 I think we'll go ahead and get started. I'd like to welcome everybody to this month's webinar, Agricultural Market Situations. Now look, webinars series we've been holding since the start of COVID. Now, almost four years ago, we're getting close to the anniversary. But today we have a few folks on the docket. Brian, Tim and I will be speaking virtually but in real time and we have a recorded talk from Frayn as well. Same policy as usual if you have any questions. Feel free to ask them during the talk but we'll save those towards the end. And obviously with Frayn not here in real time, we can communicate those to him or you can even contact him directly if you'd like. But with that, I'll go ahead and turn it over to Brian. I've given a couple of talks the last few days across North Dakota talking about production costs for the year, everything from fertilizer, land prices and equipment. And I'm gonna go through some of those in our upcoming talks, our upcoming webinar series as we get closer and closer to spring planning. But what I wanted to do today mainly was just a macro outlook for just real quick for the US and for interest rates and inflation and kind of what we're expecting for 2024, all right. So this is where we're at right now. If you look at this, when I built this chart with the Federal Reserve Tool, I included a headline inflation which is often reported and then core inflation which is also reported quite often as well. And the difference between the two as I've stated before is core inflation removes food and energy costs from that number. And we've seen, we peaked out of course, as you'll recall, around the summer, June or so of 2022. And since then inflation, especially headline has come down remarkably and as has core. But you can see here, if you look, core inflation has been for the last three months or so, kind of been staying steady around 4% and headline inflation bouncing between three and three and a half percent or so. The last report that just came out, it was actually higher than expectations. Economists had projected it to be flat or maybe even possibly down a little bit and headline inflation actually ticked up. So what you're seeing is the Fed's taken a bunch of actions to account for inflation and inflationary pressure but overall things have kind of leveled off and these inflation numbers have been kind of stubborn to come down further and keeping in mind that the Federal Reserve's target for inflation is around 2% and if you look back at January of 19 through January of 2020, so that year, that's right around where it was and that's kind of the target that the Federal Reserve is shooting for. And so I just wanted to put this up there to remind everyone, this is the Federal Reserve rate hikes that have happened since March 17 of 2022 and it went from about a quarter of a percentage point to where we are with the last rate hike occurring July of 2026, going up to almost five and a half percent as far as the federal funds rate and as we know, that's not the consumer rate but it does influence it significantly and it pushed our mortgage rates up around 7.5, 8% and loans on operating notes had gone up to 8.5% or so equipment loans around 8% and real estate loans in agriculture around 7.9%. That's where they peaked. Now they've come off a little bit in the last few months mainly because of optimism about the Federal Reserve possibly cutting rates in this year, 2024. But here's a, I wanted to put these quotes out there directly, because a lot of times what folks see in the news, talking heads on TV or reporters, analysts so to speak, putting together what they think is going to happen, they take a lot of the statements that come from the federal Board of Governors or the Fed Chairman and then kind of pick out certain phrases. And what I want to show here is this came directly from one of the Board of Governors, Governor Waller and he said, and this is a direct quote, as long as inflation doesn't rebound and stay elevated he believes the FOMC will be able to lower the target range for the federal funds right this year. But I put this in bold as long as inflation doesn't rebound and stay elevated. Okay, so what does stay elevated mean? Well, if I go back here, it's just been if he's saying stay and elevated, well, the last three months it's been kind of hanging around this number here and it has come down off those. So you might take that to mean, well, it's kind of been staying elevated. And so even if it doesn't go back up higher if it just keeps staying around that 4% core rate above three, three and a half on the headline to them, that's probably staying elevated. And that's what's happened the last three months or so. And then the second part, direct quote, when the time is right to begin lowering rates, he says, I believe it can and should be lowered methodically and carefully. Okay, so I've seen reports in the news that are saying six or seven rate cuts in 2024. To me, that doesn't sound very lowered methodically or carefully. That sounds pretty aggressive as far as some rate cutting goes. And then he goes on to say in many previous cycles, the FOMC cut rates reactively and did so quickly and often by large amounts this cycle. However, I see no reason to move as quickly or cut as rapidly as in the past. And that's a direct quote from the Federal Reserve Board of Governors. Okay, not synthesized from an analyst not me speaking, that's directly what they said. And so as you read that, you say, well, I've been hearing expectations for rate cuts coming soon, six, maybe seven rate cuts in 2024. Well, if you take them at their word, that's not what I take out of this. This sounds a lot more like, well, we're gonna look at the data and we're gonna wait and see what happens. And if and when it is appropriate to cut rates, it's going to be a very slow methodical process, probably as slow and methodical as the rate hikes turned out to be. So then I also wanna turn to this because this is often something that isn't talked about as much, but it does affect inflation and monetary policy. And that is what the Federal Reserve has done with its total assets. Now, what they do is the Federal Reserve will own many different investment tools or bonds or treasuries or whatever the case may be. And if the Federal Reserve buys them, essentially what happens is then the investment community in the United States, private investment, does not buy them, leaving funds available for them to invest in other things, which is a quantitative easing situation. In this case here, if they allow these bonds to just, they don't roll them and they expire, then those like treasuries, for instance, are then in order to get them sold, private investment has to buy them up. And then that takes money out of the economy for investment in other things. Cause if you're buying treasuries, you're not investing in Microsoft or Apple or anything or something else like that. So then that takes money out of the economy, so to speak, because the Fed is not pumping it in by buying these bonds. And you can see since 2022, they've been rolling off fairly quickly, but we're still not even to where, I mean, this Fed's balance sheet is still much larger than it was even in prior to the pandemic or just after the pandemic even occurred. It's gonna take several more months probably of this allowing these bonds to expire without rolling them to be able to get down to even where that was. So in other words, there's still a lot of cash in the economy right now courtesy of some of the Fed's actions. And then the other thing I wanna mention here is then on the unemployment side. Cause one of the things that the Fed focuses on very carefully is the unemployment statistics. And this is from the Bureau of Labor Statistics, see right there in the lower left corner direct graph from them. And unemployment's been hanging out below 4% now since December, actually October, November of 21, just kinda stay in there well below 4%. In fact, it's as low as it was prior to the pandemic, December of 19, right around that same range. And this graph only goes back to 2003, but if you go back even further, 3.7% is really low. I mean, getting historically low. And a big reason for that is the fact that the number of unemployed people divided by the number of job openings is 0.7. So in other words, there are fewer unemployed people than job openings. And I put this graph in there to show, if you look at the red line, if this blue line touches the red line, then that means there's the same number of unemployed people as there are job openings, okay? If it's above it, there's more unemployed people than job openings. And if it's below it like it is now, then there are more job openings than unemployed people. And you kinda go back to the great recession for instance, there were six times, over six times as many unemployed people as job openings. The pandemic of course occurs, you have a big layoffs, especially the hospitality sector suffers, a lot of unemployed people, not very many job openings, but then that's kinda corrected. And since mid-21, it's been hard to fill a lot of the positions that have been out there and available, there just aren't enough workers to fill them. And the reason I bring that up is unemployment is one of the dry, one of the factors that contribute to inflation or the reduction inflation. Unemployed people or people concerned about becoming unemployed, maybe because they see their friend or their neighbor get laid off or whatever, when they're worried about themselves, they don't spend a lot of money. They tend to save, which keeps prices lower because if we're all not out there buying, then prices have to stay lower. My point to that is that's something that as we go back to the Federal Reserve Board of Governor comments, they're gonna be sitting there watching the data and the data for unemployment says, we're not gonna be seeing a big increase in unemployment anytime soon. Even if it went up a percentage point from 3.7 to 4.7, that's still, if we go back on this time horizon, not that high. I mean, it would be higher than it's been lately, but that's not exactly a high unemployment rate, right? And it would take a lot to get to there considering there's more job openings than job seekers. And then finally, I wanna talk real quick about the, because inflation is also dependent upon the expectation of the consumer. If people think that prices are gonna go up in the future, then they hurry up and buy things today so that they don't have to pay higher prices in the future, which drives up the prices today, which increases inflation. The other thing that can happen too, is you have folks who are, and this is what this graph is showing, since it doesn't look like we're barreling towards any kind of a recession, this yield curve inversion, which is where the 10 year yield is lower than the two year yield on treasuries. It's saying that people think that interest rates are going to be cut soon. And they're rushing out to buy 10 year notes because they can get what they perceive to be a very high yield on them. And they wanna get it purchased before the Federal Reserve cuts rates and they can no longer get 4.5% or whatever on their treasury. And then they run away from the two year, which if you wanna pedal something that not very many people want at the time, you have to drop the price to get it sold, which increases the yield because we know that treasuries and bonds move in versus the yields move in versus price. Okay. And so we look at this chart here from the, this comes from the CME site. And it's basically what market participants thinks is going to happen in the, as far as the federal funds rate in the net over a period of time. Right now 70% of the market thinks that there will be a rate cut in March. And if you look at December, this is the target range for December of 24. Okay. Most think that it's going to by far and away think that it's gonna be 1.5% or more less than it is right now. So the market thinks that rate cuts are coming. Okay. But I go back to looking at unemployment and then look at, oh, I didn't put it in there, but our GDP growth rates have actually been positive. The last one was higher than expected and the 4% and the projection for the most recent quarter four is 2.2. So there really isn't a domestic pending recession cloud looming that we can see. So a lot of this is just based on folks thinking that eventually, here soon, the Fed is gonna cut rates and I don't necessarily have the answer to the reason that the market thinks that because based on the fundamentals that I'm seeing right now and have seen over the past six months or a year, there just isn't anything coming down the pipe or any trends right now that's showing, oh man, that the things are gonna change and change quickly and the Fed's gonna have to take aggressive action. I just simply don't see it at the moment. And so my point is you go back to the Board of Governors comments and it doesn't sound like they're in too big of a hurry. Of course they've left the option open to recut rates, but they've also said that it's gonna be slow and methodical and it's gonna be dependent upon inflation numbers continuing to come down or something else, which they've kind of been sticky the last three months or so. So I put this slide up here just to show these are the meetings that are scheduled by the Federal Reserve this next year. Then the soonest one coming in January, the rate cut expectation by a lot of the market is there in March, and then the ones with stars are kind of the big, bigger, important meetings. And this Fed has shown that if they are gonna raise or reduce or raise rates, they tend to do it at a meeting, though they don't have to, they could at any time. And so I guess I just wanna leave that to say that right now it's gonna be a data-driven situation that there isn't anything looming that I can see in the tea leaves that makes you think that all of a sudden these rate cuts are coming, especially not in March, and I would be shocked if they actually do cut rates by any amount in March at all. And I used to be a little bit more cautious in my going against what those markets are saying, but as long as these projections are based on the fundamentals, especially the ones that the Federal Reserve decision makers use, I think that in a lot of ways it's more market hope than it is actual expectation based on fundamentals that they're looking at. That's kind of what I am picking up out of this. So with that, I'm reluctant to say inflation is gonna continue, they're gonna come down quickly enough that there would be a rate cut in the next three months, possibly not even in the next six months. If I had to kind of speculate on when I might see the first one, it would probably be toward the end of the year. And then finally, I guess I'd leave you with this and ask your question. As things sit right now in the US economy with low unemployment, plenty of job openings, GDP growth pretty okay, not tremendous but not certainly bad or anywhere leaning toward recession. What do you think would happen if the Federal Reserve suddenly slashed rates one or 2% in the next few months as far as inflation goes? What do you folks listening, what do you think would actually happen under those circumstances? As far as inflation, do you think it would stay the same? Do you think it would go down or do you think it would spike back up really quickly? Because if you ask me, I'm in the last group that it would spike back up really quickly, which actually already happened historically. If you look back at the late seventies, there was a high inflation, the federal funds rate was high to combat it. It brought inflation down, they aggressively cut rates and then it spiked right back up again. And I feel pretty confident though, they haven't said as much that they certainly want to avoid a repeat of that thing. So that's kind of the outlook on there. I guess the take home one liner would be, I expect rates to stay where they're at for quite some time. I don't know how long it's gonna depend on what the data says, but that's where I sit right now. Frank Olson is going to be speaking next. He's going to have to, his is prerecorded actually due to him being on the road right now. So take it away, Dave, get her all set up. Thank you. I'm sorry, I won't be able to join you live today for today's session, but I have recorded my discussion here and so we'll go through that. If you do have any questions, please feel free to contact me either email or call my cell phone and I'll try and answer those questions as soon as possible. So just very quickly get my computer going here. Few key market movers. We're gonna talk today about the USDA reports that came out last Friday and the implications for that. USDA released four major reports. This is one of the biggest data dumps that USDA does all year long. So we had an update of the WISD report, the World Agricultural Supply Demand Estimates that comes out every month and updates of production for both updates for both forecasts of production as well as consumption, both domestically as well as internationally. We have the annual crop production report which really covers the production acreage, planted acreage, harvested acreage and total bushels for all of the major crops in the US except for the small grains, wheat, barley, oats, et cetera, which came out in September. We also got the quarterly grain stocks report which is an inventory report of how many bushels of grain we have within the system as of a particular date. And then we have the winter wheat seedings report which again will have a pretty good impact on the wheat markets in particular, the acreages of winter wheat which for both hard red winter and soft road winter is by far the largest acreage, spring wheat obviously being planted later on in the season. So in general at a very high level, I think most of you have figured out by now that these reports are negative for corn and neutral to slightly negative for soybeans and wheat. And we'll talk about those in a little bit in a little bit of a moment. But this really is in my opinion, kind of these four reports reset the expectations or kind of the mental attitude of the marketplace coming out of the holiday season. So as noted earlier in December, coming into the holidays, we tend to have very low trading volumes, people taking vacations, not only here in the US but also globally because of the New Year's. And these US reports are kind of that wake up call and we hit the reset button and saying, okay, where do we go from here? And unfortunately the numbers came out a bit more negative than I had expected. And I think most of the traders had anticipated. So moving forward, the two other big things we're watching of course is Brazilian weather, the weather in Brazil and Argentina and what kind of a crop they're gonna have. And I'll talk about those in a moment. As well as some of the things that's starting to hit the market now is what we call the net short positions from the managed hedge funds. So we have the outside investment community that often uses commodities, which include crude oil and precious metals, but also the grains and the meat products as part of their managed portfolio, their investment portfolio. So right now, when you look at the net position of all the buyers and the sellers in this category of managed money, they're net short, which means we have more sellers than we have had buyers. And those positions right now at some point will need to be offset. So essentially what's happening is we have some negative fundamental news in the marketplace and that traders, these outside investment traders are trading off of that new news. And the pricing pendulum in my opinion is a little bit too far to the negative. So when we get some new fundamental news, when we get this shift in attitude or shift in perspective again, a lot of these managed hedge funds will start to roll out of their positions. We'll start instead of selling, they've been selling for a long time, they'll now come back into the market and try and buy to offset those positions. So I'm not in panic mode yet, but I am getting a bit concerned in particular from a timeline standpoint. So let's go through the numbers very quickly to give you an update. First, let's talk about US production. So this would be for corn and soybean production of all the numbers we got in those four big reports. The probably the one that surprised the marketplace the most was the corn numbers. So the blue line on top is what the trade was expecting to see. So that's the average estimate from the traders. That's what they were expecting to see. And the red line on the very bottom is of course the numbers we got from the USDA. So we were really expecting from a production standpoint bushels produced to be relatively neutral. We had two kinds of surprises in that. So when we looked at the harvested area, the acreage that was actually harvested, that went down a little bit. So we had a shrinkage in the harvested acreage, but as a result, we also had an increase in the average yield. So I think what happened is some of those acres that were under drought stress either got chopped for silage or abandoned for crop insurance. So our harvested acreage went down the area that we harvest was smaller. And as a result, we only harvested those acres or of the best quality or the highest yields, which then brought our average yield back up again. So when you do the math on total bushels produced, which is really the number we're after, we saw a slight increase. And now the reason that was so negative for the marketplace was because we were expecting a neutral maybe slightly smaller number. And in reality, we got a bigger number. And of course, that was the shift or the tone in the marketplace that we got. On the soybean side, very similar story. We had harvested area, the acres we actually had harvested was down a little bit, but the yields jumped. The yields actually went up a little bit more than I was expecting, but I think a lot of traders were expecting. So again, when you do the math of how many bushels did we actually produce, the number of bushels produced actually increased. So a few more acres harvested, but the yield per acre went up, we've got as a result, more bushels. So when we translate that into, what does that mean for bottom line carryover? What does that mean for the inventories of grain as we come into harvest of next year? So again, the blue line on top is the numbers that we were expecting to see. That's what the traders and analysts were thought their best estimates were gonna look like. And you drop down to the bottom and the red, those are the numbers we actually got. So small adjustments in wheat, most of it was from actually old crops, some numbers, some tweaking in adjustments from last year's numbers to make the change. So not a big shock value there, just some adjustments. On the corn side, we knew, we know that more bushels came in, there was some adjustments in consumption. USDA increased their forecast for both livestock feed, as well as ethanol consumption, as prices come down now a little bit, we've got more bushels available. And so there was a partial offset, but our ending stocks, the amount of grain we expect to have in the bin, that buffer that we have is actually increased. And again, that's what put this negative tone into the marketplace. The increase in production was greater than what we had an increase in the consumption side. Very similar story on soybeans, we had an increase in production, very, actually essentially no changes in the consumption side. So as a result, our bottom line, the amount of grain we're gonna have, our buffer stocks, if you only think about it that way, our end end inventories went up a little bit. So again, the combination of expecting smaller numbers and getting larger numbers put this negative tone into the marketplace. Shifting to South American production, again, as we move forward, Brazil now in the Northern part of Brazil is starting their harvest, their soybean harvest. It's gonna take a while to get through their entire acreage, but at least they're starting that process. So we are starting to get some reports. This is gonna be kind of the news of the day for a while, both US export sales, but more importantly, how big is that Brazilian and Argentinian crop? Once again, blue line on top is what the trade was expecting to see. Again, they were expecting to see minor adjustments and essentially that's what we got from the Brazilian side as well as the Argentine side. So small adjustments, we did take the size of the Brazilian crop down just a little bit, basically stabilized with a slight increase in the Argentinian crop. So if you compare the blue line on top with the red line on bottom, small minor adjustments, USDA when there's a drought or weather problems, again, in particular in Brazil, which we'll talk about in a moment, they tend to take those numbers down relatively slowly. So a lot of the private forecasters are adjusting the forecast for Brazilian crop down much more rapidly than USDA will. I think USDA will get to some very similar numbers, but it's gonna take them a little bit longer time to make those adjustments. They tend not to have big shock value or try not to have big shock value in their reporting. So the moral of the story is, yes, it looks like the soybean crop in Brazil is shrinking. It looks like the potential corn crop in Brazil is getting a little bit smaller. Now, based on expectations, the Argentinian crop for both corn and beans were very, very similar. However, please look at the numbers we had last year. So last year was the third year of consecutive drought in Argentina. They're now getting some rains. Their crop now this year is gonna rebound significantly in total production, actually coming back to more normal or typical levels. So it looks right now as though Argentina will have an average or a very typical size crop. Shifting to the final big, no, it's not the final big report, but one of the biggest reports would be this winter wheat seedings report. And again, the big winter wheat seedings numbers came in a bit smaller than expected. So for total winter wheat, as well as when you break it down by subclass, hard red winter wheat, basically the Kansas, Oklahoma, Texas crop, there was about a 1.6 million, almost 1.7 million acreage decrease. So we had a retracement or a cutback in hard red winter wheat seedings. We also saw a cutback in soft red winter wheat, which would be the Missouri, Illinois, Ohio winter wheat. Those were cut as well. Very stable numbers coming out of the white wheat country, which is primarily in the Pacific Northwest. So if you look at the total acreage cutback, you know, it's about 2.2, almost 2.3 million acres of winter wheat that wasn't seeded this year relative to last year. So that's a pretty substantial cutback in plantings for hard red winter wheat. And we'll wait to see now as we move into the spring season, what the spring wheat acreage is going to do. But at least this sets the stage for a little bit tighter supplies for the winter wheat crop coming into this 2024 production season. Shifting to South American production, I just want to give a really quick recap and then I'll hand it off to our next speaker. This is a map of where Brazil produces soybeans, the darker the green, the more soybean bushels or tons are produced. Notice that in the northern part of the growing regions, northern and central part, we have a lot of soybeans produced. That northern region now is just beginning their harvest season. We're just starting to get a few harvest reports coming out of Montegro. So really a mixed bag so far, but it's a little bit too early to try and give the yield reports and make any kind of consensus or judgments on what the crop is going to be. Now I do want to talk a little bit about soil moisture and crop conditions. So if we look at the drought over the last, kind of the drought severity over the last four weeks, over the last one month, earlier on in the season, during planting and early crop development, that northern region in particular Montegro and Goyos into this area right here were very dry. But over the last month or so, they've had some rain showers, crop conditions have stabilized. There were some damage done earlier, but they've stabilized and soil moisture conditions have improved. However, when you look at the last month, again, this central region, which is still in the reproductive stages, is starting to see some damage now. Or it's going to start to see some stress. And that is a pretty large growing season, growing region, excuse me. And then we have the southern region, so we're really typically in pretty good shape. Well, if we look and zero in what's happened the last 10 days or so, now as that northern Montegro region and into Goyo starts to be harvested, they're getting some higher rain showers, they're starting to recharge that soil moisture layer, which is nice. It'll help improve some of the harvest conditions as long as the heavy rains don't continue. There is been some improvement into this central region where both soybeans and corn are being grown. So, but there's still some stress. And so when we talk about weather conditions and crop stress, it's not really in the north for the soybeans in particular, but more now into the central region. And so when you take the damage, it's already been done kind of in that northern region, you start including some of the potential yield reductions now in the central regions. We have to be a little bit careful about, again, the total size and potential for the crop coming out of Brazil, excuse me. Now, the other thing just as a comment, we're starting to see the private forecasters as they update their yield and yield forecast start going down. So we will look at current crop condition. This is a vegetative health index. This has been updated for the first, basically week of January. Notice in this area towards the north, it's turned white. Most of that is because the crop is now maturing. So we're looking at the greenest of the crop today relative to what we'd normally see that week of the year. And obviously because it's getting into harvest, there isn't much green this left, we're starting to dig into this neutral or basically no reporting. What we are now focusing on is this central area that I just showed where we've had some drought stress. If it's in that browns or oranges, that shows that the crop health is below average. When you look at the greens, it's above average. So you can see that there are areas, especially now in some of the central growing regions that are starting to show up with some stress. And that's also now starting to pull down some of the forecast coming out of the private analysts. So again, USDA came in with about 157 million metric ton. The private analysts have starting to drop that. The lowest private number that I have seen is actually 135 million metric ton, which I think is a little bit on the low end, but it is showing that the attitude and the perspective of the soybean crop coming out of Brazil is decreasing. They're showing that the problems are starting to show up. Shifting to Argentina very quickly, much more smaller, more concentrated growing region. It's not as large a growing region. It is obviously in Brazil. When we look at the one month drought severity, and they pulled to the last month or so during their planting and now crop development stages, they've been getting good rain showers. The soil moisture is starting to recharge based off of the drought that they had for the last several years. So crop conditions are starting to improve in Argentina. When you look at what's happened basically the last 10 days, there has been quite a bit of rainfall, kind of on the edge, the western edge of the growing region, that core growing region in Argentina. When we look at the crop conditions, kind of what is the greenness of the crop? You do start to see some of these browns starting to show up, and that's not necessarily because of drought. It's that the crop is under stress because of too much moisture. Now, as everybody knows, soybeans as well as corn, when it starts to dry out, they can recover. There's the yield potential is still there, and that's why we really haven't heard about or seen a lot of yield reduction coming out of, or yield forecast reduction coming out of Argentina. So with that, I'm gonna stop sharing, and I wanna just say thank you for your time and attention, and I will now hand it over to the next speaker. Thank you very much. Afternoon, everybody. Actually, I'm coming to you from the Carrington Research Center. I just got through talking the last two hours to our annual cattle feedlot school, so gave them a heavy dose of not only a lot of price risk management, and so today there are a couple important USDA market reports coming up that I wanna cover, and then just show you how we're doing starting at 2024 with the cattle cart. So to begin with, the USDA right now is doing a cattle inventory, the annual cattle inventory report, as you can see in the top right, they're gonna release that just in about two weeks in January 31st. And so you're well aware, I think most of you, from hearing me talk the last months and so on, that we expect the cattle herd to be down, the beef power to be down again. So in the purple there on the right-hand side, in the middle, last year in January 1st, we had 28.92 million beef cows that was actually below the number in 2014 when we had the previous record high prices. So no surprise that prices are record high again now. And so we're anticipating that report to show even lower numbers, and I just, you know, my guess right now is 28.3 million, and I think that's what maybe a lot of the trade is expecting, but when that report comes out, should that be down in the 27 million, that would really be a support of the prices on the other hand, if we would, you know, show not much reduction, and you know, I'm pretty sure there will be that, that would not be, but anyway, this would be the fifth straight year of liquidation, very supportive to prices and why we have record high prices. And the highest prices are going to occur when herd rebuilding starts in earnest and it has not started yet. And it'll be interesting to see in that report on the bottom of how many repeat replacement efforts we have. You know, there's talk and I was at another meeting yesterday about, you know, last time we rebuilt very fast and so is that gonna happen again when we rebuild and affect prices? But kind of interesting, if you put it in the bottom chart, we'll go back to 2014 January 1st, we had 4.5 million replacement efforts and last January 1st, just barely over four, so a lot less on hand now, now that replacement heifer category is really two calf crops. On January 1st, when the report comes out, it'll be the heifers that were bred last summer and there weren't many of them because, and we'll look at the cattle and feed report in a minute, they went into feed lots because it was so dry, but it's the heifers that were bred and then it's also this year's calf crop, these little 500, 600 pound heifers and so on, that they say they're gonna be replacement heifers and so that could show it's the more replacement heifers because there is interest, but those heifers do not have to win with the bull this summer and it all depends on range. So I'll look forward to that report. My next webinar, I will cover the report and earn it. Let's quickly go through the different market classes of cattle starting off through fed steers, they say the fed steer price in particular those distant futures when the feeder cattle now will be sold as market steers. And so the green is the 2021 and then the purple kind is 2022, the blue towards the top is last year and then the red line just starting on the left-hand side is where we are now. So you see continual cyclical increase, actually our last cyclical low is taken off, this guy now he was showing last year was 2020. So we've been up nicely every year and then this year we really rebounded with the fewer numbers we have, the production was record high in 2022 because of all the cows that we killed and we back up cost water, some now last year and so beef production was down about 5% and so that really caused fed cattle prices to go up to record high prices up there most of the year after April being up there over 180. Yes. Did the prices fall off a little bit at the end of the year? And a couple of reasons for that, one is that the feedlots kept the cattle longer and they got heavier, so we got the carcass weights quite a bit above and then and so that kind of effective market and then the competing meat prices are all down, pork prices are always chicken prices and so that is somewhat affected to fed cattle prices too. And then the futures are in the red squares up there and they're actually showing by mid-year lower prices than this year and if you've been following the futures market it was off sharply since September 15th I caught you in the last webinar about all those reasons why so I'm not gonna get into that this time. Actually we were up near 200 on April futures and now they're down there at 178, the futures market has been strong in the last several weeks, fed cattle are up another dollar or two a day in the futures and feed cattle are up between two and $3. So the squares you see here you have to bump them up a dollar or so and but I think fed cattle can do better than the futures are indicating, again they were higher just a few months ago, USD is projecting 178, 25 and they've came down and last year's average was 175, 54 and that's the annual average of USD is still staying, we're gonna be up a little bit I think we will be up above the blue line and it really really depends on consumer demand is the thing to watch there, but anyway we're still at record high levels and that's been supportive to feeder cattle the other thing that affects feeder cattle prices calf and feeder cattle prices are corn prices again you change corn, that's change calf prices but the opposite direction. So you see there that blue line on the top was last year, I like these Omaha prices because that's where the feed lots are the buyer feeder cattle and last year we had $7 corn in Omaha and last week the red blind shows it was 4.65 so that continue to be trying throughout the year was very, very supportive to cattle prices and Frayn talked about corn and so on a record corn crop and that's all weighing in so the lower corn prices are supporting calf prices as you see here again cyclically they've been up or they were up in 2021 the green and up again in 2022 last year they just stored because the two biggest factors that affect them are fed cattle and they were record high and corn and corn fell and so we did $80 better calves there throughout the mid-summer and we're starting off the red line on the upper left-hand corner just under $300 again, $80 higher than they were here this last time again we're gonna have fewer calves to sell this year and so that's supported we don't know what corn prices are gonna do or with the record crop and more corn prices or farmers gonna cut back the corn so will that mean higher corn is all yet to be determined and would affect calf prices and also what can feed the fed cattle rebound a little bit more than what the future say now so we have some factors there to watch but still starting off at a much higher level and I think there will be supports throughout the year if nothing else based on the lower supply and every way back on the cattle the very same story there cyclically higher every year soaring this year with the lower corn and the higher fed cattle they usually do back off seasonally as you see there since September 15th I talked about that last night so that's more of a seasonal thing that isn't unusual but then fed cattle did go down some and that affected us a little bit the red squares there are the future cattle futures market which are kind of above for the most of the year to a little bit just below there in August but anyway they were a lot higher too up there in the 280s just back to September 15th and is backed off for a variety of reasons but we could even do better than this and we're already showing better prices and last year we're starting out there in the upper on the left hand side there the red line significantly above the last year and certainly potential to stay above last year at least later on in the year and depending on what corn and so on does so right cattle being sold now are bringing very, very good prices compared to the previous year and then of course cows if you're a cow gap producer in 2018 to 20% you're gonna come from cows the same story there cyclically higher and higher but a very definite seasonal pattern when they go up into the mid-year and back off weights substantially when the PG checking starts and cows come to market but again there we're starting $20 higher than we were last year and if it rains and herd rebuilding starts so we slaughter a lot less cows and that's yet to be determined would be very supportive to cow prices as well. Oh, you know, on an annual basis we expect cattle prices to be higher but from a price risk management standpoint on a seasonal basis if we're backgrounding or some are raising or feeding cattle to slaughter wheat or whatever when they're coming out I still think some kind of price risk management is rewarded if nothing else looking at what happened or the futures market last several months should be a guide for us to use there and so in the middle there's volatility is high we've leveled off a little bit here but the futures are up $2 or $3 a day just a couple of weeks ago they were up five and down five so a lot of volatility so when we're on the upward part of the price cycle like we are here the best marketing strategy is to lock in some kind of a floor price to leave the top side open so you know if we do get higher prices and everything comes together go up a record high again that we can take advantage of that but in case of some catastrophic events or something happens maybe let's look at a floor price or two ways to do that that's LRP insurance and futures market options that's what I just spent an hour talking about at our feed loss school. Tomorrow there's a cattle on feed report which may or may not be eventful on the upper right hand side you see the last cattle on feed reports they come out monthly and as expected that red line there was this year and the blue line was last year and the purple line average and we were more on average we were below last year because we have fewer cattle and that was the expectation and no one will be older than the October report came out we went above the average and above last year and the same thing in November and the same thing in December and so the market kind of really reacted the futures market the cash market not as much really reacted negatively to those numbers saying oh USDA is wrong we got a lot more cattle than we thought we had and you know there's no tomorrow and all that and that wasn't the case at all what that was is showing up and we don't record heifers on feed every month that's a quarterly thing and I think this one tomorrow maybe is the quarter so we'll see that we had record heifers on feed here in the last few months simply because it was dry and some of those heifers that were called replacement heifers did not win with the bull this summer and ended up in the feed lot and still because of that that's what sparked our higher numbers on feed not that we have more total cattle we have fewer steers on feed but it's just that heifer category is huge because a stowed dry at the end of last year and 76% of our cowherds was in drought and we've been liquidating heifers and drys a lot of improvement in moisture here in the last few couple months and weeks and so on so the cattle on feed report on the left for the average we're still expecting you know the cattle on feed to be higher by about 2.2% but I think placements we did place a lot of cattle early too because of lack of winter wheat that now is sparking and some earlier marketing and so on and so the estimates down in the bottom show you the people that make the estimates and we're one of them at North Dakota State but anyway the cattle on feed estimates are a lot closer but you see the next category of placements quite a wide range and how much placements may have been down but again it's the cattle on feed number that's important but what to watch is the trade is expecting 2.2% more so if we would be even higher than that would not be good for the market but maybe come in lower than that would be support so with that I'm gonna stop sharing and turn it over to Dave. So I just have a few brief comments actually revisiting a few things that I've talked about in the last couple of months but it's really kind of hitting ahead and its implications for agriculture for North Dakota agriculture can't be under emphasized speaking about climate disclosure laws that are coming from a variety of different places so these laws are being placed again a law so it's regulation it's gonna require businesses to report greenhouse gas emissions and the related risks either they introduce or that they might be subject to the why is obviously there's concerns about greenhouse gases and climate and across these different platforms there's a lot of variation in terms of who has to report what do they have to report when do they report what are the standards how disaggregate does the information have to be what are the standards in terms of how things are framed and so forth I've talked a little bit in the past too about this greenhouse gas accounting so we do have in place global standards for calculating emissions and one of the big things in that is how we look at emissions for a corporation which we call scopes essentially three different buckets scope one, two and three scope one are direct emissions so if I, for example, I'm a farmer and I have diesel fuel and I use it in my field I'm gonna have tailpipe emissions among many different types going along the same line of thinking if I'm thinking about scope two as a farmer let's say that I'm using nitrogen fertilizer some anhydrous well there were emissions associated when that was manufactured and so that would be a scope two and then finally there's scope three which are up and down the supply chain and this hits a lot of things and really where this gets interesting is because of the nature of agricultural and food supply chains North Dakota farmers both farmers and livestock producers are almost certainly in another company's scope three you basically have to be because it's going somewhere and then in most cases at some point that does touch a very large corporation who may be subject to these climate disclosure laws I talked a little bit about the SEC so Securities Exchange Commission overseas some markets United States the in terms of the New York Stock Exchange are the things like that overlooking the behavior of publicly traded companies and so that's where they focused they had a proposed rule a year and a half ago and so that would be basically a description of what the policy would look like they open it up for comments they got a ton of comments back and a lot of pushback saying in a variety of ways that this was not what was wanted or what could be achieved in short order and the SEC actually did in October kind of say we're not gonna move as fast or in the same ways that we said we were going to and that was a bit of a sigh of relief to industry to these companies and others because it simply is a very big lift at the same time I've talked about the climate disclosure laws in California those are law now so they have that full weight and effective of the state of California and again they can only really regulate what happens in their state and so if there's transactions people doing business in their state they can regulate that and they've essentially decided for now that any business that has more than a million dollars in sales that does business any business in California has to report their greenhouse gas emissions and so this is about 700 companies but again as I've mentioned before even though a North Dakota farmer may have no business directly in the state of California if they're producing Durham that turns into pasta and then maybe you could say it's cremette or burrilla or whomever it is suddenly you're in their scope three and you're subject to these climate disclosure laws and that doesn't mean that they're gonna come to your farm and look specifically at what you're doing but they are going to consider what the emissions are for the production of that product and so that could be a okay thing may not impact you directly or it might be a very big thing if those numbers are wrong or as the case really is if those numbers don't exist you may have a lot of difficulty marketing your crops. Other reason I bring this up and it's news to some extent I've long kind of given the comment when thinking about biofuel policy or sustainability policy generally Europe was about 10 to 15 years ahead of the US California was five to 10 years ahead and then the US as a whole would come along that's really kind of close to where we're at because European Commission has been working on this for more than a decade and their sustainability reporting in general came into effect last January so a year ago but their reporting standards are actually enforced as of January 1st and so these are very, very robust standards demanding standards it's a quick 1200 page read of the standards and then actually going through with it but right now as of July 1 we know that any US company that's also listed on a European stock exchange within an EU country is going to have to start reporting and then we know that next year already so again less than 12 months it's gonna be expanded greatly to US companies or companies from outside the EU that have more than 250 employees more than $42 million in EU revenue in dollars or assets greater than $21 million which is a very, very low number and the expectation is this is about 3,000 US companies and so we know that in short order a lot of food and egg companies are subject to this many of them are subject to it now and that's going to expand next year we don't export everything to Europe there's a lot of our products that are consumed in the United States or elsewhere outside of the EU but we can look forward to California which is gonna have similar laws shortly after 2025 and then ultimately what we can I think what we can reasonably expect is that as these laws come in place as corporations and the firms that work with them accounting firms and others help build up these reporting systems that it's really only a matter of time before the SEC says well of course we can do this it's somewhat of an easy lift less demanding on corporations because many of them will already be regulated because they do business in the EU or California and I really want to just kind of put this on everybody's radar because it affects producers and all of us that are involved in agriculture a wrong number would be a problem the absence of a number may mean that you don't have market access that might be a very big concern for Europe you may lose customers and might not be a farmer directly but maybe someone that they sell their crop to may no longer be able to meet that requirement because they don't have a good carbon footprint number for that product and going from there there's missing pieces and then also a whole lot of work that has to be done to build up a robust system the only shred of kind of hope that this will take a little bit of time is some folks do recognize how difficult this is to do for certain industries including agriculture so there might be a bit of a delay primarily not with the EU but maybe with California but I think we can really start seeing the future now of what's gonna be required of large businesses and then continuing to push down to field level operations for most US producers including those in North Dakota those were my comments we do have time now for Q and A I know that Brian had some provoking questions to engage with participants definitely worthwhile to kind of continue that conversation about the relationship between the Fed rate and inflation and how that might actually turn out I'd also mentioned too going back to Frain's comments we actually do have higher expected use for ethanol in the next or excuse me in this crop year for corn which is nice but it's because we have a lot prices or somewhat low but we do see that use kind of coming on board so with that we'll just take a couple of minutes the floor is yours feel free to use the chat or the Q and A tool and we'd be happy to answer any questions you have and I don't know if any of the other panelists have any comments that they want to make we'll be back next month a note that it will be a bit early on the calendar the WASD comes out on February 8th and it'll come out at 11 o'clock and we'll be talking about that and other things by 1 p.m. central time so thanks everybody for coming I hope that we have good weather between now and then a question might have just sprung up Oh, so a question are there any other states interested in new emission rules like California? So I would say the answer to that is yes what is going on generally what we've seen California built and maintains a huge apparatus for its low carbon fuel standard so transportation fuels and in California they're leveraging that for a lot of these climate disclosure rules we also have low carbon fuel standards of Oregon and Washington and they kind of piggyback or have similar programs to what California has so what I would fully expect or be ready for is that states with similar political interests or ideological leanings as California does are probably gonna be very interested in adopting climate disclosure laws similar to what California has they'll follow their lead again, it's Europe followed by California followed by the United States but there might be other states there and again, I could see for example you see this on the LCFS site Oregon and Washington state maybe a few years afterwards again, it doesn't doesn't matter California is such a large market that it's big enough that it can make folks do things the analogy I give is a few years ago Vermont had a mandatory labeling law and there was very little response to that it's like Vermont's a small state they really can't push things they can create these rules but they can't necessarily have enough market power to make companies really wanna react California on its own can do that California already has a huge bureaucratic system with the California Air Resources Board to manage the low carbon fuel standard so I would expect them to continue to lead and certainly see that expansion my thought, my expectation would actually be the SEC will probably will take this on a lot more quickly than folks might have wanted if it was just the SEC working alone because you're gonna have all of these US companies that have to meet the EU standards and this is huge talk within agriculture and there's a bunch of companies that have to meet those standards in California why not just make it everybody and once you're talking thousands maybe 10,000 companies, larger companies having a national requirement again for the SEC publicly traded companies to me isn't that big of a leap and with my long answer and no other questions I think that we'll end the webinar again, I'd like to thank the panelists for presenting today and everybody for attending we'll see you on February 8th, thanks