Moving Iron: Simpler Machines, Tougher Markets – Emissions, Inventory, and Value

I'm doing good. Good. Good luck. I'm doing good. Casey, how you doing?

Well, the reason I said in the worlds of auctions and whatnot because there's a lot of whatnot that came out here yesterday. We're recording this on Tuesday. So, yeah, we kind of have to talk about that, don't we?

Yeah. That was an amazing sequence when President Trump started talking about John Deere and his thoughts or hopes or whatever of creating a situation, you know, basically pretty def engines and creating opportunities for manufacturers to strip machines down and...

I saw the clip last. I've been traveling and I saw the clip and I couldn't believe it. It was just amazing. I mean, I've been covering auctions for 36 years, Casey, and everywhere I go, you know, especially the last few years, you know how it is. People, I mean, there's chatter, but people have been in my ear forever like, 'Oh my gosh, if Deere or Case or Ford or whoever, if they could just make a simpler, you know, our favorite model of that box car Magnum, that 7120, boy oh boy.' And everyone understands it costs more to make now. But the engine, the emissions, of course, that was, well, you can't. And what he said, I mean, was like, well, what if you could? And then what would people buy them? What would the new ones cost?

What would that do to the value of a two-year-old one? I mean, the ripples, and this is just in our little world of agriculture. My god, what about trucks, over-the-road trucks and everything else that's out there? I mean, that opens a pretty big can of worms. And some of this, you know, some of the stuff, you know, the toothpaste is out, too, right? You can't put it back in there. But you could absolutely go say, 'Hey, tell you what, we're going to do these things and there's going to be...' you know, we talked about this for probably what, 25, 30 minutes before we started recording. Yeah. And we had a podcast before the podcast. But I mean, as you're working your way through this and you start thinking about, okay, the easy button here is, all right, cool. From the factory, we're going to have a deleted engine and we're going to either leave all the stuff on there so that if regulation changes or something, whatever happens, then you can go back in and make it where you need to be, or take it all off and, you know, do that. I've seen machines come through that are missing the big 55-gallon drum muffler on the front and on the stack and I mean all that stuff and...

I bet. So now if you take that from the factory and you take it off, you know, does it lower the price $50,000, $100,000? Like I don't, who knows, you know what it actually does, right?

I think when you look at this, it's a... what happens to the stuff that's already out there now? And I think that's the big question, right? So now you've got this brand new 2025, 2026, 2027, whatever, whatever your model it is, and it comes out of the factory and it's $150,000 less or whatever the number is than what the other machines are, that has effect on the used marketplace. And that trickle down that you see coming through is the same thing that's out there. I mean, just like price increases lift up the price of used equipment, right? It might, you know, if there's a 5% price increase, you're not getting 5% down all the way down to the bottom of the trough there on used equipment, but portions of that 5% price increase are applied back to different various things. Closer to new you are, the more the greater that variance is applied back to that machine. But as you watch kind of work your way through those things, you go drop the price of stuff, that means that there's stuff out there that's going to fall right along with it.

Well, I like I say, I rewatched that clip like four times last night and I just was fascinated that, you know, he said it the way he said it. It was very plain. But, you know, I'm the guy who's spent my whole life writing down, compiling prices on what people pay for different things and why. I listen to, you know, why, hey, Chuck, why did you pay $150,000 for that 2009 whatever? And what Chuck has told me and what every farmer, you know, told me, Pete, I like the simpler machines. [clears throat] And so, you know, just last week, Big Iron had a John Deere 8210, like a 2000 model, super nice machine, $25,200. I think it was out of Nebraska. $133,250, highest auction price ever. So I get this cascade of proof that farmers, when they find the nicest older simpler machines, they pay double, triple premiums for them. And then at the same time lately, as we go forward here, on the advertising side, whether it's upcoming auction or private items, it used to be kind of behind the shadows when things would be deleted on the engine. But now it's like right up front, like, we deleted this. And it's like if you want to get more money for it, I would advertise it the same way at auction. So that's the swirl.

When he said that, now again, the logistics are like, oh my god, if you're a manufacturer, your production lines, how are you going to... On the one hand, I think what people in their head are thinking like, oh, if Deere could just build a new 7810 or Case give me a new 8920, and yeah, it's going to cost more, we understand it's 2025 or 2026, but give me that. Now what would that cost versus what it cost 20, whatever, 25 years ago to make it? And then people's chatter about, I would buy it, I would buy it, would they buy it? I don't know. And would the manufacturers... I mean, so they have to judge like, well, okay, President Trump's got three years left, is this just going to boomerang the other way? Can we redo our production lines? I mean, that's the thing. Just a hell of a spot, what do you do?

But on the one hand, one thought I had, Casey, was I've always thought this, our particular space is very, very difficult to get into in terms of, you know, if you're making tractors and combines, sprayers. I mean, the money involved, it's intensive. The dealer networks, I mean, the barriers to entry are humongous. Now, what he said yesterday, I mean, when I listened to that, it's like again, it would have to all pass Congress, roll back the emissions and all this stuff. And again, the ramifications over the road, let alone our vehicles, are probably way, way out, way farm country. But in theory, if you could do it, would there be someone with say $50 billion, maybe an Elon Musk kind? I mean, there's a guy that made his own electric cars. Would someone go, I want to build a simpler, just horsepower tractor and come to market with it? Now, you don't have a dealer network. How would that work? Humongous barriers. But I never... it was like that wasn't even possible. But when he said what he said, it's like, well, in theory, that door maybe just popped open a little bit. A zillion billion logistical and political things. I mean, the politicians would have to pass it. And oh my god, I don't know how that would all work, but I was fascinated what he verbalized, what people are thinking.

Yeah. I mean, [clears throat] just, and again, we're just, you and I are talking about used tractor values, used combine values. What could happen? I mean, everyone has two, three cars in their garage. Yeah. And I mean, would they be happy if used values on their 2023 model, whatever, all of a sudden kind of tanked because everyone wants a... I mean, it's just, it's a Pandora's box, right? But for someone who's literally spent a life and built a business around data points on what people want today in the used market and how much you're going to pay for it, I mean, it's just you sit back and think about the ramifications. It's like, wow.

Holy smokes. What if, and we know not just President Trump, but obviously politicians forever, you can say things and that's how sometimes it usually takes quite a while for an idea to, you know, and that's how, you know, emission engines, you know, for our environment and that whole argument won the day and brought the regulations in and it was what it was and you can turn and go the other way, but how long does it take? And when I was rewatching that again last night, and it was right or wrong, I mean, he called out John Deere, I mean, he said it multiple times and I was like, my goodness, that's a... that's quite a pinch there. I mean, any manufacturer like, oh, they've all done it, right? There's not one of them that's... No, they're all right. They're all, you know, it's the same. So it was just a fascinating little exercise. I figured we better talk about it because when it comes to machinery, that's what everyone's talking about today anyway.

And I just found it fascinating, coming at least, I mean, trying to find the lines on what different sides of politics are these days have become very interesting. It gets very personal, obviously, but generally speaking, farmers, I mean, they're open market people who want to compete. That's what farmers do. They compete. We'll make a great product and we want to compete on the world stage. So you're right, with any kind of government force dictating price, it's so weird because it goes against what's inside us. But, you know, the costs are so high, farmers are so pinched at every turn and it's... and again in this whole mix and everyone's tired and it's... I mean, it was just very plainly spoken and he said it and it was like, wow, that's... what, maybe it goes nowhere, maybe action follows. Well, it'll be fascinating to see, but holy smokes. Yeah, I mean, I just can't even imagine what the different ripples, like you were bringing up, what that could be.

For, in every direction, because I mean, I've been traveling all over the country here going to auctions when I have for 36 years. But Saturday I was in North Carolina and they had five late-model Fendt tractors. So that was an interesting test case because people are coming up to me going, 'Pete, what do you think of these Fendts?' And I'm like, 'Well, people wherever I go say they like them.' But the reason they were asking me is because they're like, 'What do you think that 936 with 822, what's that going to bring in 10 minutes?' And I was like, 'Well, I haven't seen one that nice before and we're going to find out.' And I stood there and filmed it at 814 hours. Extended warranty, went for 285. And then down the line, he had a couple 724s, one with a loader that brought 245, 929 hours with a warranty. By the way, two of those five are heading back north, up northern US. But the number of farmers that came up to me that had either run them or maybe been with custom operators running them, and again, chatter is chatter, but they're in my ear like, 'Oh my god, they're fantastic. I love those things.' And the farmer who was downsizing basically, he was keeping the cattle and he'd run all different kinds. And he said, 'Pete,' I just asked him, I said, 'Tony, how do you like your Fendt?' And his face lit up. And he started to tell me about it. Now, what do they cost new? And okay, Tony, then is he happy with 285 on that 936 a couple years later versus maybe what a Deere or a Case would bring?

But one thing I would say, the people of North Carolina are the best. I love North Carolina. [snorts] Those farmers down there, they just are so welcoming. Tony had an Allis-Chalmers tractor, an 8050 two-wheel with 2,003 hours on it. It's beautiful. It was at the end, it was about 20 pieces after these Fendts. And I'm filming the Fendts and he had a John Deere S760 combine that was the hottest one on the sale. I think that one had 700-some hours and it went for 280 with no heads. I thought that was more than I thought it was going to bring. But I wanted to film the Allis 8050, but five young guys from Carolina there, they wanted to talk. We were having the greatest time. And I missed filming the 8050, which brought $26,000, which is the highest two-wheel I've ever seen. Again, older, pretty def, you know, whatever. But that might be a collector item for someone, but yeah, it was a great day in North Carolina. It was a lot of fun.

And I think on the one hand, it's interesting. I think what you're talking about there, Casey, we could circle it back because again, people, you know, whether to whatever level it's in jest. But people when I'm out visiting over the years are like, 'Man, Pete, I tell you what, if Deere could just build a new 4455, Case, build that new box car.' And you know, and then think about it on the dealer side as the contraction has happened, you know, farmers, we understand why, but they're like, 'Well, I don't, you know, I used to have five dealers here locally. I could...' And they understand why manufacturers have done what they've done, contracted. But, you know, as we're kind of, we're remembering what was as we hurdle forward at 100 million miles an hour and as humans we verbalize, you know, I like the way it used to be. But sometimes it's very rare when you can reach behind you and pull forward and say, 'Okay, here I just built you a new 7810. Now it's going to cost...' and we were, you know, that half-hour conversation we had before we started recording, we were trying to be as sharp as anybody on that, you know, and then it's like, dang, would people really pay that for a new, quote unquote, well, it would be a brand new 7810 with an older engine in it or a Magnum? That chatter-wise they tell me they would out at auctions, but when it comes to writing the check, would they do it? And as we're hurdling forward, it's a fascinating what-if question. We'll probably never have an answer to it, but what President Trump said the other day, I was like, 'Oh, maybe.'

I wanted to do this a long time, but I could never figure out how to make it work because it just, you know, and what really triggered it, I went to Ukraine back before the war four or five times, and three or four times, I guess. And I remember walking in this guy's shop and they had a 50-series combine. I don't remember, 9750 or something like that. I can't remember what it was, but they had it all the way torn down to just the frame. The rotor was out, cab was off, the whole thing. It was a frame. And they were repainting the frame and going back through this and it was the third time that they had done that with that particular combine, right? And they put all brand new parts in there and I'm like, 'Holy crap, how much does that cost to do that?' He goes, 'Well, it's a lot different here than it is in the United States. You know, we can basically...' the guy was telling me like, 'Our labor costs here are about $200 a month to have that guy work here.' And I'm like, 'Well, okay.'

And dealers have to compete for that talent to get those folks. I mean, really hard to keep those people, those talented people.

Well, that's exactly right. So a new Class 7 combine, which that's what that is, would be probably $650-ish, something like that would be my guess, top of my head. You know, you just triangulated the other side of it, that people that I see when I'm out at auction. Or an extreme example, people remember this story. You can find it on YouTube, but this was back in 2012. A friend of mine in New York, Kevin, you know Kevin with Will Run Farms. He's the guy that would go around and collect and buy all the super low hour... Yep. Yep. And I, Kevin, I apologize if you're watching. I'm old and I forget last names. I can remember auction prices, but anyway, Kevin bought a 4455 with three hours on it in 1994 using the DTN system before the internet. He found it through his dealer. Was a doctor in Michigan had it. Had a couple kids. Just never used it on his farm. Kevin bought it for $58,000 bucks in '94. Brought it home to his barn in New York. He'd been hearing the stories about, you know, growing up and his grandpa, the 4020s going up in value, the 4440s. So he's like, I'm going to take that truth and I'm going to make money at it. So he bought this 4455, $58,000, put it in his shed. 2012. So it's 18 years later. He advertises it for sale and I'm weighing it here, but I think it was like $155,000 and a buyer from Mexico bought it. And what made people sad about the story was when the buyer talked to Kevin about, you know, shipping it to Mexico, Kevin was like, 'Well, you know, can we put it in bubble wrap for you?' I mean, and they're like, 'No, we don't care. We're going to pound on it. It's just I'm going to give that to our...' He goes, 'We can rip that thing apart a hundred times and rebuild it.' So we just thought that's the nicest one we'll ever find. We'll buy it. We'll run it for like a bazillion hours. And that part of the story made the US ag audience super sad, actually, because they're like, 'That's a piece of our history with three hours on it, and you're just going to pound on it.' But the guy in Mexico was just looking at a straight business, right? I can... my guys, my crew is my crew and they can hammer on this thing and this thing's bulletproof and we can run it forever and rebuild it. Yeah. So it's fascinating. It all depends on how you look at it, I guess.

I had along those lines, Casey, this was about a year ago. I posted a picture. I found as I move through and do stuff, I found this picture of like a '70s pickup, like I think it was an advertising piece from Chevy and the bench seat. And I was like, 'Oh man, things were easier in the bench seat days.' And I just posted that, you know, kind of just tongue-in-cheek, you know. And people started commenting on it like, 'Oh man, I love...' like you say, 'I love my 1980, you know, square body. I love this. I love that.' But then some people started commenting like, 'Uh, I don't know if I want to drive to Omaha on a bench seat.'

I think we just solved all this, Casey. As humans, we like to kind of, we talk about what was and we're just being human. I liked my 1982 pickup. I liked my 4440. But we're hurdling forward this way a zillion miles an hour. And so again, manufacturers, whether it's trucks or tractors or whatever, always had a super difficult job to give you the tool you need, you know, at a price point that the market will bear. And we're just living in very interesting times right now. I think this conversation we're having, when I saw what President Trump said last night, I was just imagining coffee shops around the world just like, 'Oh yeah.' Oh my goodness. Yeah. Yep. You know, it's good stuff. We'll see what happens.

Hey, there's wisdom. That's wisdom. That's right. I tell young people number one thing, number one piece of repeat advice is listen to your parents and grandparents. Yep. So yeah, there's wisdom in that for sure.

Twitter message there. If you're not on Twitter, just go to our website machinerat.com. Our phone number and email's on the bottom. Send a note. I will, Casey, be in Markleville, Indiana on Friday the 12th covering an auction by our good friends Jeff Boone Realty and Auction. They got a low-hour 420 Steiger with a PTO, 58 hours. And now again, here's the interesting thing. Jeff and I were talking about the sale and he goes, 'Pete, there's one other tractor I got to tell you about.' And I'm like, 'Okay.' 1991 White 195. Okay. So you don't see many of those. Reserve $9,900. Looks nice. But Jeff tells me, 'Pete, when we went out to take the pictures of this thing for the auction, this family was so connected to their tractor that before we took it away to bring it to the auction yard in Markleville, the whole family came out for one last family picture by the White 195.' And my whole deal is I wanted Jeff to say that because yes, you're just buying a 195 on the auction on Friday, but you're buying a 195 that was a piece of the heart of a farm in central Indiana. And they loved that tractor and they cared for it. And I know what other 195s have brought with those hours. We'll see what the one brings on Friday that was cared for like that. So it'll be a fun day.

All right, sounds great, Casey. Have a good one.

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I'm doing great. We're in the chilly 60s here trying to bear down.

Falling lizard warnings.

It's out of control.

Yeah. There you go. There you go. Because water does freeze in Florida around 60 degrees. It's a little different than the rest of the world.

Yeah, it's rough. I was in Saskatoon, Saskatchewan last week speaking at a conference. And it was a good week to go there. Minus 10 with a stiff 30 mph breeze. And then I was in Toronto, which was a balmy minus two. Yep. And then I bought out the shorts and the sandals in Chicago. It was only five. And then settled into Davenport, Iowa and it was really, really... I was getting suntan lotion, that was 80. So yeah.

Yeah. Yeah. I mean, we've had a polar vortex disruption from a sudden stratospheric warming, one of the earliest ever seen. Actually occurred in November. We only had a couple of other times that we've had November stratospheric warming over the Arctic, which then sets the instability in the polar vortex, which then sets the upper air flow pattern to direct this Arctic air down into where people live. And it's a center-east focused weather pattern. Not, you know, the west is going to be on the warmer side actually and has been actually on the warm side. If you look at California and Colorado and the Southwest, they've been on the warmer side. And so, you know, there's going to be waves of cold. We'll get a brief warming up like we will later in the Christmas week and then another wave of cold. You know, we're going to keep getting these bands of cold coming in as this polar vortex continues to be unstable. And I think we're actually getting... I actually believe we'll get another sudden stratospheric warming event. Usually when you get an early one, you get another one typically later on in January. So we'll be on the lookout for a secondary one that then elongates the winter into March, maybe even to April. So I think we're going to see, you know, this is not the last. And another big thing is that we're seeing a lot of snow starting to fall. Really some significant snow, some in some places record-setting snowfall. And that's going to be the pattern. Last year was cold and dry, top 10 cold. This one's going to be top five cold. It's going to be cold and snowy. And I think we could be looking at one of the highest snowpacks in the central northern grain belt as we head into March. 2019 was the last time we... I think we're going to see a snowpack similar to this. And you know what that means? Spring thaw, snowmelt, rivers, flood, those areas that are the ground that's near those areas. You know, you're going to have a lot of acres that are not going to get planted in those low-lying regions. There'll be a lot of acres that will be delayed in planting because of the excessive river levels and the rapid snowpack melt when the spring comes and it takes this new record snowpack and melts it. So that's going to be... and that's not today, but that's something that we'll be watching. Like 2019 caused a really, really challenging planting season that year, if you recall, and we did get a big move in the grain markets, especially corn, and yields were fairly below trend that year because we got off to such a slow start and in such wet conditions. So that's kind of where I think we're heading towards. And in the meantime, South America looks great. I think a significant soybean crop is on the way for Brazil. Supplies will be coming in March, and so it's really important to get China to buy as much soybeans from us by February. And I think that's actually... Beshear said yesterday, the day before, they expect all this purchase to occur by February. And I wonder why it's February, because it's been hard to buy soybeans in March with a big soybean crop harvesting from Brazil. Well, whatever upside there is in soybeans coming from Chinese purchases, you know, if we haven't already seen the full upside, it'll be between here and February. Then I think it's going to be very difficult for, you know, March and April to get anyone excited about Chinese purchases of US soybeans. It'll have to be, you know, more planting concerns or something like that. So that's where I think we're at. Obviously, second crop corn, we don't really start worrying about that.

Late February, as we get planting further along, it's really March, April, you know, that's still a light year away. You know, that's not something we're going to be worrying about anytime in the next, you know, 30 to 60 days. It's out there still. And so we just still don't have a whole lot to go with in South American weather right now other than maybe Argentina getting hot and dry in January up in the deep south and Brazil getting hot and dry here in February, in December and January for rice. But the problem is Brazil has become so prolific in their soybean production that now Argentina production as a percent of Brazilian production is small. And so it begs the question, does it even matter? You know, I mean, everything matters, but I mean it's like if Brazil has a 180 million metric ton soybean crop and Argentina is producing a 50 million metric ton soybean crop and let's say their crop's off 20%, which would be significant, right?

Well, 180 to 170, you know, it's like it matters a little bit. Does it matter that much? The answer is no, it doesn't. So I almost feel Argentina for soybeans doesn't... Yeah, you could get a little bit of a rally, maybe a week, a little. I just don't see you get a big weather-related rally. Shoot, a few years ago we had a hit one-in-a-hundred-year drought, you know, we got a modest rally out of it. Corn can still matter for weather, but I don't think the soybeans can really much. And so I don't know, these are all about Chinese purchase or not. Other than that, weather's going to have to be an issue. We're going to have to worry about our crop to get a weather issue for soybeans at least.

The problem is Brazil produces so many soybeans that the only reason that we need to produce more soybeans is for domestic. China doesn't need to buy any soybeans from us. They're doing it for political reasons. They could source their soybeans from Brazil. No doubt about it. They don't need to buy so much. So domestic demand primarily comes from the renewable diesel side and we just can't figure out what the rules are. What is it going to be and what is it not going to be? And we're not going to allow used cooking oil to come in from outside. Now we are going to allow it to come in. What is it? Are you going to allow it to come in? Because if you allow it to come in, then you don't need as much bean oil. If you don't allow it to come in or you tariff the heck out of it, then you need a lot more bean oil. So you need a lot bigger bean crush. In order to determine how many acres you need, you have to determine what are actually the rules. And it doesn't sound like the government is able to tell us clearly what they're... they keep flip-flopping on this stuff. We want these big mandates. Yeah. But now there's a lot of exemptions. So I don't really know how many acres of soybeans we need.

What I can tell you is farmers are going to, knowing what's going on in South America with Brazil production for soybeans being prolific, they're going to continue to plant a higher number of corn acres until the rules for soybeans come clear. And it's a logical thing because they know what the rules are for corn. We know we don't need China to buy corn. We're selling all kinds of corn to all kinds of other people. We know what the ethanol rules are for corn. You know, we know what the feed demand thing is for corn. We know that Brazil is not really in the same position growing corn like they are soybeans and their corn-based ethanol in Brazil is going parabolically. So most of the extra corn they're growing now is going in the corn-based ethanol down there, which means that their exportable supplies are really not going to grow much. So corn's got a great story. Soybeans, I don't know what the story is. I really don't know what the story is. So if you're a farmer and you're saying, 'What the hell should I do here?' I'm going with corn, especially if it's on good ground.

And in my meetings, especially in the Midwest that I just had last week, there's a ton of preparation of anhydrous and such that has already been committed to corn. We're going to plant a lot of acres of corn next year unless the weather is not good. I'm not saying we're going to plant 100 million, but I think it's going to be upper 90s. I don't think this idea will come back to 94. I don't think so. Not with what I'm hearing and from what I heard last week and from other sources that I've been talking to. I mean, there's a bunch of acres that are committed to corn and are not going to go back what they've already done to prepare the ground for corn. So I'm thinking 97, 98 million acres of corn's coming up because the market has no idea what the rules of engagement are for soybeans. And so we get this thing, they're going to hand $12 billion out back to farmers yesterday as part of a tariff relief plan. I mean, I don't know. I mean, maybe I'm not very good at math, but I don't think that covers it. No, I don't think that's quite going to cover the loss in economic value that the tariffs have imposed on the farmers. I mean, every little bit helps. I'm not saying it doesn't help. And obviously, most of the farmers I know don't want handouts. They don't want central government planning. They want the markets to give them their bread and butter. But so we're back to, you know, government handing money out to farmers because of these policies and because the government can't decide what they really want to do here on renewable diesel and everything else. Just haven't decided.

I mean, even for corn, you know, increasing the national percentage of ethanol in all gasoline, they could easily raise it, you know, E20 or E30, and with corn we would not have a corn problem in the world. We wouldn't need anybody to sell it to. I mean, they could easily create renewable energy policies at home that the market can pay the farmer a fair price instead of some kind of a tariff twist, is what I'm calling it, you know, where they're claiming they're, you know, giving some benefit back, but they just don't seem to be moving that ball forward. And so until they do, farmers are going to plant more corn. Not that it's the best story on the planet, but it's a more clear, concise, understandable story. We know yields have to come down significantly here in January. If they don't come all the way down, they're going to move the quarterly grain stocks down. We're going to have a billion-five, billion-bushel carryout for US corn. Not the end of the world, but tighter. You know, there's just a good story on corn that we don't need government intervention. We don't need China. We don't need any change in the renewable diesel... I mean, in the ethanol policy, it would help. We just need to keep doing what we're doing. Soybeans is just a basket case. My opinion. Yeah.

There's not a good story. And we've lost our dominance in soybeans and it's not coming back unless there's a significant change in the world order from what we have today. And, you know, I mean, I don't see that happening. They have committed to growing, being the king of soybeans. They have a lot more acres to plant. If it's economic... it's not really that economic to do it right now. So like this year, I don't think they planted a lot more acres. They're just looking at maybe a little better yield. That's why the year-over-year increase is going to be fairly small. But, you know, you put a 12-handle on the soybean price, away they go. And that's the problem. We really can't get the soybean price up too much or else they're just going to... So they're the governor on how high soybean prices can go because they'll just keep growing more of it.

And so we have to decide what our game plan is. Are we just going to stop growing soybeans altogether for export and just strictly grow what we need domestically? By the way, I'm not saying there's anything wrong with that policy. Is that our strategy? Is our strategy that we're going to increase our renewable diesel and really commit to it and put rules in that clearly commit to growing that domestic demand base? We have to do something because exporting to China, although we're doing it now, is a short-term solution. They will not be buying soybeans from the US longer term. They will not be doing it, in my opinion. They will not be doing it.

No, I mean, they'll do it for the next three months, six months, maybe a year, but in the long run, they're not going to do it. And one day we'll wake up and somebody woke up on the wrong side of the bed and is angry and then the whole deal is off and we got nothing, you know.

And just remember now that they grow soybeans in Brazil. So almost the entire country grows soybeans now. It used to be, you know, but now the whole... so the south is bad, usually the north is good. If the north is bad, the south is good. Like it's almost impossible to have the whole country bad. I mean, it's such a massive country that to say that the whole country is going to have bad weather at the same time... I mean, I'm not saying it can't happen, but the chances of it happening to create a major crop problem is very, very remote. Yeah, you can have a problem in the south and they could have some issues. You could take a few, you know, metric tons off the top, but I mean to have a crop down 30%... It's almost impossible to happen because the whole country would have to be in an abject drought or massive flooding or something crazy. Highly unlikely that's going to happen, that you're going to get that kind of a broad weather... planted area and say we're going to have enough, you know, shoot, the corn area for us that matters. It's this little square, you know?

I mean, you take that, multiply by 50, and that's what you're looking at for Brazil, you know?

So anyway, yeah, it's just a tough deal. That's all I can tell you. Tough deal. Not trying to be negative or anything. I'm just trying to be realistic.

Our only play to sell soybeans is if we trade at a discount to Brazil, which we were trading at, and then this China truce, and now the Brazil soybean price and the US prices come together. So yeah, I mean, if we traded a discount, someone will buy our soybeans. You know, economics say you would buy one as long as there's no tariffs. Someone will buy a cheaper soybean from the US. Absolutely. But it's going to only be because we're cheap relative to Brazil. And that usually means it's not an attractive price. Usually we're not going to be able to sell soybeans when the price is 12 and 13 or 14. You know, we're going to be able to sell when it's 10 or it's nine and a half or it's nine, you know, right? Which is fine, but that's not really what we're trying to export, a high price, and I don't think that's just not the way it'll work, right? You know, it's below cost of production, and then you start looking at that with why do it, right? Why do it at all?

Website is hackettfinancial.com. We have a Twitter page at @Futures11. We also have a LinkedIn page. Once in a while we'll put some interviews out there or some tidbits about our weather work and cycles, how we look at forecasts in different markets, and viewers might find some interest going to those places on top of watching obviously your great show that I'm privileged to be on.

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Greetings from the high plains.

I'm not there today. Not there today. I'm... can't...

Yeah. Yeah. The weather here is not much different than the weather back in the panhandle. It's just a little more... air's just a tad bit heavier.

It does. There's a big difference in the way 30 feels. That's pretty...

'Welcome to the east side.'

You think the humidity sucks in the summer? No, no, no, no. The winter is when it gets you.

Right to your marrow. Just all the way in.

Biting cold.

So, you're saying the plates are at the table?

But just for the audience, what you're calling a one-year-old today is a '25, correct?

That's in my shed.