 Welcome everybody, thank you for joining us today. This is the May 12th edition of the Agricultural Market Situation and Outlook. This is a monthly program put on by NDSU Extension and in particular the agribusiness section. So as we move forward, we're gonna go through the presentations. We ask that you kindly use either the chat or the Q&A function to ask any questions. We're gonna try and save those questions towards the very end and be able to answer them at that point after we've gone through all of the sessions or all of the different sections. The other thing is that if you have any questions, later on, don't hesitate to reach out to us and contact us. We will also recording this. So for reference, if you do wanna go back and see some of the previous recordings, you can certainly do that. So Dr. Brian Parment is not gonna be with us today. So I'll begin the session and talk a little bit about the implications from the May WASDE report, the one we got out just about two hours ago. This is my contact information. So I'm Fran Olson. I'm the crop economist and marketing specialist with NDSU Extension. Some interesting things. The May report is the first report that USDA makes forecasts for the new marketing year. So this is the first month we have indications and information on the forecast for the 2022-23 marketing year. Basically the crop that we're now starting to plant. We got an update from the old crop numbers from the last marketing year, 21-22, which I'll go through in a minute, but I think a lot of the interest and a lot of the questions are revolving around what is USDA projecting and expecting for 2022 marketing year. So let's begin with a recap a little bit of any changes and adjustments made for the old crop numbers. So I'm gonna go through several slides, they're laid out basically the same way. I've tried to compare what the pre-report industry estimates were. This is a survey of industry forecasting firms or individuals that do projections of independent projections, say what do you anticipate to see coming out of the USDA report? So large news agencies will poll or survey these folks and then they have an average trade estimate, which is listed and highlighted in blue at the very top of this table. We have the highest trade estimate, the lowest trade estimate. The highlighted in black towards the bottom is last month's information. So this is the forecast that USDA had last month versus the information we got today, which is highlighted in red on the very bottom. So for reference point, usually what we recommend is that you compare the blue number with the top row versus the red numbers on the bottom, because in many cases the trade is expecting to see some changes. The question is, is USDA gonna follow through with the numbers that are as large, either an increase or decrease as expected? So I just wanna quickly go through, this is again from the old crop numbers, this is from the crop that's still in the bin. This is a forecast of the ending stocks, the amount of grain we expect to have in the supply chain just before harvest. So when we start comparing the numbers all wheat, there was a slight reduction. So we came out with some lower wheat numbers, lower wheat ending stocks numbers than had first been expected. And that is one of the reasons we're getting some of the rally in the wheat market today, that's only a portion of it. I'll talk about more details in a moment, but that also kicked us off. So our old crop expectations are a little bit smaller than we had expected. For the corn numbers, I think the private estimates were looking for a slight decrease. They were expecting something, I think a little bit higher exports numbers. When you compare this month versus last month, it's essentially unchanged. So USDA didn't make any changes in the old crop corn balance sheet. For soybeans, there was some reductions. And again, the reduction that we saw relative to what the, from relative to last month. So the black line versus the red one, we were expecting to see a reduction. The reduction wasn't quite as large as what the trade is expecting. So if you compare the blue number to the red number, there was a reduction, but not quite as large as what the trade had expected. And most of those changes came in the form of some change or shifting in export numbers. Now, as we look forward, so that's kind of a recap very quickly of old crop. Now, again, most of the interest is in the new crop numbers. So May is also one of the first months we get an update for the production forecast for winter wheat by class or by category. So again, the blue line on top is what the trade was expecting to see. The red line on the bottom is what we actually received or what we got in the report. We did have, again, as a reference point numbers from last year. This would be for 2022 wheat production relative to the black line, which is 2021 wheat production. So if you look at all wheat, the forecast for all wheat production was actually significantly lower than what the trade was expecting. And again, this is also part of the reason compiled on top of lower ending stops from last year that we're starting to see an increase or a rally in the wheat market today. Most of that reduction, if you notice the hard red winter wheat column, which is a third column over, let me use my arrow here. If we're looking at this column for hard red winter wheat, most of the reduction in those numbers came from that hard red winter wheat category. And a significant portion of that was because of lower forecasted yields in total production out of Kansas and Oklahoma. So again, when you look at what the trade was expecting versus what we actually got from the USDA forecasts, pretty significant change relative to where we had been before. Now the soft red winter wheat numbers, which would be more of the Missouri, Southern Illinois, Ohio kind of winter wheat. We also have some soft red winter wheat in Michigan that's produced. Very, very similar to what the trade was expecting, a little bit lower than last year, but well within the trade range. For white wheat, now again, white wheat, the winter portion of white wheat is also both soft white as well as hard white winter wheat. Those numbers actually came up a little higher than expected, but the white wheat market is actually a very specialized area and we don't have a futures market for it. So when we look at what happens in the futures market today for hard red winter wheat, soft red winter wheat as well as spring wheat because there's some spillover effects, we're looking at a response to lower carryover stock from last year as well as now lower than expected production numbers. Shifting into corn and soybeans. Again, we're looking forward into the 2022 year production year. This is the first time that USDA is putting some projections together for both production and consumption for 2022. I wanna be a little bit cautious because they are going to use for the planted acreage numbers as well as harvested acreage. They're gonna use information from that March 31 planting intentions report. So that March report for planted acreage, they make an adjustment for harvested acreage based on kind of historical relationships. So the really, I think the biggest wildcard in the equation was what is USDA going to use for a yield forecast or a yield projection? So if we compare not only corn but also soybeans then between what the trade was expecting highlighted in blue versus what the red number is highlighted in on the very bottom, we noticed that USDA did come out with us a bit lower national average corn yield than expected. So if you look at the trade estimate about 180 bushels per acre, a national average is the trend line yield. So if you look back the last 30 years and you do a trend line, it comes out to be at about 180 bushels per acre. USDA did lower that a bit. And I think part of that is because of the slow planting progress as well as not only delayed planting up here in the Northern Plains but also into the corn belt. When we look at soybeans, again, the yield forecast or projections that the trade came out with versus what the initial USDA forecast is very, very similar. Again, that 51.5 bushels per acre is about a trend line yield. So when you do the math on plant harvested acreage and you plug in these yield numbers, you come up with those forecasted total production. So on corn, total production numbers actually a bit lower than what the trade is expecting. Again, the reason that we had a little bit of a lift in the corn market after the port came out. On the soybean side, I would consider that relatively neutral. It's very close to the trade estimate and well within the trade range. So when we put all of this together, that's the production side, but we also look at the consumption side. And when you take the production less the consumption, here's the at least initial forecast for ending stocks. Again, the amount of grain we're gonna have left in the supply chain just before harvest now of 2023. So we're looking quite a ways into the future. So there's gonna be, especially for both production and the consumption, there's gonna be some I guess room for adjustment as we go through the rest of the growing season. So if we look at what the trade is expecting and the top row and blue versus what they actually came out in the report on the very red on the very bottom, we do see that wheat ending stocks are expected to be up a little bit from what the trade was expecting. Now, again, this is relative to what we expected to see. It was a little bit higher than what we're expecting. The majority of that was because USDA did cut or reduce their forecast for wheat exports. And again, I think that part of that is because of the higher prices we see in today's marketplace. But again, we'll have to wait to see how the export pace for wheat continues throughout the rest of the growing season. For corn ending stocks numbers again, very, very close in my opinion, what the trade is expecting versus what we actually saw. Again, just a small amount, a small amount of difference rounding here in my opinion of well within the trading range when we looked at the same thing for soybeans, the average trade estimate came out very, very close to what the trade was expecting. Now, I wanna go back half a step. Remember we had corn where the national average corn yield was below what the trade is expecting but our ending stocks ended up to be very similar which implies or suggests that there was some kind of reduction then in the forecast for consumption. And to me, this is a little bit of a surprise. USDA did reduce their forecast for feed consumption, feed and residual when we compare the number they forecasted for this new crop year versus what they were forecasting for the old crop 2021. There was in my opinion a pretty large reduction. So again, we'll wait to see as we move through time if USDA starts adjusting that. But I guess that was a bit of surprises I went through the numbers. Just a really quick update on South American production. Again, now this will be for the old crop numbers. This is for the harvest in Brazil and Argentina that's basically completed. I think the only number that's really yet to be determined is the corn number for Brazil because Brazil has both a first crop and a second crop corn. The second crop corn harvest has not been completed yet. There are some very dry conditions now showing up in Central and Southern Brazil which will have an impact on corn production on corn yield and yield forecasts. So far, it based on when you compare it again the red line on the very bottom versus the number we had last month there was really essentially no change in the Brazilian corn forecast. I do think the traders expecting to see a slight reduction because of those weather conditions. I do expect that USDA will eventually catch up to what the trade is thinking but again, it might take them a little bit longer time. So just a brief update on the corn situation in particular coming out of South America. The other thing I wanna comment on and then I'll hand it over to Tim Petrie in a couple of slides here is when you looked at the USDA chief economist briefing report. So every time before the USDA releases the information to the public for both the production numbers as well as the WASDE report, the supply demand estimates. They have a special briefing for the chief economist to review all the information, summarize it and they have made those in the last several years made those briefing reports public. So we get an idea of some of the things that not only the chief economist is seeing but also what some of the forecasters are talking about. And in this last briefing report we also provided some, I guess a bit more specifics on the assumptions that USDA are making regarding the size and production capacity of Ukraine. And I know that is one of those issues we're really still struggling with on how big of a potential reduction are we looking at for 2022 production coming out of Ukraine? So I wanted to briefly review kind of what the current assumption base is within the USDA forecasting models and what they're putting together just for a reference point. So they are estimating when we look at total planted area looking at about a 30% reduction that's their current base estimate. Now this reduction includes the losses in area due to mined fields. Those fields that are unworkable because of bomb craters or debris fields that cannot be planted due to lack of seed and labor because that is one of the two of the areas that are in short supply right now is again the seed as well as labor to be able to put the crop in. The Ukrainian Ministry of Agriculture has made an estimate that the fuel availability is about 82% of normal. So again, fuel supplies relatively tight mainly because of the war and the war effort and a lot of the fuel being diverted to the military actions. Now at least within the current forecast for USDA they're looking at yield estimates similar to 2020. Excuse me. So this would be the yield per acre or yield per hectare. So most of right now the thought process is the reduction in production will primarily come from a loss in planted area not necessarily yet a loss in yield and yield potential. Now I do expect as we move through the rest of the growing season we get a better idea of weather conditions. Obviously these estimates will be changing and updated. When we look at projected export levels now you have to kind of dig through the information a little bit differently and look at some of the specific tables. I did dig through and say, well, what is USDA forecasting for export amounts, export volumes out of your crane when we compare 2021 versus the 2022? And if you look across for wheat they're looking at estimating right now about a 47% reduction in export wheat volumes. So they may be able to produce a crop but are they actually gonna be able to get it sold and shipped? So that's a pretty significant cut. The other one that obviously impacted the corn market today is the reduction in corn exports. And again, excuse me, Ukraine is about the fourth largest corn exporter in the globe before the war. Now obviously since the war has occurred that major change in that they're looking at about a 61% reduction in corn exports. Very heavy reduction. Where's that additional corn are gonna come from is really an open-ended question. I also did some digging and looked at sunflower oil exports because the vegetable oil market right now is really very hot. We're seeing some very large or high global as well as domestic vegetable oil prices. So when we look at the, again, USDA's forecasts are looking at about a 19, almost 20% reduction in exportable stocks or exportable ability for the sunflower oil. They also prepared some maps. These are really interesting. They prepared some maps where they take and overlaid where's the current military action relative to where the crop is being produced. So in each one of these different obelisks or these different regions within Ukraine they have overlaid where's the current military activity? So the darker the green that means there's more bushels or volume produced. The lighter hatched areas especially in these northern regions is where there were military conflicts before but the Russians have retreated versus these heavily-fatched or cross-hatched areas down here is where there's still active military action. So when we're looking at total planted area what USDA noticed in the bottom right-hand corner is forecasting about 6.84 million hectares. Again, a slight reduction in their ability to both plant and harvest. The other interesting thing to note is also where are those major or not major where are the port facilities that can have the ability to be able to load and transit for grains? And they're highlighted in these small yellow dots. Okay, so these are not only the major export terminals but also some of the smaller export terminals. So you get a general idea now of overlaying where's the military action on top of where's winter wheat being produced? Again, recognizing this is winter wheat so it's currently growing, that was planted last fall. This is the same picture, the same graphic then for corn production. And notice that the corn production tends to be a little bit further north in the country, especially when we get into those heavily-producing areas, those areas that have the higher total production volumes. And again, you can see where right now the challenge is not gonna be necessarily the yield portion of it but it's going to be the planted area and then again the ability to be able to export those crops. And then my last slide is the same thing for sunflowers. Where are sunflowers planted? Where are they harvested? Where are the major production regions? And you can see that it's more in the central portion of the country. There are areas that are currently being impacted with the conflict, with active military action but there are areas of course that are being seeded and farmed as normally as possible. So with that, I will stop my presentation and switch things over and allow Tim to go. So I appreciate your timeliness and comments and we'll look forward to questions in a minute. Good afternoon, everybody. Tim Petrie and you extension livestock marketing economist gonna mainly concentrate on cattle today. Sometimes I do all the others but more of a concentration on cattle particularly for the summer grazing season here. So a lot of times I do start off with fed cattle because the two things that affect feeder cattle the most are fed cattle prices and then corn prices. So I'm gonna talk about both of those and what prices are doing. Again, most of you have heard this before but any newcomers just on this chart spend a little bit more time on the key because all my charts are keyed the same way. I like to put three years on the chart of three past years because if it happened in the last three years I guess it could happen again and then put the current year. So the green line is 2019 purple 2020 the lighter blue is 2021 and then always red is 2022. So just looking at the chart, mainly concentrate on the red line what they're doing this year. And we've been somewhat stagnant this year but at quite a bit higher prices than last year. In fact, last week's fed cattle, five area fed cattle prices was the highest price since August 2015 there at 143.42 and actually you go down to the blue line that's $25 higher than last year. And of course our expectations were for higher prices because we reduced the beef cow herds three straight years and this year will be the fourth year and USDA is predicting for the first time in a number of years lower beef production this year as well as lower pork production as well on the lamb production on the competing meat side. So lower supplies were positive for prices and that has been occurring. So I know a lot of you it doesn't seem like prices are high because of all the other issues with particularly with the blizzard and the corn prices going up and inflation and all those others but we have seen a nice rebound in cattle prices. The red squares there then are what the futures market is saying for the rest of the year starting with the June futures and usually seasonally cattle do go down into June and August when we have the peak slaughter of the previous year's calf crop and then rebound into the end of the year and so you see the futures are signifying that there. These are yesterday's closing prices and they're off a little bit again today but for June then we were there at a little bit over 133 and the futures market there is taking some seasonal risk premium. We could do better than that we're really watching inflation closely and gasoline prices and a consumer stop and fill up their tanks with gas and get sticker shock and then go to the store and probably don't feel as much like buying a higher priced beef cut as you know it's been good for hamburger and it's been good for chicken but so watching that closely but anyway, I would be in agreement with that still throughout the year above last year and then going to next year are the orange squares at the top of the chart there averaging over 150 which again would bring us up another $10, $12 higher than this year again simply based on lower supplies lower calf crops and lower beef supplies and competing meat supplies for that matter but again inflation is a concern and a lot of issues going on there. We're gonna start on the feeder cattle side with last week's market report and then I could talk about this slide for an hour with all the different marketing alternatives or might be and so on but just gonna kind of give you a quick overview. Again, this was for last week at the three markets at USDA reports that's Napoleon and Whitmandan and Dickinson. And so we had a pretty good movement last week towards the top there under current week over 4,000 heads sold compared to last year about 1,200 and so there was talk last fall at all the calves because of the drought moving the phone we wouldn't have any left by spring but we've seen quite normal selling receipts throughout 2022 and so calves were backgrounded and held over. You start with the stairs on the left and then the heifers are on the right but just go on down. I'm not gonna cover all these numbers and you can come back and see them when if you want to do that or you can get the market report from the USDA AMS website but start there at the top purple line. You know, my next chart I'm gonna show you calf prices averaged these are 550 to six weight calves averaged to 1178 last week but again a wide range in prices there you see 196 on the low to 217. That's a $21 range in prices. So, you know, $120 a head difference there. So I do averages but I realized that wide range just go under below that. You know, one of the problems now is that there are some fleshy cattle coming in and you know, fleshy cattle get a discount and with eight buck corn do not get the cattle too fleshy because you get a discount at the market plus you've got to have expensive feed. So again, just a caution there go down to the further down purple one then and you know, our average on 758 last week at those three markets was just under 159 there. But again, you've got a $19 range there about a $150 a head difference there. And so, you know, kind of I tell you that if you're selling cattle obviously you want to be on the top side but if you're buying maybe going down and getting some cheaper ones might be something to consider for if you're going to do some summer grazing or something that we'll talk about in a minute. And then on the bottom on the stairs you see, I just picked that to correspond with heifers over there but you know, kind of the top of those 850 to nine weight steers there, the top was about 155. Now I'm going to switch over to the heifer side and we do keep and background a lot of heifers and develop replacement heifers in North Dakota in fact, just on January 1st of this year we had the eighth largest number of replacement heifers ever going back to 1920 in spite of the most severe drought since 1988. And so the reason we do that of course is because heifers are severely discounted in the fall and still are now maybe $30 under stairs in the fall. And by now if you do the right thing and with heifers you know, they'll sell for the top end of steers there. So if you want more on that I have that agriculture by the numbers. I think all of you that are on this listserv received our newsletter that just came out and I have a long column more on that all devoted to heifers there if you want to know more on that. So I'll move into the calves that I talked about last time seeing, you know, similar to Fed cattle we went above last year at the middle of last year and then significantly higher throughout the year here as we would expect with again the calf drop going down three years and less to sell there. Then seen a nice spark in calf prices here the last few weeks, you know, we've got that's mainly due to even though corn is going up it's due to the moisture conditions and summer grazing potential. I just talked to a counterpart of mine down in Oklahoma on Monday and they're still showing up particularly in Western Oklahoma is being pretty dry but he said they got some nice rain there and that sparked their market down at Oklahoma City and thinking they're going to get some green grass so, you know, you know, prices there again probably I think about 47 almost $50 higher than last year at this time. Last year in this, that's time on those calves that blue line we took a nose dive because it was so dry here. We had hot, wind, dry, dirt blowing and everything else so that hurt the demand for calves. And then again, I just show you that range there. More importantly, I guess we're looking ahead to fall and what's our expectations there. And again, you know, corn is the big thing we'll talk about that in a minute and fed cattle but right now I'm kind of going, you know seasonally we do bring them down the middle October this is the last three years there was the worst time to sell calves it's actually four years in a row I don't have the fourth year in this chart so seeing like I think we will bring them down but I'm kind of shooting for that $192 range in prices now and then we'll have to see what happens with fed cattle and corn as we go along and maybe refer more to that when we get into the feeder cattle futures chart and so on. So now we're going to kind of switch to corn. Again, we have that opposite relationship between calves and corn, change corn 10 cents and change feeder cattle a dollar in the opposite direction. So in this chart, I have May through yesterday's close May feeder cattle futures and May corn futures. Both of those have changed today as Frane talked about, you know, corn and the last I looked is the fall corn at least is up a 13, 14 cents. And the nearby this May feeder cattle was down about a dollar and a half I guess but the distant feeder cattle now are down another $3 today just opposite of that corn going. So go back on the bottom there where you see 15 I'd like to go back to February 15th because that's right pre-war and before we saw the big run up in corn prices and feeder cattle going down. So on February 15th, May feeder cattle futures were right at 177. That was the expected price for 800 pound steers and we're usually right on that. In fact, a little above that North Dakota. So we were expecting 177 cattle by now. And, you know, and like, you know, we're as we'll see in the chart that I showed you in a minute we're down there at about 159. And so, you know, corn was 637 on February 15th two months ago, feeder cattle about 177 and yesterday feeder cattle had plummeted down to 158, 15 and now another buck or so off of that corn went up at the upper left-hand side of the chart in green there was yesterday's closing corn at 802 and a quarter. So see that opposite relationship why are feeder cattle so volatile? Well, because corn is so volatile. So, you know, I'll probably expect that to continue as we see how many acres we get in and Ron's going to talk about PP in a minute and so on and do we get the corn acres in and how do corn prices respond? So we can certainly expect that volatility to continue. Here is the heavier 800 pound steers again the same story about mid-year they went above the last couple of years and doing better with the lower supplies and we haven't had that big rally like we saw on calves on the red line there because feeder cattle are, you know these are what's placed into feedlots and the feedlots are dealing with corn and so on and the line looks more like fed cattle being kind of just stagnant across there as fed cattle were to and corn going up. But again, still above last year which is the good news I guess seems like they're not high but to $24 above where they were last year and then the red squares there are the futures market and of course may futures are right there about where the market is now right there at just under 160 but still the futures market is saying improvement in these heavy weight cattle by fall and you know up to 170 there in August and up almost to 180 by November bees again quite a bit higher than last year and so we'll have to see. On the left hand side of the chart those orange there are next year's futures again we expect everybody's expecting prices to be higher next year with the lower supplies the rest of those orange lines up there they change things up and if you go down to the bottom right hand on the chart those are what futures were back on February 15th like I just talked about. So there you know the May futures again just back on February 15th were $19 higher so we were expecting cattle to be 180 now and then look at by fall you know they're up at 190 and I'm gonna talk just kind of remember that 190 and some of these things because I'm gonna mention that again you know they're off $11 now and off another I don't know if they're gonna end up $3 down or not but today with corn but you know there are expectations that has declined with those higher corn prices. So I'll talk a little bit about summer grazing on our website, on my website to the livestock economics website I have a summer grazing budget I'm not gonna go through all these numbers but just kind of you know highlight them and get down to maybe talking about some price, risk protection and how much you know since we looks like we're gonna have grass in North Dakota of what the potential might be just start off their course pasture outside of the cost of the calf is the biggest thing and so this is just my estimate I've had to change this twice here in the last couple of weeks and might have to change it again as prices are going down but anyway on the right hand side this is an Excel spreadsheet so you put your own numbers in here and you know can take it to your lender and discuss it with your lender and so on or do your own budgeting on the right hand side but these are just some estimates that I go by so you know go down to the kind of go down to the bottom there with my estimates I just brought in a $200 calf and then it allows you to just under that purple arrow on the left on K there it allows you to put in a selling price so I just put in a 173 selling price for September how I got that is just followed the purple arrow down again September futures were at 173, 17 yesterday and actually I did this a week ago so I was under what the futures were then but I just use that and you know given that price looks like $120 based on my assumptions there and again you have to do your own one and then the spreadsheet automatically computes a 10% higher selling price and a 10% lower selling price for you just to give you that idea and so a 10% higher selling price was 190 that's where futures were two months ago so that conceivably of corn all of a sudden fell out of bed or fed cattle increase that would be I suppose possible but not really probable now the other thing is if they're 10% lower than our expected selling price it brings it down to about 155 follow that area over and that's where they are about now so they're about that now in order for them to be up at 73, 173 we're gonna have to have higher fed cattle or lower corn or both so what that tells me is certainly price risk management maybe something you can want to consider if you're gonna summer graze because at the current market on 800 pound steers we'd lose about $16 given my budget so that's just all something for you to do your own budgeting and talk to your lender so talking about price risk management just to end up here I just brought the livestock risk protection insurance over this came out yesterday afternoon again around 4.30 was good till nine this morning but on the top of those green circle things are probably the most important things to discuss here if you want more information on LRP I'd be glad to do it see your county agent and extension agent and be happy to provide a longer version but yesterday for September 9th maturity could have locked in almost 171 the premium that you would have to pay as a producer is about $5 so fairly expensive I kind of like to say since you're buying insurance here we don't buy insurance hoping to collect we hope the market goes up to 190 like it was just a couple months ago the expectation but what LRP does is it allows us to put in a floor price but leave the top side open and so when you buy insurance maybe I suppose the chance of collecting would be higher at these higher numbers but go back here to the budget and where that arrow is on the left hand side again based on my assumptions here we had a break even of about 157.69 so if you wanna protect that you can go down to the bottom of this chart they USDA lower their offering prices by all the way starting at 170 and then 170.75 will offer to $2 less all the way down I skipped a bunch there but I looked at 158.75 you're still a buck above your break even and you've lowered your premium down to a buck 50 but again, these are all issues for you to do your own budgeting and to discuss with your lender and so on but the market is really volatile and we don't know what a corn is gonna do and so on so if you are summer grazing certainly I would at least consider some price risk management so with that let's go see what Ron has to say if we're gonna have any prevent planning and if we're gonna be able to get our corn crop in. Okay, good afternoon everybody Ron Haugen farm management with NDSU and I'm gonna talk about prevent plant of course that's on everybody's mind now with all the rain we're having and there's a lot of problems out there are we gonna get more rain and it kind of appears there's a big blast coming in again in the next day or today and maybe tomorrow and then it looks actually a little better the next week cooler but a little better as far as participation goes. So I just wanted to show you a few slides here of where we're sitting this is very hard you can't really read this but it's basically in the Eastern part of the state there's about the 400 to 600% of normal precipitation actual mounts are about between four to seven inches of rain in some places. So things are really getting wet out there. Here's another chart that shows kind of a in the last 30 days in this area right here was actually the wettest area then into Trail County and part of steel and parts of Grand Forks County that's actually about 600% of normal total accumulation you can see this wet area here all in the Western part of the state things have actually improved as far as a drought goes so we really don't know what's gonna happen there if they're gonna get enough to produce a hay crop this year or not. Here again in the last shows in the last 60 days in the last 90 days and you can kind of see how things have progressed here as far as wetter areas throughout the state. So it's a pretty wide area that are gonna have water problems this year and we're getting late in the year and the question is what are we gonna do? Are we gonna get the crop in? Are we gonna try get some prevent plant insurance or what decisions do we need to make? I wanted to talk about our prevent plant analysis tool some of you may have used this before and it was developed to help producers make a decision on what to do it just uses partial budgeting and it kind of helps you decide if it's better to just take it when it gets where it's when it's getting so late is it better to take your insurance payment or is it better to plant a later crop and have some risks there about getting a crop but probably a lower yield and basically you enter in your estimated information as far as your production, your APH and coverage levels and maintenance costs for the PEP as well. And here is the website where you can act the link where you can actually find that on the NDSU Extension website. And I just took some screenshots here of the it's an Excel program. I just kind of go through this and it's very simple. All you need to do is put information in the yellow areas and everything else is pretty much calculated for you. You have an option of choosing various crops. So in this example, we just chose spring wheat. We put in an APH of 50 bushels put in a coverage level of 75. And then of course it's too late now but if you haven't bought up your prevent plant insurance for most crops it's 60% of your coverage level but you can buy up another 5% for a little more coverage on your prevent plant. Corn and canola are 55% and you can buy up another 5% dry beans are 50% and you can buy up another 5%. And the closing date of course was March 15. So if you didn't do that you're pretty much stuck for what you have. This program will automatically pull in the spring prices. You can put some information here on the cost of maintaining your prevent plant. You're gonna have to keep the weeds down and there's gonna be some maintenance costs there. Put in your own numbers. The second part of the program here, there again, we picked, going back, we picked wheat here and this would be, and the second part you would act, if you think you're gonna plant your wheat very late then you would pick wheat here or you could probably switch it to another crop. And for this example, we just pretend we're switching it to soybeans instead of planting that wheat we're thinking it's getting too late for wheat. Then we get 38 for the APH. What kind of policy is it? A revenue policy, your coverage level and then it brings in the price. You have to make some estimates on what the harvest price is gonna be, put in whatever numbers you wish, how many days late it's gonna be if you're gonna have a yield drop or not and expected market price. And then all your various costs associated with that. And based on this partial budgeting, a positive number indicates it's a greater return from collecting insurance and maintaining that than seeding. A negative number shows there's a loss from prevent plant relative to planting a crop. And so when you plug in all your numbers whether it's positive or negative, that's what it compares. So it's a pretty easy program to use but of course with any computer program, garbage in, garbage out, you're making a lot of estimates and to come up with an estimate. I wanna make mention too then when you pick what crop that you are going to collect insurance on, if you do, you do not have to necessarily pick the crop that you were planning to plant there. The crop insurance rules allow you to pick maybe a more valuable crop, but you can't exceed your history. You check with your agent on all the details on those rules. It's a little hard to read this, but we get a lot of questions on this. If you are gonna be planting a late crop, if I'll just read this to you, the revenue or yield guarantee is reduced each day the crop is planted after the late planting date. And in this software that we have, we have another tab in the Excel program where you can click on and look up your county and see what the various dates are for the crops in your county. It varies by county. For example, sunflowers, I think are June 15th for almost every county. For wheat, it's May 31st for most counties and June 5th for some southern and southern and eastern counties. Canola is reduced by 1% per day for the first five days and 2% after that. Other crops are reduced 1% per day as far as peas and lentils up to 20 days for sunflowers, 25 days for most other crops. Now, this is what they call the late planting period. If you plant your crop within that late planting period then your recoverage is reduced accordingly. But if you plant after that late planting period this is something to think about, then your coverage gets reduced to your prevent plant coverage just automatically gets lowered that much. There's a couple of notes here I wanted to point out. There could be a benefit to actually getting a crop in the ground because it might suck out some of the moisture because if you didn't plant the crop or have anything grown there it's probably gonna be just as wet the next year. And also if you do use prevent planting that does not affect your APH but if you plant a crop and get a low yield that will be used in your APH calculation. So these are a lot of things that producers are considering at this time and we'll have to see what happens with the weather and it's tough decisions to make here but we just wanted to make you aware that we have this available for producers to use. This also we have a chart and a table based on the information that spits out of this program. So if you wanna find it instead of giving you a link I find it easier just to click on our get to our webpage, click on egg hub click on farm management go down to the bottom and find it. And as always keep your crop insurance agent informed if you think you're gonna have PPE they usually want you to file a probable prevent plant and just keep in touch with your agent at all times. So with that I will entertain questions at the end and I'll turn it over to David. Great thanks Ron. Go ahead and get started here. Dave Rippling our Bioenergy Economic Specialist meeting you this afternoon from the Dickinson Research Extension Center just some general comments about what's going on and energy really broadly starting first with inflation with Brian gone we didn't touch on inflation too much but new numbers were out yesterday for April down a bit to 8.3% from 8.6 over the year previous. Here in this slide I show it broken down by major categories really focusing on the energy category where we've seen a 30% increase in prices in the last year. And so obviously that has serious ramifications for the economy more broadly even though in general the economy is doing relatively well. Talked about this the last time I was on a few months ago we are looking at very high prices nationally for energy including gasoline these are national gasoline prices from AAA from today. It's important to know too you know some of these prices are high or in some places record high but if you adjust for inflation we're actually not even close to the highs that we saw about a decade ago. At the same time we're not into the driving season the summer driving season and we're gonna see that conversion over now to those summer blends as well as expected increased demand for passenger travel for gasoline to power those vehicles during the summer driving season and again with high income and people coming off of COVID it's expected that there's gonna be significant travel this summer. And going along with all of this too many of you are familiar with we've seen about a 50% increase in the price of used vehicles here since the bottom just after COVID struck this is expected to persist for quite some time and really there's a bit of reasoning of course we're behind demand is high we've unfulfilled demand kind of carrying over people looking for those vehicles which are expensive we're seeing little production a lot of vehicles sitting in parking lots outside of factories without certain ships or even being sold without ships or production and generally just being slowed down a bit trying to catch up. It's important to know too if you think about when this is gonna be resolved it's actually gonna take a few years and again this is really looking at used cars one of the biggest sources of used cars is actually from that rental market and you think they're short now they're gonna have to get those vehicles kind of filled up and then it's gonna take a year or so for those to come back out onto the used car market and so really we're probably looking at 2024, 25 before things really relax in terms of price although if you do see from the chart we've actually seen it down from that high in terms of the price increase from the previous year. Talked a lot about preventive plants I think back to 2019 and especially the corn crop this is some figures from FarmDoc at the University of Illinois just looking at where we're at from last week so that week ending may first at that far left map versus the five year average and then that difference on the right and clearly plantings are behind across the board including here and one of the things I looked at is pulling up that 2019 data a lot of that crop did get in the ground and the yields were not that bad they were down significantly from 2018 where we had a very strong year to basically just a bit below trend line we need to get the crop in the ground and growing to meet the various uses, the demand that's sitting there waiting for that new crop and here's just a chart kind of showing those numbers that long-term national corn yield for the United States looking really closely at ethanol the energy markets in general are very strong gasoline prices are high, gasoline feedstocks the material ready for blending in ethanol are seeing really high support in some cases record prices, if we look at what that means to our South Dakota corn ethanol refinery they're making some pretty good money on a per gallon basis clearly covering all of their costs and doing well and again, this is really driven by that strong that demand pull, prices are very high and again, this does incorporate in South Dakota almost $8 corn in the spot market and if we look at production data from USDOE from the Energy Information Administration you can see that production is actually is pretty strong, pretty steady as we get ready for the driving season supplies are where they are and we're gonna learn a lot as things go forward and we'll see if that demand for gasoline with ethanol is part of that blend ends up being the stronger issue or if that price of corn will end up being the primary driver. It's a news from a couple weeks ago the administration, the president did issue an emergency waiver allowing the sale of E-15 in non-containment states so that allows them to sell E-15 ignoring the reed vapor pressure issue. This is nice, it does expand the market but again, it's a very small impact is gonna be expected from this really to build those markets you need long-term availability and that's not necessarily what this provides but it does put those products in the market and actually if you go back to the previous slide look at that price of ethanol in South Dakota relative to gasoline, wholesale prices, rack prices it's really selling up even just a little bit higher than the fuel or the energy the price of energy based on that energy density of ethanol so it's not necessarily gonna be a great driver of sales and of course in the past we have seen times where the price of ethanol is at a significant discount low enough that it's value on an energy basis is less than that of gasoline and again, we're not there right now. Another just quick slide talking about vegetable oil we've experienced a lot of this you see as a farmer, as a lender in agriculture typically we're working at prices again these are soybean prices from CME we're looking at 90 cent vegetable oil that's by far record high being driven by a number of factors but I really look at this renewable diesel opportunity as being again, a major demand poll for that product and again, we're really looking at this time and the math is getting closer and closer if we're not there where really soybeans are being traded on the basis of oil and not protein just one last slide question oftentimes received we've seen very high oil prices and not much activity in terms of additional production nationally including in North Dakota and the Bakken and here's a chart from a survey that the Federal Reserve Bank of Dallas does every year asking the folks who are actually in exploration and development what their break evens would need to be for new wells or existing wells the Bakken used to have its own category its own color now we're rolled into other US shale you see that price for other US shale let me just assume that it would be the same for all of the Bakken it's $69 substantially less than the price today but we're not seeing much activity and again, it's been driven by a couple of things a lot of low hanging fruit the easier oil to access the Bakken has been drilled, it's been available if not produced and now we're really sitting there going looking at does it make sense even with high prices to bring additional production online you know, what does that mean in terms of profitability and again, it's just not causing the amount or yeah, causing the amount of activity that we typically expect or might have expected looking at the far bottom data I got it from Baker Hughes North Dakota rig count right now is 36 and that was for ending last week versus 15 a year ago so I mean the rig counts are still really quite low of course, we go back to five or 10 years ago we're certainly getting a lot more production online for each rig but not necessarily the amount of activity that we might expect at these prices so those were the comments that I had and that obviously concludes our presentation of prepared remarks with that, we'll open the floor up to question and answer and I see that Frayn has a question already regarding soybean meal yeah, so I'll read the question USDA notes that low soybean meal prices relative to corn are contributing to an increase in soybean meal domestic disappearance for marketing year 2022-23 will we see, will we start to see the soybean meal in diets compared to DDGs and Dave, you know, feel free to chime in and comment on this as well I guess in this is kind of an opinion piece but in my opinion, I do think we will see more soybean meal relative to DDGs now they're not perfect substitutes depending upon the species that you're feeding and the specific feed ration but in many cases, they are somewhat energy substitutes again, depending upon whether there's full oil DDGs or whether the oil has been extracted from it but again, as Dave noted given the strength that we're seeing right now in global oil seed prices as well as the demand base for renewable diesel I do think the profit margins for crushing soybeans are very, very strong right now oil is definitely driving the bus at this time which means that we will likely have a larger supply of the soybean meal now I wanna be a little cautious to also point out DDG prices in a general sense do follow corn prices so as corn prices go higher DDG prices will also increase because those are a little bit closer substitutes but I guess my general consensus is yes I do think there will be some switching because of the relative prices and relative feed value of the DDG versus soybean meal so there should still be a pretty strong demand for the meal. Do you think the production estimates for Ukraine are optimistic? My personal bias, yes, I do think they're a bit optimistic to be honest, I think that the acreage numbers their forecast for acreage planted acreage I think will be reasonably close but to plug in, I know 2020 yield forecast or yields out of Ukraine were a little bit lower than average, but I guess I would I think that's kind of an optimistic number in order to get the kind of yields that you normally, that you typically would get means that you've got fertilizer applied that you're being very timely in your field operations for both spraying for weed control and disease control as well as timely in your harvest ability and so I'm not sure that the Ukrainians are gonna have as much flexibility in some of those field operations the other thing that is also happening that's raising some concerns because the old crop export volumes that the pace of exports is relatively slow right now there's still a lot of grain in storage. So a lot of their grain bins are full right now with old crop grain as the new crop in particular new crop wheat starts hitting the market are they gonna have enough storage capacity available storage capacity to handle both the winter wheat crop and then later on the corn crop and some of the minor oil seeds as they come online. So I do think there's gonna be some questions about not only yields and production but also how much of that is gonna be marketable product how much is gonna be actual harvested? Will it spoil? Are we gonna see some more harvest loss? Next question. What do you think the winter wheat market will look like at harvest compared to spring wheat? Very good question. You know that price relationship between winter wheat and spring wheat is always something that I try and talk about. I'll be very blunt. I do think a lot will depend upon the kind of spring wheat yields and production we have out in North Dakota. Again, given the wet conditions we will likely have some prevent plant for spring wheat. We don't know the extent of that yet. There's also some very dry conditions in the Saskatchewan growing regions in Canada. And so we can't forget about what's happening north of the border. And again, there are planted acreage and yield production yield estimates coming out of there. So right now, in my opinion, it's pretty difficult to try and weed that out. There is kind of a maximum price spread that we tend to see between winter wheat and spring wheat. My current bias, if I were to put a number out there I do think we'll start to see kind of the premiums for spring wheat over winter wheat, at least in the futures market, return back to something that would be a bit normal. It's somewhere between that 70 cent to a dollar range. But again, that's gonna be heavily dependent upon what happens later on this year with total production. Next question, how high can new crop spring wheat go? Oh man. Again, a very loaded question. To be very blunt, I don't know the answer to that. But I do wanna caution people, especially as farm managers and people that are very close to production agriculture, we get very wrapped around our thought process, gets very focused on the production numbers and understand that as prices go higher, the whole reason that we have higher prices is trying to ration use. And so even though supplies may be exceptionally tight, prices start to increase, the real question is how sensitive will the buyers be to those higher prices? Now, domestically, most domestic buyers and domestic wheat mills can pay a relatively high price for spring wheat and still make it work, as long as winter wheat prices are also high. The real kicker for me, I guess the big question mark for me is, given these very high prices, what does that mean for the export demand? And there are some of the countries that we export to that are willing to pay the higher prices for spring wheat because they like to have it within their mix. But again, there's limits to what they can afford to pay. And I do think the export market tends to be much more price sensitive than the domestic market. And so I guess what I'm really looking for as an indicator have prices gone up high enough is are we continuing to make some export sales for spring wheat? When we start to see those export volumes for spring wheat drop off or where we start to see international buyers are really hesitant about buying spring wheat, in my opinion, that's about as high as prices will go. Where that price level is, what that number is, I'll be very honest, I still don't know what number to put out there. Any advice on locking in prices for 23, 24, et cetera? Again, kind of an opinion, you know, there's so much uncertainty right now in the grain markets, right now based on everything we see, I know this is gonna be a very loaded answer. And I'm gonna try and express an opinion here. I do think the probability, the odds that we're gonna see a major price decrease in the next six months are very, very low. So in my opinion, I wouldn't be terribly anxious quite yet to start pricing 23, 24 crop. If we start to have more production problems this summer as we start to see if there are additional rallies because of weather problems, at that point, I would start pricing some, at least some 2023, possibly a small amount of 2024, because we saw something very similar happen in 2012 when we had the drought conditions. Now the conditions that led that out are a little bit different than what we see today, but if we see a price spike or some kind of major rally in the summer, I guess that's when I would be more apt or more likely to try and price them from for the next couple of years forward. Info on chemical and fertilizers applies during planting season. Usually Dr. Parman handles that one. I can try and take it if you wish, just letting others have an opportunity. So for fertilizer supplies, I don't think we're gonna have major problems with fertilizer supplies again, given the fact that we have a late spring. I did talk to one fertilizer agronomy center and I asked them about this question about fertilizer specifically and they said, well, the train that they had coming in to restock for mid spring supply chain had arrived. And so now they hadn't really had moved any of the fertilizer out of the bins yet. So they were scrambling, trying to make room for the train that they had already booked for arrival as that restocking fertilizer. So I don't think fertilizer supplies are gonna be a major problem, at least from the warehousing standpoint to get it from the dealer onto the fields obviously can be a challenge because of the very compressed planting season we'll have. For chemistry, for chemicals, I haven't heard any major supply chain disruptions on the chemical side. Obviously supplies are short for certain chemicals and that's more on the manufacturing side. And we've known about that for quite a while. I know a lot of the agronomy centers have already tried to book as best they can for chemicals. If there are some, if we have a kind of a specialized program where we need, for example, a particular type of fungicide that isn't currently in stock, that could be in short supply. But the indication I'm getting right now is that a lot of the, because we saw some of the chemical supply chain issues showing up, people have been doing their best to try and work around that. So again, we'll wait to see, but there might be some chemical supply issues, but I don't see things, given what we're looking at today, major fertilizer problems. Okay, so Ron mentioned PP is based on historical production acres. What if a producer rented additional acres this year? Will those acres be eligible for PP based on past producers history added to the new renter? Okay, I think I know the answer to this, but I am probably 80% sure. I think if you can get the history of the previous renter, you could use that. But otherwise, I'm not sure. What do you, do you know anything about that frame? I know that there are some rules on that, but it's been a while since I've looked at those. And so again, without, I don't wanna mislead anybody. I guess the recommendation is obviously to talk to your crop insurance agent to try and track that down. If you do have a trouble finding that, please contact either Ron or myself and we'll do some more digging and make sure that we can answer the question directly. And then the last one I think is for Tim, do you see any other programs coming out for livestock producers to offer assistance with spring storms? As of now, I don't see any new ad hoc. It would be, you know, have to go through Congress happening. One thing I will say, we do have the existing livestock indemnity program to pay for losses. And there is things in the work that that lightweight calf category is very low compared to the value and so both FSA and the congressional delegation are working to raise those for those under 250 pound calves. That's in the works. And Frayne, I think there's some chat things for me. There are. Yeah, okay. Yep, go ahead, Tim. Yeah, I, let me see. Okay, so Tim, the first one is, Tim, why are feeders trading at new contract lows? Okay, there's very good, very easy answer for that. Feeders are at contract lows because corn is at contract highs. And as long as corn keeps going up and fed cattle stay in the same feeder cattle are going to go down, keep going down. That's just the way it is because fed cattle are the same feed lots are, you know, looking at that. And one thing they have control over is the feeder cattle site. So that's gonna, corn is contract high and feeder cattle are contract low. That's the story. Okay, so another probably a follow up question is when does Tim see cow herd liquidation ending with corn increasing and live cattle decreasing? Also the economics of running grass cattle being better, is the economics of running grass cattle better than running cattle better than running cows, excuse me. Okay, well, the cow liquidation is pretty much gonna continue on this year. Even if it would rain all over the US we've already slaughtered 17,000, 17% more cows. And so we're gonna go down again this year. All depends on rain. 60% of the beef cow herd is in drought now even though we've improved in North Dakota. And so that does not bode well for increasing it. So we're gonna go down this year and the next year, if we get rain rain and with the prices that we do expect I think that there will be some interest in herd rebuilding, but again, it's a slow process. We can't manufacture cows. We keep a heifer calf back and breeder the next year. She has a calf the next year and so on and so on. So we're in for lower beef production for the next several years which will be supportive to prices. And then what about the follow up for running grass cattle? Is that better or worse than running cows on a pasture? Well, that varies from year to year as well. As of now, it looks like running, buying calves but that'll adjust as we have fewer and fewer calves with the lower and lower numbers that's gonna be like I said, for selling people selling calves that's gonna be very supportive but that means you're buying a higher priced cattle again with the lower supply. So I wouldn't sell, everybody sell the cows with seeing I'm just gonna run grass cattle. But it does offer flexibility if you do have a dual thing there and you have cows and you do like a heifer development or grazing then in a dry year, you don't have to cut back on your cows and you don't have to do that. But if you have plenty of forage then you can add on. So that does offer flexibility there. Okay, next it says for Frayn and Ron what do you think about the administration's interest in support of double cropping? Ron, do you wanna try start that or? There's a reason why some areas of the country double crop and most areas do not is because it's not necessarily doesn't necessarily work for most parts of the country including us up here. We're lucky if we get one crop in. So I don't understand the logic at this point. I think someone can prove me wrong. I think the logic is that at least in the short term to try and provide an incentive to plant as many acres and produce as much as possible to try and keep food prices in general down or lower, keep them at a minimum of the food inflation. Again, I don't know that we're gonna see a lot of shift in acreage. I don't know that we're gonna look at a big increase. It is something that I think will help but weather is gonna have more of an impact than the double cropping issue. So I do think it's an attempt to try and show that they're being proactive, but at the end of the day I don't know that it's gonna make that much of a difference. And we do have one more question that came in in the Q&A, any word on the HWIT payment for crop producers from last year? Ron, I think that's yours. No word yet, a couple of months ago they said they were gonna simplify the program and it's just like in a black hole at this point. So we don't know anything yet. I would assume that if they try to simplify it probably won't be that simple. All right, so with that we are a few minutes over are a lot of time, but we did wanna make sure we got through all of the questions. Again, thank you guys for participating. We do this once a month, usually the first Thursday after the WASI report, the supply demand estimates come out of USDA. So thank you for joining us today. If you do have additional questions, again, don't hesitate to contact us individually. So thank you very much and I hope you guys have a great day.