Market Plus: Mark Gold

Howell: This is the
Friday, November 22, 2019 version of the
Market Plus segment. Joining us once
again is Mark Gold. Mark, welcome back. Gold: Thank you. Nice to be here. Howell: Mark, we’ve got
a lot of great questions this week on social media. It’s crazy to think that
people are already turning their attention to 2020
and what’s coming down there. But to kick things off
here we’ve got a question from Austin in
Belmond, Iowa. When do those delayed and
abandoned fields start to be factored into the
USDA’s acreage or yield reports? Gold: I don’t think we’ll
see the full extent of it in the December report, I
think we’ll see it in the January report. It’s going to be final,
final by then and those are going to be the
numbers we have to work with. Are we going to see
numbers that a lot of us think are not there? I don’t think the USDA
will be that aggressive. But I think certainly with
the harvested acres and with what did or didn’t
get planted, what went into silage acres, we
don’t know those numbers yet but we should have a
good number come January and hopefully we’re going
to see lower numbers, not only production, but lower
yield as well and that could be the start of a
nice market in January. Howell: And it’s crazy,
I was talking to some producers this week that
are saying, upper Dakota areas, that were saying
it’s probably going to be January, February, maybe
even March until they get some of that crop
out of the ground. How does that factor
into the market? Do we see a delayed slump,
I guess a post-harvest slump? Gold: I don’t think so. I don’t think there’s
enough corn up there, just there that’s going to
make the difference. It’s not only in the
Dakotas that they’ve had problems but Minnesota,
Illinois, Iowa, Indiana all having trouble
getting the crops out. Illinois should get some
good weather next week, guys should be able to
finish up, let’s hope. But I think the USDA is
going to have a pretty good idea of what it is
by the January report and those are the numbers
we’re going to have to live with. Howell: And so we’ve
talked a lot about the January report, we’ve been
talking about it for it seems like two months,
three months now. It’s nearing. We’re already almost
into January here. But you also mentioned
during the program that basis levels have also
continued to be relatively strong for this
time of year. So we’ve got a question
here from Josh in Bloomington, Illinois. Should producers take
advantage of the positive basis and relatively
higher prices on corn or hold out for those
adjustments that could be coming for yields
and acres later on? Gold: I think that’s
a good question. This basis is so strong
but between now and the WASDE report, I think it’s
January 10th, we’ve got a good five, six weeks. A lot can happen to a
market, if there’s no trade deal, if things get
tough, we know the Chinese are upset about the
resolutions passed in Congress condemning
the Hong Kong attacks. So is there a deal or
isn’t there a deal? If there isn’t a deal and
somebody gets tough about it this market could break
another 30 or 40 cents. So would I keep a cheap
short-dated put under it if I’m going to wait? I would. Like I said, I believe
after the first of the year we’ll see a pop
but that may come at the extent of the
basis backing off. So it’s kind of a double
edged sword, pick your poison. If you can lock in basis
now for delivery in January I might do
something like that if you can deliver after the
10th, that may be one way to handle it. But I just don’t want corn
sitting in the bin hoping for something that may not
come just because there’s a strong basis out there. Howell: And so you
menitoned there, what strategy would you be
employing if you are locking in basis now to
make sure that if there is some sort of bump here
come January that they’re able to take advatanage
of that/ Gold: Well, certainly if they’re going
to be selling the grain I would be buying
back call options. I want to keep the upside
open after the first of the year for some of
the reasons we’ve talked about. But I think there’s good
things coming next year. We’ve been in such a
really a four year slump now in agriculture. I believe we’re due
to come out of it. It looks like there’s a
little bit of a potential head and shoulders bottom
on the weekly corn charts out there. So I think we’ve got
a chance in here. But again, as a risk
manager, I’m not going ot tell somebody not to sell
corn, I’m going to tell them if you’ve got it in
the bin hold onto it, keep a cheap put
underneath of it. You can spend a nickel and
get something relatively decent for the short
period that you’re looking to protect. Howell: Mark, as I
mentioned we’ve got questions about 2020, a
lot of questions about 2020 already. One of the other questions
which shocked me that we’re already thinking to
this is the acreage mix for 2020, which seems
crazy because this year’s crop is not even out
of the field yet. But we’ve got a questio
here from Paul in Nebraska on Twitter. Assuming we don’t have 20
million acres of prevent plant next year what does
the acreage mix look like? Gold: Well, we’re going
to see a lot of acres, there’s no
question about it. That keeps me on my toes
to look for marketing opportunities that may
come in the summertime because we are going
to see a lot of acres. How much? I don’t think we’re going
to see the kind of delays that we had, it would be
unusual to see the delays we had this year. So can we boost corn 10%? Can we boost beans 5%? I think without any doubt
those are the kind of numbers you could be
looking at out here. But let’s see what
the WASDE report says. MAybe they’re going to say
we didn’t lose those kind of acres out there and we
don’t have to add those back into the mix, which
I think would be a little bit friendly in
and of itself. But the fact of the matter
is farmers are going to plant, just like they
always do, and we’re going to replace those lost
acres and farmers want to get out there, plow the
ground, plant the seed and harvest a crop. So we’re going to
see more acres. But I believe along with
that we’re going to see better demand not only in
corn and beans but maybe wheat as well. Howell: So do you see any
acres being pulled away from wheat or cotton or
another commodity to plant more corn and
soybeans into 2020? Gold: Well, cotton is a
little bit of an issue for the soybeans. You’ve got 62 cent cotton
out there which isn’t going to get
anybody too excited. But then again
you’ve got $9 beans. Nobody is going to get too
excited about that either. But the fact of the matter
is I don’t see where the real big shifts are
going to come from. Are guys going to double
crop whatever wheat was out there? That certainly
could be a factor. We could see more beans
beacuse there’s just so low wheat acres. What are they going
to do with that land? They’re probably going to
put it into bean sor corn so we could see a little
bump from that as well. Howell: Okay. Mark, we’ve got a question
here looking at some more technical stuff. I actually thought it was
named after you becuase it’s called the
Goldman roll. But Bradley in Upand,
Nebraska would like you to explain the Goldman roll
and how it changed the December and March
corn and bean prices. Gold: Well let’s be very
clear I have nothing to do with the Goldman roll. Howell: But you
could say you do. Gold: Yeah, I could and
everybody would know I was a liar. It’s the Goldman
Sachs rollovers. Goldman Sachs is one
of the major players in commodity markets. They have funds and they
generally trade them from the long side and a lot of
these funds whether it’s long or short they roll
these positions, by law they have to roll them
before you get in the delivery period. So when we get into
November you’re going to see them starting to roll
the December and that is usually bewteen the 5th
and 8th business day of the month. So they’ll seel
December and buy March. In this case they’re short
December corn so in this case they’re going to
be byuing December corn, selling March corn to
roll those positions. Net, net everybody knows
it’s coming, everybody knows when it’s coming and
so I think a lto of guys, professional traders kind
of get set to take the other side of those rolls
where they can pick up a quarter, half cent
on large numbers. If they are members of the
exchange or have a real low commission rate they
can afford to do that. So I don’t know that it
has just a huge impact on these markets
in the long run. The Goldman Sachs rolls
have been around for probably the better part
of 20 years and rarely do we see it have that
much of a difference. It’s just a month-to-month
spread and what they knock out of one side they
put into the other side. So the spreads stay fairly
calm except you will see Dec lose a little bit to
March most likely in this roll. And on the January, when
we get to January they really don’t have any real
positions at the moment, maybe long 20,000
beans in January. So in December will they
start rolling out of those? Yeah, but 20,000 contracts
isn’t going to do much to the market. Howell: So does this
Goldman roll have any impact on basis prices or
a producer taking a cash price on the spot,
delivering to the elevator, will it impact
any of those things? Gold: I think anybody
trying to make those decisions based on a
Goldman roll is looking at the wrong thing. It’s time to look at
something else which I think could be more
important but I don’t see it being a huge impact
on these markets. Howell: All right, Mark
Gold, thank you so much, always a pleasure. Gold: Thanks, Delaney. Nice to be here. Howell: Join us again next
week when we’ll crack open a story about a wild North
American crop and Elaine Kub returns to the
Market to Market table. Until then, thanks for
watching, listening or reading. I’m Delaney Howell. Have a great week!

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