 Today is Good Friday and it's a good day to talk about economics. A couple of ground rules you'd like to go over. Please have your microphones and cameras off during the entire presentation end at the end because we'll use the chat for questions. Anytime you can send a question but specifically at the end we'll address those questions. And as I said the Q&A we'll use the chat. We also have feedback which has been working great. People have been letting us know what they want to see, what they liked or didn't like. So if you just take down that URL and there's three quick questions and we're ready to go from there. So okay to start off we've got Brian Parman. Hey nice to talk to everybody on a holiday. Thanks for joining us on this Good Friday. I know a lot of people are off work today and hopefully enjoying a long weekend although some of us have been home long enough that we're probably ready to do something else. But today I'm going to do a little bit of the macro situation update. Talk a little bit about production costs namely fertilizer and then move on into land values. So the University of Michigan and they're pretty famous for this. They do a consumer sentiment index. Okay and what it basically gauges long story short is it just talks about how consumers are feeling about the economy and how they're feeling about income and how they're feeling about their basically their net worth. In other words home values their 401ks and things like that. And if you look at this chart we've been moving up nicely you know and in fact we'd hit new highs just to start the year 2020 or not new highs but consumer confidence was very high getting close to that 100 mark. And then the dotted line that you see not the blue one but the dotted one that's the weekly. They do this every weekly survey and you can see that that is just plummeted dramatically. The blue line is the three month moving average and I'm sorry the dotted line is monthly and the blue line is three month moving average. And you can see that in the last month consumer confidence has absolutely cratered. In fact since they've been tracking it they say it's the the lowest the largest drop that has happened since it's been recorded. So one of the things that's been talked about in the last couple of days and another action that our federal government is taking is the Fed has announced another 2.3 trillion in rescue slash stimulus. Now this is different than the 2.2 trillion CARES Act that was planned and I just put 2.3 trillion dollars okay in in actual numbers there on the screen you could see it that's four commas in a trillion. So that's a really huge number we throw it around like it's nothing but it is a lot of money. And really what this is doing is backing some of the programming and access to loans and liquidity that the government has tried to put in place somebody has to buy up or back that debt. In other words banks don't necessarily want to go loan to a business that is not making any money because they view that as bad debt. So you've got this 600 billion dollars in main street lending fund for small to mid-sized businesses that's a backing. So you still go through the bank but then they buy up or guarantee the debt at 600 billion dollars and they got to have the money there 500 billion for short-term notes directly purchased from states counties and cities this is sort of a way for the Fed to help prop up states and municipalities who are losing a lot of money whether it's sales tax revenue or income tax or whatever the case may be to continue services moving along without going broke. Then the other thing they're going to do and this is a big deal is they're going to buy what are called junk bonds. These are non-investment grade some people call them high yielding bonds but they are companies who their balance sheets aren't that strong their cash flows aren't that strong and they're going to buy them up. Now they had to have been high investment grade bonds before things took a turn after COVID but if their balance sheets and their cash flows and they were downgraded by Moody's say to junk bond status the Fed will back those and they're going to buy highly rated new issues of collateralized loan obligations and mortgage-backed securities something that they did back in the 2008-2009 financial crisis. Now this is the Fed taking on a lot of risk that they never really have ever taken on in history I mean they're these are some risky assets that they are backing that they pretty much have never stepped in and and backed in previously so this is some historic stuff going on here and aggressiveness by the Fed. So the next slide shows again let's talk about unemployment right quick the previous peak for unemployment adjusted for population growth was in 1982 and I adjusted it upwards to 900,000 it was actually 695 but if you adjust for population growth since then it would have been the equivalent to 900,000 if you look to the right of that chart you see this blue line going straight up so the next slide I zoom in on a year okay I zoom in on the following this year so this is just a year timeline so we can see what that blue line actually means and what that blue line is is the last three weeks new filings of unemployment so March 21st so again the previous record was 900,000 March 21st we had 3.28 million new filings for unemployment March 28th the week ending March 28th that is it was 6.87 million this was revised up I think it was 6.6 when it first came out but they revised it up to 6.87 and then the week ending last Saturday was 6.6 million so still that March 28th number is a record but 6.6 million so to put into perspective typically when we see unemployment go on the rise it's a it's a build up you know you got this you know maybe I don't want to call it slow but you've got this build up of 300 400,000 new filings per week for several weeks or months and the unemployment rate increases this is historic in the sense that this is putting millions and millions of people on new unemployment roles in a matter of just a few weeks this is reaching some of the highest levels we've ever had in probably the shortest time that's ever occurred in in history so my next slide kind of breaks down the numbers here so again the week ending March 21st was 3.28 a week ending March 21st 6.87 and then April 4 6.6 previously before all this happened are we had 5.8 million people considered unemployed you add that to the totals previously and I'm assuming that there wasn't a whole lot of job creation that yields a total of approximately 22 to 22 and a half million unemployed up from 5.8 three weeks ago so the labor force participation rate is roughly 164.5 million so I estimate that our unemployment rate went from 3.5 percent to 13.5 percent in a matter of three weeks so literally added 10 unemployment in three weeks the peaks of unemployment just to show some historical perspective in 2009 the height of the financial crisis it was 9.9 percent in 1982 another big recession it was 10.8 percent and in 1933 which was the height of the great depression it was 25 percent that's estimated because they didn't really collect data very strongly back then now again though this is not the depression level and I don't want to make that case that it is because while the peak was 25 percent during the 30s there were years and years and years that it was 15 14 17 19 percent leading up to that and then in subsequent years it basically lasted a decade the same thing with 1982 there were years before 10.8 percent that were 7.7 percent 8 percent and then subsequent years same thing with 2009 so in this case and why it's so historic is we have never went from an unemployment rate that low to one that high that fast not even close it's typically like I said a build up and then a grind downwards and that's why when folks are talking about the recovery how quick it might be is because this came on so quickly we shut down we shut down sectors of the economy abruptly people lost their job instantaneously they're still losing their jobs there is some fallout from that happening but we'll see how that how that translates out in the future so now I want to shift gears here to input costs and fertilizer so on my next slide I just took this yesterday took this graph from DTN and it shows the price for the cost of nitrogen fertilizer per pound okay and we've got a few different products here we've got anhydrous which is the green line urea which is the red and then 28 and 32 which are the orange and blue and you can see that right now if we look at anhydrous I always base everything off of anhydrous because that's from which all these other fertilizers come it's not as low as the previous low we saw back between 17 and 18 which you guys all remember was was a pretty good year for fertilizer but right now we're definitely a lot lower than we were last last year last year we had a little bit of a spike in fertilizer prices a lot of that had to do with wet weather and problems and planting in the corn belt so far this year we haven't had those problems logistically things are solid so we've seen a bit of a you know a decrease in fertilizer prices which has been a help my next slide I'm looking at in in this case DAP ammonium phosphate and if you look at the red that's the 2020 price per ton of DAP and that's considerably lower than it was in 2019 which is the green line you see way above I mean we're talking a hundred dollars a ton cheaper now that's real savings you know basically a drop of 20% and well below the five-year average which is that gray dotted line so some real relief in the price of phosphate now on my next slide I show potash potash not as cheap as 2018 but still cheaper than last year 2019 and well cheaper than this this average seasonal time in April from the five-year average so down there around $370 a ton so one of the things that's a bright spot that we have going on right now as we head into planting season Nebraska's pretty much done from what I'm hearing Iowa's applying some fertilizer not done planning but fertilizer application with the anhydrous same thing in Iowa is mostly done so it doesn't look like we're going to have too many problems at least I hope logistically getting our our our starter fertilizers our phosphorus and our and our nitrogen fertilizers heading into this planting season so that's good news now I want to talk about land values real quick all right so we put out a report on Friday on pasture land and then on I believe it was Tuesday no Monday on cropland and I'll give you the cliffs notes version of the report and what I said was that cropland values and rents are flat and if you look at my graph it's pretty easy to see that that's the case you got the blue line which is the land value and that's on the left axis you got the red line which is the average cash rent for the state and that's on the right axis and pretty much since about 2015 we have been flat we basically haven't budged enough to really talk about and I equate most of those movements you see in rent and just noise I think if we were able to get more and better data it'd probably just be flat there without those tiny little peaks and and movements so right now for going into 2020 cash rents and land values I don't see any change there that's that is in a way that's very helpful in the sense that we land values is a big store of our credit that's how we're able to get financing or secure financing collateralize any debt on land and so the fact that they haven't dropped much has been a good thing and the biggest reason why being low interest rates and ad hoc farm programs helping us out meet cash flow obligations rents haven't come down because they really haven't needed to the next slide I show pasture land values yeah they're down a little bit in the last year coming off of those highs they haven't really been as flat as cropland values but still holding on pretty strong in the report I say they're down slightly and and you can see why pasture land values being the orange line pasture land rents fleeing the blue line they've they've come down in the last year or so livestock prices haven't been that great they haven't been horrible either though and again it's it's looking pretty flat for the most part and and while these movements are occurring when you look to the left of the graph and you see what was going on in the years leading up to it we are relatively flat compared to what's happened in the past so I'd just like to sum it up I believe with this on the land values front in my last slide shows interest rates I they are going to remain low for the foreseeable future as as as aggressive as the Fed is being right now we're not going to go to negative rates you can see not not just what I showed at the beginning of this talk but the actions that they've taken even prior to that it's some folks are saying their balance sheet may hit 10 trillion by the end of the year there is no way they're hiking interest rates in the near future they'll they'll divest from those other things before that happens so I expect interest rates to stay low for a while uh government support programs for ag we don't know what they are going to look like yet uh but we know that they're probably coming or we believe that they're probably coming so that's going to help meet cash flow obligations probably once again every time it looks like we're up against it something comes down the pike that winds up helping us out and uh things more things changed the more they stayed the same and the biggest thing the biggest thing we have going and this is kind of leading into uh frane olson and tim petrie's talks and production and demand conditions are going to play a key role heading into into this next year and a big one being on the macro front consumer confidence and consumer confidence even if we recover even if it turns out to be the case that COVID isn't as bad as we thought we're able to come out sooner the big question is going to be are consumers going to change their behavior in the short run or the intermediate term out of fear or concern or whatever the case may be and we don't get that big rally we don't get people flooding the restaurants because they're a little bit nervous about being in crowds even after we're told that most of the the worst is over and that and that things aren't things are closer to to normal again and that's that's what that's what we have to watch because when over 70 of the economy is is consumer driven well how but how consumers think and how they behave is key to to our recovery and so with that i'll go ahead and turn it over to our next speaker thank you all right um my name is frane olson i'm the crop economist and marketing specialist with ndsu extension um today i've got to try and answer two basic questions that i've been getting um or try to answer one of them is uh most common question i'm getting so when do we think we'll start to see this recovery or pickup especially in the grain markets and then the second question is how quickly do you think we'll get it then obviously nobody knows that for sure um we're all speculating at this point uh brian did a really nice job of kind of setting up the the macro economy and what what what consumers may be doing and i'm going to touch on that as a little bit as well um so first we don't know when it's going to happen and my my viewpoint right now is that the recovery and grain prices may not come equally as rapidly for all of the grains and we might see differences we might have some some leaders and some followers in that whole process so my first slide um is is really talking about the historic corn usage and i'm trying to differentiate between domestic demand or what's happening domestically and what's happening internationally and again that was kind of the second set of questions i'm i'm getting now and some of the information and feedback that you folks gave us from last week is a little bit deeper dive into what's happening in the export market side so if i'm using usda information um these are the categories that usda uses in the wasdy report or their estimates for corn usage we use the term usage instead of demand but it's it's basically where's our corn going and we have several different buckets on the corn side the blue line is feeding residual let's for right now just call that the feed pile the red line is ethanol the black line is exports and the green line is pretty much everything else so those little dotted lines on the far right hand side is the current usda forecast and again as of thursday we got some updated numbers so i want to talk a little bit on the on the domestic side corn is very a very domestic based um we do have exports um the the export pace for corn is forecasted to slip slightly from last year um and i'll show you an update on where we're at right now today but the i guess the big question for corn is what's happening domestically and again tim is going to talk a little bit more about on the on the livestock and the meat side um when it comes to feed and feed supply or feed usage we're really more concerned about the number of animals um and yes the profitability of the industry makes a difference but the real question we're worried about is what's what's the number of animals we have to feed and what's the growth rate in those in those animal populations and again there's still some uncertainty longer term about what this growth rate or what the change in animal numbers will be as we move forward on the ethanol side again two big uses feed and ethanol i know dave rippler is going to talk some more about the ethanol industry some of the challenges they're facing right now usda did recognize that um uh ethanol production has been dropping and dropping fairly quickly they did adjust their forecast for total corn use this year so corn is really a domestic market and and we can watch what's happening domestically and look for what it what again potentially changes in consumer and consumer behaviors looking at on the next slide i tried to summarize a bit more about the rate of export for corn so this is a cumulative export sales so every time we make an export sale we add it to the pile of exports so we'd like to see those lines on that graph grow as quickly as possible um the uh red line is where we are today that's the 2018 uh yeah 2019 20 marketing year the one we're in right now for a whole crop the black line is uh last excuse me let me get my colors right here the green line excuse me is last year's numbers oh there we go i'm i'm clicking around on the wrong wrong buttons here um so the green line shoot there we go the uh green line is last year's numbers uh obviously export pace in corn right now is is much slower than we've seen in the last couple of years it's it's paralleling very closely what we saw 2015-16 now in 15 and 16 we did see a slight acceleration as we moved into the summer months hopefully that acceleration in export sales will continue on the next slide i shift into soybeans and the usage for soybeans is slightly different and again now on the soybean side we have more of a 50-50 balance between what's happening domestically as far as crush crushing into oil and meal um as well as what's happening on the export side uh historically or the last several years we've been talking about the growth in exports and export pace primarily because of china and obviously because of the u.s china trade war that that has taken considerable retraction here in the last year or so the current usda forecast is for our soybean export sales to follow or track very similar to what it did last year um and and actually when we're seeing today is is very similar timing is a little bit different but the quantities are very similar so on the next slide we're we're looking at weekly export sales for soybeans and the reason i do weekly export sales is because we have this big seasonal export pattern in soybeans for corn and wheat we don't see a real seasonal pattern it tends to be much more equal or more uniform throughout the throughout the year but on soybeans we have this peak export demand kind of during our export sales period during the october november december time period and then as we move into the summer months our export sales those new contracts that enter into the market the new buyers that come and buy us us grains tends to slow very very quickly so there once again the red line is this year's numbers so 2019 2020 the black line is last year's numbers and again this would be all export sales this is for everybody that we sell soybeans to you can see that this year it's it's following much more closely to that seasonal pattern although the peaks have not been as high obviously we missed some of the export season last fall and and our total export sales are down from what we've seen previously on the next slide i did the exact same graphic but this would be for soybean sales u.s soybean sales to china only now the point i want to make here is that you know the the chinese now have come back into the u.s market they haven't been buying the quantities that everybody was hoping or expecting but that purchase pattern the seasonality seems to be much more similar to what we saw before with the exception of course the two of last year would because of the trade war and the black line so you notice that the purchase is china made last year um based on the black line was much more back loaded it was much more we had a couple big sales in this february march time period and then really nothing until later on and then july august time period now this year they have made some purchases uh just after our harvest was completed but recently there they have not been back in the market and i know the soybean market is really hoping that they will come back in the chinese will come back in and start buying some u.s soybeans later on in the season july and august my personal opinions i do think some of that will happen um however right now the when you look at export bids the brazilians export bid is much much lower than it is here in the us and so i do expect at least short term for the next couple months china will continue to buy from the brazilians at least for their soybean supplies on the next slide it's this is really preparing the same information just seeing it in a little bit different way um again this is cumulative sales so again every time china buys something we add it to the pile you can notice that the pile of sales this year is much lower than it has been historically but again following a more similar typical pattern the real reason i wanted to throw this graphic in here was to show you that total soybean exports from the us to china this year at this time of years almost exactly the same amount as what they had purchased last year now again the purchasing pattern was very different but the total quantities are very very similar and so to be very honest i don't know unless we have some really large export sales to china later in the season again into that july august time period i really don't see a big burst of purchases at least for china in buying us soybeans the next slide we shift into wheat and again kind of the same perspective i wanted to show the blue line which is what usda calls the food line or the food consumption that really is us wheat going into the domestic milling um industry um that tends to be very flat very stable um you know given the coronavirus issues right now we are seeing a little bit of an uptick in in bread and and pasta consumption but i don't know that those will be large enough throughout the whole year to really have a big impact or have a big burst in that blue line um i think that usda's forecast is going to be relatively close maybe a little up a little bit when we look at exports which is the red line that bounces around quite a bit again very difficult to forecast wheat exports just because it's a very complex market so the next slide shows us all wheat exports so this is all wheat we don't care what class it is but our wheat export sales this year have been you know better than we've seen the last several years again the black line is 2016 17 we're seeing some numbers very similar to that now we have seen a slight down tick the last couple weeks although there was an announcement this morning that china did come in and buy about 165 000 metric tons of us wheat it was hard red winter wheat um it was announced this morning that's about two and a half cargos or two and a half vessels of wheat so that's very positive china hasn't bought wheat from us in in a long long long time they are now starting to make some purchases and hopefully that'll put some support underneath the us wheat market on the next slide it's the exact same cumulative export sales but this is now for hard red spring wheat only so we're now separating out how is spring wheat doing relative to the other wheat classes and again we started off the year not in too bad a shape or exports were you know averaged just slightly above we're not getting quite the export pace we did in 16 17 but again hopefully we'll have some opportunities a little bit later on in the marketing year now again the answer to that will really depend upon how quickly our customers their major customer base can recover from the covid-19 problems that they're having in in their respective countries so my last slide i just wanted to show which countries do we need to be paying attention to again when we talk about an economic downturn with a potential recovery when we look around the globe and recognize a lot of other countries and economies are having problems with the coronavirus issues what are the countries we need to really focus on when it comes to us export sales so i rank this based off of last year's numbers that again just as that's the most common and and in our clearest memory of what we did last year for corn our largest buyer is buyer is mexico second largest buyer is japan third largest buyer is columbia those three countries if you look on the very bottom row make up about 60 66 percent of all of our u.s corn exports so those three countries are very dominant in our ability to be able to sell corn internationally shifting over to the soybeans kind of the same layout our number one customer even last year was still china our number two country was mexico our number three customer was egypt all of those added together accounts for about 45 percent of our total export x soybean exports last year wheat biggest purchaser is philippines very closely followed by mexico and again those two countries tend to flip back and forth on who's number one and number two and then we have japan those three countries make up about 36 percent of our total wheat exports now when you jump directly to hard red spring wheat only it's really the pacific the south pacific regions excuse me the south asian markets are the ones that we really need to focus on so hard red uh software hard red spring wheat excuse me philippines is number one japan number two in taiwan is number three those three countries make up about 50 percent not quite 50 percent of our total export sales so we need to be watching countries like mexico like japan especially southeast asia for spring wheat to see how difficult a time are they having right now how quickly are their economies going to recover because in my view that's going to be one of those key variables to say how quickly can we increase our export sales and try and and and get a price recovery back out on the backside of this once we get the virus under control so with that i'll hand things over to tim okay good afternoon everybody tim petrie extension livestock marketing economist uh we did a review of last time and found out that i talked a little on this i'm going to try to cut it back a little bit so if we go to my first slide uh i'm going to follow and frame steam about exports because i many of you know that we're predicting record exports of our commodities this year and of course we have record as i told you last time we have record production of beef pork and chicken so exports are important also i want to highlight three uh reports that come out from usda just in the last week and the websites are shown there for each one a lot of those as we go along but these are interesting reports so in the future you can look at them on your own if you want to the first one came out yesterday is from the foreign ag services livestock poultry world trade markets and uh this is a really really neat report because uh and they do it quarterly so this is again the new of their new forecast for april but they do for cattle beef hogs and pork and chicken those three commodities they do uh by country uh the total production by country in the world the total numbers of livestock the total consumption by people and total imports and exports so kind of a neat thing if if you're in a discussion sometime and you want to know the number of cattle in brazil or hogs in china or uh chicken exports to korea or whatever it might be just go to this and and there's a it's a long long report what i want to just basically talk about today is how uh they think how the foreign ag service thinks that covid-19 might change the global protein markets and so three lines there on that chart starting in 2015 with the green line top green line being chicken and then the blue line beef and the import we have been increasing exports of all three of those on a worldwide basis now i'll get to us in a minute a worldwide basis we've had record trade in those commodities and uh initially before the covid we were thinking that two they were thinking 2020 was going to be another record year but unfortunately covid is going to uh affect demand some so this most recent april report that just came out yesterday their backing beef uh trade off by about two percent which isn't huge it's still historically relatively high and chicken off by about one percent on a world basis but still a all-time record high for pork with the demand for china so when we go to the next slide then we'll talk more about the u.s. meat trade this is the was the report that frane just mentioned and the important grains and showing exports and supply and demand and so on the livestock side i'm just going to go into them take a table out of that was the report for the u.s. meat trade and so the 2019 estimate is really good now so that's a firm and then and then for the uh 2020 again is a forecast and this is by the office of chief economist again comes out once a month around the 10th of the month and so you see those little broken record icons there uh they have lowered their forecast a little bit from the march 10th report but still looking for record exports of beef all-time record high exports of beef up 138 million uh from uh pounds from last year we go to park again we're going to break records by over a billion pounds is again with the china demand so they're still this is yesterday's report so they're still expecting strong exports and in spite of colvin and then on the broilers again for you the u.s. as of last month we're predicting record exports you see that they changed it down from 200 in the march report and so if you would back in march they were predicting 7.4 3 million pounds and or billion pounds and ratchet that back so we aren't quite going to as of now going to do a record checking but again very very close so so far their prediction is still we're going to do very well and records for beef and pork go to the next slide is another report that came out just last friday not in time for me to talk about it last friday but the economic research service keeps track of exports on a monthly basis unfortunately there are almost you know over a month sometimes gets to be almost two months behind so just on last friday we found out what the february numbers are so on the left hand side you see that so far we were on track quite a bit above last year and when we that dotted line is last year you could go to the end of last year we did struggle down on exports simply because of japan and japan had settled the agreements with a number of our competitors and we had so we were facing really really high tariffs there and now we have an agreement as of january first with japan and so our exports are going back quite gangbusters into japan and so again this is only for february and we got to look ahead and and covid and so on but again looking at those previous predictions we're still hopeful that we will have a good year and going over to the pork side again you see by uh end october november last fall when dotted line exports just skyrocketed again that was all to china despite of 60 percent tariffs still on pork we're sending a lot of pork to china simply because our hog prices are quite low as we talked about before and so you know we've got a very low hog price and still with the tariffs moving a lot and so you see january and february they're just at all time unprecedented movement of pork into china and on the bottom side then again our broiler exports were up as well and so that uh you know not quite a record but that's good news so we'll go to my last slide i've shown you this slide every time and so i don't want to give up on a good deal there so to speak but just kind of update you on the background of cattle market there's some good news in the market last week uh again when i talked to you last week it was it had been an absolute dismal week that red line there is again the cash market uh at markets in north dakota and the squares of the futures market but we had a just a terrible week last week we did recover this week uh the uh cash market went up about nine dollars and cattle are still selling the the feeder cattle futures were up eight to twelve dollars so you see for the fall there back up to around 130 when they were 120 last week so uh that and one of the reasons for that is that the distant fed cattle futures did go up eight to nine dollars this week as well however the fed cattle cash market fell off this week about six dollars from 111 we're down to 105 we're slowing up slaughter we stopped the slaughter plant in Iowa and we're having some struggles in Greeley and some of the other plants and so that is is slowing up capacity a little bit there and so even though fed cattle prices went down no feeder cattle prices went up and buyers are still uh active all low lower prices obviously than last year but like we talked about before the Nebraska feedlots have uh a lot of corn a high moisture corn in the bunker and we have less cattle to sell than we did last year so that uh helped influence prices so that's all I'll wait for questions at the end and move to Dave to talk about bioenergy great thanks Tim uh Dave Rippling our bioproducts bioenergy economic specialist within DC extension uh just moving right into kind of an overview of of what's going on in general the corn ethanol industry has rapidly reduced production which is good because that's what needs to be done much faster than what's going on a petroleum and refined petroleum products so we've seen at the consumer level a drastic decrease in in vehicle miles and tremendous use in the reduction in use of gasoline and ethanol summer between 40 and 50 just in the last five six weeks and then of course just mentioned you know the corn ethanol industry is has really begun idling shutting down plants to to respond to to the demand side of things that being said there's still some additional reductions that are needed I think that ethanol is pretty close but on the petroleum side they've got a long ways to go EIA itself has said for the second quarter that they expect a 40 percent reduction to gasoline use and you could just translate that over to ethanol so you know what we're seeing right now would be expected persist for for the rest of the quarter and then probably the bigger thing to look out for in the future is this storage crisis again we have limited storage for for accrued and for refined fuels in this country and stocks are rapidly building and that's what my first graph shows uh so I guess I'm gonna talk about corn ethanol first so corn ethanol production so we've seen in the last two weeks is the 33 percent reduction of production which does not quite correspond with the reduction in use you know a rapid decline a little bit of a little bit of a leg but but but really kind of getting to where it needs to be the the chart shows production last year and this year and the the measure is the annualized ethanol production level so typically right around 15 16 billion gallons for for ethanol and right now we're just above an annual rate of 10 billion gallons with still a little bit to go looking at what this means in terms of prices or what ethanol refineries are looking at going back to USDA's South Dakota ethanol report you're seeing an 18 percent lower prices for the corn that's purchased at those plants a 42 percent reduction in ethanol uh in you know as low as 68 cents and right now the the margins are not good and then of course on the livestock side which is getting a whole lot of attention is that that dramatic increase in the price of distillers grains again is that supply has declined significantly uh that price of distillers grains has has risen uh because it has found a a good spot in the nation's rations and folks are not easily replacing that at least for the time being looking at the next slide uh here's here's my my slide on stocks this last week we had the the greatest increase in stocks and crude oil in history uh basically up about two million barrels of oil per day 15 million barrels over the week uh and and really what you kind of see at the end of that blue line which is the the actual stocks level is you know we're we're rapidly increasing to that rate you know somewhere uh somewhere close to 550 the official number of commercial storage is about 650 million barrels but things get really tight at at 550 and you know as we get closer and closer which is definitely expected the next few weeks and as we get to that number things are going to get messy one of the impacts that's going to have is it's going to it's going to echo throughout the the the transportation fuel industry uh and some folks are going to be better positioned than others just on their location uh and and maybe just having a little bit of storage than than other folks do uh going to the last slide uh just thinking what's going on in the back end uh you know we're we're kind of at the end of the line uh with most of our refinery located in the gulf uh wti the the cushioning price is actually uh and the cushioning price they're really not that close to uh the gulf either but kind of looking what's going on is there there is a a change in the spread which is that green line uh with with the buck and selling a significant discount about 10 bucks uh to wti the last week and you know it's really important because as things fill up the the market's going to signal differently to different different types of oils different locations of what exactly they want uh this chart also shows the the the rig count which is the blue line it's a little bit dated what i have here is the baker hughes number which is an industry number which actually ended for last week as we look at what's going on locally uh the the state has actually reported that we're now down to 36 rigs in the state which is down uh you know significantly you know more than a dozen in the last two weeks which means that we're responding and again the question is how how much lower we might uh end up going all right thank you so much uh we appreciate everyone tuning in if you have questions as you can see we use the chat um also we have the feedback form just to remind you that um three quick questions um and before we get any questions here are there any thoughts sometimes when you guys talk one guy comes up with something they didn't think of do you have any thoughts guys it's a holiday we're not thinking very well yeah well that is uh exception i'm i'm really pleased that people showed up even though it is a holiday but i also appreciate you guys doing this on a consistent basis um we'll just go a little longer here without if we don't have any comments or questions and we can end our webinar but we'll just give it just a little bit more time just in case one thing uh one thing i just thought of that i didn't present is on the uh cares act tax rebates in other words the payments to individuals if anyone on here or anyone listening if you're a the person uh kind of person who has to pay taxes at the end of the year or you have to mail in a check um there's a very good likelihood that the irs does not have your direct deposit information and if you use i think i read if you use their direct pay uh site that that's not necessarily controlled by them and so they're going to be putting up a portal i don't know if it's up yet or not i haven't checked lately but uh where you can add add in your direct deposit information to receive that money otherwise they're going to send you a they said april 20th maybe possibly they're going to mail out a paper check uh honor about april 20th to the last address shown on your most recent tax filing thanks brian there is a question um anything on the nine billion usda has uh for livestock and specialty crops programs yeah sure i can you hear me just a step yeah okay good uh having some problems here with the speaker yeah no more new things than i gave you last week all the commodity groups are sending stuff to usda and they have gotten a lot of them uh we expect both the national and the state organizations and again this includes cattle hogs sheep dairy even all the minor livestock classes uh they're sending stuff to usda and pretty much those will all be in next week and then at however usd has a monumental task then to sort through that all livestock producers are going to get something but like i said last week uh everybody wants a big slice of even though 9.5 sounds like a lot it's a small uh will be a small number of wants so everybody's going to get something there's already talk are there going to be more and uh we don't know that there maybe will be the way brian's talking and the trillion's getting thrown around but anyway we gotta wait now usda has got the information from the commodity groups and the damages from all the different livestock groups and so now they gotta sort through with the money they have how are they going to distribute it so really nothing new yeah and just to add to that on the specialty crop side a very similar thing there um i know there's been some uh conference calls and some discussions with the commodity organizations as well as usda and they're trying to figure out okay what are what is that the level of the need but then also how can we come up with a procedure um that that may be equitable for for the different specialty crops on the major crops of course we have a lot more information about what's happening on prices but also about quantities and inventories and we just do a better job of tracking some of the bigger commodities the specialty crops gets to be more of a challenge and again that i think that will also have an influence then on how usda structures program but i know there's there's a request for information um or a basically request for ideas and and more importantly in estimates of what they think the damage is and and one of the arguments or one of the things that that i know i have been uh been making and and as i've been talking to people and talking to some of the commodity organizations is obviously this isn't over yet and so the challenge becomes how do we are we going to have a sequence of programs or is this a one-off my guess is it's good there will be a sequence of of support programs that will come along um the issue is do we how do we break that into into pieces that are manageable and and making sure that the the program isn't overly burdensome and people can sign up relatively quickly one of the one of the big concerns of course is fsa of a farm service agency staffing um they already have multiple programs that they need to be administering not only with rcompil c where the signup is already completed but we have the wit plus program you know they had to put quite a bit of on hold part of the workload on hold because of the mfp payments um so right now you know the the usda in particular the fsa staff is is pretty much overwhelmed with the existing programs and now we're going to come up with some additional ones or new ones and and again the concern is information needs not only from the farmer but then also from from fsa and and what what the process will look like so all of those things are being discussed right now we don't have any real clear vision or information about what's going on but please stay posted and we'll try and get you the information as soon as is available i have another question for dave what will happen when refined fuel capacity is maxed out yeah yeah so the question i think it's storage so when when essentially we run out of storage within the within the supply chain uh this is a physical issue not a price issue that the market right now the prices are telling folks to to slow down uh in some cases stop production especially on the on the on the crude oil refined petroleum product side again you know this is talking about a physical um and so it's completely different if there's no place to put it what do you do uh you know as a refinery do you shut off in the middle of the week because you're out of tanks you're out of temporary storage um you know what the prices have to be prices can be negative uh you know you would see that the retail level but prices may become negative primarily for gasoline uh and then you know you're just going to see this this this push back all the way through the supply chain you know going upstream just saying you know we're gonna we're gonna fill up the pipes you know we're gonna shut in the wells we're gonna do what we have to do and it would be it would be nice if the the oil industry is being as responsive as the corn ethanol industry is in in ratcheting down production given the the market you given use and these market signals and that's just really not happening um you know and it's you know we're getting these mixed signals one thing I didn't talk about is these mixed signals we're getting with OPEC uh and reducing production uh you know a week ago there was thought that you know that that a deal had been made early this week it was off now it's back on again for those who don't follow this might seem surprising for those who do this is is is what happens um even if they kept their even if they said they were going to follow through with their promises within a few months or years it would likely break down uh crude options with negative strike prices it's interesting um you know is your expectation that we would get there I don't even know do they are they trading negative I haven't I haven't looked um but again the expectation would be and and that wouldn't be on crude I mean crude is is is likely not going to be zero uh for for SEBI WTI it could be zero or negative in the market it could it could definitely be zero or negative for other uh oil sour oil uh heavy oil which really doesn't fit well in refineries um but but across the board you know the signal is to slow down and then the question too is you know if you have good storage you know if we had excess storage for some reason here in the Midwest you know prices would would be able to endure for a little bit the the the system would be able to work but you're going to see various disruptions uh in in in different localities in different regions of the country again if something doesn't start giving pretty soon and again it's too bad we're not driving because you know if if we had a motoring public right now this would be the lowest cost memorial day in decades to to drive around the country all right well I think we're uh we're done with questions we want to thank thank you gentlemen um our ag econ specialists for all the latest information thank you those who joined us for yet another webinar and we hope you have a good Friday