 Welcome everyone to this month's Agricultural Market Situation and Outlook webinar presented by NDSU Extension Agri-Business. My name is Dave Ripplinger, I'm an Extension Economist who works primarily in bioproducts and bioenergy. I'll be the webinar host this afternoon. I'm sure many of you have joined us recently. We have a series of presentations from different specialists in our section. We'll save questions until the end. We ask that you use the Q&A tool. We're using the webinar platform of Zoom. You're also welcome to use chat. We'll check those as well. But we'll save those questions. We'll address those questions at the end. But in the meantime, you're welcome to listen. And if you have questions in the meantime, you can submit them. We just won't get them until later in the webinar. But kind of kicking things off today, we have Frayne Olson, who's going to talk about the WASDE report. All right, thank you, Dave. So again, here's my contact information. I'll be providing a kind of a quick overview of what we learned in the WASDE report and how that's going to set us up as we move into the rest of this month and actually into the month of August. So if you do have any questions you think about later on, please feel free to email or use my cell phone. That's probably the most reliable given right now in the summer months. So on my first slide, I just wanted to provide a little background on the pre-report industry and its estimates. So what was the industry expecting to see relative to what we actually got out of the WASDE report this on Monday? So I am going to go through both old crop ending stocks and new crop ending stocks. And the reason that's becoming so important is especially for soybeans. There's been some concerns about whether we're going to have enough beans to be able to make it through the end of the marketing year and into then the new crop year as harvest begins. I guess right now I think the consensus view is that we will have enough inventories, but again we're going to have to, you know, we're going to be monitoring this very, very closely. So just to recap very quickly, if you look at the top row, the average trade estimate, that's the average of the people at a report. There's usually about 12 to 15 different companies that are surveyed to say what is your forecast for what USDA is going to tell us coming into this report. So if you compare the top row to the bottom row, which is with the numbers that USDA actually did report, it gives us an idea of what did they expect to see versus what we actually got. Now there really wasn't a lot of uncertainty or concern about the old crop ending stocks. We know that they're going to be very tight, but we're kind of narrowing in. We're getting close enough to the end of the marketing year. We typically don't see major, major changes. But I didn't want to put this in play now just as a context. There were some small adjustments on the old crop corn numbers. The old crop soybean numbers basically stayed the same. So no big shocks or surprises there. On the next slide, we have the same information. Next slide, please. There we go. For the same information for new crop. Now in the new crop, if you look, not only at what the average trade estimate is, but also the range between the highest and the lowest trade estimate, it gives you an idea that there's still a tremendous amount of uncertainty about what our production and consumption will be for this coming crop year. So when we look at the average trade estimate, which is the top row versus the bottom row, you'll notice that on the wheat side, the ending stocks numbers tightened up a lot quicker than I think a lot of the trade was expecting. For corn, we were within the trade range, obviously, because the trade range is so wide, we're a little bit higher than the average, but not really a tremendous shock value. And then on the soybean side, the opposite. Excuse me, we also had a little bit more ending stocks. The USDA came out with ending stocks a little bit higher than what the trade estimate was. But again, I want to caution everybody to also look at that range, because that range is exceptionally wide. And most of that uncertainty in today's world is really coming out of the yields and the production numbers. And I'll talk about that in more detail in a minute. So my next slide, the other thing that came out in this July report, was we get the first estimates of wheat production by class. So up until this point, USDA has been forecasting wheat and wheat production and consumption in a larger sense, but now we start breaking it down specifically by class, by state. So these are the first really solid estimates we have for wheat production numbers. Now this would be for wheat production. How many total bushels are going to be produced? Just like the other graphics, the top row highlighted in black is what the average trade estimate was. The bottom row highlighted in red is the numbers we actually got out of USDA. So if we look in aggregate, if we look at all wheat combined, the far left hand column, it was a little bit, it was kind of towards the lower end of the range, but definitely within the range. However, when we start breaking it down by class, this is where we start getting some differentials. And these differentials in production are actually going to play out and are playing out right now in the relative prices we see for the different wheat classes. Because I've been getting a lot of questions over the last several days. We're beginning some strength in the spring wheat market. The question is, well, how high will spring wheat go? The challenge we're facing is spring wheat, even though production is going to be way down on spring wheat, our ending stocks are going to be much tighter, we still have this larger winter wheat crop that we have to deal with. So let's talk about winter wheat for just a moment. If you look at what the average trade guess was for hard red winter wheat, versus the number that came out is a little bit larger. So the winter wheat crop, based on the early harvest reports now, coming out of Oklahoma and Kansas, is that its yields are pretty strong, quality profile is good, average proteins are a little bit lower than what we typically see, but not horribly bad. The other thing that was a little bit of a surprise was the soft red winter wheat, that the soft red winter wheat numbers were a little bit stronger from our production side than the trade was expecting. So when we look at our two major winter wheat classes, hard red and soft red, we have a few more bushels than had first been expected. Now on the soft red side, we are starting to rebuild some inventories. The soft red winter wheat inventories have been very, very, very tight and so these additional production numbers will help give us a little bit more of a buffer in the soft red winter wheat market. I'm going to skip over white wheat for right now. I think the trade was expecting a little bit more of a cut primarily because of the very, very hot dry conditions out in the Pacific Northwest. A lot of the white wheat we grow in the U.S. is both in Washington, Oregon and Idaho. And so it's kind of that PNW region that has the white wheat. There is some white wheat that's produced in Michigan as well, but the smaller acreages. I want to zero in a little bit on spring wheat in Durham. And this is, again, not necessarily a surprise because we do know that this region is obviously having some pretty severe drought conditions. We're starting to get a better read or figure on what our yield and yield potential may be. I recently traveled out to western North Dakota and in my drive across the state, I saw a lot of variation. There are some areas where the wheat was actually looking pretty decent. There was other areas where it was just absolutely horrible. So we're trying to figure out, given this wide variation in crop conditions, some areas of the state have had rains. Others have not. The timing of the rains are really critical. This is all kind of playing into this level of uncertainty. So on the spring wheat side, now this is all other spring wheat. But most of this is hard red spring that we grow up here in the Northern Plains. The production numbers were actually definitely on the low end of the range. In fact, it was lower than the lowest trade estimate. So that was a bit of a surprise to the spring wheat market. I think the average trade was expecting a little higher numbers than what we actually got. My personal opinion in studying the numbers for expected yields out of North Dakota, Montana, Minnesota, I do think USDA came pretty close. I, based on what I saw, my assessment in talking to farmers and some of the county agents, I think they're relatively close in the average yield estimates for the state and the region. The other kind of big shocker for the wheat market was the Durham. So if you look at what the average trade estimate was and the range of the trade estimates, now recognizing also, to be fair, there aren't as many private analysts that will do specific forecast for the wheat by class. So we're not looking at the pool of people that are doing this kind of forecasting for corn and soybeans and wheat in general. All bundled together is relatively large, but there's a smaller subset that will do specifics by class. The moral of the story is that, yes, our Durham stocks are going to be pretty tight. And as I listen to and try and read and study what's going on in the Canadian side of the line, both spring wheat as well as Durham production in Canada are also under a lot of pressure now. They've been getting a few more rain showers than we have here in North Dakota, but it's not really been enough to make a large difference. We're still looking at a smaller crop coming out of Canada also. So this now has kind of set the stage for not only overall wheat prices in the wheat complex, but now starting to also look at what is the relative prices between these different wheat classes. All right, on my next slide, I do want to give you, again, a little higher level of where, what is the change in the ending stocks? So I really want to focus on those blue bars on the bottom, which is a percent ending stocks. It's our ending stocks number divided by total use. So think of it as what percentage of our needs, of our total needs, are we going to have in reserve just before harvest? And please notice now for old crop wheat, excuse me, old crop corn, which would be the new crop corn and the forecast is in the red on the far right hand side, just to the left of that is old crop corn. So our old crop corn stocks relative to history are pretty low. We're seeing forecasted ending stocks as a percentage very similar to what we saw back in the 2013-14 time period, which is relatively low. Now, it's not record low. If you look back on the left-hand side of the chart, you get into that 1995-96 time frame, and they were actually much smaller, percentage-wise than they are today. One of the reasons that the corn crop or corn market is starting to have kind of a schizophrenic kind of personality here is we're getting this divergence now between what's happening in the old crop and our expectations for new crop. Now, please understand that red bar on the right-hand side is assuming that we're going to have trend line yields for corn. So the trend line yield is the number that's currently being plugged into the production of corn. The production and consumption numbers. And that's just under 180 bushels per acre national average yield. Now, there's a lot of folks that are starting to raise some questions, given the dry conditions we're starting to see show up in particular in the western corn belt, are those yields achievable? And again, this is going to be the hotly debated topic from now until the combines run. So from now until we start harvest and start getting some actual yield reports, we're going to have very differing opinions about what the size of the crop is and what our yield potentials will be. So please understand, even though it looks like we're going to have some larger or rebuilding of these inventories, that's being hotly debated right now, whether that'll actually happen or not. But what tends to happen is as that ending stock's number, as that gets smaller, as that gets tighter, two things happen. Average prices increase and prices become more volatile or more variable. So again, be paying attention to the weather forecasts and any discussion about yield and crop stress. In particular now as we get into later July, first part of August, we get into the pollination stages and reproductive stages for corn. The next slide, we have the exact same thing for soybeans. Now please notice again on the far right hand side and highlighted in red is the current forecast for ending stocks of new crop soybeans. It's a tiny, tiny increase over old crop supplies, which is just a tiny, tiny increase from our record lows that we saw back in 2013-14. So we are exceptionally tight on our soybean supply demand conditions. Again, the red bar that we see right there is assuming a trend line yield, a trend line yield of just under 51 bushels per acre, national average yield. Same questions are going on for soybeans. Given what we see happening now with the weather forecast, with soil moisture conditions and crop development, do we really have the potential nationwide to be able to see that occur? And we're seeing this real differencing now between the yield expectations for the Western Corn Belt versus the Eastern Corn Belt. And I'll talk a little bit more about that in a minute. The next slide is the exact same kind of percentage carryover stocks for all wheat. Now this is all wheat classes blended together. So we're not breaking it down by class, it's just wheat is wheat. And you can see we have been taking those ending stocks numbers down. I usually consider on an all-wheat basis the kind of that typical range of carryover between 30 and 35%. It kind of in the modern era of wheat right now, which is right now towards the lower end of normal, but we're not nearly as low or small as what we saw in that 2007-2008 time period where we had exceptionally low prices and we had the price spike that kind of everybody remembers in the spring of 2008. The next slide is the same supply-demand conditions, but for spring wheat only. And this is really where the big shift has come. When you look at what we saw and expected in the June report versus what we're seeing now in the July report, this is very different. We did take those production numbers, the yield numbers down pretty significantly in spring wheat, which is now really starting to tighten up our ending stocks and our expectations for carryover for the hard spring wheat. And that's obviously the reason we're starting to see some additional strength in spring wheat markets. Okay, next slide. I want to talk a little bit about this price spread now between spring wheat and winter wheat. And this is where the question is, what's kind of the high end? How high can spring wheat prices go? And the challenge is spring wheat prices because it's a relatively small market compared to all wheat, and in particular compared to corn and soybeans, it only has so much strength to work independently from all of the other kind of wheat classes as well as from the other commodities. So what I charted here, and I pulled this this morning, kind of mid-morning before we came on today, and what this is is the price differential, that price spread between hard red spring wheat on the Minneapolis Exchange and the Kansas City hard red winter wheat futures traded on the Chicago border trade. So if you take Minneapolis spring wheat minus Kansas City winter wheat, what's that price differential? And this is a long-term continuation chart. It goes back into about the 1990s. And you can see that price relationship. Let's ignore for just right now, please just ignore what happened in the spring of 2008. That was kind of an anomaly. Some really, really strange things happened to cause that big spike. But if we look at more from like 2010 forward, we say how much of a premium can spring wheat have over the winter wheat markets? And it looks as though we're getting to the top end of that price differential, that price range. So the moral of the story is we have this spring wheat market trying to make a rally, an independent run by itself, but it only can separate itself so far from hard red winter wheat, which is really from a volume standpoint, a much larger class of wheat. And notice what happens. We can get to about this $2.50 spread differential, and then all of a sudden it starts to contract again. Now what that means is either spring wheat prices will fall relative to winter wheat, or there's enough momentum that the winter wheat market will also be pulled up. So we're just talking about this price differential. The moral of the story, what I'm trying to get at is we have very large adequate supplies of hard red winter wheat. And in the global market, there is plenty of hard red winter wheat available in the global market. Even though some of the supply demand conditions are tightening up a little bit, there's still plenty of supplies. And we have very, very stiff competition from Russia. So the biggest concern right now in the hard red winter wheat market is what's happening with corn prices. Because if the corn prices get too high and the hard red winter wheat market doesn't stay at a premium to corn, we start feeding more corn, in particular in the poultry sector. So the bottom line is if we're trying to figure out how high can spring wheat prices go, we really need to look at what's happening in winter wheat and also what's happening in corn. So if we continue to have some strength in the corn market, that allows the hard red winter wheat market to also increase, which then allows the spring wheat market to continue to move up. So I know that seems like a kind of a complex set of relationships, but in today's market, that's really what we're seeing. So please understand, if you're looking at the spring wheat market, you cannot look at spring wheat independent of the other wheat classes or independent of corn. Next slide please. So really quick, drought monitor map. Everybody knows kind of what's happening in North Dakota. I know Tim is going to talk a little bit more specifically about what's happening in North Dakota. I want to point out a couple other states that are impacting, again, those larger corn and soybean markets. Let me focus in a little bit on what's happening in South Dakota. We know that South Dakota is also exceptionally dry. We've got some really challenges going on. I talked to some folks from some farmers from South Dakota here recently and they said, yeah, you know, this is, we're in pretty tough shape as well. The newer developments and the part that the corn and soybean market is watching really closely is Southern Minnesota and Iowa. So I really want you to focus in your eyeballs on what's going on in Minnesota and in particular in Iowa, those two regions. We're getting this separation of the Eastern Corn Belt versus the Western Corn Belt. Now, the dividing, the imaginary line between East and West is usually the Mississippi River. So if you're west of the Mississippi River, you're kind of Western Corn Belt. And that's really what we're talking about here. Eastern Corn Belt, Iowa, Illinois, no, not Iowa, Illinois, Indiana, Ohio, Kentucky, Missouri, those guys are all getting some rains. Their crop condition and ratings are much, much better than they are in the Western Corn Belt, which is primarily Nebraska, Iowa, Minnesota, South Dakota, North Dakota. So we've got this dichotomy going on. So there's a lot of focus and attention on how dry is it getting in Iowa and Southern Minnesota? But we can't forget that there's the possibility partially compensate for losses there with a higher yields that we're getting potentially in the Eastern Corn Belt. So next slide, please. One of the ways that we try and monitor this is actually using some satellite imagery. And this is, I stole this from the lockup briefing. Basically, this is the briefing that the secretary of the, in USDA, the chief economist gets briefed before all this information is released to the public. And they provide a copy of the slide deck that the economists use to brief the chief economist. And this is one of the slides that I wanted to point out. This is vegetative health index. So this is some satellite imagery saying how green is the crop? And it does give a proxy, a rough proxy for, well, where are the areas of the state that we've got a really healthy crop coming versus an area of the U.S. where we've got some problems showing up? Now, it does match up and trace pretty well with that drought monitor maps, but not identically. And again, what the area that the markets are watching very, very closely right now for corn and beans is that Southern Minnesota and Northern Iowa region. And you can see that there are some of those regions now that are starting to get dry and the crop conditions are starting to suffer. And as we get into pollination for corn as well as flowering for soybeans, this is going to become pretty critical. Next slide, please. One of the, even though it's a subjective assessment, this is this crop progress report which comes out every Monday morning is followed very, very closely. And I just want to highlight a couple of things to give some perspective here. In most cases, when you read press reports that are looking at the very bottom block that I've highlighted in red. So this is kind of the average across all of the corn producing, or at least the major corn producing states. And typically what we say is what percentage of the crop is rated in that good to excellent category. We add the column for good and the column to excellent together and we get a proxy for an idea of, well, what percentage of the crop is looking pretty good versus what areas or what percentage of the crop may be having some issues. So there's two ways to interpret this. We can compare this week's numbers relative to last week's numbers. So is the crop conditions improving or getting worse? But we also look at it from how are we doing this week, this year versus the same week last year. So let's compare this year to last year. Well, if we look from week to week change, there really wasn't a lot of difference. But when you compare what the crop condition ratings today versus what we saw last year at this time, when you look at corn in general, you know, they're not dramatically different. They were a little bit better but not dramatically different. So now we dig a little bit deeper into which states, where are the regions that are starting to have some problems? What are the areas that we need to focus on? So I've highlighted in blue two different regions. I've got Illinois, Indiana on Iowa, the I States, and then I also highlighted Minnesota. So let's look at some of the differences between what's going on in Illinois and Iowa and Minnesota. And if you add up that good to excellent category for Illinois, you add up the good to excellent category for Iowa, you get almost the identical number. So what's going on? If there's such a big problem in Iowa, why are these crop condition ratings or the crop progress looking so strong in Iowa? It's because again, this is a visual assessment, right? And we do know that some of the Iowa crop is starting to show some stress. So depending upon the weather forecast, we will likely see the Iowa numbers start to slip. We're going to see less and less in that good and excellent category and some more showing up percentage wise in that fair or poor category, all depending upon what's going on with rainfall and what's going on with temperatures. Now contrast that to Minnesota. If we look at what's in good to excellent ratings from Minnesota, it's a very, very different condition. Southern Minnesota is in a little bit better condition than Central Minnesota, but only marginally so. So we're starting to see some of these wrinkles show up or some of these problem areas get to a point as the crop is developing and maturing that we're starting to see these crop condition ratings fall. And so again, this is information that the market uses. Whether you agree with it or not is irrelevant. This is the information that people are trading off of. So the next slide is the exact same thing. Weekly crop progress for soybeans, very similar story. When we look at the conditions this week versus last week, they're identical. When we look at conditions this week versus the same time last year, it's a little bit weaker, but not substantially weaker. But again, you start doing it some state by state comparisons and the states that are having some problems are obviously starting to show up North Dakota, South Dakota. We definitely have some issues with both the corn and soybean ratings. But even the Minnesota ones are starting to slip a little bit. Next slide is the same thing for spring week. Now again, this shouldn't come as a shock for it to anybody that listening. We are having some problems obviously with this. The the condition scores and for the ratings of the spring week crop. We already know this. The real question now is as we start to finish out this filling phase and we start moving into harvest, how many of those kernels that are actually in the head are going to be shrunken and broken? How many are actually going to be able to fill out to a point where they're harvestable? And of course, if you have some wheat that's only six or eight or 12 inches tall, how do you get that through the combine? So is the yield we have out there really harvestable? We're also getting some reports of some of the wheat acres being paid for livestock feed, which is obviously a very legitimate question and something that both Tim and Ron Haugen will be talking about next. All right. I think I got one more slide if I remember correctly. I just want to show the precipitation forecast for the next five days. This is coming out of National Weather Service. I pulled this late last night. It just shows that those areas that have been getting rainfall are now continuing to get some rainfall. Those areas that are missing some of these rain showers, it seems as though they're continuing to miss some of those showers. This is the information the markets are watching right now. This is going to be very, very sensitive. We're going to continue to see a lot of market volatility as we move through the next several weeks. And with that, I'll hand things over to Tim. Good afternoon, everybody. Tim Petrie, NGSU Extension Livestock Marketing Economist. Go to my first slide today and I'm going to talk. The drought is affecting the cattle market and particularly affecting us in North Dakota. Frane has already showed you the drought monitor on the lower left-hand side and I just focused in on North Dakota on the top to show you the most severe conditions now or right up in the bullseye of the state up there and where it's really, really dry and a lot of problems with pastures. Actually down on the Southwest there are areas that have improved and Frane and I talked about this. You can go five miles, particularly down Southwest North Dakota. You can go five miles it being pretty green to nothing. And so quite variable as Frane mentioned. I just talked to my counterparts and we can look at the U.S. map down there and then to the right is Frane mentioned crop conditions poor to very poor and so on for the crops and so I've got the very poor to poor conditions for pastures shown on the bottom right-hand side and corresponds to the drought monitor. But just like I started saying just talk to my counterparts in Colorado, Oklahoma, Texas, Mississippi and Tennessee in a conference call just this week and the one thing that they all said is it's been cooler than normal and wetter than normal in fact their biggest complaint is that they can't get their hay up because it's too wet. So when we start thinking about the cattle market and the impact of drought, yes, drought is having an impact but on the other hand there are a lot of cattle that are in very good grazing areas and that's important because now with the higher corn prices we're wanting to graze cattle longer and put calves for instance on grass keep them longer rather than in the feedlot and we'll see in a minute here the spark in feeder cattle prices and that's coming from that area down to the south of us Oklahoma only 4% poor to very poor and up into Kansas and Nebraska and even eastern Colorado Colorado was very, very dry last year and they've gotten good rains down there so that's actually helping prices. You know our producers here now are asking a lot of questions first of all how much should I reduce the herd? What alternative feeds are there and planning for next year of course is very, very important and what our price is going to be next year if prices are going to be poor maybe I should really cut down or bail out but if they're going to be better maybe I should try to look at some alternative feeds and do something to at least keep a base colored and that's kind of what I'm recommending. There's no cookbook for every producer is different and we've got different conditions and so on but my recommendation is yeah I think for a lot of us particularly up in that north center we're going to have to continue to reduce herds and you're doing that but on the other hand it'd be important to keep a base herd because as we'll see in a minute we do expect higher prices in the next year or two so go to the next slide you know here's rugby years right up in the epicenter of drought and typically this time of the year rugby might be selling go every other week with a sale sell 100 cows or something and this is Monday sale of rugby almost 1400 cattle and they're selling pairs up there which obviously is expected and very very dry conditions up there so move to the next slide we'll take a look at prices starting with fed cattle prices because I know we don't feed a lot of cattle up here but fed cattle prices and corn prices are the two most important things that affect feeder cattle and so I've got the last three complete years on here and with the light blue being 2018 the green 2019 the purple 20 and now the red line this year and so focus on the red line of this year and what's happening next year fed cattle prices have steadily improved throughout the year and you know we did up here 124 a few 125 cattle and a little bit lower than that in the southern plains so we're averaging out there about 123 but we've seen improvement the red bars are the futures for the remainder of the year and then the orange or tan bars or squares that are on top are 2022 futures so on the fed cattle side you see prices right now are higher than they've been the last three years way higher than they were last year with COVID but even higher than 2018 and 19 back similar to 2017 prices coming from both lower supplies and very robust demand the lower supplies of course is we've reduced we reduced the cow herd in 2019 reduced to the beef cow herd in 2019 again in 2020 and looking at the drought monitor at least in the northern plains in the west I think that'll be enough to at least probably reduce it a little bit more this year and so those lower numbers are obviously supportive to prices and are already starting to show up and so looking at the futures then by the end of the year we're up there over 130 up there to 132 and then next year we've got futures April futures and by you know some seasonal weakness in mid-year as usual but by the end of 2022 at the beginning there in April and the end we're right up there pushing $140 the best prices we've seen since 2016 and 17 so we do expect better prices and again based on lower supplies and demand go to the next slide just hit a couple there Brian isn't on today to talk about macro and I'm certainly not a macro economist but just hear some signs of how the economy is doing again we've you know the vaccinations and people restaurants opening up and food service and all that is really helping beef demand and you see the Dow Jones industrial average on the top there at record levels in the last couple of days up to to been improving and up to record levels we've got help wanted signs everywhere drive through right next door to us is a gas station and across the street a fast food and they've got big signs help on it and all over so you know that's certainly helping beef demand and funneling into these prices go to the next slide the other part of the demand equation then our exports and again on the export side we're doing gangbusters there record exports on the top we just got the new data at the end of last week and beef exports have been setting records the last several months again way higher last year we're affected by COVID but look at the average there and so we're doing record exports expect those to continue and you know what's really nice to see on those exports is our prices are higher our wholesale beef prices are high in it at the same time we're exporting a lot and and we've kind of had a change in where it goes in the bottom you see that China has really picked up last year I think China was down about our 10th best customers and they've moved up now to our third best customer only behind Japan and Korea and so we're sending record amounts to Korea and about the same to Japan that we always do and then China's picked up and so we expect record exports this year and at least nearer record exports next year and so that's another thing that's funneling into those fed cattle prices so go to the next slide here's our calf prices and there's 550 to 6 weight calf prices and again there look at the the colors are the same in the years the last three years and so you see you know we have sparked calf prices here in the last month or so and and in a little bit I'll talk more about corn but anyway that's we've got lower supplies and then you see those good grazing conditions to the south Oklahoma Kansas eastern Colorado and so on and the lower supplies and so you know the prices aren't as high relative to fed cattle prices because of the higher corn prices but right now it looks like we will do better than 2018 again if we maintain that with the big question mark of being corn so we're going to have better prices on the fed cattle side that funnels down into feeder cattle in another reason if that you know if we can hang on here and and keep a base call heard for you know take advantage of better prices in the next couple years we certainly should consider that so go to the next slide is the corn and again why what's helped on the feeder cattle here in the last couple of months is that corn in Oklahoma has went down over a dollar but I've got all kinds of question marks there you see just in the last couple weeks it's been jittery you know when they the acreage report and so on came out you know we were up the limit one day and last week one day we're down the limit and so as Frayne mentioned so eloquently we got a very volatile situation going on there and what's going to happen and look at Iowa and southern Minnesota and all that so you know what are corn prices going to do remember that old saying is change corn prices 10 cents change fall calf prices a buck in the opposite direction so that's the big thing we got to watch for for fall calf prices go to the next slide then are the heavier weight yearling prices and we see the same thing there prices now have moved up till above the last three years and we do have a futures market for these heavy weight yearling so move on to the rest of the year again we're right up there with the prices we had in 2018 by the end of the year futures at least now up there at 163 and so on are much higher than they were even in 2018 back to 2016 levels and then the futures the orange futures there on the upper left hand side of the chart up there at 165 you know significantly higher than the last several years so a lot of optimism there again based on smaller supplies and strong demand and and those distant live cattle futures trading quite well now doesn't mean that you know something can come along and happen and we've seen that in the last couple years so you know that is a little worrisome but right now the fundamentals there are looking good and the futures market is is reflecting but you never know when something drastic comes along too so we're kind of holding our breath on the situation so move to the next slide talk about cow prices and cow prices over the past few years haven't been as variable in fact last year at this time they'd picked up quite a bit simply because remember last year the shelves were bare of of of hamburger and people were wanting to cook at home and we're they just had to stay at home and so on cow prices were had moved up last year above the previous two years and we're right up there on you know where they've been the last few years and so that is in spite of higher quite a bit higher beef cow slaughter that we'll talk about in a minute but you know several things going on again the entire meat complex the protein complex prices have moved up for broilers and and pork and beef as well and so you know hamburger is a lower-cost item and so selling very well at the store and that's helping out the cow-cow prices and then the other thing is where our imports are down Australia is rebuilding the herd so and then China is buying beef from them because they're a lot closer than than the U.S. is so we've got some good fundamentals they're supporting the cow-cow market which you know we've got a lot of cow-cows coming to market in North Dakota now and and so you know at least we've got decent prices selling even though we've got some forced movement there so go to the next slide there's the higher beef-cow slaughter you see the blue line on the top and again last year a kind of a poor comparison because we had all the issues with the packing plants closed and so on but are the last several weeks there three weeks you see slaughter similar to what it was last fall when our peak slaughter numbers are in the fall when calling takes place so that's the drought showing up there and cows coming to market and and so again and kind of another reason why I think we're going to reduce the beef-cow herd again this year which again overall would be supportive to prices so let's finish up with my last slide then again I do believe that there are better cattle prices ahead and and you know I know we're suffering in North Dakota now and we do have forced liquidation in a really tough situation out there you know we'll open up CRP hanging at least by August 2nd if we don't get any emergency before that and so some other things and so I know you know producers are looking at alternative feed sources and so if we can at least maintain some cows I think to help us when things get with the better prices that I think are ahead you know something to consider so with that let's go to Ron thank you Tim yeah Ron Hogan extension farm management and I was going to talk to you about a new rule that just came down from RMA on on prevent plant so the next slide basically here's the title producers now can hay and graze or chop cover crops anytime and still receive their prevent plant payment so the next slide this is just from their news release which was which USDA put out on July 6th and it basically says you can if you have crop insurance and you've head prevented plant you can you can use it for use your cover crop for silage or hay and still receive 100% of your prevent plant payment typically if you wanted to do that you could do it but you you would be reduced by 65% which is a big cut okay but now after November 1st then you can you're always been you have been able to do this so the next slide basically it's it's part of the USDA and RMA they want to be flexible and help it trying to help people out as much as possible and there's a big believer in cover crops important for reducing erosion and boosting soil health the next slide then shows a couple quotes then from our from the acting administrator fornoy just saying that they're working diligently with federal crop insurance programs to help manage risk and they're dedicated to the needs needs of agriculture and they do support the use of cover crops and the next slide then is important RMA recognizes that the cover crops are not planted as an agricultural commodity they're planted for conservation benefits and for the 2021 crop year and beyond RMA will consider a cover crop planted to be to be a prevent plant claim to be a second crop but RMA will continue to consider the cover crop harvested for grain or seed to be a second crop and it remains subject to the reduction of that 65 percent so what that's saying that that RMA will the rule is permanent until it's changed I guess but it's permanent that you can hay or graze the cover crop but you cannot use it for grain or seed then you will get the big cut in the payment so the next slide the last slide this just says that that it allows the flexibility for the 2021 crop year and that it's in line with the the goals of the 2018 farm bill for cover crops and good farming practice and with all of these rules that come down please contact your crop insurance agent and FSA before you do anything so with that I will turn it over to Dave great thanks Ron Dave Rippling your bioproducts bioenergy economic specialist hopefully sound is a little bit better this go around some general comments about things that are going on it's been actually a lot of news in the energy space the last month so I'm happy to get the chance to talk to you starting with corn ethanol just in general what we've seen almost a complete recovery of ethanol production to pre-pandemic levels the rates of production the last few weeks are really on par with pre-COVID in the summer and again we have additional demand use in the summertime with the summer driving season and corn ethanol industry has met that one thing I do have up are the Celticota crush numbers again these are from USDA egg marketing service they don't have North Dakota numbers use Celticota numbers and their crush margin is actually a little bit low typically my rule of thumb is at 75 cents to cover operating at $1.50 to cover operating in capital so we're in a place where we're covering operating but not much better and a lot of this is being driven by higher corn prices in Celticota which again you might sit back and think you know how much of this is being driven by the drought and concerns about those local supplies but in general the position of the industry is actually quite positive despite a variety of news that's been coming up the first thing I'll talk about which is bad news for the industry is the Supreme Court ruling in late June regarding small refinery waivers so this has been an issue for the last four years the previous the EPA of the previous administration issued a large number of small refinery waivers that allowed these smaller refineries to make claims of economic harm due to the renewable fuel standard and possibly be issued waivers for their annual obligation so that kind of came about and there were a large number of waivers for a few years starting last year they started piling up they weren't making decisions EPA wasn't making decisions and actually at about that time the 10th Circuit Court ruled that EPA had been misapplying the rules and it came down to this issue of language and so the 10th Circuit Court made a decision one way in the Supreme Court a few weeks ago flipped it the other way and the whole idea and this is an issue of semantics is what exactly does an extension mean so according to the 10th Circuit Court and those of the minority on the Supreme Court they thought that the extension would have to be continuous that is that each year small refineries would have to apply for this extension and the first year that they didn't they'd no longer be able to the Supreme Court the majority decided that that wasn't the case and that is that these small refiners could come back in any future years and that's what an extension means it's interesting right now because there are a pile of waivers that EPA has to make a decision on and again that'll impact not necessarily it shouldn't impact the total renewable number although in the past few years it has but we're really kind of wondering exactly what this is going to mean for future EPA decisions regarding the RVO those annual numbers and then those specific refinery numbers in addition to those small refinery refinery application kind of piling up we're actually piling up in terms of actually setting the those annual numbers the thought right now is that EPA sometime is going to issue numbers for a number of years to catch up and then kind of get ahead of their responsibility in that place another round of bad news came out just two weeks ago this was a DC district court of appeals they decided that EPA had overstepped its bounds that it had exceeded its authority in allowing E-15 sales previous law under the Clean Air Act limited the use of ethanol to 10% blends due to concerns about read vapor pressure so this is essentially how fast a liquid vaporizes and you know in the summertime it gets a little bit warmer so there's non-containment ports of the country where they want that number to be a little bit tighter and ethanol changes it a little bit they had there was a waiver for E-10 EPA under the Trump administration said you know there's substantially similar fuels and that within the spirit of the law that E-15 should work the court of appeals decided otherwise and in fact they didn't even have a ruling formally per se they just said flat out it was you know what EPA had done was wrong and they really didn't need to say much more than that which was interesting importantly this won't affect this driving season but we'll see what happens in the future right now the industry and industry groups are talking about different remedies there's been a couple of bills introduced in congress to allow E-15 as well as you know pursuing appeals on this and other potential regulatory remedies it is kind of disheartening for the industry E-15 sales have been small but been growing relatively quickly year over year and we're kind of a bright spot in that bigger space especially for market growth moving forward it's also interesting as in some respects this damages the competitiveness of the trans liquid fuels including petroleum based fuels as there's this push to decarbonize and by doing this essentially the petroleum folks to kind of duke it out with their partner in this now in the biofuels industry saying you know we don't want E-15 well the use of E-15 would have been a lower carbon fuel than E-10 and supported those competitive notions that are becoming more and more important next thing I want to talk about just really quickly is what's going on in North Dakota in terms of oil these are some numbers I've been watching really closely the last few months because we've seen this this rapid increase recovery of of oil prices and now we're we're seeing spot prices West Texas Intermediate as the North American benchmark for oil now in the mid 70s which is you know a very high price relatively speaking the highest that we've seen since the collapse in the summer of 2014 so that's the orange line and that looks pretty good and then we look at the blue line which is the actual rig count here in the state of North Dakota and we saw a collapse with COVID from just over 50 rigs basically down to zero and now these numbers ended these are Baker Hughes numbers these numbers ended on the ninth according to department of mineral resources in North Dakota we're up to 23 but you can see this huge recovery in oil prices but not a commensurate increase in the number of oil rigs and clearly thinking about economic activity jobs, tax revenue, wealth creation and the like it's lagging a bit and so my continue to watch this you know waiting hoping that that those rig council will start going up more than they have been the last thing I want to talk about is kind of a macro issue as it relates to inflation so those numbers just came out very high numbers the number that causes probably the most you know is most newsworthy is the one in the upper right hand corner which is that 5.4% number for the 12 months that just ended you know and that's a little bit of a a line with statistics type issue again because we're coming off of 2020 where things were certainly tough for me more importantly as we can just look at the the month over month change in the price level which was almost 1% in the single month which is you know a huge number and then also looking specifically at where that came from most of it is coming from energy you may see that as you're at the pump as well as a little bit of the gas station we kind of just go through each one of those food both home and away was up almost you know 0.8% I mean that's a substantial number if it continues right there there is this huge discussion going on right now although I think more and more folks are kind of coming to grips or open to the idea that we might be entering at least a somewhat inflationary period the Fed has said that you know they still have all of their tools at their disposal and they're ready to act when necessary what we're seeing those types of things and some of this does go back to Tim's observation too about all that help wanted and you know a lot of these costs you know you do have these underlying commodity costs energy can quickly impact much of the economy labor can impact much of the economy as well we can look at those energy numbers specifically again we are entering the summer season so some of these you know for the month over month so that left that left circle which has that you know that two two and a half percent change if we're different for different energy different fuels that folks buy and then of course if we go back to a year ago we've seen tremendous increases but again those are somewhat distortionary don't really tell the true picture the one that I've been looking at because I have a daughter who needs a used car is the increase in the price of used cars up almost 50 percent over last year 10 percent in the month of June and so some of this is being driven by the chip shortage or the potential chip shortage some of it is also just the automotive industry enjoying a significant demand for new vehicles and you know taking advantage of those high prices isn't kind of slow walking vehicles to the the showroom floor as well as just catching up with the pent up demand from COVID but those prices are certainly high and they're expected to last for through at least the end of the third quarter and likely persist for for quite some time so those are the comments that I had and that concludes our our prepared remarks and now we can move over to Q&A if there's any questions from the participants and I think we must have done a fantastic job today frame the one thing I would mention in the WASDE you didn't get into it I thought they're they're 5.2 billion bushel number for corn for ethanol was you know that's I think that's a pretty easy one for them to pick and I think they're pretty much spot on and it could be that everybody's on mutant ready to go to the lake for the weekend yeah that's that's probably it all right well it just to to remind everybody this is a monthly webinar our next one is Thursday August 19th at 1pm again at the same site I do need to update the the webinar location we have revamped our website within extension in the egg hub site and you may have seen that I'll say the follow up when we do upload the slides and the recording of this webinar so you know where it's at the the URL for this webinar will remain the same but the actual location on the web of where we'll have a repository of the slides and the recordings you know has changed but that should be available to everyone and if you if you don't see something and can't find it just reach out and we'll make sure that you can get that information since I don't hear or see any questions coming up if there's anything any panelists want to add or if you're also ready for the weekend or or for the next thing all right well hearing none I want to thank everybody for joining us today and we'll send out a blast as soon as everything's uploaded to the web thanks