Moving Iron: What A Recent Arkansas Auction Tells Us About Equipment Demand

I'm doing well, Casey. How about yourself?

Uh, seven below air temp. It was 21 below Friday air temp. So, I guess it's the sun. So, yeah, it's amazing how warm approaching zero can feel. But, uh, how about you guys? Did you get hammered with all this snow and cold the last few days?

55. Oh man, can I — maybe I can book a flight to western Nebraska, catch some. I was in Winnipeg last week — or, uh, Winnipeg, driving to Brandon, speaking at a farm show up there in Manitoba on — I think it was Thursday. Oh, Wednesday. And, uh, I rented a truck, was driving across, and it was 19 below air temp, but the north wind was just racing across Canadian Highway One driving west. And, uh, I don't think there was any cancellations up there. They were just like, 'Hey, you know, it's Wednesday, sun's out, winds blowing, it's winds 48 below.' It's like, 'Hey, welcome to Canada.' I was like, 'This is awesome.'

Yeah. Right. Oh, yeah. It's all relative. Yes. Kind of like the used machinery market — it's all relative, isn't it?

Yeah, last Thursday, January 22nd, my friend Kirk Witcher with Witcher Auctions ran an online farm auction for Hill Farms. Folks may have seen the YouTube preview. I went down there. We filmed it for our TV show in advance. So we interviewed Seth Hill and his dad Rocky and Kirk Witcher — really, really nice stuff. The Hills had a big poultry operation and livestock, and they'd been rice farming for 10 years, and then they kept getting flooded out like four times the last nine years. And they said, you know, let's just shift. And so they're building big new poultry facilities there. So they're getting out of their equipment. And it was very low hour, Casey, and I thought the sale was terrific — continued the trend, the little lift we've been seeing since November, good used, good condition used equipment.

So here again down in Arkansas, the lead tractor was a 23 model Case IH Steiger 470 quad track, only had 73 hours on it, and it sold — hammer price was $418,000, and then you tack on I think it's 3% or something, it was like $430,540. And so that's, I mean, that's the second highest auction price we've ever seen in a 470 quad. But more interesting to me was the fact that Seth Hill, the owner, texted me Friday morning and he's like, 'Pete, wow, we're just over the moon, happy with the sale.' And he showed me the contract they paid for that tractor new — they paid $415,000. So now it's just, you know, two to three years old now. Still low hours, but it goes for $430,500. And auctioneer Kirk Witcher — who's great, he's as sharp as they come — he texted me Thursday night as the sale was unfolding. And he's like, 'Pete, we just blew past our appraisal.' And so, again, indicative of the trend we've been seeing across the board.

I mean, a couple other highlights, Casey, they had a — let's see — an 870. So, they had red and green. That was a 21 model, just under a thousand hours, for $321,360. So that was pretty solid. A combine, maybe kind of more in line. That was a 21 model Case 8250, 658 hours. Nice machine that did $221,965. But yeah, across the board, very, very strong sale.

Yeah, a 2024 model 550T Case. Never used. I bought it. Got flooded out last year. Didn't plant rice. And that came in at $208,575 on that one.

It was 40 foot. 40 foot.

Yeah. And we saw the next night, Casey — Friday evening this last week, so that would have been the 23rd of January. We hop over to Georgia — Fort Valley, Georgia. Our friends at Rich and Rich Auctioneers had a super nice farm auction. You and I are friends with Bryant Roberson with Rich and Rich, and Bryant has made a big push into the state of Georgia. So Rich and Rich are now expanding their footprint.

But they had a farm sale for Malcolm and Leslie Giles. And what people were talking about, and what I posted about Saturday morning, was the 4255 Deere, 92 model two-wheel drive. So, you know, 3220 original hours — you know it's going to be a hot one. But it brought $63,000 and it was out of Georgia. So very strong there. But that same sale had a pair of 22 model 8R 410s, and the hours were 948 and 810, and they went for $346,250 and $340,500.

Now if you go to machinerypete.com, hop into the free auction data and do an average on just the 22 model 8R 410s — last year the average was just under $324,700. And so here you go: you flip the calendar, and you know these were nice, but again, 948 and 810 hours, and they're $346 and $340, so there's that little bump compared to last year that we're talking about. And one other tractor on the sale, Casey.

It's not just the crazy low-hour stuff. To me — I mean, I've seen this before, but it's really accentuated right now — if it's good condition, even if it's higher hour, it's ringing the bell. So on that same Georgia sale Friday, they had a 7930 Deere. Now, no loader. It had 9,591 hours on it. Just, you know, good solid tractor, but, you know, pushing 10k hours. We're at $55,050.

Now, again, same thing. You go into our auction prices and you do a filter. That's the second highest auction price ever on a 7930 with over 9,000 hours and no loader. And so those are just data points. They're coming in. Farmers are voting with their checkbook. And by the way, back to Arkansas — that 470 quad track went to South Dakota. So, again, that's, you know, that's kind of the market right now.

Yeah. You know, Kirk Witcher — uh, when we were down, we went down two weeks ago to film in advance for our TV show because this was an online sale. And when we were down there, uh, Ty Morgan, my good friend with U.S. Farm Report, said, 'Greg, can you do an interview with Kirk?' — kind of getting his take down in the delta there, uh, on his take on the market. So when we interviewed him, he, in a humble way, was just saying, you know, it's about good condition equipment. The price of new is very high, and it matters — it matters a lot how you market this stuff. So when we were down there — I think it's — and we talk about this a lot — but to me it's just becoming more and more important. So when you have something for sale as an owner, what we're doing right here is becoming more important.

So when we framed up Seth in front of his 470 quad and I just said, 'Yo, dude, why does this thing got 73 hours on it?' And he just looks at me and he just says, 'Pete, well, here's why. You know, we're in northeast Arkansas, we got three rivers right here around Pocahontas. We got flooded out last year — four of the last nine. We bought this thing, just didn't use it.' And then you go on down the line and he says, you know, we're moving out of rice. We've just kind of had enough. We're investing on the poultry side. So, and Seth is just a farmer, but he comes across like — my experience is really what all farmers do. You get up our way — you're in Nebraska, I'm Minnesota — farmers tend to be a little more reserved than down south. That's just kind of how we are. But when you get them talking about your equipment like, 'Hey, Joe, tell me about your whatever' — it doesn't matter what it is.

You know, with these tools we have now — these screens, which drive us nuts a lot of times — but when you're marketing something for sale, you really, really have to utilize that. And frankly, if you don't utilize those tools and work with auction companies that utilize that, your sale prices, they just aren't going to be as high as they could be. That's just plain simple truth.

By the way, our friend Bryant down in Georgia Friday — exact same thing with Rich and Rich, you know, putting forward all kinds of great continual promotions. It's not enough anymore just to say, 'Hey, we got a sale coming up in two weeks.' You really have to look — and it's really twofold. It's a smart business for an auction company because when we go down and talk with Kirk or Bryant, their personalities come through. Or Jason AOK down in North Carolina — same thing with his sale. He promoted it the same way on Saturday. I guess I haven't mentioned that one, but another sale in Kingston, North Carolina that sold really well Saturday. Same thing — Jason promoted the heck out of it. And then you appeal, you extend your reach as an auction company, you establish trust, and you find buyers who aren't necessarily in your neighborhood.

That's very true. I've always been like, why is the internet guy still bidding when the guy on the ground stopped? Now, it doesn't mean — they could be outside their budget. There's a lot of things that you could point out. But I also think it's also pointing towards these guys don't see the condition that I see, or they don't know this, or they don't know that. It's one of those things where they kind of have that little...

Yeah. So, really great comment there, Casey. That's been the truth, you know, since online bidding has started, I've noticed. And it's interesting. So, Seth, the farmer down in Pocahontas, Arkansas, with his dad — when he texted me about the quad, he said, 'Hey, Pete, we paid 415 and it brought 430. We're over the moon.' He also relayed to me, he said, 'Greg, can we do more videos after the auction?' Because Seth is a people person as a farmer, and he got so much outreach after we did those preview videos and all of Kirk's promotion. He said he enjoyed so much talking to farmers from all over. And one of the themes he was getting at was, you know, they're kind of trying to save a few dollars. You have new equipment — it's a couple years old — but they wanted to talk to the owner, which is super smart. Just get the owner. I always used to advise that: just call the seller, get them talking, and then, you know, start talking about football or Husker basketball or whatever. And then eventually you're going to get a take on this guy or gal that's going to either add to your confidence level in bidding or detract from it. And in Seth's case, it all adds up that the equipment was so nice. Everything fit. They like Seth.

So now you just start drifting into the old truth. When I used to cover auctions before the internet — go to a local farm sale, retirement or estate sale — you get a, say it was a Casey Seymour auction, you get a Casey premium because all Casey's a great farmer, takes great care of his stuff. We like Casey, we respect him. So all Casey's stuff would sell a little bit higher. And that's what we're talking about here: is now transferring that level of trust 10 states away.

And so to the auction companies — and frankly, again, if I were dealers, to me, huge, huge opportunity. So whatever is on your used lot, to whatever extent possible, it shouldn't just be anecdotal about, oh, I've got those three cotton strippers I got out there or those three combines or whatever. Somehow in the listing, you need to bring forward the history on that piece. And when you have something that's off a really good farm — and again, what the truth there is at the dealer level, I suppose, when you would take something in on trade from a certain farmer, a top level guy, that stuff was probably already sold because everyone knows that this is John's. And I just see opportunity on the retail side to paint a better picture of the things you're selling with more bits of information like this.

Now, easy for me to say, I'm not a dealer, but some dealers are going to figure it out and they're going to put more video truth — even if it's the salesman talking about, you know, I took this in on trade from a third generation customer of ours and they farm over the hills over there. Just talk about it, because when you talk about it, what you're trying to do is establish trust. So, not only for the one piece you're representing there, but I also think about what is it worth for a dealership if you can get people from four, five, six states away connected to your salesperson or your general manager — 'I like the way that guy talks about' or 'that gal talks about this stuff.' What is that worth long term? I mean, that's off the charts.

This goes back to me. I've said it a lot, but when I was a kid growing up and my dad had two stores as a dealer in western Minnesota, the business to me was not selling new equipment. The business was the relationship with the customer, the farmer, and that trust. So stuff happens sometimes — you know, mistakes, whatever — but you know, making it right, calling it what it is as best you can. And if you take a long-term view to it, once you establish that level of 'this is who we are, this is how we roll,' and now we have these new tools — my dad was doing it back in an age when everything was local, but still did it for the right reason. That was who he was. But that to me was the farm equipment business: was the relationships. And especially right now when there's stress all across our space. On the farm side, there's stress. On the dealer side, there's stress. Good times for auction companies, I guess. But, you know, all the more reason to be real with your customers.

Use a difficult time like this to establish more trust that will benefit you 5, 10, 15 years down the road. But that's just long-term thinking, the way I look at it. But I get excited about these tools because the bottom line, Casey, I see — like when we were in Arkansas and did all the video storytelling — I look at what it sold for. It's not very complicated. The opportunities are there if we lean into them.

Yeah, just hit our website, machinerypete.com. There's a little contact button on the bottom, or, you know, just hit me on Facebook or Twitter — that's a great place. Send me a message on Twitter, Instagram, and yeah, love to visit with you.

Sounds great. Have a good week, Casey.

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I'm doing pretty good for Florida standards. We're in the 40s, which is pretty chilly. And we're going to be going into the mid-upper 30s here over the weekend, which is about as cold as it ever gets here. So, uh, not that anyone is going to be feeling bad about my situation, because they're going to be looking at minuses and windchills and such.

Nonetheless, it just shows you how extensive the cold is to come all the way down to South Florida here in Boca, where it almost never does. It's pretty significant.

It's hunting weather. It's hunting weather.

We're going to go do some pig hunting in the swamps.

Generally speaking, in order to have a sustainable inflationary move in U.S.-priced commodities, you almost always need a change in capital flows away from the U.S. dollar and into foreign currencies. The last time we really saw a sea change in the dollar like what I think might be happening here was 2002. That's when the Brazilian real broke out to the upside and actually went on a 10-year rise before topping out in 2012. And it's been on the — and then the Chinese renminbi did the same thing. There's other factors obviously. It's just not the currency. I mean, obviously you still have to have supply and demand — you know, that doesn't say how much the commodities will go up. Some will go up a lot, some will go up less, but they all will go up.

And what it seems to me, Casey, is if you look at the Brazilian real, which since 2012 declined all the way into 2020 and then it's been going sideways since 2020, and we're breaking out of this long-term sideways trading base. And the renminbi, the Chinese currency, is doing the same thing. And if you look at the U.S. dollar index, we broke through triple-bottom support here yesterday. Any follow-through, and we could be looking at a significant, significant change in currency structure, which would favor higher U.S.-priced commodities, make the U.S. far more competitive to its trading partners, and for the first time really since 2002 to 2012 we could actually gain a competitive price advantage on Brazil, who's been eating our lunch — not only because of the currency, but also because of their willingness to continue to add planted acres, especially for soybeans.

So this is significant. I think what happened yesterday — and, you know, the precious metals have sort of been sniffing this out, as they always do, well in advance. They go up first, well before other commodities start to figure it out. And then what happens is when the market then realizes that we're in this sea change in currencies, then there's a rotation out of precious metals into energies and agricultural, especially the grains, and then the precious metals underperform for the next few years. So we think we're about ready to switch over from an outperformance of precious metals to an outperformance of energies and grains. And if you look at crude oil, for example, very, very quietly it's moved from $54 to almost $61, $62 — which is still low prices, by the way, but we're starting to see the market going up. And obviously natural gas prices on the spot price doubled in three trading days because the weather models finally said, 'Oh crap, it's going to get cold out there.'

So things are changing, things are changing. And what's very interesting is if you look at the corn price — the corn price has removed half of the decline we saw on that Monday when the USDA report came out and they put out their ridiculous spreadsheet of what they think the corn supplies were. We've already given half of that back, meaning we've rallied half of that decline already, suggesting that the market is calling the USDA's bluff. And on top of it, you know, the currency situation helps improve the bid in the market, the competitiveness in the market. So I'm really constructive here that, you know, we're looking at some very, very important bottoms in energies and grain markets, with bearishness that got just about as one-sided as we've ever seen. So, yeah.

Well, the big — I mean, the big issue, there's three main issues for the orange juice market. One is that U.S. demand has been declining for decades. People moving away from consumption of orange juice. And of course when we had the big price rise — you know, we tripled the price, quadrupled the price, quintupled the price from low to high — on all the hurricanes that we had here in the U.S., the citrus greening we had here in the U.S. And of course people have to also remember that they also have citrus greening in Brazil, the number one producer in the world and number one exporter in the world. 49% of the groves in Brazil now are suffering some form of citrus greening disease issues. So you have constricting supply and constricting demand. And so what happened was supply came down so fast that even though demand was declining, you had a shortage. And then what's happened is production has sort of stabilized as demand has continued to fall and now we have too much orange juice supply. While there could be a reaction in the futures market, Casey, on a frost that we think is likely this weekend in Florida — just to give people an idea, we used to produce 700 to 800 million boxes of oranges, or gallons of orange juice, you know, like 15, 20 years ago. At the low a few years back, we did like 20. I mean, it almost went to zero, practically went to zero.

So if there is a rally, you know, we don't think it's going to be long-lived, just because our production just really isn't that important anymore. But, you know, if you're producing oranges or you're producing, you know, grapefruits or anything in the citrus area whatsoever that don't have a futures market, of course, it's going to be quite unpleasant, I think, with the damage that's going to be done here this weekend. And I do think the market in oranges would react a little bit, just because I just think speculators would just react to that for a little while. But I don't think it will have the kind of sting to it on the price side that it used to have, I guess, is the point I'm trying to make.

People have come to understand that what we were taught as a kid in terms of what was deemed to be good nutrition was wrong. And not just a little wrong — like a lot wrong.

And that we're actually eating very, very unhealthy. And that what the body really, really needs is substantially more protein. Whether you get that in terms of milk powder protein or you get it through high-protein legumes or high-protein fruits or eating more beef or chicken — you know, more protein consumption increases muscle mass, reduces caloric consumption, reduces fat, and if you work out at all, you know, it makes you more of a fit person generally speaking. And so I think what JFK Jr. and the government is doing is making it clear to what many people already have sort of figured out — that we need to be eating more protein, that there's a deficiency in this country in protein consumption. And so obviously anything that the government comes out with that communicates with more people about this, the more consumption is going to go up. There's no question there's a correlation between when the government says something — especially if it makes any sense at all — the masses will do more of it. That's the first thing.

Second thing is that these GLP-1 weight loss drugs that primarily had been utilized in the past to help people with diabetes have been found to be really good in reducing people's weight. And so all these drugs, you know, got approved like a year and a half ago, something like that. But they were injectables — you actually had to physically inject yourself. I don't know a whole lot of people that are very excited about doing that. Now, it doesn't mean people won't do that, but, you know, generally speaking, some people just will not give themselves the injection even if they think it could help them. Secondly, the insurance wasn't covering it for a long time, and it was costing $1,500 a month to do this, which means only, you know, fairly well-off people could afford to do this. 12% of the 60 million Americans that are deemed to be in the overweight sphere — that would have an interest in these GLP-1 drugs — 12% of that group were willing to take an injection. And now that a pill form has been approved, and there should be a couple more different pills from different companies approved here in the next, let's say, 3 to 6 months — taking a pill that costs now a couple of hundred dollars, that now the insurance companies are covering a good portion of, means the masses of that 60 million are going to be able to take this drug. The fear of the injection is gone away, and obviously the cost has dropped down to something much more manageable.

We know that — if you think this through — what all the research says so far is, when you take these drugs, you lose all your appetite for salty, sugary, snacky, processed foods. You reduce your desire for sodas, sugary drinks, and the desire to drink alcohol just drops off a cliff. In fact, there are studies being done that this could actually help alcoholism, potentially. And that's all good. What we're finding, however, is that when you take these drugs, there's a 20 to 25% reduction in caloric intake, which is kind of negative — meaning you're eating less food — and you're losing 10 to 15% body weight, which is good. I mean, obviously, if you're overweight or you think you're overweight or whatever, and you lose some weight, everyone knows a little less weight generally speaking means you're likely to be a little healthier. The problem we're finding, however, is that those who are losing the 10 to 15%, it's not just fat. They're losing fat and muscle.

And in many cases, they're losing more weight from the muscle than from the fat. Meaning that yes, you're losing weight, but you're actually wasting — you're losing muscle mass. And it's known that if you reduce your body weight through loss of muscle mass, not fat loss, you're actually less healthy. And what's going on is because people are reducing their intake but they're not consuming enough protein to keep the muscles strong from the lower caloric intake, the body sends a signal and says, 'Hey, wait a minute, this is not good, we need to consume more protein.' So there's a strong urge from these people that are taking these drugs to increase their protein consumption naturally, to maintain their muscle mass. The other thing is that, you know, I think a lot of people have this conception that you could just pop these pills and sit in front of your TV every day and you're going to be a healthier person. And actually, that's not true. You do need to do something where you move your body, to move your muscles, to work your muscles, to actually build those muscles, to take advantage of the weight loss and the protein. Meaning just popping pills and not doing anything isn't really the solution. It doesn't mean you got to go hardcore — you know, 5 hours a day — but you know, you got to move your body, you know, 20 minutes a day to keep those muscles healthy.

So what it all means is that while there's a dramatic reduction in alcohol and soda and snack type foods — McDonald's, I mean, we've seen sales collapse for these companies across the board — there's a significant increase in consumption of proteins, especially meat proteins. And now that a pill form is available, Asia and Europe are now going to be able to adopt these more readily because of the price point. And so I think we're going to see a renaissance take place in protein consumption. And like I said, we've already seen that trend developing, but I think it could accelerate. Now the issue is that that 12% are very wealthy people taking it. But the next market share is going to be a bunch of people that are in the middle or lower socioeconomic strata. They're not likely going to be very excited about eating a lot of beef with the price point that is currently afforded to them given their budgets. They're going to be looking for cheaper meat proteins like chicken and pork. And so we believe chicken and pork — from where we stand today, especially pork — is going to be the poster child for this trend of dramatic changes in habits and diets, as everyone looks to increase their protein consumption and tries to do it without breaking the bank and breaking their budget.

So, last time I checked, pigs and cattle and dairy that produces dry whey and milk powder — that are very, very popular in these protein drinks and such forth and so on. Last time I checked, we feed them a hell of a lot of corn and we feed them a hell of a lot of bean meal and we feed them a hell of a lot of feed wheat. Meaning that the feed demand that's going to be required domestically and internationally for feed grains is going to go substantially higher. We're going to see a step up in feed demand like we haven't seen in a long, long time. And I think that the next couple of years — if we have an interview like this two years from now, I think we're going to be talking about how wild this feed demand consumption has been, how it ran over the market, the market didn't expect it. Throw in some weather volatility and you have the makings of why we're so constructive of the grain market pricing structure over the next few years. Because the best markets are when you get a step up in demand with some weather volatility. If you think of the 2000s, we had a step up in demand from corn-based ethanol and then we had some weather volatility that created a wild move higher in grain prices. We think this GLP-1 step up in feed demand and increases in weather volatility are going to conspire together along with a weaker currency, which we haven't seen since 2002, sets up a really exciting period for the grain markets, which are the poster child for what everyone on the planet wants to be bearish on. This particular asset class right now, it is the most bearish of all the asset classes we see. I can't think of an asset class people are more bearish on right now than the grain markets.

Well, we had a top five cold December. We are — we now verifying we're going to have a top five cold January. Everything is very, very clear that we're going to have a top five cold February. And everything is very, very clear to us that we're going to have a top five cold March, which means we're going to have a top five cold winter since 1950. Whether it's number two or number three, you know, those details have to be worked out. And it's still going to be center — you know, center east — where most of the people live, where most of the heating degree days come from. Is going to be where this continues to be the focus. And we're going to continue to have aggressive snowfall, especially in the east northeast. Another big Nor'easter coming up the northeast quadrant over the weekend. Such forth and so on. And so if you look at the natural gas supplies here in the U.S., and you work out where I think we're going to wind up at the end of March, which is the end of the drawdown season, I think we could be looking at at or below the lowest levels of natural gas in storage since we've been measuring this. So it's been a long time that we've been able to get the natural gas supplies down as low as I think we're going to get them down to.

And what's very interesting is that Europe has had a top five cold January and it looks like they're going to have a top five cold February. Their natural gas supplies are down to 40%. And it looks to me like, if you remember a few years back, they literally ran out of natural gas and they got to $100 natural gas. I think they could run out. They may very well get very close to running out again. So, what does this mean? Beyond the fact that natural gas prices certainly still would appear to have some upside price risks at least heading into February — what it means is the U.S. and Europe simultaneously are going to have to rebuild their natural gas supplies from almost, you know, from very, very low levels. Meaning a normal injection season is not enough, like a normal season. You need to do more than the normal season, which means prices are going to have to stay high, you know, much higher than they normally would be, to try to incentivize greater production so that by the time we get to the next winter, you know, we at least get our supplies back to the five-year average. Whether the market is actually able to do that or not — that's the rub. And the LNG exports to Europe — I mean, Europe this past week said they're no longer going to ever be buying natural gas from Russia ever again. And it's set in stone, and they passed the bill, and they're never going to do it again. So, they're going to have to buy from us.

They're going to be buying maxed out LNG supplies from us for the rest of the year, trying to get their supplies, you know, back up. So that's quite a scenario. The last time natural gas price... If we both don't have enough, that's an interesting scenario and it may cause a higher price plateau because the last time we went up, we went up and we came straight back down. I think that we're going to go up and we might need to trade a much higher plateau for a while until the market gets comfortable that we can actually turn on the natural gas again and get ourselves... Now remember, this is all happening when AI consumption of electrical power is going up parabolically from all these data centers, and the majority of these data centers are going to be, in the near term, in the next couple years, driven by natural gas-fired new electrical power plants. So the domestic consumption for natural gas is going to... for domestic, I mean, it's really going to be difficult, Casey. I've always felt that all we need to do is get these supplies down one notch from a coal winner, and then it'd be very, very hard to rebuild them again with everything that's going on. The coal winter's happening. It's happened. Our supplies are going to get down, and I'm not sure, you know, that we're going to be able to put our supplies back in a comfortable spot with the AI demand ripping like it is. There's just those three demand sources: Europe's demand for LNG, our demand for electrical power, and just needing to extra rebuild for our supply. I just don't know that we're going to be able to do that anytime soon. And that sets up a very different framework for natural gas prices and the cost of electricity, which is everybody. I don't care who you are, where you are in the socioeconomic ladder, everybody consumes electricity 100%. Everyone's impacted by the cost of electricity 100%. It is something felt by all, and it's one of the greatest inflationary issues that we're going to have to be grappling with going forward. And this cold winter was exactly the wrong thing at the wrong time. Deep down, I hoped the forecast would be incorrect, but it hasn't been, and it's not going to be. So...

It's insane. It's got nothing to do with China, which is beautiful, and this GLP-1 demand hasn't kicked in yet. This is pre-GLP-1 demand. So...

Just like natural gas, this demand base for natural gas has been growing and growing and growing, and we've been just staying ahead of it. And all we needed was one coal winner to just totally turn natural gas supplies upside down in demand. We just need somebody to have a bad crop. And it doesn't mean it has to be a major crop problem anymore because of the demand base. It just needs to be off. So whether it's Brazil, whether that's Russia, Ukraine, whether that's Europe, whether that's the US, whether that's China, whether that's India, somebody just needs to have, you know, a crop that's a little off, and that's going to set the whole thing off. So the weak currency, the strong demand from GLP-1 drugs, the strong demand we already have, it's going to set the thing off. And once you take that supply off the top and now you're chasing it, then all this negativity and this pent-up bearishness that's kept grain prices at historically cheap relative value prices immediately reprice higher, like we've seen in precious metals and like we're starting to see in natural gas. So...

When I look out ahead, you know, to what we're looking at here, we are currently ending a weak La Niña. We're going to be converting to a weak to medium strength El Niño by the fourth quarter. And that El Niño is going to continue through probably next summer-ish, the following summer. Okay. So, what does that mean? That means that when you go through a conversion from one to the other, there tends to be an increase in weather volatility in the US. So long as the El Niño doesn't arrive by spring, you tend to have dry, warm weather in the month of July, you tend to have very dry weather during the spring for where winter wheat is grown. And obviously, we're going to continue to have winter kill frost risks well into the spring because this pattern that we're in does offer greater risk. So the way I'm looking at it is, I think the first thing that sets this off is winter wheat supplies coming off from dry weather and winterkill threats here and abroad. That's the first chip that you're taking the supply down that gets the markets uncomfortable. The second thing is that we get enough warm, dry weather in the month of July that it takes the top off the crop. With maybe... I think we're going to plant 97 million acres of corn, give or take, still a large number but down two or three. And if our yields are, let's say, slightly below trend, we would get a very, very tight corn market with the kind of demand that we have, and we're going to plant another very, very low acreage number on soybeans. So that would be chip on supply number two. El Niño historically is correlated in the following growing season in South America with very, very warm, dry central north Brazil, where they grow the majority of the soybeans and they grow the majority of the corn in second crop corn, which would carry over into the following second half of the growing season. Chip on supply number three. What it also means is that India, Southeast Asia, and China, including Australia, tend to get into severe, extreme drought-like conditions. Now, I know not necessarily someone like Australia is the biggest market mover around, but they do produce, you know, some pretty significant supplies of wheat and sugar and cotton. And obviously India, with their prolific rice production, prolific wheat production, prolific cotton production, sugar production, and obviously Southeast Asia is significant in rice production and sugar production, and even things like Malaysia that produce significant palm oil production, you know, in terms of how that's going to filter into renewable diesel and how much we can import and that sort of thing. There's just a lot of really important areas in the world that are going to see uncomfortable weather volatility chipping away at these supplies. And when you ramp up demand through low prices, through weak currencies, and then you get a step up through a unique demand situation like corn-based ethanol was in the 2000s, or like GLP-1 protein demand and feed demand is going to be here over the next few years, you get into a situation where you just fall just below... you reach the pivot point where then there's not enough, and then everyone just starts chasing it and chasing it and chasing it. And I think that's kind of what I'd be looking at. Look for winter wheat to be the first weather-related catalyst to take some significant supply off of grains, the first one to excite the market. You know, I mean, I know a few years back, winter wheat put over a dollar on, and it's going to impact everything. You know what I'm saying? And just keep looking for chipping. And of course, one of these areas could have a major crop problem. Okay, I'm just saying just a little off, a little off, a little off, a little off. Nothing I've mentioned here is a major crop problem. Just chips. Chips. If we just get chips, we're going to get ourselves into a lot of trouble. If we have a major crop problem somewhere, it's a completely different story. And so we'll be watching very, very closely, like what happened this winter. If we start to get really, really strong signals that some region in the world could potentially be looking at a major crop problem, then all bets are off, and then things accelerate much, much more rapidly than what we're prescribing here. And so once again, if I'm thinking through the livestock sector, Casey, everybody knows about cattle and how, you know, that's kind of... I don't really see a huge opportunity in the cattle market, just as high as prices are. Obviously, this trend for higher protein doesn't hurt the cattle market, but in terms of an undervalued, underpriced, mispriced, misperceived market, I look at the hog market and I say, you look at the pork price and you look at the beef price, and I understand, you know, I understand why. But if we're going to be moving from, you know, 12% market share, we're over half or 60% of these 60 million people and a big chunk of people overseas are going to start taking these GLP-1 drugs and they're going to want to consume more protein and they're not going to be able to afford beef, they're going to consume more pork. I just think pork has so much room to the upside. That ratio between beef price to hog price, which is at a record ratio right now of expensive beef versus cheap pork, we could finally be looking at a renaissance period for pork demand to bring demand back into this industry that's been lacking for so long. It could be the demand thing that really catches everybody off guard. And if you look at the price of April hogs, just as an example, you know, we like to look for chart patterns, these long-term wedge patterns that consolidate, kind of develop a coil spring. We had a multi-year wedge pattern complete this month, and hog prices have now broken out of that wedge pattern to the upside. Our experience in our history is that whenever you see a market spend a long time in this kind of a wedge coiling spring pattern and it breaks either up or down, the move tends to be dynamic, significant, and longer term in nature. And we've seen that happen here in the last two weeks. So price is starting to verify thesis. We're, you know, we're guilty for sure of sometimes being too early or seeing things too early or maybe not being patient enough to let the market tell you when they're ready to trade a thesis. So we've learned from our early years of getting our butt kicked by being too early that have a thesis, have a strong understanding of fundamentals, and have a strong idea of what the price action would need to look like to tell you your thesis is starting to be correct. And we feel the hog market is now giving that technical signal that price is starting to verify thesis. And so I think that's going to be an exciting area that the market is totally asleep at the wheel, and I don't think anyone is prepared for what might take place there. You know, we've seen, you know, the cattle price make all-time new highs by a long shot. You know, we saw the dairy price many years ago make all-time highs. You know, maybe it's the hog market's turn to go make some new all-time highs. I think the all-time high ever printed, I think, was $130, something like that, give or take. Don't quote me on that, but I think it's around $130 there. There's a recipe here for that to potentially occur over the next 12 to 18 months, if our thesis is correct. So...

Our website is hackettadvisors.com. We also have a Twitter page, @hackettadvisors, a LinkedIn page. We do put some information out there and interviews that go over some of these statistics, cycles, and correlations on weather and other factors that help our customers and hopefully help those watching your great show hopefully make better decisions wherever they are in the food chain and agriculture.

Sounds good, Casey. Always a blast.

Well, there they are mocking you.

See you next year, loser.

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Pretty good. Pretty good considering what happened Sunday afternoon. I guess the sun came out Monday morning, so another day. Here we go.

You only left 12 points of field goals on the table out there.

Pretty.

Yeah, that game... in theory, the game should have ended 10 to 3.

The backup had a fairly decent game for the first game he's ever played in the NFL, with the exception of the other four scattered out throughout the nine years he's been in the league.

Yeah. And it just moved.

It's funny to me. The Broncos are, you know, famous for snow games and all that.

And the snow affected them more negatively than it did the Patriots.

Yeah.

Yeah. That was a tough game. A lot of things that could have went... they kind of bounced around there a little bit.

Yeah. But...

They're doing good. It's going to be... they get their stuff together and they'll be regular.