 I want to welcome everyone to this month's edition of NDSU extension agribusiness's egg market situation outlook webinar. This is actually the last one for the year. We'll follow the form rat we always do. But Brian, if you want to take questions after your presentation. Yeah. So Brian does have to has another commitment after his presentation. So we'll have questions immediately following that otherwise save them to the end. You can we prefer you use the Q&A tool, but you can also use the chat tool to ask questions. And then we'll we'll get to those either immediately after Brian's talk or at the end of the webinar. So Brian, the floor is yours. Alrighty. Hello, everyone. I'm snowed in here far ago. We've gotten quite a bit so far in the last 24 hours and supposed to get more in the next 36. So we'll see how it goes today. I'm kind of kind of putting two things together. I want to talk about real quick. Our newsletter is coming out and I have an article about cap rates and interest interest rates that that's included in it should be coming out shortly when we get it. And that newsletter will be the last issue of the year and there won't be another issue in January. So the first the next issue is going to be February 1 because of the holidays and everything. But first, I want to talk quickly about what the Federal Reserve did. So we're going to kind of end the year on interest rates and inflation and talk some about land values. But so this is the Federal Reserve's actions so far this year. And then they just took action yesterday with a half a point increase, which was expected. But so far, so we started the year. It's pretty interesting. Started the year beginning of March 2022. The Federal Fund's rate, that's what FFR is, was a quarter of a percent, 0.25. Inflation kept increasing. It stayed persistent, not only persistent but increasing. We started the year around five percent, five and six percent in the early months, all the way up to eight and change. The Federal Reserve responded with these rate heights that you see on your screen right now. Quarter point in March, half a point in May, three-quarter in June, July, September and November. And then the most recent brings us from a quarter of a point to start the year to four and a half percent, which is the highest in 15 years. And so that was not unexpected. That's kind of what the market projected was going to happen, but it did indeed happen. But I like to show this slide with this information because just to put it into perspective, yes, interest rates have increased, they've been increasing. But the average Federal Fund's rate after yesterday's increase is four and a half percent. The average going back to 1954 is 4.6 percent. So on the long run, long run time horizon, we're really right around average actually. So that's, I think, I find that interesting because it's a perception thing. We've been, if you look at this chart, this is where it was starting in 09. Basically, as close to zero as you can get. In some cases, it was zero. Increased a little, if we recall, back in 18 to about two, almost three percent, and then back down after COVID lockdowns and that recession that occurred. But since then, increasing back up. But again, it's a perception thing. If the Federal Fund's rate had been three or four percent, just below average and was now 4.6, nobody bad and I. But since interest rates have been so low for so long, it feels like they're much higher than they are because decision making has changed. I mean, because we've had a decade of low interest rates. So eventually people start making decisions as if this is the new normal and the way forward. But again, we have had much higher rates than this. So moving toward inflation real quick, price increases and this is the report that just came out this week also. They were slightly lower than expected. The market expected 7.3 percent and this is kind of one of those deals, kind of like the crop market reports that frame puts out. You got what the trade expects and then you've got what the actual numbers turn out to be. In this case, the trade, so to speak, the market's expected 7.3 percent of 7.1. So still high inflation, relatively high, off the highs quite a bit, but it does appear to be slowing and that's what folks were waiting on seeing. We saw the numbers come down a bit in October and then come now they've come down a bit in September. And what I mean is inflation is still high, but the rate of increase has slowed and a big reason has been energy so far. And we've even seen decreases in things like used cars, things like that have come down some, so that's softening some of it. Food though still remains high, food in general. There are food items that have gone way up, things like eggs and so forth, but then there's items like beef, which actually has come down some, but food remains remains still pretty high over 10 percent. So the projections for quarter four of 2022 and 2023 inflation continued to be above 8 percent. Well, it doesn't look like that's going to have happened. And then the thought is that it will be about three and a half percent by 23. And then central Florida's projection, which came out not terribly long ago, slow faster, theirs is appearing to be more closer to what's happened in quarter four. By the end of 2023 inflation will be down to 2 percent, but this is due to actions by the Fed, the assumption being that they're going to continue to fight inflation all the way through 2023 as well. So the next time the Fed meets is going to be in February. They don't have to wait for a meeting to actually increase rates, but that's typically that's kind of traditionally what they've done and what this Federal Reserve appears to be doing. The current target rate is again four and a half percent. A lot of folks, 73 percent of the market thinks it'll be about a quarter percent increase up to 4.75 and about 25 percent. A quarter of people think it'll be another half a percentage point increase, bringing it up to 5 percent. And I put this up there just to show what the federal Board of Governors thinks the rate will be through 2023. And what this indicates is that the Federal Reserve's Board of Governors does not believe there's going to be a rate decrease in 2023, that the average rate most are thinking it's going to be around 5.3 percent for most of next year. They're not going to continue increasing at these three quarters of percentage points. And what that does is it'll put interest rates around seven and a half percent or so, seven, seven and a half, maybe as high as eight percent, and just let them sit there. And the thinking being that if they sit there, that will be enough to slow the rate of inflation that they don't need to hike the federal funds rate up to six, seven percent, pushing consumer rates up above 10. These Board of Governors that you see represented by this dot grouping here are thinking five, five and a half percent somewhere in that range is going to be enough just kind of hanging out there, keeping out interest rates elevated to slow things down to continue this steady decline in the rate of inflation down to the rate that they hope to be, which is two percent. And then finally on this, what I wanted to mention was land values. And I put this chart in the most recent newsletter that I wrote that again will be coming out in the next week or a few days. And what it shows, and I find this concept interesting, if we go back to 1994, all right, you got the purple line, that's the cap rate, which is the rental rate on farmland divided by the market value. They call it a cap rate, we call it a cap rate, and it's expressed as a percentage. Then the black line is the 30-year mortgage rate. Then the gray line is the 10-year yield on T-bills, treasuries, 10-year notes. Typically, the yield on treasuries, 10-year notes is about 2% below that cap rate. And that relationship, this chart goes back to 94, but it holds back before that into the 80s pretty easily. And then the typically the cap rate is above the 30-year mortgage rate as well. And it kind of makes sense because if you had to borrow money, because let me back up real quick. If I'm looking at farmland as an investment piece of property, a piece of investment property, if I'm borrowing money at 7% to get a rate of return of 4%, yes, there's a little bit of an increase in the rate of return when you include equity accumulation. But it wouldn't make much sense for me to borrow money at a rate that's higher than the rate of return on the investment that I'm borrowing money to buy it on, right? I mean, no one would do that, or wouldn't do that in most other arenas. And so that relationship holds. So you got this cap rate, 30-year mortgage rate. Sometimes they invert a little bit as that mortgage rate changes and changes faster than the cash rent does, or the market value of farmland. Those mortgage rates are a little more volatile. But typically it hangs out above it. Now we come here to the, and then that relationship with treasuries, it being a little bit higher. And part of the reason for that is, if I was looking at it again from an investment perspective, treasuries are very liquid. I can turn around and flip treasuries anytime I want to, any day I want to. So I can turn those into cash relatively quickly. So typically the rate of return on those is lower than farmland, which has a much slower, it's less liquid. So the current 10-year T-note is about 3.5%, 3.4%. It was over 4% in November. The cap rate for farmland has been around, especially if you deduct for property taxes, below 3% for about the last six, seven years, and up around three at best if you even, if you don't deduct for taxes. So the last time the 10-year yield and the mortgage rates were this high was about 2008. So you go back here to 2008, see the mortgage rate is about right here, right around that six, seven percent mark for the year. Treasuries again right around 4%, which is roughly where they are now. But you look at where this cap rate is, in fact, right now the yield on 10-year treasuries is higher than the cap rate on farmland by at least a half a percent. And the mortgage rate is more than double what the cap rate on farmland is right now. And so the question is that I was, you know, been thinking to myself is, will this relationship that's basically been the trend for 30, 35 years continue, will it at least 30 to 35 years? That's how far I got the data back from this. Will it continue that relationship between the cost of borrowing outside investments that are relatively safe and in farmland? Now, I know that folks may say, well, it continues to appreciate and value and that's also included in returns and that's true. But then basically what you're saying is the speculative aspect of farmland has to be extremely strong in order for any purchase to make any sense that the capital gain has to offset the fact that you're getting essentially half that the rental income generated is half of what it needs to be to be comparable to both the rate that you would have to borrow at and or other investments that are considered more liquid and steady such as treasuries. And that is that is true in a lot of arenas, whether it's residential house buying or other commercial real estate or farmland until it's not right. If you're banking on a capital gain to be the difference between it being a positive investment or not, we've seen instances in history where that's true for a decade, 15, 20 years until it's not. And then and then things tend to tend to fall apart. But just calculated real quick, rents would need to increase compared to what they were a year ago about 66 to 75% in order to get the cap rate where it needs to be to maintain that relationship. So I guess the question is how long do we think interest rates are going to stay up there? I showed some information on what kind of the Fed thinks that they're going to be there for at least another year or so. And then the other part is is will rents come up? Because last year we had increases in land prices in North Dakota closer to 11, 12% on cropland but rents only increased 3.1%. Are we going to see a big jump in rents? I don't think it'll be big enough to offset a lot of what I just showed. I do think it's going to be much higher. But I also think there's going to be a land price increase. And how high those are relatively is really going to really going to tell the tale and kind of see if that relationship maintains itself. Yeah, great question. I actually a question from the participants. Doesn't this sound very similar to the housing crisis of 08? Yes and no. And here's why. The housing crisis of 08 and the farmland crisis of the 80s was very similar because what you had happening was people were borrowing money at rates that were much higher than they could afford and using equity to essentially make the purchase paper equity. Okay, if you want to think of it that way. So they were the house that the assumption was when somebody bought a house in 08 for those who don't recall are just a refresher. I would buy a house for instance that I couldn't afford the payment. So they would put interest rates extremely low, no interest maybe for the first five years, then a ballooning payment would be added on to the end of it at a much higher rate because I didn't have any money down or anything like that. But if my house appreciated say 15, 20, 25% in the five years that it happened, I rolled that equity into the loan to put my 20% down and get a much more manageable fixed interest rate. That works until it doesn't. The minute that housing values stop increasing, all of a sudden I can't roll that loan and get a much lower rate and I can't afford the payment in year five that's ballooning to 13, 14, 15%. The same thing happened in farmland in the 80s, not with ballooning interest necessarily, but farmland prices were increasing 15, 20% per year. And so on paper, if you allowed those farmland values, the equity to increase, I could then take that equity, use it as collateral on my next farmland purchase, and then away I go. That's all true until all of a sudden farmland prices go down by 15, 20, 30% and all the equity I thought I had, I no longer have. It just got wiped away and one fell swoop. This case, we're seeing less of that equity type borrowing being used as collateral and more cash and things like that lately. But what I'm saying, what I worry about though in this in the farmland values can still decline because if I'm looking at it from a perspective of now all of a sudden it's prohibitively high priced for the amount of income that it generates. Interest rates are high. So anyone that would have to borrow some of the money is out of the market now and not going to the auctions, not trying to purchase once the cash gets burnt through, then you see farmland prices essentially dip or rents go up because the relationship is kind of messed up. So it's different. It's similar, but it is different because of how it's being financed. I answered that one, how far will rates fall in a year or two and will this be a new normal interest rate? Well, here's the thing. When I showed those average time horizons on rates, the average rate on commercial loans, just consumer loans, is around between 7% and 8%, right around 8%. So it's tough to call it a new normal. That was the normal before we went through 10 years of rates being pegged so low that 7% or 8% is actually average. So I do think that interest rates are going to stay much considerably above 5% and 6% where they had well below that. I mean, a lot of us have mortgages that are below 2% and 3%, right? So I do think that that's going to happen, but I think that they'll stay above 5% and 6% for a considerable amount of time. All right. Last one, Carl. Sounds like land prices might decrease due to high interest rates. I think so. I think it's going to be a combination of things. High interest rates are going to price people who had to borrow, who would have had to borrow and could have helped bid up the land price out of the market, those who are on the bubble. But I think the other thing that it does is it makes folks stop and think about, even if you can't afford it, interest has been an afterthought on any purchases for a long time. All of a sudden, you get 7%, 8%, and 9%. It's no longer an afterthought anymore. It's a real cost. The cost of capital is actually considerable at that rate. And so, yes, it will, and I want to be careful. I don't want to say it's going to cut the legs off. And all of a sudden, we're going to see like a 20% reduction in land prices in 30 the next year. It could be a deal where they just stay flat for the next 10 years. And rents continue to come up to match it. Okay, that's one of the ways. And I think that that's probably more likely the case simply because the way that the land was purchased with cash and everything else, these aren't people who are going to be upside down in loans. So they may not be able to afford to buy more and want to buy more, but they're not going to be under tremendous pressure to get rid of and unload the land they got. So that's why it's different. Okay. Thanks for the questions. Hopefully I answered them all. I know we covered some a lot conceptually, but I appreciate everybody logging in this year. I hope everybody has a great holiday. And I hope you don't have too much to dig out of. I know I know why I do this evening. So thank you very much, everyone. Thanks, Ryan. Frame, floor is yours. All right. Very good. So here's again, once again, here's my contact information. I'm Frank Olson. I'm the crop economist and marketing specialist with NDSU Extension. Happy to be with you here this afternoon. Again, I hope everybody's safe and warm at home. I know we've got some, as Brian said, some shoveling out to do later on today, but hopefully be able to share some information and answer some questions for you. So I do want to start out with just a brief comment on the December WASDE reports. So again, just to remind everybody, the WASDE is the World Agricultural Supply and Demand Estimates. It's the forecast that USDA make every month on total production and consumption, not only for U.S. domestic, the major crops in the U.S., but also globally. This month's report was actually exceptionally quiet. There really wasn't much new information. There were very few refinements or additions or changes. I guess the most notable change and the one I'm going to talk about and focus on a little bit now today was a reduction or cut in the forecast for total corn exports. So USDA did cut total corn exports, their estimate, by about 75 million bushels. So we went from about $2.1 billion to just under $2.1 billion in December. So again, it wasn't a major shift, a major reduction, but it was something that I think caught everybody's eye. All of the other numbers, when it came to production in use of soybeans, production in use of wheat, when we look at what's going on in South America, basically their expectation for soybean production was unchanged in Brazil. The expectation for soybean production out of Argentina was unchanged. Now, I do expect as we move forward because of some of the weather challenges, some of the slower planting progress, some concerns and reports coming out of Argentina, that because of the extreme drought that's going on there, yield expectations and potentially planted acres are dropping. So I do expect that we're going to see some downward revision or adjustment in Argentina's production numbers for both corn and soybeans as we move forward into the new year. The Brazilian production numbers, again, for both corn and soybeans, we're watching soybeans probably the closest because it's a larger number. I think it'll take a little bit more time to see if there's going to be any major adjustments or changes. So what I'd really like to kind of take a step back and think about or talk about is our current export pace for corn, soybeans and wheat. And in particular, for corn, because if we look at the, for the last several years, kind of who has been buying corn from the United States, how much have they been buying? I tried to break this table down into kind of two different quadrants, and I'll explain it for corn. When I repeat this for soybeans and wheat, you'll have a general understanding. So the first four columns on the far left-hand side are yearly totals. So that would be the marketing year totals for these different crop marketing years. And just as a reminder for everybody, the marketing year for corn and soybeans start on September 1. So it's just just before harvest. And we think about, okay, how much inventory do we have bringing in from last year? How much are we going to produce? We add in some import importation to be able to get the total supply. And then we start subtracting out our usage. And again, usage for most of the crops, it spans the calendar year. That's why when we look at 2021-22, that would represent the crop that was harvested in 2021 and was being sold and marketed in 21 as well as into 2022. So that was last year's crop. So these are the totals for the 12 month period. And again, just to remind everybody, this is for corn. Mexico is typically our number one export destination. So all of the countries that are listed are ranked based off of last year's totals. So notice last year, Mexico is our number one customer, China was number two, Japan number three, et cetera. So I listed basically the top five or six countries for each of the major commodities. Now, going back two years, notice as we came out of the trade war, as we started looking at an expansion of exports into China, China came in and bought a lot more corn than we had originally expected. Last year that number was down. So when we look at the grand totals, this total in 2020-21, that marketing year, that was our record high. That's the high watermark. So last year, USDOs forecasting a slight decrease in our total export pace. A lot of that was because they didn't anticipate that China or expect that China would come in and be as aggressive a buyers as they had been the previous year. So now let's look at the two columns on the far right hand side. So these would be the total export commitments. So these would be the contracts for delivery into the global market. These are the announced sales that we've had. They may not have been delivered yet, but these are sales that have been announced running from September 1 through these dates. So this is last year's total, September 1 through December 9th. And this was the information we got this morning on the far right hand side. So now let's compare the export pace to this year versus the export pace we had last year at the same time. So this column right here is the grand total for the entire 12 month period. And this is just from September 1 through this first week in December. So very quickly, let's start talking about well, what are the changes? Do we say any major adjustments? Well, our friends from Mexico have been buying a little bit slower pace than last year, but we did get an announcement this morning after these totals were prepared that Mexico did come in and buy about another 100 million metric tons. So we could add about 100 on top of this, about 6.5 million metric ton versus 6.8 last year. Let's move to China. Again, last year China was still a pretty good customer of ours, but a lot of that was front loaded, meaning that they came in early after our harvest was completed and started buying a lot of US corn. Well, when we compare last year's number at this time versus this year's number at this time, again, I'm a dramatic drop off. So a lot of the change, a lot of this reduction in our current export pace is because China has not stepped in and bought US corn, at least not to the levels that they had previously. Now one on the sidebar, just a sidebar comment that I want everybody to be aware of, there was recently a change in the trade relations between Brazil and China that will allow Chinese companies, as well as Chinese governments, the government buying agencies, to be able to purchase Brazilian corn under less restrictions. So there were some pretty stiff restrictions that China had on the traceability of the corn that was being exported from Brazil into China and their certification process within Brazil. Now some of those rules and regulations have been relaxed, making it easier for China, the Chinese government buying agencies as well as private companies, to be able to purchase corn from Brazil. So Brazil is the second largest export of corn right behind the United States. US is still by far number one, but Brazil is number two when it comes to export volumes. So the big question people have is with this drop off in Chinese buying of US corn, how much of that is traced back to just that they may need less corn, they may be buying a total lower amount of corn off the global market versus the expectation they're going to be buying from Brazil rather than buying from the US. It's still a little bit early to tell which of those is going to be the dominant play. I suspect there's going to be some of both. So as we move forward, we're going to have to be watching and looking for will there be continued purchases by China of US corn? Because right now that export pace is well behind what we saw last year, which again was lower than the year before. Japan very steady customer. Again, they are down the pace, the rate at which they're buying is down from last year. In the case of Japan, I do think some of that is because of some of the logistical problems we had on the lower Mississippi River. That some of the Louisiana Gulf ports end up shipping a lot of corn into that Japanese market. I do think the fact that they had some problems with barge traffic and the low water levels have slowed some of those purchases and deliveries that made US corn a little bit more expensive than the Japanese were willing to pay. I do think they recognize that this is a timing issue. So in my personal opinion, I do think the Japanese will come in later probably after the first of the year and start buying some more US corn and will likely catch up to the pace that they have had over the last couple of years. Because when you look at the annual totals, they have been a pretty nice steady customer for us. Now we get into some of the smaller countries as far as purchasing volume, Colombia, Canada. Canada is well behind the pace that they had last year. Korea is probably pretty similar. So when we drop down to the bottom line, this is the big concern we have. When we look at how much corn we have sold at this time last year versus the numbers we're seeing right now, we're more than 50% less. And yes, a lot of that can be traced back to this drop off in Chinese buying, but not all of it. Only about half of that difference can be traced back to the Chinese market. The other half is everybody else. So yes, China's not buying like they did. They weren't as aggressive this year as they were last year. That is a large portion of that helps tell the story. But we also have to realize that a lot of the other countries that typically would be buying from the US at this time are very slow in their purchases. And again, I'm not 100% sure how much we can blame on the movement of grain through the Mississippi River levels and the fact that corn prices are high versus just corn prices are high enough that they're starting to ration use. So this is one of my big takeaways from today's session is we have to be watching corn exports very, very closely as we move into the 2023 calendar year. And in order for us to maintain the kind of price levels we're seeing domestically here in the United States for corn, in particular in the futures markets, but also then for cash levels and basis levels, these export sales numbers are going to become more and more important as we move through this calendar year or excuse me, the rest of this marketing year. Shifting to soybeans, slightly different story on soybeans. We've actually had a pretty good export pace so far this year. So again, same thing. The four columns on the left-hand side are the annual totals. The two columns on the far right-hand side are from September 1 through this first week in December. So when we compare last year's export pace versus this year's export pace at the same time, we're actually a little ahead of where we were last year. And a big chunk of that is because of some increased sales into that Chinese market. Now, again, when we look back at 2018, 2019, those two marketing years were heavily impacted by the trade war. So we really can't look at use those as a good reference point. But when we look at these numbers from the 2020 as well as 21 marketing years at about 35 million metric tonne and 30 million metric tonne, this 35 million metric tonne was near record export pace. So this 30 million metric tonne that we saw last year when we look over kind of a long-term history is actually pretty close to what China has been buying historically. So if we look at what's going on in the last several months, the Chinese have come in and been relatively heavy buyers of US soybeans. But again, I want to caution everybody, once that Brazilian crop starts harvesting, once they start harvesting in northern Brazil, some of this export pace, the rate at which we're selling soybeans, especially to China, is going to start to slow down and taper off. Also, just as a reminder, the Brazilians started planting very early this year. They had kind of a dry spring. They were able to get in the field very early. They had some very rapid planting progress. So then they got the seed in the ground really quickly. That's putting some really big expectations on yield and yield potential. However, that also means that if they have a typical growing season, they're also going to be able to start harvest earlier. So rather than looking at a Brazilian harvest that's maybe first part to mid-February is kind of hitting into the real peak or gut of their harvest, we're really looking, in my opinion, probably mid-January to late-January as when the harvest progress in Brazil is going to really pick up and start gaining speed. So the moral of the story is, yes, we've got some really good export pace right now. China is coming to the US to buy their soybeans. But I think a lot of people in the marketplace are talking about by the time we get to mid-January, maybe later January, we're going to start to cease that export buying shift from the US and get into the Brazilian crop. So our export window, the window of opportunity we have this year, might be a little bit shorter and tighter than what we've seen in the past. Our number two buyer of US soybeans has been Mexico. And again, when you look at the pace that they brought last year versus the pace they're at this year, we're getting some really good soybean sales into the Mexican market. Let's cross our fingers and hope that that maintains and that stays because if so, that would be a new record export levels of US soybeans into the Mexican market. So that would be helpful. The European Union has been a really sporadic buyer of US soybeans. If they're low priced enough for cheap enough, they will buy US soybeans and bring them into the European Union to be crushed and processed into soybean meal and vegetable oil. Their pace is a little bit above what we saw last year, but again, relatively little or small levels at this point in time. So when we go into some of our other countries, you can notice that that they're very similar pace and we come down to the bottom line. Our total export sales, when you add up all of the possible countries that have bought from us, even though it may not have been delivered yet, the purchases are ahead of the pace we had last year. And so what I'm really hoping is that this continues. Obviously, we'll have to wait to see how aggressively the Brazilian crop is marketed and how quickly our export sales drop off. So I think we do have a window where we're going to continue to have some good sales, but that window is closing relatively quickly. So again, watching very closely what's happening as we move forward. Shifting to wheat. Now this is all wheat. This is all classes of wheat blended together. Would be hard red winter wheat, this hard red spring, the white wheat, the Durham, the soft, soft red wheat all blended together. Mexico has typically been our number one customer followed pretty closely by the Philippines and Japan. Those are kind of the big three. When we look at all export sales for wheat, those big three are ahead of where they were last year, which is good. That's something we'd like to see. However, recognizing that last year our export sales for all wheat was relatively low. So we've been running in about 24 million metric ton range for the last several years as far as exports last year was a very disappointing year for us. And part of that was because we didn't have as big a spring wheat crop. We also had some lower winter wheat yields, which we didn't have as many bushels to sell. And so then again, because we don't have the bushels available, prices were a little bit higher. It was priced out of the global market. Somebody had to give up some of their purchasing. So when we look at the big three, our major customers, they're a little bit ahead of pace. Unfortunately, when we come down here to the total, so far our total wheat exports are a bit behind what we saw last year. And again, last year's number was a little bit disappointing. So with all of the, I guess, uncertainty going on right now with the Ukraine and Russia and the war that's going on, the ability of both Russia and Ukraine to be able to export their grain, as well as some production problems now coming out of Argentina because of the drought, their yield, their wheat yields keep ratcheting down just a little bit every time that there's a new report. Australia had a very large crop, but they had a lot of rain during the harvest time period. So some of that wheat is going to be in feed quality, not necessarily a milling quality wheat. So I do think as we go into this 2021, excuse me, into the 2023 calendar year, as we move, roll the clock over and we move into the calendar year 23, I do think we're going to start to see some more wheat sales. I just hope that they are strong enough and aggressive enough to be able to make up some of the difference. So we have a little bit better export season in US wheat. Getting to spring wheat only, the story is a little bit better for spring wheat. So if we isolate on just the spring wheat sales, again, these are the totals for the 12 month period. Philippines, Japan and Mexico are kind of the big three with the Philippines being by far our largest customer for US spring wheat. When we look at the totals last year again, was a little bit disappointing for spring wheat sales, but also recognized that we also had a drought. So the available bushels were down. When we look at total export sales this time this year, this would be from June 1. Now the calendar year, marketing year for wheat is a little bit different, starts on June 1. We're a little bit ahead of the pace that we were at last year when you look at the country by country breakdown, the Philippines are a little bit behind, Japan is right on pace, Mexico is a little bit ahead. A lot of this ends up to be these other miscellaneous countries that buy US spring wheat. So we're starting to get a little bit more interest as we have our supply chain is refilling, as spring wheat prices start to come down a little bit, becomes a little more affordable in the global markets. And then we start to see our export pace start to increase a bit. Now this is still not a terribly aggressive pace. I would just want to caution everybody. The other thing I want to remind you is that the Canadians also had a very good spring wheat crop. Their bushels were actually near normal when you look across the entire country. Their quality profile is in pretty good shape. So the Canadians are going to be major competitors for us again in the global spring wheat market. So there are available supplies. The question is, can we ship them out of the US relative to Canada? So it's looking a little bit better for spring wheat, but again, recognizing last year was not a very impressive export season. A couple more comments then I'm going to finish and I'll hand it off to Tim Petrie. Brian spent a little bit of time talking about rising interest rates. What does that mean kind of globally? It's not only here in the US that interest rates are going up, but also globally. I do want to caution everybody. Just to remind you is that as interest rates go up, that also increases the cost of carry, meaning the cost of holding grain in store starts to go up because that interest, that opportunity cost for the interest keeps chugging along as well. One of the most common questions I'm getting from this discussion about interest rates is, so what does that mean for exchange rates? What does that mean for the value of the US dollar? And this is where I want to throw one more caution in. The dollar index, this is a graphic of the dollar index. This is often quoted on the radio, or it's used in print as kind of a reference, a guideline for how is the US dollar doing relative to other currencies? Are we high priced or are we normally priced? And this just shows historically going back into the 1990s what that index has done. My caution in doing this is yes, that number, that index does influence market psychology, but please understand it's an index. So it's how is the US dollar compared to a bundle of other currencies? So I'm going to go back one slide. That bundle of other currencies are very, very heavily weighted towards the European countries. So the euro is 57%. The British pound is about 12%. The Swedish corona is about 4% and the Swiss franc is just under 4%. If you add all those up, about 77% of this index is made up of European currencies. So what happens in the Europe and the European economy relative to the United States has a really big impact on what this index does. My point, we don't sell a lot of agricultural products from the US into the European markets. Okay, so when we think about exchange rates and what is influencing the balance of trade or how easy is it for us to sell our US corn or US wheat into the global markets, we need to look at the major countries that are buying our products. So yes, the Japanese yen is part of that complex and yes, the Canadian dollars part of that complex, but the Mexican peso is not the Filipino currency is not, the Chinese yuan is not. We don't have anything that shows the relative rate of, for example, the Argentine peso or the Brazilian currency. So exchange rates are really from country to country. So I do want to caution you, yes, the exchange rates make a difference, but please don't get too wrapped up in the fact that, oh, our US dollar index is X, because that really isn't a very good indicator when it comes to agricultural trade. So with that, I will stop sharing. I will try and save my questions to the very end and hand things over to Tim Petrie. Good afternoon, everybody. Great to be with you. Today I want to talk a little bit about the meat industry and particularly records. We've been setting records in 2022 actually before that in some cases, but a lot of records this year and so that's going to be the theme. So I'm just going to start off with total meat and poultry production in the US and that purple arrow on the top is 2022. And so we set a record all time meat production this year. And also on an individual commodity basis, we set a record for beef and chicken in total. Swine production was down a little bit, pork production, just a hair off of a record that was set in 2020. So we're producing a lot of meat, the only exception. And by the way, that icon you see there that is a broken record. And so we'll see a lot of those icons in my presentation today. The down talking about lamb and veal also set a record, but it's on the opposite side. We had a record low lamb and veal production, but about everything else. And of course the total is what's important is at record level. So usually when I'm doing this presentation live, I ask the audience, if you have a background in economics, what does record high production mean in terms of prices? And usually I look out in the audience and see people showing thumbs down that usually record production would mean lower prices. So let's jump ahead. And, you know, if we're talking about cattle or beef, then competing meats are important or depends on whichever one you're interested in compared to the others. But interestingly enough, even though we had record meat production this year in record beef and chicken and total production, prices have also been relatively high at particularly on a weekly basis, not necessarily on an annual basis, but in the upper left hand corner, hog prices were record high back in July on a weekly basis off the pace a little bit from an annual basis, but they had record high weekly level go over the lamb prices were record high a year ago. Down in the lower left broiler prices reached record high this summer and will likely for the year. And of course, even influenza had something to do with that, but we're still going to have record chicken production this year in spite of avian influenza. And then on the bottom right hand side, turkey prices have been record high all year and we're just right before Thanksgiving. So we've got record high prices for a lot of commodities and record high production. And so in order to have these record high prices, of course, we have to make it up with demand. And so demand for meat has been very good and better than expected. In many respects, both the domestic demand and the export demand is very important to us as well. We are the largest exporter of beef and turkey in the U.S. and second only on the chicken side to Brazil. And I don't know if I've mentioned hogs or not or pork, but highest there. So export market is very, very important to us. And that's been very good as well. So let's get into the individual cattle market classes because we have not been at record high levels. And we were affected greatly by the drought the last couple of years. And so we expected originally a year or two ago for beef production to be falling because we've decreased the cow herd four straight years. But with the drought then we have slaughtered a lot more cows. Cow slaughter is up 12% this year. And actually fed steer slaughter has been down because we've got lower numbers. But because of fewer replacement heifers, in fact, on July 1st, we had the lowest number of replacement heifers on record going back to 93. So they're going into the feed lot. So heifer slaughter has been up about 5%. So that's what's given us the record high beef production and has kind of put a limit on prices with the more that we're selling there. But anyway, start off with fed steers and a lot of very busy slide here. And so basically I'm just going to forget about the last three years on the bottom and the red line there has been this year. And so fed cattle have average $20, 100 weight more than they did last year and have moved up throughout the entire year. We're up to right up about one just under 160 there last week. And we're at the highest level that we were back in 2015. Recall that 2014 was our record high for all market classes of cattle. So we're up to 2015. And so looking ahead, then let's look at the futures market. Those gold squares on the top are the 2023 live cattle futures. And so on the left hand side, you see our last record annual record high on fed steers was 153.84. That's the annual average for 2014. So if you look at those six futures contracts for next year, trading up there 155 to 160, I just averaged them out before we came on the air here and they average out to 158.50. So the futures market is saying we'll have record fed cattle prices next year. USD is a little bit more conservative. Still saying we'll have a record next year at last was the report USD forecast was 155.50, which would still be a record. And then way up in the top on the left hand side, there are the 2024 futures that are another $10 higher for 2024 starting out. And so it looks like a continued record year there. Of course, that's from a supply demand standpoint now and barring any uncertain or unpredictable events that come along. When we go down to the feeder cattle, we've had a good year on calves again, here's the 550 to six weight calves in North Dakota averaging $30 better than they did last year, the red line up there. But we're quite a ways off the pace for record prices as of now, although we are enjoying cyclically higher prices, the average North Dakota 550 to six weight steer calves in 2014 was $250. We're right at 110 now and we're likely do better next year. What's holding us back on the feeder cattle versus fed cattle, the record high fed cattle prices obviously going to be supportive. The two major things that affect calf and feeder cattle prices are fed steer prices and corn prices. And so fed cattle prices are going to be at record levels, but unfortunately not as high annually as 2012, but corn on a weekly basis did hit a record high earlier in the summer. And the calendar year average USDA average USDA corn price in 2014 was $4 of bushel and it's going to be $7 of bushel this year. So we've got $3 higher corn to deal with. Again, remember my old adage, change corn 10 cents of bushel, change calf prices of buck in the opposite direction. So we're further off from hitting record highs in calf prices, although we do expect them to be cyclically higher and just more on that in a minute, we'll hit to the heavier weight yearly and cattle then and kind of the same story there. We've been $20 higher than last year on the red line. Again, they're closer to the feedlot and the higher feed costs that they're experiencing. There's next year's futures up there, the eight futures contracts trading up there to begin the year next year 2023 at around 190 and getting up there closer to 210 by the end of the year. And so the 2014 record high average on these heavyweight yearlings was $208. The futures, those futures contracts average $195.75, about $196. So, you know, about a little over $10 under the historic high back in 2014. But again, the big thing here, we know we likely have record high fed cattle prices of what's corn going to be. And so I'm glad you're listening to Frayn there and talking about the exports and so on of corn. But anyway, that's the thing to watch for next year. But as of now, given what the 2023 corn futures looks like, it looks like we, although we'll be cyclically higher, we won't be quite at record levels on the now yearlings as well or like we are on the fed cattle. So here's a little bit longer picture then. And again, there's our record highs. This happens to be the blue line on the top, then are the calf prices in the red line are the yearlings in the bottom, later blue line are the fed steers. And so we're predicting the next several years to be cyclically higher. The actual numbers are showing down in the bottom right hand side there this year will average 200 on calves next year the prediction is 225. And then on up on 2024 again not at record levels we'd have to get up to 250 there for record. And then on the yearlings again 175 this year probably 195 next year the futures are right there right now and then again higher in 2024. Now, again, probably by 2025 and corn is the big thing there by 2025 not on here, we're likely to challenge those highs on the on the record highs on the feeder cattle. But you know, it basically depends on corn prices and then any other uncertain factors that come along. But anyway, since the cow herd has went down four straight years and we're still have 70% of the cow herd in drought don't know what's going to happen next year. It when it starts raining, and then we start keeping heifer calves back and sell a lot fewer cows beef production is going to drop sharply and and that's going to certainly spark prices so we know or we think that we are going to have record high calf and feeder cattle prices in the next few years probably are probable by 2025. But it could even be earlier in that depending on corn prices and so on. And we'll just have to wait and see. So with that wish you all happy holidays and hopefully this weather straightens around a little bit for you and let's go to stop sharing here and turn it over to Dave. Great thanks Tim. So I've been getting a lot of questions recently about diesel prices specifically and so I'm going to talk with a little bit of support about the diesel gasoline spread. So the observations been made pretty regularly by many is that diesel prices are high. And again what prices aren't high you know we're experiencing pretty good inflation including an energy food you know it's it's kind of there. I think one of the things that where it's coming from is that they're that the the price is higher significantly higher relative to gasoline that is that spread is very we might not use the word spread when we see it but we typically have in our mind some some common difference between gasoline and diesel prices and when it's outside of that range might take notice. And then obviously going along with that you know why is this happening and then for how long. So what I have here is a picture of gasoline prices diesel prices and then the difference. So the blue is ultra low sulfur diesel this is all from EIA so it's from the Midwest or pad four gasoline is that orange line and the spread isn't gray. And so we can see you know just looking at the the blue and the orange lines you know they they're all they move together mostly differences at different times and of course if we look at this this spread that'll show us what those differences are. And so typically and I always think that diesel is going to be more expensive than gasoline that certainly isn't always the case but it holds most times and then if we look to the far right you know into 2022 and especially in the last few months we see that that spread has has gotten large at the difference between the price of diesel and gasoline has increased to a level that we haven't seen in the last 15 years and actually longer than that. One thing I'd bring up here is you know these are Midwest prices these are somewhat indicative of what we might see in North Dakota the spread is large in much of the country but the behavior isn't exactly the same as it is here. So why is this happening there's a lot of a lot of things that kind of feed into this you know to me the biggest drivers are what's happening in Europe. So we have this historic shock to European energy markets with the war in Ukraine and there's just this high demand for energy imports in Europe natural gas, crude oil, refined products and the like. So that's driving up prices everywhere and then especially on the east coast because they're competing oftentimes for that same Brent oil. The other thing that's going on too that's really kind of you know just the seasonal thing is it is winter. Most of us can notice that looking out the window and heating oil which is essentially diesel fuel a variation diesel fuel is used for a lot of heating in the northeast and so it's in this period of high demand especially as things are cold and things will be cold. Unfortunately if you guys haven't heard when the the snow stops falling it's going to get bitterly cold so that's really not going to help this situation either. Another thing that feeds into this too is that east coast has little refining capacity so they're really getting squeezed. You have a lot of folks in Europe bidding up prices you have folks on the east coast bidding up prices for diesel specifically and you have to sit back and realize that gasoline is a related product but the markets are really different. So you know diesel fuel primarily is the fuel we use for freight that we use for industry that we use for agriculture gasoline is for passenger travel and you know the the demand for gasoline really fell off mid-summer and remains weak and especially relatively weaker and significantly weaker than than diesel relatively speaking so and that difference in the high demand for diesel and the low demand for gas is really you know driving what what you see and just to kind of read it out more so just a quick review of petroleum refining so you have a distillation column you put a barrel of of crude oil in and you get a variety of products and for the most part the the products that come out are dictated by the characteristics of the oil and the characteristics of the refinery you can't shift you know tremendous amounts of material into diesel even though that's most highly valued at the time. There are some tools that you can use there's some flexibility depending on the refineries outfitted but for the most part the hands are more or less tied in terms of the product that's coming out and that is is really important because you think that right now you know everybody wants more diesel but as you have more diesel you're bringing more gasoline to the market so that drives the spread you're increasing that supply of gasoline that has to be sold as a at a discount to clear the market and that's why you're seeing the significant difference. One thing to always note and people always miss this and it's not highly related to this but local markets local conditions are going to lead to differences in local prices and you can see that from different parts of town or driving down the highway you know where the price from one community or one station to the next is different because of those dynamics we're talking about what's happening more on the wholesale side that is pushed through to those local levels and the question is how long is this going to persist and so the first and best good news especially for agriculture is that the high prices of diesel should be relieved to some extent as spring approaches again because this is being driven by winter it's being driven by what's happening in Europe and again because they're experiencing winter by the time we get to March and April we'll see a decline in prices so I did have a the numbers for the New York Harbor futures for ultra low sulfur diesel was 30 cents less than it is for the current spot so that's good news one of the issues that persists is unless we you know enter severe recession and we see a significant downturn in freight movements which I would find surprising you know a lot of this is still driven by some structural issues that aren't going to be quickly addressed I don't know what's going to happen in Europe but I really don't see anyone building a refinery anywhere even though these economics would certainly support something like that if the conditions were to persist and other factors wouldn't negatively impact that type of decision but again just talking to a farmer who might be worried about prices there should be a little bit of relief come spring so going to be at relative highs just like much of energy is like a lot of other prices are in the current economy so with that that ends my part of the presentation and we're going to open it up for questions I do know that Frane had one so Frane if you want to go ahead and field that one and there might be another all right let me get my camera clicked back on here there we go so question that came in so what is the status of the trump china tariff situation so just to remind everybody can during the during the big trade war with the united states there was a series of import tariffs that the us put on on chinese products all of those tariffs are still in place so the tariffs that president trump put on on the importation of different basic inputs or basic products coming from china into the us has all of those tariffs are still in place the biden administration has put on additional restrictions so the difference between a tariff is you're just trying to increase the base price you know the the price that as it arrives and then it's basically an import tax that's put on before it enters the country that's the tariff piece the biden administration has actually put a ban on the importation or use of certain chinese technological products there are some new bands being put on on chips computer chips that have been manufactured in china that are that are going to be imported into the us as well as the sale of us computer chips going into the chinese economy so some of the the technology part of our trade between us and china is starting to get more much more complicated but the original tariffs that were put on are still in place and they're still in play thanks friend and we're already over time so i'm sure everybody's ready to go out and shovel since it's been an hour are there any last questions feel free to use the q and a tool of the chat feature does any any the presenters have any additional thoughts or questions for another presenter one one thing i would want to mention because it comes out occasionally is that these these high prices in energy or in any cases because industry is selfish right so the petroleum industry is selfish and that's just a horrible way of putting it they're they're working in their own interests which is what they're supposed to be doing they're actually required by law to do that and they're they they're working no differently or harder than they did prior to these prices going up it's just that market conditions have changed you know they're positioning themselves for it refining is is extremely profitable right now it had it hasn't always been and it probably won't be again in the future and eventually we're going to have a lot of stranded assets but you know when people say although those selfish folks are driving this that's really a a poor understanding of economics or at least a poor way to communicate it so we did have a couple things come in i don't know if you saw the one question is for you dave yeah so a question about an app for lower diesel prices so i'm not familiar with that one i'm familiar with others oftentimes there are tools like that you know i can't speak specifically to it you might be able to save a nickel or two and you're and probably the best way to put it is your mileage may vary i i i do think it makes sense that it you should take some time to look at these high prices as always in your own self-interest as a farmer to look for ways that you can reduce costs you know you always want to minimize your costs relative to your your production so you know if that might work right if if you do investigate that and you see that it does i'd love to hear more about it and if there's no more questions i want to thank everybody wish everybody a happy holidays please be safe over the next couple of days uh hopefully you did buy your presence before it gets cold next week and you have to pay the heating bill because it's going to be it's going to be a big one uh but with that thanks everybody for joining thanks uh frayne and tim for also presenting and we'll see you next year thanks all right happy holidays