In this conversation, Casey Seymour interviews Sean Hackett from Hacker Financial about the current state of the commodities market. They discuss the price of corn, the possibility of a low in September, and the factors that could drive the market, such as weather, geopolitics, and demand. They also touch on the balance sheets, demand for corn and soybeans, and the potential for a rally in soybean prices due to increased demand for bean oil. They then shift to the cattle and hog markets, with Hackett expressing concern about the cattle market and a more positive outlook for the hog market, particularly concerning Chinese demand. The conversation concludes with a discussion about the Moving Iron Summit and where listeners can find more information.
Takeaways
Chapters
00:00Introduction and Discussion of Corn Prices
03:47Factors Influencing Demand and Balance Sheets for Corn and Soybeans
08:54The Potential for a Rally in Soybean Prices Due to Increased Demand for Bean Oil
12:59Concerns About the Cattle Market and the Need to Lock in Prices
15:00The Oversupply in the Hog Market and the Potential for Chinese Demand
18:16The Moving Iron Summit: A Valuable Event for the Equipment Business
Casey Seymour (00:08.972)
Hello and welcome to moving our podcast markets of Sean Hackett. Sean Hackett is with Hacker Financial out of Belkerton, Florida. It's nice enough to come on and talk about what's happening in the world of commodities. Sean, are you doing this morning?
Shawn Hackett (00:18.616)
Doing really, really good, Casey, real good.
Casey Seymour (00:20.908)
Good man. Had a little bit of a downturn in the price of corn over the last couple of weeks. We've watched it bounce between the mid 390s to the mid 405, something like that, kind of bounce back and forth through there. It felt like we hit a technical limit here and it's bouncing in the mid 390s to low 390s over the last week or so, Sean. So I guess as you look at
the situation that we're in right now, what are your thoughts and have we hit the bottom and are we looking for a way to go up?
Shawn Hackett (00:58.126)
Looking at 30 years of pricing behavior, technically, on average, the harvest low most of the time will occur in the last week of September. Doesn't mean every year. It just means that if you average all the harvest lows that we've ever had, going back 30 years and I can go back 50 years, it's averaged the last week of September. Now,
That doesn't mean necessarily that it goes down into the September. It just means that's when the market begins to turn up. So we could be at a low now and we just go sideways. But what it's saying is that you really can't be confident that a final low is in until you get a short -term technical confirmation that we're breaking out of the downtrending pattern that we've been in, which we have not done yet. Now, what would it take to do that? Not much.
You know, not much, I it's a moving target, right? So, so if you look at the December corn chart, if we had a weekly close over 401, that would break the downtrend that we've been in for months now. so that's really your, so to me, that's how you determine below is in, is you get that first initial technical buy signal that says you've broken the prevailing, downtrend that's in the market. And we know.
They're given that most of the speckle of capital is momentum driven. However, they are developed with whatever programs, whatever AI, they're all some form of a momentum algorithm. Well, if the momentum stops going down and starts going up, then by the very nature of how they're structured, they'll start to buy back their shorts. And that's really ultimately at this point, we just have to wait for that.
Casey Seymour (02:38.388)
down and starts going up and by the very nature of how the structure will start to fly.
Shawn Hackett (02:52.014)
On soybeans, I just wrote the number down here. I was just doing this actually this morning believe it or not. Let me see here. Give me one second. I give you the targets on the other two that would indicate that a short -term low is in. Let's see here. Okay. And on soybeans, we would need a weekly close over 992, which say that the soybean low is in. And on
Casey Seymour (03:11.914)
Okay.
Casey Seymour (03:17.204)
Right.
Shawn Hackett (03:19.95)
December wheat, this is SRW wheat, a weekly close above 558. And even a daily close I would pay attention to. Like a daily close would be the first thing I would look for, okay? So there it is. I mean, you wanna know if a low is in? We need to get over, now next week those numbers will be lower. And the following week those numbers will be, like they keep going down until you do trigger the technical buy signal telling you that the short -term trend is up and we've made the low.
So that's all I know to do with something like this. know that the seasonal pattern says we might have a few more weeks and we haven't broken above those technical patterns yet. So right now the trend is still down until it's not, although my suspicion is, my feeling is, my instincts say that we're going to bottom and turn up before the traditional last week of September. That would be my guess. Usually the market doesn't let everybody get what they want.
Casey Seymour (03:49.236)
I know that the seasonal load, seasonal patterns, we might have a few more weeks and we haven't broken above those patterns yet. So right now the trend is still down. I tell it's not, although my suspicion is, I feel, I instant say that we're going to turn up before the traditional last one.
Shawn Hackett (04:16.65)
Everyone is just sitting there complacently waiting for that last week of September to cover. And usually the market will do something to trip everyone's strategy and get them to do something or get caught or surprised by something. So my guess is we'll break up before the last week of September. But really at the end of the day, that's ultimately what we're looking for here, Casey, on when is the low in. And then once the low technically is in, then we can try to look at what kind of upside do we have?
Casey Seymour (04:24.532)
everyone's strategy and get them to do something, not get caught or surprised by something. So my guess is we'll break up before the last of this September.
Shawn Hackett (04:45.154)
What's driving the market? it weather? Is it geopolitics? Is it the dollar? Is it something, is it demand? What's going on here?
Casey Seymour (04:53.252)
Yep, okay. All right, so as you're looking at, let's talk about demand here a little bit. So as you're looking at the demand situation that we're in,
I mean, by all reports I've read, we're at the lowest demand for US corn and soybeans we've seen in some while. As you look at that, Sean, we've talked about balance sheets on here before as to what the corn, even though we're gonna have a higher yielding corn crop than we've seen in probably ever, and one of the biggest crops ever, the amount of corn that actually got planted is lower.
I guess, so as you're looking at demand and we're at balance sheets still a lot of 23 corn out there that hasn't been, that's still in bins. So I guess as you're looking at that, Sean, what are some of the ebbs and flows you're seeing here in those balance sheets and demand?
Shawn Hackett (05:44.238)
I think the most important thing is we can have whatever the USDA says we have 2 .1, 2 .2 billion bushels of carrot. Doesn't mean all those bushels are for sale at 390.
Casey Seymour (05:56.137)
Exactly.
Shawn Hackett (05:57.998)
Everyone thinks, well, some of it is, but how much, assuming that number is correct, and I don't think it's correct. I think it's too high, but assuming that number is correct, how much of that corn is actually for sale at 390 futures minus the basis? How much? No one knows for sure, but I think it's a lot less than people think. Meaning, know, last time I checked, we had record farm income and record profitability in 21 and 22.
for farmers. So I really don't think most are in dire straits unless they did some really stupid spending. Some did, of course, but in the margin, I don't think most did. I think most actually can stick it out. Sure, there's always needs to be some that get sold, but I think there's going to be a lot less available at this price level. Now you get a rally of 30 cents or 40 cents. Well, now whole much more of it is available, right?
Casey Seymour (06:29.323)
Yeah.
Shawn Hackett (06:57.85)
demand, you know, the, export demand is, is the bright spot for the grains. We've seen some very strong numbers, because of the lower crops in, South America, because the lower for of corn and the lower crops in Russia, Ukraine for wheat, you know, the U S is the best export price in the world right now on all three grains. We haven't, I haven't been able to say that. I think you'd have to go back to 2018. The last time we were the best export price.
Casey Seymour (06:59.528)
and you know the export demand is white spot for the drink.
Casey Seymour (07:07.276)
the lower crops in South America. the lower crops corn and lower crops are for wheat. The U .S. the best export price in the world right now on all three grains. I haven't been able to say that.
Shawn Hackett (07:27.202)
Worldwide in every grain market right now. We are so we're gonna move a lot of grain here And any buyer who's worth their salt's gonna buy a lot of grain here So I still feel that when we go through the September October Increases in yields, especially for corn. They're gonna raise the yield They're gonna increase demand and they're gonna still knock those harvested acres down some least on corn. going to more and
Casey Seymour (07:38.348)
So I still feel that when we go through the September, October increases in yields, especially with corn, they're going to raise the yields, they're going to increase the demand, they're going to still lock those harvested acres down some way, some corn is going to, more. And I don't believe that the ending stocks are going to change too much.
Shawn Hackett (07:56.11)
And I don't believe that the ending stocks are going to change too much. I think we'll be in this 2 .1, 2 .2, even if we go to 185, all that's going to change it much. So I'm not sure you can say that. We're not really seeing demand. Well, lately we've been seeing some better demand, but it's not enough to say that we can expect the US data increase to mean too much. What I will say is bean oil,
Casey Seymour (08:04.992)
I'm sure you can say that. We're not really seeing demand. Well, lately we've been seeing some better demand, but it's not enough to say that we can expect the U .S. state increase to be too much. What I will say is that oil is becoming very, very competitive.
Shawn Hackett (08:24.608)
is becoming very, very competitive with alternative feedstocks for renewable diesel for the first time in a while. Meaning when you're looking at the economics of making renewable diesel, if you don't have an issue with supposedly the carbon footprint, if you're just looking at dollars and cents, bean oil is one of your best feedstocks to use right now. If you're looking to make, maximize money on your processing plant, refinery plant.
Casey Seymour (08:28.244)
alternative feedstocks for renewable diesel for the first time in a meeting. When you're looking at the economics of making renewable diesel, if you don't have an issue with supposedly the carbon footprint, just looking at dollars and cents, oil is one of your best feedstocks to use right now if you're looking to maximize money on your processing plan.
Shawn Hackett (08:54.808)
So that is, to me, know, is, says to me that we're going to see bean oil demand, not, not because there's been any change in government policy. It's just that the parity or the economics support using more bean oil right now versus using alternative oils. and to the extent that that increases the demand for. Bean oil and increases the price for bean oil and, then, and then by very nature increases the need for a little bit of a higher crush to make more bean oil.
Casey Seymour (08:57.762)
It says to me that we're going to see clean oil demand, not because it's beginning to change government policy, it's just that the poverty or the economics support using more clean oil right now versus using...
Shawn Hackett (09:24.866)
You know, on the margin, you know, I would be looking for potentially some better crush rates here based upon this competitiveness of bean oil versus other vegetable oils. That's something that I think is a, probably going to be a pretty good story for why soybeans put in a low here. Despite, you know, look, I'm not going to sugar coat the soybean spreadsheet. It's pretty ugly, but, if the demand is strong enough and the farmers are stubborn enough, it doesn't mean we have to go a whole lot lower.
Casey Seymour (09:48.108)
demand is strong enough, the farmers are stubborn enough, it doesn't mean we have to go a whole lot lower, but it may mean that we need to spend a lot more time, at least for soybeans, at a lower level to soak up something that's oversupplied. Where in corn, I don't believe we have wheat, because the demands are already dynamic, and because the supplies overseas are always so tight, I don't think we have wheat, we have even here.
Shawn Hackett (09:53.666)
But it may mean that we need to spend a lot more time, at least for soybeans at a lower level to soak up some of this oversupply. We're in corn and wheat. don't believe we have wheat wheat wheat because the man's already dynamic and because the supplies overseas are already so tight. I don't think we'd have, we have anywhere near the need for as much time to stop up US supply. think that could, that will be done much more quickly. So my
The way I envision this whole grain complex situation is the wheat market should be the first one to go up and lead. And then the corn market should follow behind it. then, and then as we get into October, the soybean market then comes in behind it, especially if we can develop a weather market. And then for this one in 100 year drought, meaning the history says this Casey, whenever we've had, planting delays,
Casey Seymour (10:44.118)
history since this case. Whenever we had a point in the day.
Shawn Hackett (10:51.416)
for soybeans in Brazil that has gone, that exists by mid -October, it means that the overall planting for soybeans is going to be late and that yields are gonna be compromised because of that late planting. What it also means is that we're then impinging upon second crop corn that we want to plant in February, which then reduces the acres for corn.
Casey Seymour (10:56.8)
that exists by mid -October, it means that the overall planting for soybeans is going to be late and that goods are going to be compromised because of that. What it also means is that we're then impinging upon second property that we want to...
Shawn Hackett (11:20.942)
and then hurts the production for the potential for corn production in the back half of the growing season. So mid October is really, really an important time where if we're going to catch a weather market on this one in 100 year drought, low two percentile soil moisture in Brazil, know, first half is all about soybeans. We don't grow any hardly growing corn in the first half. We don't grow any cotton in the first half. They don't grow wheat down there. It's all about soybeans. Mid October would be the
Casey Seymour (11:27.83)
really important.
Casey Seymour (11:38.256)
know, the first half is all about soybeans. We don't grow any hard -burning corn in first half. We don't grow any cotton in the first half. They don't grow wheat down the ground. It's all about soybeans. Mid -October would be wheat. That would be the window to see a better market. In any case, historically, harvest was...
Shawn Hackett (11:49.73)
That would be the window for me to see a weather market and historically harvest lows in soybeans is the first week of October. So October, I think is a big month. It's going be very difficult for soybeans to rally much, unless the just buy it off. just buy like incredible amounts from us and decide that they're just going to, you know, buy lights out and surprise the market and overrun it with
Casey Seymour (11:59.177)
I think
Casey Seymour (12:14.718)
I
Shawn Hackett (12:19.34)
And they have the ability to do that. I can't predict that, but the only way you're going to get the Soviet market up off the tar mat prior to October, in my opinion, is you need the Chinese to come in over on the market and take the supplies that are available here. Just take it off. Just buy it off. The great grain robbery too, instead of being Russia, it'd be China doing it. that's kind of where I think we're at with the grains right now.
Casey Seymour (12:46.102)
Yeah, okay. All right, so let's look at cattle real quick. You look at the cattle marketplace, you've seen the sum of the same kind of topsy turviness that we've seen in the other marketplaces. You look at that, Sean, what are your thoughts there?
Shawn Hackett (12:59.207)
I'm really worried about the cattle market short run. It looks very heavy to me. You know, we got hit really, really hard when we had the end carry trade liquidation. We bounced marginally on the rebound that we've had, which you would have expected better.
Shawn Hackett (13:19.15)
It's just acting very heavy to me. I don't see any signs that were herd rebuilding, which is kind of what we've always seen in every cycle. We're just not doing it. And that's kind of how you get more constriction of animals off the market. I don't see it. Our exports are five to 8 % down from a year ago in terms of beef exports. I don't know, Casey, the market looks heavy to me. 175 December live cattle, 230.
November feeder cattle, you know, went right to those price levels and we've bounced here a little bit. But if we don't hold those two price levels, then the technical chart really breaks down. And then you can have a much more protracted decline like the decline we saw from the fall of last year into the early part of this year. I would be suggesting that cattle producers need to be doing something to lock in prices here. I'm very worried about the cattle price going into the end of the year.
I'm not saying it's a bear market. I'm not saying it's all over, but I just worried about price into the end of the year and then the prices are still very attractive. I would be certainly looking at any way that I can get cash sales on the books or do some LRP, anything, which is the government subsidized program to put a floor under the market. I would find ways to lock in my profitable price into the end of the year. just don't like what I'm seeing in the cattle market right now.
Casey Seymour (14:46.479)
Alright, so let's talk about what you see happening in the odd market. Same thing there. You've seen some good run -ups here. Early August and kind of some stabilization. Now we're kind of seeing that topsy turvids again. I guess your thoughts there.
Shawn Hackett (15:00.792)
Well, certainly we're not looking at an expensive pork price. We know that, you the pork cutouts very, very low. Nobody seems to want it because we talked about how there's a lack of flavor and whatever, but.
Casey Seymour (15:04.578)
Right.
Shawn Hackett (15:15.34)
You know, in the California situation, they don't want to buy, like pork from inhumane treatment of hogs has they defined it. But I mean, the, well, what I see here in the hog market is that. You know, we're not growing production. We're not going to grow production. There's no expansionary plans, but we have an oversupply and the only way I can see to get.
Casey Seymour (15:37.1)
expansionary plans, but we have an oversupply. And the only way I can see to get over that oversupply is we have to have a come to Jesus moment with the consumer in the US, where they all of a magically decide they want to increase their consumption of pork because they love it now. Probably not. I mean, if you're going to increase the flavor of pork, it's going to take some years to develop that and get people used to that. But always a chance. Maybe I'm wrong. But you need China to come in and buy a bunch of pork.
Shawn Hackett (15:42.656)
over that over supplies, we have to have a come to Jesus moment with a consumer in the US where they all of a sudden magically decide they want to increase their consumption of pork because they love it now. Probably not. I if you're going to increase the flavor of pork, it's going to take some years to develop that and get people used to that. always a chance. Maybe I'm wrong. But you need China to come in and buy a bunch of pork. And that's really predicated on the post -African swine fever.
Casey Seymour (16:07.572)
And that's really pretty good.
Shawn Hackett (16:12.778)
I show a chart in my reports, as you know, Casey, where I show the Chinese pork price breaking out on the charts and now trading at the highest, the highest level in five years. And it's going straight up right now. That means that they're developing a pork shortage. The herd liquidation is over. They're on the other side of post ASF. And, we know, you know, they go into their holidays.
Casey Seymour (16:25.906)
It's been five years and it's going straight up right now. That means that we can now build a pork shortage. That permit foundation is over. They have done another side of the payout, post -ASF. And we know that they go into their holidays in January and February and they all go around and tell see how wonderful he is and they eat all kinds of pork. They're not going to want to run out of pork. want the certain amount of
Shawn Hackett (16:42.394)
And January and February, when they all go around and. Tells you how wonderful he is and they eat all kinds of pork. You know, they're not going to want to run out of pork. They don't, they certainly wouldn't want to run out of pork during that one of the highest demand parts of the season for them. So I, I, I think I would be looking for very sizable increase in Chinese imports of us pork going forward. If we start to see one week, then two weeks and three weeks, the.
Casey Seymour (16:55.934)
one the highest demand parts of the season for them. So I think I would be looking for very sizable increase in Chinese imports of New York before the start of the season. One week, two weeks, three weeks. Our market's gonna start to react.
Shawn Hackett (17:11.49)
hog market's going to start to react very aggressively. My suspicion is that we're going to just keep doing what we've been doing in this coiling pattern, like you said, Casey, back and forth, back and forth. But I think the closer we get to the end of the year, the more likely it is that Chinese demand is going to come in and over on the market. And we're going to actually get the market to enter an upcycle. And that's really where I, so I'm much more constructive on the hog market right now than I am on the cattle market.
Casey Seymour (17:41.216)
Well, Biden and are supposed to have a phone call sometime this week or maybe next week. So big, big time, big news coming out of that. I'm sure Biden and Xi, they're supposed to have a, a big phone call with each other sometime. Biden and Xi.
Shawn Hackett (17:49.24)
Who? Who?
Shawn Hackett (17:55.01)
Who? Who?
Casey Seymour (18:01.184)
Ha ha ha.
Shawn Hackett (18:01.75)
I'm sorry, I couldn't remember, sorry.
Casey Seymour (18:05.42)
think he's, I think he's still the president. I haven't heard much from him here for the last 45 days, but yeah. Pretty sure he's still the president.
Shawn Hackett (18:12.566)
Well, I'd to hear how that conversation goes.
Casey Seymour (18:16.5)
Allegedly. Yeah, good times. Yeah, good times. All right, buddy. I think it's probably a good place to stop. Folks, I'm gonna reach out to you, get more information about what you're doing over at Hacking Financial. What's the best way to do that?
Shawn Hackett (18:31.15)
One way is our Twitter page at ferredex11. have a LinkedIn page, website hacket, H -A -C -K -E -T -T, advisors .com. I want to warn everybody, we are not social media personality junkies that we have nothing else better to do with our lives but post stuff on Twitter. We will post some stuff from time to time, but we spend most of our time trying to work hard to make good forecasts for our customers. But if you want to see some of the things we're saying about our statistics cycles and correlations,
Those are the places to start.
Casey Seymour (19:02.592)
Right on, So with while go check out, go check out Sean's homepage. There's a lot of good information there. That's, that's for free. You can just look at that and get a lot of good info there. And a lot of, a lot of moving parts there. Also, you can sign up for Sean's newsletter there as well. So a lot of good information comes from that too. So check that out. Yes, you can.
Shawn Hackett (19:19.166)
And you can go to the moving iron summit here in November, which I will also be there, doing some ex - extended, conversations about, know, some of the things that we're seeing going ahead. And then, and it's a pretty dynamic time, as you know, Casey, for even though it's, it doesn't feel good right now, there's actually a lot of positive dynamic, developments going on for why prices are not likely to sit here for as long as people are right now projecting.
Casey Seymour (19:50.372)
Yeah, if you want to come to the Moving Iron Summit, if you're a dealer, analyst, you work on stock market side stuff, whatever it is that you're doing, if you're one of those people that are wanting to see what's going on in the equipment business as well as what's some of the driving factors behind that, go to movingironllc .com and click on the Moving Iron Summit tab at the top. You get all the information there. I should have the...
agenda up here this week and that'll give you a better view of what's there. I'm just waiting for a few things to come through, but just about how that all put together and that'll be up there so people can see that. But check that out if you're interested in doing that. Go to there if you need more information, send me an email at movingironpodcasts .com and I'll be sure to get back to you. Sean, appreciate you being a podcast man.
Shawn Hackett (20:40.462)
Thanks Casey, always a blast.
Casey Seymour (20:42.304)
Right now I'm Casey Seymour with Moving Iron Podcast. Check me out on Facebook, Twitter and Instagram at movingironllc. to LinkedIn and Moving Iron Podcast. Check out the YouTube channel over, obviously on YouTube at Moving Iron Podcast. Check it out there. Go to, TikTok, I guess why you still can't, man, I guess that's not a, it's a no factor anymore. We're, done worrying about TikTok. So I guess it's, it's still there. So check out TikTok at Moving Iron Podcast. And can also go to movingironllc .com for everything moving iron related. So with that, I'm Casey Seymour, Sean Hackett.
Squishmire folks out.