 presentation of agriculture, market, situation, and outlook. I want to go over just a couple ground rules for everyone please and that's keep your video and microphones off so there's no interruption and later you'll find out that you can add questions at the end to the chat. You can text or email the email on the screen but please try not to use your microphone or camera. We appreciate that. All right, Brian you can go right ahead. Okay so obviously everybody's kind of been watching the news and trying to wonder what's going on and by the way I'm the ag finance specialist for NDSU and our department of agribusiness and work for extension and so I'm just going to do a kind of a hit some key points with what's going on. So on my first slide there, this just puts into context exactly what's happened in the stock market over the course of the last month relative to history and basically we see the top 15 worst days on record. Three of them happened in March. That includes the Great Depression. In fact the 16th of March was the second worst day of all time just behind the 19th in October 19th in 1987 and then on the right hand side worst weeks. Two of the top 15 worst weeks happened this last March and then the week ending the 15th was the 21st worst week. So for the most part about 35 percent of the stock market's high has been wiped away. It's about 60 or so percent of where it was just a few short weeks ago. So this is kind of showing what the market and some of the I don't want to say panic but concern that's rippling through everything and and how it's going to affect many industries including the restaurant business, hospitality and hotels have been furloughing and laying people off. We especially in these states like New York and California that have these shelter-in-place orders going. So on my next slide it pretty much shows what's happened with interest rates and I try to tie some of this to ag but we all know the Fed has cut rates. They're injecting liquidity into the system and yet interest rates are going up. This shows the 30-year mortgage rate. Generally theory would say that these rate cuts would actually lower interest rates but a couple of things are happening right now. Number one businesses are running to cash because they're worried about making payroll. They're worried about how they're going to stay afloat over the next few months. So when you run to cash that tends to increase the demand for dollars which increases the interest rate and the other thing is basically risk concern for what's coming and so the risk premium that goes that's a portion of any interest rate or any cost of borrowing that risk premium is getting higher because of all the uncertainty surrounding driving driving rates up and then on my next slide I show we talked about the yield curve and how it didn't invert it and you can see that it has steepened dramatically over the course of the the last month again because of this the Fed cutting rates so dramatically and a lot of uncertainty in the in the short run. All right so there's a my next slide shows that there's this a company out there that's rating industries based on their exposure to China how tightly they're tied to China possible problems in the supply chain and then the business environment portion is talking about domestic essentially and so they rate the risk of future problems and and going forward how vulnerable they might be to potential bankruptcy or serious financial strain layoffs those kind of things and the top section of the table shows some of the industries I already mentioned that have been mentioned a lot like food fast food that is restaurants travel agencies things to that nature and they're extremely vulnerable now at the bottom half of the table is ag and oil of course I put that in there for North Dakota and a lot of medium and high risk in there of problems down the road for these for these specific industries and you'll notice one of them is ag banks and that just changed in the last day the concern being that if folks if we have problems people losing their job or or lower prices going forward how is that going to affect the the banking system you know for instance just taking into account if somebody loses their job and they work at a restaurant are they going to be able to make their credit card payments are they going to be able to pay rent are they going to be able to make their car payment and so any of these lending institutions that have lent money to those individuals could be could be in big trouble down the road and sort of that's what this is this is showing so with that I'll kind of turn it over to I believe Frane Olson's coming next and await the questions at the end all right thank you Brian this is Frane Olson I'm the crop economist and marketing specialist with NDSU extension this is my contact information so if there's something that comes up later that you want to talk about privately feel free to email or or to call my first slide I just wanted to try and put a recap on from an ag market standpoint specifically from the the cropping standpoint you know what are we looking at right now and one of the challenges this really becomes a psychological battle at this point we're we're unsure what the underlying supply demand conditions are we really have no reference points in history that we can look to to say well what is similar what is what is a proxy year that we might be able to use as as a reference point and we really don't have anything and as a result what's happening is the market traders in particular in the grain markets but also in the equity markets in the stock market in the energy markets are really trying to figure out well what is the worst possible scenario and they're preparing for the worst case scenario because we don't have any reference points so psychologically this gets to be the the big challenge for us and in my view in my opinion that we won't there will continue to be some downward pressure on prices again i'm looking at prices broadly until it looks like the number of new cases has begun to drop or begun to drop off and the reason i'm using that as kind of the reference point of the benchmark is that at that point once we see the number of new cases of COVID-19 dropping off then people will say well now we know what the worst is looked like where it looks like we're over the hump it looks like we're in this rebuilding mode and we can start planning for the future our time horizon for planning becomes much much longer because again when we get into high levels of uncertainty our planning horizons get very very very short so now instead of thinking six months forward a lot of people are thinking one or two weeks forward so i'm looking as at at this this downturn in the number of new cases in the U.S. is being kind of that tipping point that trigger point to where psychologically the market is going to start looking at things differently the other thing i want to emphasize is in in my viewpoint and i know tim will follow up in my viewpoint the grain markets as well as the energy markets will start to rebound after that point and in my view the the grain markets will probably be the quickest to rebound start rebuilding some strength we've already seen some rebuilding going on right now which i'll talk about in more in more detail but in my view it'll take a little bit longer for the livestock prices in particular meat complex to try and rebound simple because of of the dynamics going on in the meat markets and again tim will talk about at that briefly my next slide i get some questions about the U.S. dollar index and the impact that that might have on exports what i did was i prepared a chart and i grabbed this chart this morning the U.S. dollar index at about 8 o'clock or 8 15 this morning was about 102 and again realize this is an index so it's the value of the U.S. dollar relative to a bundle of other currencies and there's some concern about as as our dollar strengthens it becomes more difficult for us to export things in the global market makes it easier as a consumer to buy things but it makes more more difficult and and more expensive to sell things i did want to put this in historical perspective that if you look at the rates we're looking at right now their tens looks like there's kind of a support or resistance line at about 102 103 we're touching that right now we have to go back quite a ways we have to actually have to go back into the early 2000s to find a dollar index that was higher and again just as a reference point the the financial crisis of 2008 2009 you can see where that is on the graphic the the high numbers that we saw especially going into the 2000 2001 time period that was really the 9-11 event so what tends to happen because the U.S. dollar is the currency basically the dominant currency in world trade and is considered still to be the most stable currency there's a rush to buying or trying to get your investments into your U.S. dollars and because the demand is increasing of course the price starts to go up if we the next slide if we click into what's happening within the corn markets let's look at old this is old crop corn so this would be the value of the corn in the bin we're looking at the May contract it looks as though we've set a low at about 330 on the futures again this was this snapshot was taken about eight o'clock this morning as we're during that morning break before the the day trading started right now may corn is trading at about the same level 344 so we have seen a little bit of a rebound off the bottom some of that is because we're starting to see some buying interest i mean the values that we have right now in the futures market these these are some real buying opportunities we're starting to see some countries come in and purchase small amounts to make sure that they have the supply chains in place as as we move through this crisis we did get noticed that china did come in and buy a little bit of u.s. soybeans on friday they also purchased a little bit of u.s. winter week which is the first time in in quite a few years that they bought u.s. winter week so we're starting to see this demand-based building which is a good thing because again these are these are value opportunities the next slide would be for this may soybean futures again it's a very similar chart where we saw the the low we've seen a pretty strong rebound right now we're trading about up 19 so we're at about 382 on the futures today or right now so we're we continue to rebound some of the soybean charts one of the questions i get of course is how high will this go if we get a rebound where's the first level that we're going to start to run in some some resistance those blue lines that i put in there are the support and resistance lines so think of those as the psychological barriers to price movement as prices come up where's the first blockage point that we might start running in this in trouble on on this may soybean futures it looks like about 890 is kind of that topping point so if there is a rally that'll be the first time that we start to test those psychological boundaries and say is this getting given everything we know today is this getting overvalued then last next slide or these basically the last slide in my set was for hard red spring wheat and again part of the rally that we've seen in spring wheat is because of the purchase that china made of of u.s hard red winter wheat china has not purchased u.s wheat since about 2017 at least not in significant amounts and so the fact that they're coming in and buying some u.s wheat there is a slight preference from the chinese buyers to to look at a spring wheat instead of a winter wheat i think the reason they chose the hard red winter wheat was mainly because that was is is valued a little bit more at a better buy right now than the spring wheat is just because the relative prices so just as a real snapshot again i think the next upward resistance in the spring wheat mark could be about that 540 mark so we can see some rebuilding we're starting to see a little bit of that with some value purchases but there's the longer term trend in my view is still have some some upward some downward pressure excuse me just because of the economic conditions we're going through right now so with that i'll be quiet and i'll be looking forward to your questions good afternoon everyone tim petrie extension livestock marketing economist uh you see my email address there if you want to get a hold of me also you see my website there i'm only going to show you two slides today but i have many many slides and other presentations on my website and i will be updating these two slides periodically that i'm going to show you today so feel free to go to my website also i am only going to show you two uh cattle market class slides i realize that there are other very very important livestock species and market classes in North Dakota so again if you have questions on those please leave those to the end and and i will try to answer them so go to the first slide is uh 550 to 600 pound steer calves in North Dakota we have uh USDA reports for markets in North Dakota and that is Dickinson, Mandan, Napoleon, and West Bargo so these are just averages for those markets and bear in mind there's a wide range of prices that do occur for the same market class so these are just averages and i like to put the last three years on a chart because if it's happened in the last three years it could happen again and i think really sets the stage there so to begin with you see that i've highlighted that calf prices usually do peak out seasonally at the end of april end of may and they were at 180 the last three years and we were certainly going to do that again this year in fact at my meetings i've been asking producers to predict the price and i have this on there so well you know we were right on track to do that um uh just a month ago we were at 177 178 and you know all the fundamentals were really good there but you see what's happened to market for all those reasons that brian talked about the stock market and certainly about beef demand and so on and so on that i won't repeat so if you have these lighter weight calves to sell now obviously you're looking at at lower prices there are really no good marketing strategies to use now and you know probably have to switch more to financial strategies and working with your lender and so on and and what you're going to do there is prepricing opportunities are are over with but anyway one thing about calves just being more now looking ahead to fall is we do have some time to buy there what's going to happen between now and then you know as anybody's guess but hopefully the pandemic and all hysterically will be over and i agree with fraying completely it might be slower on livestock but that is a long way off but again i think what we have to do for fall is kind of prepare for the worst and hope for the best we were looking for sure with the fundamentals that we had with fewer calves to sell and strong export domestic demand and and so on that we would have been at least up to the blue wine there 2018 levels this fall maybe even up to 2017 levels and now it's anybody's guess they could even be lower than they were last year which was not the best year but you know again we've got to hope for the best here and that they will improve but again work with your financial institution and if they're similar to last year or lower you know what can you do there so go to this last slide these are for the heavier weight yearlings and which would be backgrounding cattle selling now and again we did sell quite a few of these in the january and february like we always do but march is a big month and unfortunately again there you see the red line that prices fell dramatically in the last month because of all the issues that brian talked about so again you know for calves being sold now the marketing strategy is over and we just are dealing with more prices and and no good options there the the square dots across the bottom are the feeder cattle futures market which aligns with the 800 pound cattle if you go back and go up from january at the beginning of the chart you see there and at the end of january the feeder cattle futures market closed about 141 and that was right on with what cash cattle and north dakota were on the average and so those squares would would very much correspond to north dakota prices and again we came off quite a bit there a little on the futures market it is up the limit today i'm just looking at the screen now at 450 and it was up the limit on friday and one of the obvious reason it's the same way on the live cattle the fed cattle side is is that the futures market overreacted to the cash market and is below the cash market so you know you can add another 450 onto those squares across there so we're up in the mid 20s for the nearby we're actually up to 132 over that line for the fall futures but much below last year and just a month ago feeder cattle futures were up at 155 so you see what they were on friday just add 450 but very significantly low similar to the charts that dr. Olson showed on the grain side so we have a wide range of possibilities for this fall again and we could improve and and you know beef production is at record levels now but by the end of the year it's going to to be reduced some and and again the fundamentals were so good just a month ago and and so it all depends on what happens the beef demand certainly all the sporting events and so on are closing the motels and travel is not good for beef demand and we'll just have to see how that pans out the beef demand now in the short run obviously is very very good because shelves are empty and so on but that's probably going to be a short run deal so again just a lot of not many marketing strategies that you can use now and more financial strategies and working with your lender and so at this time i'll just wait for questions at the end and turn it over to David rippling or a bioproducts great thanks tim uh Dave rippling or a bioproducts bioenergy economic specialist at NDSU extension uh just to kind of start on my first slide i just to talk about some of the key factors that are going on uh first it's really important to note that the the energy market has already started a downturn before the recent activity here in the United States in the last week or two for a number of reasons obviously China was hit early on in january with with COVID-19 and as the the world's second largest economy there's concern about their energy use and broader global economic impacts in response to that again primarily that the chinese impact Saudi Arabia, OPEC, and Russia had had discussions about how they were going to address this over supply and typically you can go one of two ways one would be obviously be to to reduce supply to to help prices rise to to kind of equal things out with demand they couldn't reach an agreement and so that was about two and a half weeks ago and essentially what's happened is Saudi Arabia the Gulf states and Russia have all decided that they're going to produce as much oil as they can with the intent of lowering prices and damaging everyone else at the table including themselves and again that was two and a half weeks ago now we're really seeing here in the United States as COVID-19 is starting to materialize is the expectation of significant reduction in in fuel use you know both gasoline which is primarily a passenger fuel as well as diesel on the freight side you know as frame spoke about we're in this place where there is no technical support if you look at the charts you have to go back 20 years or more to find a time where prices have been this low for a variety of energy products and so we can't go back and say hey this is what it looked like recently and so you know we have that point of reference and that you know that's really been the case now for for a few days especially for gasoline with our bomb contract is the benchmark for that and right now it's trading under 50 cents a gallon you know a month ago was at $1.60 or so so I mean that's fallen by two-thirds and again there's just a lot of uncertainty in terms of what actual fuel use will be it's important to know too that the arbalb contract is for New York Harbor and obviously New York City is one of the the most affected parts of our country right now so my next slide just to talk about how kind of how the markets responded on that top half of the slide it's it's global cases of COVID-19 which is in red followed by deaths again different access but you see how that behavior results if you actually kind of walk through that you know the numbers kind of came up and then kind of plateaued around the 12th of February that was when China got control of COVID-19 by locking down Hubei province and much of the rest of the country and in the last two weeks much of that growth has been coming from Italy both in terms of cases and deaths and now as we increase the amount of tests in the United States we're clearly seeing that here you know going down to the bottom half I have WTI which is the the US benchmark for oil which is in which is an orange and then the the blue line is the ethanol spot price it's the Chicago or Argus price for ethanol and as you can see there's been a significant decline in both of those but oil in general has taken a bigger hit ethanol has been somewhat resilient but almost the same way that you have to think about the local market for Arba New York Harbor you have to think about the actual local demand for ethanol most of the prices in the region the spot prices here in the Dakotas of Minnesota have been higher than this to a point where firms might still be breaking even or we're breaking even breaking even last week and so that's good news and of course the question is how are these things going to catch up into what level of severity on the next slide just to talk a little bit about kind of what my expectations are and me and everybody else an extension of this kind of these conversations you know what is what's going to happen here in the the near term which I just call second quarter of 2020 which starts on April 1 you know there's going to be a significant an immediate reduction in fuel use and exports which is going to you know echo and we know we have refineries up they're producing you don't necessarily want to shut down and so I don't know if we're going to ratchet back fast enough which again is going to result in a significant oversupply and lower prices my next point which I think is pretty important is just to think about how severe and how long the situation might last and what it could mean to the corn ethanol industry specifically but also how it reverberates through the rest of agriculture and again these are just some thoughts in terms of how how bad and how long the situation might be and then to measure it in terms of the amount of acres that we would dedicate to corn that would be used for ethanol that would be lost and so for example if if what we have right now lasts for four months and I actually did increase these numbers in my expectations from Friday quite a bit you know if it lasts for four months and there's about a 20% decline in gasoline use and consequently a 20% decline in US corn ethanol consumption you know that equates to about two million acres lost for the year and again would that come off of old crop or new crop you know that's what's going to play into the longer scenarios and of course as you lengthen the duration and increase the severity it obviously can be a number of acres so if this is going to last for all of 2020 and a 25% reduction which I do not think is the worst case scenario you know we'll be talking about a loss of about a fourth of the the corn acres used for ethanol which is about seven and a half million acres also talking just about expectations you know energy can respond it's a very liquid market but you know it's really going to go and this is kind of based on our experience with the the financial recession the 2018 excuse me 2008 recession the financial crisis you know traditionally transportation follows GDP fuel use follows miles traveled and you know a lot of this is just going to depend on how the market as a whole reacts how the economy reacts you know we're going to see unemployment numbers we're going to see some immediate significant changes and while I'm confident we'll you know we'll catch our feet and begin to grow as early as the the third quarter you know it's going to take you know likely years to get back to the same level of GDP and then consequently the same amount of fuel use all right thank you gentlemen it's time for q&a so if you have a question you can use the chat or you can also text the number on the screen or the email address and then our gentlemen here will answer your questions as we're waiting for the first question to come in do you guys have any additional thoughts as maybe the next person was speaking that you went oh yeah i should have mentioned this um if i can make one one brief comment i guess the springboard off a few things david had said um also one of the questions i'm getting from from farmers as well as some of the egg press is well two two parts what do you do with the old crop i focused a little bit on the old crop pricing and what's going on in the value of the stuff that's in the bin but as we move into spring planting now the question is well should farmers change their planting intentions or should they modify what they're expected to plant this spring based on the what we have today and in my recommendation at this point is to not change those um if we look at the price relationships in the marketplace right now there is a slight advantage to planting additional corn acres but as david pointed out um there's some questions about the longer term demand base and how quickly the ethanol um ethanol industry can rebound out of out of these downturn so i would at this stage of the game not change my planting intentions based off today's price levels um again it is a benchmark but given all the level of uncertainty and the extremely short planting horizons that most people have right now and the rapidly changing in but economic environment um my recommendation to farmers is don't keep the plan in place um obviously the economics is a big portion but you also have to look at uh what is the the weed control issues what your rotation system um how many acres you're actually going to get seeded this spring um obviously spring melt and and potential flooding is also going to play into that role so i would not change my 2020 planting intentions based on what i see in the marketplace today I see a question there from I believe Todd Neely on uh inputs my uh my brother is a he works for a very large co-op in Nebraska farmers co-op and that's his job is sourcing inputs and then turning around and selling them uh retail the farmers and so far he's told me he hasn't had any hiccups in the supply chain of sourcing inputs and in fact they're trying to decide how much fuel to buy to completely fill their coffers and at what point like in other words you know Dave Dave can probably address where he thinks the bottom is but they're they're trying to guess that too and so a lot of businesses that are sourcing ag inputs including fertilizer uh NH3 uh urea those kind of things where's the bottom and uh when should they stock up but as far as he said the the supplies continue to be there the ability to source it is there it's a lot better than last year because they're not having these barge and flooding issues of getting need to be you know Nebraska and Iowa and those guys are are several weeks ahead of us in terms of their planting season and so far so good i don't know how much of that's going to be maybe translated on to you the farmer in terms of lower costs as these as these fuel supplies and things like that are less expensive but i don't anticipate any input problems right now it sounds like that the that that supply chain is is solid and and will continue to be going forward that's that's my take but again this this environment is changing so fast that i i can't i we're we're trying to basically look out weeks and weeks and and things things change rapidly but so far so good on that we have a question that was just before that tyson added five dollars to fat cattle purchases how is it i'll take that one yeah tyson's adding five dollars on so certainly that'll uh help cattle prices that fed cattle prices this week and the other packers will fall along again this is kind of a short-term deal and that the shelves are getting bare around a lot of places for beef and we're trying to funnel beef out of the hotel restaurant back into the retail chain and so on and obviously one of the things that the price system is supposed to do is prevent shortages or surplus isn't it right now there's a shortage at the retail level so prices are going up there and and to ration the product and also funneling the fed cattle but again our concern is into the future and you know how long is this thing going to last and no travel and no sporting events and all that how's that going to affect demand into the future so in the short run and you see the futures markets up the limit today so you know that's a short run thing and and prices are going to be higher this week but our concern is long return see another questionnaire while i'm on a question about dairy and uh same thing is for all the livestock and dairy that i talked about just on cattle as we've seen price declines now and and how how is demand going to be affecting the future we were looking at a quite a bit better year for dairy this year and prices did come up and and now the the futures market there too has been going down so just concern about you know what's going to happen to the economy and people and again a lot of dairy products sold at the hotel restaurant business and so no answers just many many questions but the the uh entire meat dairy complex is struggling with what is demand going to be and david do you see there's a question about fuel supply and any thoughts on biodiesel industry yeah both really good questions so obviously right now we're not seeing any disruptions in any of the gasoline or diesel supply change don't really expect that i know that farmers have begun pricing uh some some of their their their fuel for for spring work and again you know that that general marketing principles again if you can lock in a low price you know you can sit and say is it going to get lower or higher you know i i don't know if you're going to see significantly better prices again in our lifetime so again in some respects that's like the only silver lining in this broader situation uh are are those low lower fuel prices uh in terms of biodiesel it's going to be really interesting because what we're seeing now is you know the problem is a significant shift in demand and so this is obviously hitting both the renewable side and the fossil fuel side and there's excess there there is now excess capacity in both oil refining and in biodiesel refining or in corn ethanol refining and it's going to be troublesome and again biodiesel consumption is actually pretty easy to estimate uh again in terms of its relationship with gdp we're going to see a hit in gdp we're going to be i think for the most part you know moving a lot less material a lot less freight activity in the second quarter and that's going to hit both diesel and biodiesel pretty significantly uh and you know one of the thoughts you might have is the solution would be well let's just increase the biodiesel blend rate again because there's no blend wall again the challenge with that is the the petroleum industry is going to fight that tooth and nail because they're really going to be giving up part of that tank at a time when they they don't want to give up anything else because it is uh it's such a difficult situation right here's one for you can we move the low quality corn or is that going to cause even more problems um so the it depends about how low quality you're talking the ethanol industry at least the local ethanol market has been taking up some of our lower quality corn the lower test weight corn some of the low test weight corn has also been going to the feedlots and what the feedlot folks are doing is they're taking a train load of the low low excuse me low test weight corn that we have here in in the dakotas they're blending it with some of the higher test weight corn that they've got coming out of western kansas western Nebraska and they're coming up with the feed ration they need and so for the ethanol standpoint as david was saying i think there's going to be a lot of pressure on on those folks who try and increase efficiency as much as possible meaning there'll be if they're going to discount for low test weight corn they'll likely increase their discounts just because the conversion rates aren't as strong for the feedlot sector again tim may want to jump in and comment on this but um for for the feedlots of course they have the number of animals in the lots right now they need to be fed the question is how quickly can they refill them and at what weights are they going to try and bring them into the feedlot at and so that one's a little shakier um i do think there'll be some some again pressure on light test weight corn throughout the rest of the summer just because we there's so much of it into the marketplace right now tim you have a question um have you seen anything from the other major packers regarding a similar offer yeah i think that that'll go on i haven't seen any announcements on others and this was just kind of an add-on but that that raises the price and so you know i think whether you add on or the price level goes up this week that's the case i see another question of you know how will beef demand compared to chicken and pork and obviously beef is the highest price meat item we have record production of beef pork and poultry and so all of those are very dependent on the hotel restaurant trade that you know is is getting less and less every day and again the big demand at the retail now how does that carry through and so you know it you know we just got to wait and see here how consumers react and so on but yes beef is the highest price item and so that could be impacted more um another question about will there be any support for cattle or livestock producers and again uh i have no idea there the government right now is is debating a two trillion dollar package and and only hogs and dairy were involved with mfp payments and so uh this is a whole different story and so brian maybe can talk more about it both two trillion dollars and do we have another one and how many what happens in congress so i can't answer that but i know many senators have indicated the livestock situation to the secretary of agriculture and the president so you will have to wait and see there yeah there's there's another one does it make sense for for cow calf producers to hold on to their calves for say another 60 days to hope the market will rebound yeah okay that's is kind of risky and i can't answer that nobody knows what prices are going to do but again uh if we struggle on the demand side and again half the beef uh goes into the hotel restaurant institution sector and we're trying to move that over into the retail level but uh again when reality comes that we're you know with the ncwa and all the other stuff where we sold a lot of meat there certainly is downward uh chances for cattle prices on out so you know it's i just can't answer that it it could yet there is still a chance of downward pressure so i think you have to discuss that with your lender and uh and see what this that the situation might be there and and to kind of attack on with with tim there's a estimates out there of a second quarter contraction all the way up to 30 percent of gdp basically that's kind of uh that what that actually came out from a federal reserve uh banker out of philadelphia goldman sacks has come out and said 25 percent um and that was days ago and it's actually people are revising these these these market analysts are revising them every day as conditions continue to deteriorate and like tim said the most vulnerable sectors for what's going on right now are the ones that are going to heavily influence meat prices uh you you can't shut down every steakhouse in new york who are the people who tend to buy box beef cuts the most expensive cuts and they're not serving them and our general economic theory says that when incomes go down or or we have a recession like i i don't want to use the term recession because that has a very technical definition but contractions like they're talking about um there's just no way that it's not going to impact these things dramatically and people tend to buy cheaper if they're worried about their jobs if they're worried about income if they're worried about it down the line even people who maintain keep their jobs and aren't necessarily that worried about losing them we tend to start pinching pennies they're they're gonna they're gonna buy the cheapest cuts of meat uh the cheapest food in general that they can get their hands on and save as much as they can going forward and then we have how is this going to affect the the credit markets tim brought up you know i see some questions streaming here on government relief yeah there's been our senators who've who've brought these uh concerns or bringing up these concerns for farmers right now there isn't a lot of talk of that and it could come in in several different forms one being the mfp style direct payments that uh that we received last year another one might be uh basically loan programs to commercial lenders who will the government will guarantee loans that they normally lenders might not have made in uh based on some of the cash flow problems that that might be being faced by our farmers there might be some government backed uh loan programs right for higher risk loans so fsa getting involved and making these kind of things or the the triple c coming in and and doing some sort of relief there we just don't know i would be i would be surprised if myself and i and these guys can agree or not i would be surprised if there isn't some form of help coming but as far as who gets it and how much that's that's impossible to say but the numbers they're throwing around trillions with a with a t with a big capital t compared to that 14 and a half billion dollar mfp last year that's a drop in the bucket uh with the numbers they're throwing around right now so i i'm hopeful i think that there probably will be but in in what form it comes it's it's really tough for us to say right now that the conditions are changing so fast and i saw another question just real quick while i'm on about fertilizer prices again i kind of addressed that a minute ago but it i don't see this necessarily affecting fertilizer prices and input costs they're i'm not saying that they're not going to move up or down but i i don't think it will necessarily be because of this those supply chains are robust the people that i know that are in the industry are having no problems sourcing fuels and fertilizers and herbicides and things like that and they were ready for the planting season uh you know before all this happened they already had a lot of that stuff sorted out so i don't see that this impacting your ability to either secure inputs or the the price on those inputs dramatically and in fact if if anything you may see them go down because of things davis mentioned about fuel prices in terms of soybean and wheat production how are other countries doing um okay so let's take those in in two different pieces in soybeans uh the basically the three largest producers of soybean globally um the u.s and brazil which are approximately the same size in then argentina of course we're going into our planting season um the expectation now is that our soybean plantings will obviously be up from last year but down from the from two years ago so we're going to looking at a because of the carryover stocks of soybeans from from old crop um on the wheat side okay so back up on the soybeans argentina brazil are both going to have very very large crops um the brazillian crop is nearing the end of its its maturity most of it's been harvested the argentine crop there has been a few dry spots in it and and kind of the top end is coming off some of the yield expectations but they're still going to have a very very good year um in in south america and that's going to put some pressure not only in old crop soybeans but also put kind of a cap on any kind of new crop rallies we may be able to get on the wheat side most of the wheat the vast majority of the wheat we grow globally is in the northern hemisphere and so their production cycle is very similar to what we have in the united states so for example the black sea region of argentina and i mean of ukraine and russia have a very similar uh production cycle to let's say in oklahoma or or kansas here for their wheat production their winter wheat production um right now it looks like uh most of the regions globally for wheat production with the exception of of australia are in pretty good shape um there are a few issues starting to show up in in russia but again they're relatively minor at this point there's a few spots in parts of europe where the winter wheat crop looks like it might be under some stress but uh global supplies of both wheat and soybeans look to be very adequate for the foreseeable future train any thoughts on what's in store for basis levels and local cash bids for both old crop and new crop all grains okay so we did see as as this coronavirus started to evolve we did see a slight weakening of the basis levels for corn in particular corn delivery into the ethanol system i don't anticipate major uh drops in basis levels we also had a question related to that about china buying us commodities and what about our port facilities and any any threats of shutting down the port facilities from the export standpoint if we did see some some issues at the port levels where um port workers were either ordered to stay home or or there was in brazil i mean yeah in both brazil and argentina now there's discussions about strikes by the port workers because of corona virus and concerns about being infected as they're loading and unloading vessels we haven't seen that in the u.s yet but if there was some kind of supply disruption in particular at the port levels obviously local basis levels would respond respond fairly quickly now i don't anticipate that happening i i don't see it happening right now but it is a possibility now if we do not have a disruption in the supply chain i really don't see the basis levels crashing and crashing dramatically we may see again some downward pressure i don't see at this price level in the futures market the farmers are going to have a lot of selling activity most farmers that i know of are not really thrilled with these price levels so the inflow of grain into the system will be relatively muted which should maintain basis levels at least within my guess my anticipation within within the next month or so thoughts on msp3 i know brian touched on that a little bit um i think it's a possibility whether it's part of this big stimulus package that's being negotiated right now or not i don't know that's being put together fairly quickly i think the focus is primarily on industry level support for the the hospitality and airlines and and cruise ship industries as well as trying to get some immediate cash relief for those that are facing unemployment or those that are concerned about their jobs whether agriculture is part of that that's bailout or stimulus package we don't know i think it is likely given all the things that are going on i think the probability went up but again i have not heard anything through the grapevine about a formal mfp3 3.0 kind of program or payments yeah i i uh scoured you know the news to try to find any mention of an mfp3 uh other than it being somewhat discussed by uh members of of congress and whatnot i i don't i haven't seen anything and i read uh the the the phase three actually has a outline of the things that they're going to address and of course that's changing probably right now uh but i didn't see any mention of agriculture really in there a lot of it you know but technically speaking i mean ag is small businesses so i don't know if the small business liquidity that they are pumping into it would uh go towards agriculture as well or if there's or if it's going to have its own bill because it may be a scenario where uh ag banks are able to access some of those funds and maybe there's there's the ability for farmers to take advantage of some of these uh loan programs through the sba i know that that's encouraged in some states where where farmers use sba loans and are they going to be loans that are then forgiven or are they going to be just you know are you going to be on the hook for the payments in the future a lot of that's all up in the air right now is it and it's changing by the by the minute so that that's kind of where we sit there i i hate to say yes we're going to get an mfp or no we're not going to get an mfp because we just don't know what it's going to look like but i i do believe there will be something i just we just don't know what it is brain do you see even more possible preventative planning acres happening this year because of wet conditions and of course the fear of the market presently yeah one of the things we saw last last spring when when it looked like prevent plant was going to be a very very large portion of our of our us acreage we saw quite a rally especially in the corn market to try and provide that incentive for farmers to keep planting in today's environment we do quick back to the envelope math on prevent plant prevent plant is always kind of a second best choice in most farmers minds they'd rather plant a crop but when you do the economics on it with today's price levels again i want to be cautious about making decisions with today's futures market prices but if we do use that as a reference point and do the math on prevent plant obviously with the lower prices prevent plant looks like a better better scenario do i think farmers will dramatically change or or look at prevent planting differently in today's environment i you know i know there's going to be some farmers that that may but i think the majority of them would prefer to plant a crop and not have to deal with the issues about weed control and and and staying within a crop rotation longer term i finally have a text question here so this one's also for frame you mentioned that the port workers strike what caused the soybean dust issue in pakistan in february any background on that oh that is a great question i don't know the answer to the pakistan one i'm that one i'm not i'm not familiar with all the details there so that one i can't comment on i guess the i will fill in a little bit of blanks on the both the brazilian and the argentine issues because that came out basically on friday in in one of the major ports in argentina actually argentina has river ports so the import they the farmers deliver the soybeans into these port facilities the crushing facilities are very very close to the ports where they load the vessels the one of those major port areas would be similar to our like the gulf of mexico you have multiple companies and multiple cities working along that region they actually blocked the the citizens tried to or the cities excuse me tried to block the import or movement of the trucks into the city to dump the soybeans for processing and for export and so even though nationally they said no you're allowed agricultural products as a is a priority product you're allowed to ship it within the country the cities themselves put the put the ban on saying we're not going to allow these trucks in and so there is a supply chain on reserve right now for a few days but again that might run out shortly in in argentina in brazil uh the brazilian dock workers are going to vote today um in the city of santos to try and decide should they go on strike because of concerns about health issues and the coronavirus i haven't heard anything yet as of this morning on what their vote came out my guess is it'll be another day or two before we find out but even even in brazil where there's again huge volumes of of beans being shipped right now the port strike the park workers are very concerned about their own health and their family's health and are are actually considered striking because of it so this isn't a developing issue it's something we've got to keep our eyes on for sure back to the other question have you seen guys struggling to get operating credit i'll start with that one and brian maybe you want to jump in or or tim or dav um as of right now i have not i mean that there's there's obvious okay so backup um the economic conditions coming in for loan renewals was was a struggle to start with and i want to be very careful how i put this in my discussions with with ag lenders they're doing everything possible to be able to rework the loans so that they keep as many people farming and as much and provide as much financing as possible but obviously there's going to be limits and each lending institution has their their line that you can't cross and they say look we just can't do this anymore because it's too high risk so there are farmers that are not going to get financing this spring um to my knowledge the change because the coronavirus has not yet impacted the lender's ability to provide credit my understanding and again i haven't had a lot of conversations recently but my understanding is that banks are continuing to use the price and price forecast that they had been using earlier in the winter as they're putting together the cash flows for the 2020 operating line lines of credit so to my knowledge there's not been any adjustment on the lender's side to make make revisions to either existing loans or even the new loan applications given the drop that we've seen in prices today yeah again it's most of the any credit issues are going back to people who had cash flow issues from previous years as far as we can tell at the moment there's not any liquidity problems going through the the banking system and and adding to adding to the the issues that we already had so at the moment not any more than you would expect based on economic conditions from the previous years yeah there's been some instances that i've heard about where credit is getting tighter for individuals but we're not going to know exactly the impact that this has had for a while there's a huge lag effect and so um we'll continue to continue to monitor it there's a question about corn acres how many have left to go in north Dakota or Wisconsin frame so i don't have any good numbers out of Wisconsin um the last official numbers that i saw out of USDA NAS for the survey was about 40 percent remaining are actually closer to 30 about yeah 40 was the last official number i know as of about two weeks ago when i talked to farmers as well as you know some of the commodity organizations they figured there's probably a third of the corn that was still left in the field at least in north Dakota in this region and and i don't know what's been happening the last week or so because of all the other stuff going on but i suspect farmers are still trying to plug away at getting that cleaned up so if i were to guess today i'd say anywhere from 25 to 30 percent of the of the corn crop still remains across the state but that's just a guesstimate on my part i think we caught all the questions but if you guys could kind of scroll up and down and make sure we've covered all the questions i just want to point out to everybody that we really appreciate your feedback on this webinar i inserted a url there that you can click on i promise it's only three questions very short sweeten to the point but we want to know if this was was worthwhile for you or not so if you would provide that feedback we would really appreciate it and like i said if you guys can just kind of scroll up and down and make sure we've answered all the questions however we don't want to cut off the discussion if you think of something please throw it out there there was one question that came up to me privately and i don't know if it was just a purposeful or a click of the button but it the question had to do with the federal reserve and in and interest rates and what the federal reserve activity is and what i thought might happen to interest rates and i know brian and i have talked about this i'll make a few comments and please feel free to chime in when when you want to brian um you know we're essentially at anywhere from zero to point two five percent as the federal funds rate right now and that's the rate that the large banks will loan money to each other on an overnight basis so that becomes kind of the starting point for short-term interest rates the interest rate on your credit card the interest rate on your operating loan that's kind of the starting point for that i really don't anticipate the federal reserve going to negative interest rates i i just don't see that as a possibility i know the federal reserve chairman uh gerome powell is against that idea i think most of the federal governors are against the idea right now there's a more discussion about the quantitative easing or essentially having the federal reserve try and help buy some of the low quality loans off the marketplace to try and provide an additional incentive then for the large banks to continue to loan money and i do see that you know that continuing i really in brian chime in please i really don't anticipate short-term interest rates the federal reserve increasing interest rates for an extended period of time this is going to take a while for the us economy to rebound and to start growing again and they're going to want to try and provide as much stimulus as possible to make that happen um yeah so uh as far as them increasing rates i don't see that happening for years when you think about what happened after the 2008 financial crisis i mean we stayed at basically zero percent interest on the federal funds rate that is for a very long time the quantitative easing that went on and the steps that they're taking now makes what they the federal reserve did in 2008 looked small i mean the amount they're talking about pumping potentially four trillion dollars by the time this is all said and done into offering like frane said the ability to buy up bad debt that they know is going to be bad debt um but they're basically rather than the government sending uh sending a small business owner a check they offer them a you know a risky loan and then forgive it if it doesn't get if they can't pay it i mean those are the kind of things being kicked around right now and in order for that to happen you know the federal reserve has to make money available as does the you know the treasury so i don't see interest rates going very high um in the in the near or medium term future i mean i just don't now that's not to say because i showed it a chart that that interest rates actually went up in the last month because but you got to remember interest rates are the federal funds rate plus approximately a three percent prime and then and then as well as individual risk so if right now before these uh the the lenders are able to access a lot of that money uh they have to assess risk and then assign an interest rate accordingly and it's gone up for that reason but as far but they're still historically low we're still talking about below four percent we're still talking about three and a half i'm just saying that this recent spike is is not not a interest rates going higher as far as that goes um so that's that's that's what i think about that now this was a very different conversation just a year ago uh but but things have things have transpired that and like frane said they're not going to go going negative interest rates has historically not been very useful that's one reason they're not going to do it plus it sends a pretty bad signal when they do that a lot of people react when countries go to negative interest rates that they're basically their economy is totally in the tank that that's kind of the perception that comes with it um and i just wanted to mention i said it in the chat but that phase three a trillion dollar bailout package failed in the senate once again so we're seeing these equities market react pretty unfavorably right now for because of that so we'll i guess we'll see going forward i do think it's going to get past this just how long is it going to take and what's it going to look like we were not sure i think we missed one question up a little ways just is there anything that we didn't cover that farmers and ranchers need to keep in mind as we navigate the unknowns of the coronavirus and i would also not throw two questions to you guys at once but also just is there a key message you've all been to my training is what's the key message you want to leave people with what have we forgotten and what are the key messages i guess i can start while everybody else is trying to collect their thoughts um my big takeaway on on on this is you know not to panic we've had a lot people are adjusting the situations changing very very quickly i do think the market in general whether you're talking the the grain markets or the livestock markets or the equity markets um are are right now in because we don't know what's happening they're thinking a worst-case scenario and and i really don't think that the worst-case scenario in people's minds right now are the ones that's actually going to play out so right now don't panic let's let's think about what's going on make smart decisions get as much information as possible before you make a decision and and and be very thoughtful about how you move forward again so this is not a time to panic let's not overreact to what's happening let's think through and and make decisions that are based off of the best information we have yeah and i i'll just i'll just uh attack on with frame that right now the the situation is changing so fast and uh and estimates of long-term implications are changing and new ones coming out every single day uh some are like uh like frame said this worst-case scenarios of a 30 retraction in gdp some are a lot more optimistic like a 12 retraction in gdp the the real i guess variable is is how long is how long are we going to be operating under the condition we're operating in right now and the reality is nobody knows um they're they're just estimates uh the treasury secretary came out yesterday and said 12 weeks that we'll be kind of operating under this self-quarantining cities certain businesses forced to remain shut down those kind of things if it's 12 weeks that's uh that's an awful long time um and and it's going to have long-term implications but again making decisions based on those kind of uh speculations is probably uh not productive simply because again things are changing so fast that you you try to plan right now and and and by the time you implement some of these strategies the the situation's changed on you so going forward i think we you know we put our heads down and we try to plow ahead as best we can and and then you know react accordingly yeah i would just agree that don't change your marketing plan based on what happens in today or tomorrow in the futures market i mean it's going up the limit down the limit and so on last week in cattle futures some days we had a $10 range in price they'd be up the limit to begin with and the dow changes that goes down so uh be very careful to make big changes in marketing plans we just have to wait this thing out and and see and it's very very unfortunate but uh there are way more questions than answers right now oh you're still muted if there's no more questions we want to thank everybody for joining us today especially a big thank you to frame brian tim and dav for providing so much information and please click on the feedback form like i said it's only three questions long but we would greatly appreciate knowing if this was useful if you would like them to do it again if you have topics that you'd like to see addressed in the future that they can delve deeper into so thank you very much for joining us today the recordings will be on the ag group business and applied economics extension page and the indiasu extension coronavirus website both of those websites so we'll let you know if we're doing this again with additional topics that you've suggested thanks so much for joining us today bye