a digester uh produce renewable natural gas uh fertilizer digestate uh as well um and just if you note that obviously the scale of this facility is very large and then of course that's slatted floors one of the things that really has prevented a lot of producers in animal agriculture in our part of the neck of the woods from doing this is we really don't have access to uh manure that is uh able to go into a digester and and and not follow the digester easily by having a slatted floor like uh dairy or swine certainly have it avoids that that that issue obviously there's there's a capital cost on that as well the reason all this is happening is california policy so low carbon fuel standards we've talked about many times before they incentivize low carbon fuels renewable natural gas is one of them and based on the the the amount of of natural gas produced and the carbon footprint and the price of of those carbon credits projects like the one in northern north dakota have been extremely profitable in fact we've seen billions of dollars move into agriculture in the last two three years uh to uh see these investments made on farm a lot of what's happened is movements of capital to the dairy industry or the swine industry uh adding these digesters to existing facilities here we have uh more just you know an almost uh separate expansion you know they're adding you know a large number of cattle to take advantage of this so the question is why are we looking at rng or why is it so advantageous and the chart on the right is kind of difficult to to break up it is from california air resources board which oversees the lcfs um the reason why renewable natural gas is because its carbon footprint is so low and in fact it's typically negative and often uh extremely negative so if you look at that chart on the right we have a number of different fuels both biofuels and fossil fuel based uh fuels and if we go down about two-thirds of the way you see that yellow line and this bio cng is covered up that cng is compressed natural gas that is renewable natural gas for our purposes here but you can see how that line goes much further to the left than almost anything else the only one that gets close is bio lng which is basically the same thing just liquefied instead of compressed and again if we look at that difference between the fossil fuel lng which is just it's just between those two and where bio lng uh bio cng is that difference can all be captured uh in those carbon credits in california so as we have that bigger spread more credits are produced uh and then that is a tradable instrument and can generate large sums of money um well the questions might get is like how can its carbon footprint be so low uh for renewable natural gas and really what's happening is we're trading on-farm emissions in the form of methane for tailpipe emissions for co2 so if i have uh manure on the farm and i and i don't manage it well at least immediately some of that's going to be methane methane is a very potent greenhouse gas much more impactful than co2 24 times as much uh for for a hundred year time frame or i can have co2 when i when i burn uh compressed natural gas liquefied natural gas for for for power for transportation so again that's where the trade is we're taking methane which is very potent and doing co2 instead so you're really swapping those i and avoiding a significant amount of emissions so just so you kind of understand the magnitude some of these numbers might not be much uh right now the the the spot price of natural gas is about $2 per mmbt which is substantially lower than it's been the last two years um much higher than you're actually going to pay here in North Dakota uh for a couple of reasons especially once it finally gets to to consumers or businesses but just so i understand so that's that's pretty close to what the the spot price is um if we look at the difference in that carbon intensity so where that fossil fuel number was all the way over to uh that low end for for carbon footprints it could be as much as 600 grams of co2 equivalent per megajoule again don't don't have to worry too much about that right now but that's substantial difference and that current price of carbon and so i'm going to present this to you as a quiz and if anybody wants to take a guess but my my quiz for you and other specialists you're welcome to answer this as well you might not want to do it for the record but what is the value of those carbon credits for each mmbt again an mmbt is that standard measure we use for for natural gas uh in North America so again the price of the natural gas is $2 the value of the carbon credits created with this renewable natural gas is all right drumroll $40 an mmbt so 20 times as much so massively dwarfs the price of that natural gas so if i'm a farmer i collect this manure i produce this natural gas as long as it can hit a pipe uh that's part of the national uh natural gas pipeline network and i have an approved pathway with with california i'll be able to sell that physical for $2 but i'll also generate $40 in carbon credits uh so some substantial amount of money especially relatively speaking i'm just looking a little bit on some some methane math uh just how much methane we can expect per animal and this is some some numbers from uh you produce extension it's actually not that much and this would be methane coming off of the digester you know substantially more and this is it's an interesting measure it's per thousand pounds of animal um so we have a disproportionate amount of methane production for dairy per thousand pounds of animal uh beef and swine you know a little bit less than that but anyways if you just look at these numbers if we have this average weight uh animal um these are actually taken from from per two so a 1300 pound dairy cow 900 pound uh had a beef cattle 150 pound cog and just i just pick these numbers for the number of head for an operation just for an example um and then i could calculate the amount of natural gas that's the mcf per day and then finally that annual revenue and now you can suddenly see for relatively moderate sized operations you're talking about a significant amount of revenue and this is a revenue in addition to other benefits of course financially you know traditionally you'd have that fertilizer benefit you might sell that natural gas or burn it on farm which would have value but again the biggest one traditionally has been manure management and and and also as i mentioned usda programs to help support the the the financing of these facilities and now you're talking you know in excess of a million dollars in additional revenue on top of that and that's why really almost any dairy uh in the united states has really seen activity in this space even smaller dairies wisconsin dairies have often aggregated you know or work collectively in small groups in the same area to put in a digester again because the sums are just so large and that's really what i wanted to get across first time i'm pretty excited that there's a project in state um you know this is you know one of the first that's done it with beef um because we typically don't manage manure uh in beef feedlots like we do with dairy or old hogs uh but but it's here in it and significant uh one of the big things too for all of us in agriculture and including here north dakotas we look at uh expanding our animal egg industry uh you know this is really a critical consideration you know anybody who's looking at a new uh facility uh you know feeding operations clearly this is on their radar but even for existing operations it's something to think about it really does change the economics significantly uh not so much so now that we're going to see uh a shift or i'm called to the destruction of everybody else in the industry we're seeing new growth so expansion is taking place in this way but it could we could certainly get to a point in the future where if a business does not have this technology in place does not have that revenue they may no longer be competitive uh in in their part of the business uh also important to note too is that the price of carbon credits have fallen significantly in the last two years we've actually seen a pretty big slowdown in rng projects you know it's it's less than half it was about 200 a metric ton uh in early 2021 2020 now it's about 80 uh but even at that level you know that incentive ends up being significant especially anyone who has a manure management challenge this just ends up becoming gravy on top of that decision so that's what i had for my presentation and that concludes the presentations for the day we'd be very happy yet to answer any questions you might have again you can use the q and a tool or the chat we'll be back next month on june 15th and brian make note of that uh it it's a week later right later in the month and it typically seems but we'll be back then if you have any questions feel free to ask also if anybody has any last-minute points or things they'd like to add to their presentation or questions for other presenters now is the time and i was going to say did anybody guess $40 per mmb to you i was i was gonna promise i was gonna promise i'd either mail uh or hand deliver a fun-sized snickers bar but i don't think anybody got it i wanted to make sure um just really quick i did get an email um while people were talking with uh um kind of a quick blast on the kansas wheat numbers um it looks as though the total for the three-day tour is the average is going to be about is 30 bushels per acre um the third third day came in at 44.1 which is much higher than the rest of the state um so 30 bushels per acre for 2023 relative to a 39.7 bushel estimate from last year so again um very similar to the numbers that i had talked about before so that's hot off the press so should i go buy some flour today frayne am i good uh you're good all right well it doesn't seem like we have any questions today uh it's uh it's summertime should probably make most of the weather while we have it um with that i'd like to thank the other specialists for presenting and for all the participants for attending and we'll see you next month thanks