[upbeat music] So we got some good news around corn last week, right, John? What's happening there?

Yeah, I mean, we've talked about corn a lot over the past couple of months, but everything up until last week was in regards to this current crop, size of crop yields and whatnot.

After that August WASDE report, Pro Farmer report, everyone was talking about yields.

Now it seems more people are talking about demand following that stocks report last Wednesday, I believe.

Corn stocks came in above the September WASDE's 25, 26 carryout estimate.

And it was a pretty big change, too.

For the second year in a row, we've seen a much bigger September 1st stocks number than what the USDA reported in the September WASDE.

What's going on there?

All right, John, what's going on with these crazy energy markets?

Yeah, so, I mean, we've ripped higher over the past few weeks.

We've had a number of different escalations in the Middle East that have kind of tamped down on traders' optimism regarding a solution, resolution, whatever you want to call it, coming anytime soon.

I think maybe the most important one was Trump's promise that the war will be over right after midterms, which kind of just sounds like...

That's the earliest it could happen, which is not anything anyone was hoping for at the offset of this.

I don't think anyone, even in their most pessimistic outlooks at the beginning of this war, was expecting it to go all the way through midterms, but here we are.

And then we have the Houthis on the other side of the Arabian Peninsula making some alarming progress down Yemen's Red Sea coastline.

So we don't want to be distracted about feed costs right now, John, because they've been up quite a bit, right? What's going on there?

What's going on there? Yeah,

it's, I think, started the process of coming back down to earth after all those gains we made earlier in the summer.

I think what got it started was...

Reports of warehouses in Brazil filling up.

So what that means is all these farmers who have been holding out for higher prices, kind of making this rally worse than it probably would have been without it.

They're not going to be forced to sell.

They're going to be forced to accelerate their sales of this current crop that I think just finished coming out of the ground.

So speaking of bottom, the egg markets have been kind of trending around the bottom as of late, right, John?

Do we have a problem with this corn crop?

Yeah.

Last week we had Pro Farmer's annual crop tour, which is a really well followed event, especially for corn and soybeans in the grain sector.

And soybeans, it's kind of a snooze fest or I mean, there were some interesting takeaways, but it ended up being pretty close to expectations once the final estimates were released on Friday.

The big story was corn.

I mean, the state-by-state yield estimates came in below the USDA's expectations almost across the board.

And, you know, when I say below the USDA's expectations, you kind of have to remember that there always is a difference between Pro Farmer's yield estimates and the USDA's.

So lots of other stuff going on out there, right, John? I mean, we've talked a lot about Hormuz, but there's some things going on in the Black Sea that are concerning.

What does this mean for the markets, in particular fertilizer prices, which we haven't heard a lot about recently?

Yeah.

Well, there's good reason for that.

So fertilizer spiked right at the offset of this war, right as the strait was closed, but has been coming back down to earth ever since then.

So I wouldn't say we're back to normal per se, but we're trending in the right direction and hopefully we'll have some kind of resolution here by the time South America's harvest com- or planting season comes around.

That's the first real concern with fertilizer, and you know, we here in A- in the, in North America, we won't start planting until next spring, and most of the farmers who were planting this past spring already had their fertilizer needs covered before this thing started.

But South America is a concern, but I don't think it's as much of a concern as some people are making it out to be.

What's going on there?

[laughs]

So that's, that's the code of the West, and it's, um...

For me, I mean, I was raised in Arizona, and so I, that was just something that kind of came really easy.

And I find it's very easy, like, with the, uh, podcast I have and with this contest, Writers of the Future, um, and also with, you know, I, I mentioned, I, I think I mentioned also that I publish all the fiction works of L. Ron Hubbard.

But the um... with over 1,000 winners of Writers of the Future, I have, um, I have no idea who these people are.

When they submit and they win the contest, it's strictly based on the creativity of their story or their art because the, all the judges ever see is a number along with the art and a number.

So they have no idea if it's male, female, nationality, ethnic, nothing.

You go.

But what's going on with the crops?

So, carryover support from crude oil is definitely playing a role and likewise playing a role in the sell-off today.

But a lot of the grains have their own supportive factors working in their favor for wheat and We have all these Black Sea headlines.

Ukraine struck, I think, some ports in the Sea of Azov.

Russia responded with some strikes, I think, in Odessa.

So those are two of the biggest, I mean, that's much of the biggest wheat export infrastructure along the Black Sea and Sea of Azov right there that has been either voluntary or involuntarily taken offline over the past week or so.

Russia closed the Sea of Azov ports, the Kerch Strait, all of that until just out of caution.

But how about some better news, John? Let's talk bacon, right? There's always good news around bacon.

So, John, these multi-week lows in the on-highway gasoline and diesel prices aren't really telling the whole story, are they? Yeah, no.

So gasoline and diesel are following crude oil lower.

But, I mean, if you look at the futures board, both RBOB gasoline and ULSD still are following their 100-day moving averages higher.

And I'd say that's kind of warranted at the moment.

Like, there's a lot of fallout from this war that we're going to have to deal with here in the United States on the domestic petroleum balance sheets for the next few months that I think crude oil specifically hasn't really fully accounted for yet.

We're kind of flirting with a breakout below $70, which...

In my mind, without this war or any other outside factors, if it was just these domestic balance sheets, just how tight stocks are right now, I feel like crude would be above $70 just based off the domestic data.

What's going on?

Is that fair, John? Yeah.

The domestic side of things with much lower imports than we're used to for this time of year and near record or even record at one point exports, regardless of the time of year, those two things together really took a toll on the domestic balance sheets, especially as we got closer to the summer driving season that we're in now.

And, you know, we have another three months of summer driving ahead, another three months of higher refinery runs, higher crude going into refineries.

So we really need to get those imports and exports back on track until that happens.

We're not returning to our pre-March norms anytime soon.

And stocks are pretty tight too, right? Yeah, for this time of year, yeah.

You know, like I said, with three months of summer driving ahead, you'd like to have a looser balance sheet than you do right now.

Now, not that it has this recent weather issues in Brazil necessarily would be El Nino impacted, but we have had some weather issues that, John, we think are pretty important, right?

How do we interpret this? Yeah, it does

seem like we're... slowly but surely working our way towards some kind of resolution.

I mean, it seems like Washington is thoroughly motivated to figure out something.

The only problem is, are all parties involved and motivated to figure out something? You've already kind of touched on crude oil, obvious link between the two there.

A lot of the world's crude oil moves through the Strait of Hormuz, and we here in the U.S. are heading into the summer driving season, so we're obviously looking at a really tight situation domestically.

here in the next three or four months if we can't get that straight reopen, if we can't get our exports to come back down to earth and get our imports back to more normal seasonal levels.

That's one thing you'll see a lot with the crude oil trade.

Right, John?