Commodity Prices and Water Management in the Bushel Business

What’s happening in the world of commodities? Jamie is joined by Tommy Grisafi, commodity broker and host of The Ag Bull podcast, to discuss commodities prices, opportunities in the small grain market, and why tiling is a smart investment in the business of bushels.

Transcript

Jamie Duininck (00:02):

This is The Water Table.

Speaker 2 (00:05):

A chance to hear the agricultural side of these issues.

Jamie Duininck (00:09):

A Place for people to go find information and education.

Speaker 3 (00:13):

Water management is just going to become even more critical into the future.

Jamie Duininck (00:16):How misunderstood what we do is.

Speaker 2 (00:22):

I would encourage people to open their minds and listen to this dialogue.

Jamie Duininck (00:32):
Hello, everybody. Welcome back to The Water Table Podcast. Today I'm super excited about the guest I have, Tommy Grisafi. I think this little episode here is going to be full throttle.

Jamie Duininck (00:44):
And Tommy's with Ag Bull Media, Ag Bull Podcast. He's really at the heart of what's going on in agriculture and commodities.

Jamie Duininck (00:53):
And we're going to just have fun talking about what's happening in the world of commodities. We're going to talk about obviously Water Table management. We might even dip in a little bit of what's going on in the world. And geopolitically and how the war in Ukraine affects what's happening in the US when it comes to agriculture.

Jamie Duininck (01:15):
So thank you for joining us, Tommy. Tell us a little bit more about what you do every day.

Tommy Grisafi (01:20):
Hi Jamie, thank you for having me on. I listen to all your episodes. And although I don't farm, I do realize here as a commodity broker, I'm a commodity broker here in the Red River Valley, in North Dakota and I help people manage the risk of their crops.

Tommy Grisafi (01:37):
Now, the whole key to managing risk is to be in the bushel business. And I'm not in the crop insurance business. I'm definitely in the future as an options business here in the bushel business, not in the crop insurance business either.

Tommy Grisafi (01:48):
So we need bushels and talking about, we could do a whole episode about what happened to Ukraine. But overall, what I do is, I help people. I spent my whole career at the Chicago Board of Trade and I help people use those products.

Tommy Grisafi (02:02):
It's easy for me, but as these markets move, as you know, a week ago, wheat moved $4 in a week. That's volatility my friend. And so we're trying to make people's lives better. And I think you're doing the same and we're all in the same business. I tell people I'm in the bushel business. And then, that's what I do.

Jamie Duininck (02:19):
Well, let's start right there with small grains. You're talking about wheat. And with what's happening in the small grain market and a lot of that volatility is due to what's happening overseas.

Jamie Duininck (02:32):
But what I was thinking about today when I was preparing for this is, just the opportunity that the farmers have this year to think about small grains. And a lot of times, all that's connected with water management is these contractors out there, a lot of times will give discounts in the summer for late summer tiling before row crop and soybeans and corn are off.

Jamie Duininck (02:55):
And so, might be just a huge win-win to think about tiling. Think about planning wheat this spring and then tiling it in the late summer.

Tommy Grisafi (03:05):
Well, it's an interesting concept because over here in the Red River Valley and up and down, we are running against the clock. This isn't Iowa. We're not going to be able to do stuff around Christmas time. We have time to get the crop in, time to get the crop out. And then time for someone yourself or your associates to do the tiling.

Tommy Grisafi (03:26):
I saw though that happened down in Prosper, North Dakota last year. Someone had planted some wheat or barley. Got off away. And then I think they tiled the section. And if you think about the Red River Valley and what's going on here, more crops have been lost to water than drought. And although last year was a doozy of a drought. We still actually produced amazingly. We produced bushels.

Tommy Grisafi (03:51):
So as you look at the last 30 years here in the Red River Valley, I'm not sure the exact number, but I would say five to six crops in that last 30 years for some of people I know in this area, have been lost due to water, not drought. The drought, it comes and goes. You'll play crop insurance into it.

Tommy Grisafi (04:08):
But to put all that money into the crop and put, Jamie, think about putting fertilizer down. Seeding the crop and everything else and then getting a big rain and having it wash out.

Tommy Grisafi (04:18):
So when you talk about, Thailand now, although people say it's expensive, how many crops do you have to lose to water before you say, "I need to get it off." And the interesting thing is, and you could add to this, I still have a hard time wrapping my brain around the Levi.

Tommy Grisafi (04:37):
Either was the best sales pitch ever. But he said, "Tile works well in droughts too." And I laughed. But what he meant was I think, and I'll explain what I think it means. And then you correct me. I know you're going to do that.

Tommy Grisafi (04:49):
But a lot of times when you have a drought, you could actually be wet in the spring and then go into a really hot dry situation. And so when someone says tile works well in a drought, what do they mean by that? I guess.

Jamie Duininck (05:01):
Yeah. Well, really what it's talking about is the root system. And when you have a cold wet spring, which is also when you talk about what's happened when you say five or six times in the last 20-30 years, we've lost a crop due to wet.

Jamie Duininck (05:15):
How many times, even in the last 10 years, have we had a cold wet spring. Looks like we might be going into one now. And what happens is, one thing, maybe the crop gets planted late. And Every day after middle of may, you lose a bushel a day in your planting.

Jamie Duininck (05:30):
But also, if it's cold and wet in the spring, that root development, if that subsurface moisture, there's just too much, the root development doesn't happen the way it should.

Jamie Duininck (05:42):
Whereas if you have the land tiled and your water management in place, it promotes healthy, deep root growth. So that when June and July come and you go three weeks of hot without water, your roots are deep and they're down where the water is and it doesn't burn that plant up.

Jamie Duininck (06:00):
So it's exactly as you see much better yields on tile ground and in a drought than you do on non-tiled ground.

Tommy Grisafi (06:09):
But you can understand as a novice, someone like myself who doesn't own ground. If you're at a bar and someone from a tile company tells you that you're giggling. You're like, "All right, that's where they teach you this in sales class."

Tommy Grisafi (06:19):
But it's true because that's when we go on the crop tour and we have the shovel and we dig down and we go, "Oh, my. This crop has a problem. It's hot and dry. And those corn roots are only a foot or two down."

Tommy Grisafi (06:30):
They had so much water in the spring they start to go down and then they, I think it's called, they pan out. And they just like, "There's water every other day. We don't need to worry about this."

Tommy Grisafi (06:39):
Versus when farmers sometimes tell me, "This is good. We had a nice little spring. It got a little dry. The crop got stressed. It shot."

Tommy Grisafi (06:48):
You see this a lot in the ice states or any state, I guess, but the crops root down. And you see a state like Iowa that didn't get much rain last year. And then they had some timely rains. The yields I heard in tiled ground in Iowa last year, with those timely rains, were crazy.

Tommy Grisafi (07:02):
Either you start to think farmers are fibbers because they like, "It won't make 200." And they're harvesting 260 bushel of corn.

Jamie Duininck (07:11):
And we did a little bit of that on The Water Table last fall. We talked to some guys from Iowa. And that was I think, off the top of my head, it was in that 250 on non-tile ground and 292, one of the guys we talked to on tile ground. Well you start talking 40 bushels an acre with today's corn prices, you're going to pay for that system pretty fast.

Tommy Grisafi (07:33):
I think about what the state of the Ag economy was. I've been in the Red River Valley since 2014-2015 and times were bad. We were $8 beans, we were $3 corn. Who knows what wheat was, it wasn't good. People weren't even talking about it.

Tommy Grisafi (07:49):
Literally, when I started to become a commodity broker up here in the Red Valley, it was figure out what crop you could plant and lose the least. And now when you turn the clock ahead to 2022, every crop's profitable and some are more profitable.

Tommy Grisafi (08:06):
And depending on what type of ground you have, that opportunity this year to grow small grains like canola flags. I mean things that you just don't hear a lot about. But barley contracts, corn, edibles. There's a lot of crops you can get in and get out quick and then get some work done. So it'll be interesting.

Tommy Grisafi (08:25):
I do know this, Jamie, the farmer has the money. So when clients call me now or potential clients they always say the same thing too. "I sold my grain a few dollars ago, what should I do?"

Tommy Grisafi (08:39):
So they should be so blessed to be able to grow grain, then they sell it. But the first thing I do when a client calls me is, I ask them their first name, last name and what county they're in. And while they're telling me why they sold their beans $4, I looked them up on the EWG.

Tommy Grisafi (08:55):
And then while they're doing that, this is horrible. But I got to tell you. Breaking news, only on your podcast, this is the dirty secret. Then I look up PPP loans and whatever they say, an option's expensive, well, first thing I say is, "Not as expensive as selling your beans $4." But then I say, "God, the government gave you this much money last year and you got this much of a PPP loan, you could afford this."

Tommy Grisafi (09:21):
So how you tie that back in the tile is, there's an incredible amount of money out there. And I've had farmers, I'm sitting now at First State Bank in Mayville, North Dakota. And I've had farmers come in and say, "Hey, my operating has paid off. Flushed with cash. What should I do?"

Tommy Grisafi (09:38):
My question to them is, "How old are you? And are your kids going to farm?"

Tommy Grisafi (09:41):
"If your kids are going to farm and you want to give them the ultimate gift, why aren't you taking your favorite quarter and making it better? Why aren't you taking your worst quarter and selling it?"

Tommy Grisafi (09:51):
And this is something Roger taught me, he said, "If every farmer took their worst quarter and sold it and put that money into three other quarters, it would be the greatest gift you could ever give your kids ever." What do you think of that?

Jamie Duininck (10:05):
Yeah. Well, first of all, just want to explain to our listeners that when you're saying Roger taught you that, you're talking about one of the godfathers of drainage, Roger Ellingson. And that is not surprising, something like that comes from really wise words. Totally agree with it.

Jamie Duininck (10:21):
And when you start talking, backing up a little bit to what you said earlier around 2014-2015 and just hanging on. And, "What crop are we going to lose less on?" I think that's another reason why people need to think about tiling and drainage is, you go back to 2010 through 2012, 2013, and it was sort of the same as this today. Lots of money in the agriculture. Farmers pretty flush with cash.

Jamie Duininck (10:55):
And then you go through these periods where it's, "Hang on. "Hang on." "Hang on." And now we're back to that. And if you have the proper drainage in place, if your farms are tiled well, you're going to take some of that out of the market, some of that fluctuation. And be able to grow a crop and raise a crop in which you're going to make a little bit of money even in the tough years. And so when you got the money, you got to spend it on the things.

Tommy Grisafi (11:22):
And this is a fun conversation to be having. This isn't two guys sitting around wishy washy. Talking about, "Well in three years, when things get better, because we're going to take canola and squish it and making the aviation fuel."

Tommy Grisafi (11:37):
I'm sitting at a bank. The banks never had so much excess cash. Interest rates are at record lows. On Wednesday, there's a Fed meeting. They may raise a quarter. They may raise a half. This is not the 1980s.

Tommy Grisafi (11:49):
And 1980 rates started at 10%, went to 21%. So when you go to a farm meeting, some old guy says, "This is just like the '80s." I'll sit down there, at first I got to get a glass of water, laugh and then argue with them. It's not even an argument. It's just an education process. In the '80s, interest rates were at 10%, they went to 21%.

Tommy Grisafi (12:07):
We were at zero. Right now interest rates are at zero. The tenure today hit 2.10. A few weeks ago it was at 1.80. Money's cheap. I mean, if you borrow money to do something like this, if it's 3% or 4%, although everyone felt this fear of missing out that they weren't involved in stock markets, but now the stock markets are starting to have a healthy, healthy pullback.

Tommy Grisafi (12:31):
I just tell people, "If you love your kids, tile." They're like, "How would a commodity broker from Chicago understand something like that?" I go, "Because the people in this little area where I'm at..."

Tommy Grisafi (12:45):
There are some farmers in this area, without mentioning names, but they are customers of yours and Rogers. They are the first ones in and the first one out. And everyone thinks they're great farmers. And I would say they're good farmers. They have the same John Deere tractor as you. It's the tile. The ground is ready and they get in and get out.

Tommy Grisafi (13:05):
And then with that, when you talk about marketing right now in past years, when do we have the least amount of grain on hand? A few days before harvest starts. And so not only can you get in, get out with less aggravation, you can usually get a premium.

Tommy Grisafi (13:23):
So, if you're bringing grain down the Tharaldson for ethanol, that bit, what we call the basis. The difference between the cash and the futures, is usually best right before. "When do we have the least grain?" "Right before harvest." "When do we have the most?" At the gut slot of harvest. And then it's up to the farmer to store and ignore as they like to say or catch the market creates carry. And the market we have right now, there isn't carry.

Tommy Grisafi (13:50):
And one thing that's interesting to talk to about, "You didn't go this year, nor did I to Commodity Classic." But if a North Dakota farmer went to Commodity Classic, the thing they would brag about would be, "We have the worst basis in America. We're the armpit of America basis."

Tommy Grisafi (14:04):
And that's changed. And I think if what I'm seeing is correct, I think that's changed permanently, because when you look at the export market and you look at our domestic use and you look at what the future of biofuel, biodiesel, aviation type fuel, renewable, green new deal, North Dakota has wonderful potential to grow soybeans and canola and other oil seeds.

Tommy Grisafi (14:31):
And then crushing plants and possibly this mill up in up North there a little bit. And there's some things happening here between export market and domestic use. We no longer have an abundance of grain sitting around here in the Valley. And that's not something we're used to talking about. This was before Russia-Ukraine, Jamie. If things don't get right there, we are one of the main sources of high quality grain in the world.

Jamie Duininck (15:01):
Yep. And I think another thing, like we talked about before, neither one of us are farmers, but we are you in the agricultural world. And there's volatility that hasn't been there in the past. We've had some volatility in certain areas, but energy prices which affects plastic pipe prices and supply chain issues and things like that.

Jamie Duininck (15:32):
We just have been on a really steady ride for years and years, now we're facing those. And I think, for sure, in Minnesota, in the drainage side, one of the challenges in the past or one of the things that customers and farmers worried about was, the potential of regulation down the road. "I should tile today be because I might not be able to in the future. There might be regulation that's going to, I can do it, but it's going to cost more." Those kind of things.

Jamie Duininck (15:59):
And that still is a threat that's always going to be there. And that's part of why we started The Water Table to educate people on what we do. So they can understand what we do really has a positive environmental impact and not a negative one.

Jamie Duininck (16:14):
But what's happened that I want people to understand is, these supply chain issues and this energy crisis that's going on right now, we don't know when that's going to come back. And part of me believes it may never come back to where it was.

Jamie Duininck (16:26):
And as we're running up here, people should be tiling now because it might be more expensive the following year. And it still will be a good idea to do it from a bushel standpoint.

Tommy Grisafi (16:37):
From the bushel standpoint, tile is a form of insurance. So the best time to buy term insurance was yesterday. The second best time is today. And if you look at the insurances that are offered, crop insurance, which in a few days will be March 15th. People will be listening to this podcast after that.

Tommy Grisafi (16:56):
So if you're listening to this podcast now, you have hit the window where you have to decide you want federal crop insurance. We have futures and options that you can use the set a floor put.

Tommy Grisafi (17:06):
But if you combine decent dirt with tile, with federal crop insurance, with futures and options, I think you'll be deadly. I mean, I could put up a tiled farmer against anyone. That's not to say, "A lot of ground here." Do what percent of ground in the Valley's tile?

Jamie Duininck (17:24):
When you get into North Dakota, it's a very, very small percentage of all North Dakota. And even I don't have that figure. I don't know if anybody does.

Tommy Grisafi (17:33):
Say it's like less than 5% though.

Jamie Duininck (17:35):
Yes, sir. That would be correct.

Tommy Grisafi (17:37):
Roger and those guys and his sons came up here, that was definitely new. And they thought he was crazy. I don't think anyone thinks he's crazy now. Maybe, but no. Crazy smart.

Tommy Grisafi (17:48):
But where you live in Minnesota and where my clients are in Northern Iowa, in Minnesota, it's a very high amount. Isn't it?

Jamie Duininck (17:55):
No, it's still, Western Minnesota, Central Minnesota, it's more than Red River Valley. But it still is pretty low. You get down into that Southeast Iowa, down that Rochester area where we've been talking about Roger Ellingson or his home office is, that gets to be much more Eastern Iowa.

Tommy Grisafi (18:13):
Albert Lea.

Jamie Duininck (18:14):
Yep. Albert Lea, Rochester, Austin, that area. So there still is emerging markets in the both Dakotas, Western Minnesota. Even Western Iowa isn't like Eastern Iowa. And Illinois, some of the practices are a little bit different there. And as they learn and grow, things do change.

Jamie Duininck (18:36):
And some of that, what's combined in what we've been talking about, but we haven't mentioned it. When you talk about tiling ground, you already have. But these land prices across the Midwest have just gone crazy Tommy. You know what's going on in the Red River Valley and where you live.

Jamie Duininck (18:58):
I get a lot of feedback from Iowa and parts of Western Iowa where land is sold for more than $20,000. Even in the $25,000 an acre land. That's been a little rare, but lots and lots of ground has traded in the last six months over $20k an acre.

Jamie Duininck (19:15):
My wife is a farmland auctioneer. I don't know if you listen to that episode. But she's been selling farms in central Minnesota, well above 10,000, an acre, which is a barometer in this area.

Jamie Duininck (19:27):
And when you consider that and you talk about, "If you love your kids, tile the ground.", there is more risk in buying ground today at these prices. And I just want to talk about that.

Jamie Duininck (19:43):
The risk or the tension between buying more ground at this high price and just improving what you already have.

Tommy Grisafi (19:50):
Well, from a percentage standpoint, if ground was $5,000, and it used to be a $1000 to tile. And now ground is 12-15,000 dollars. And it's say $12,000 to tile. So ground's $5,000, used to be a $1,000. Now it's $10,000-$15,000. I mean, it is. That's what if you offered your ground, you could really get that.

Tommy Grisafi (20:13):
From a percentage standpoint, one of the greatest things you could do to improve that ground is on sale. From a memory standpoint, it feels expensive because you're just used to saying $800, $1,000, $1,200. But percentage wise, it's an improvement.

Tommy Grisafi (20:32):
I don't know, what are your thoughts on, can lower quality ground become higher quality ground by adding tile?

Tommy Grisafi (20:39):
Or is the rule that you only pay for good dirt once and you pay for bad dirt every year?

Tommy Grisafi (20:45):
What what do you feel about that, Jamie?

Jamie Duininck (20:46):
Yeah. For sure. You can buy lower quality ground and tile it and improve it drastically. There also is the people out there, some large investors that only buy really good ground. And part of that's because they can afford it. And there is probably a little bit less risk in it from the standpoint of, "You don't have to tile it immediately."

Jamie Duininck (21:12):
Sloped right, right soils, whatever that. You can still get a good crop out of that ground. But absolutely you can take marginal ground that maybe isn't been producing well and improve that. And get really nice yields off from it after you have put a water management system in place.

Tommy Grisafi (21:34):
I also live in Valparaiso Indiana. And Valparaiso is in between Chicago and South Bend. So, North of where Purdue University is. And now we are West of Notre Dame and an hour South East of Chicago Board of Trade.

Tommy Grisafi (21:49):
Ground by us is just, it's going for a premium. But my clients who grow seed corn, the seed corn producers demand that ground. That they're not going to pay you all that money to have a crop failure.

Tommy Grisafi (22:01):
So when you look at specialty crops or certain crops, we're coming to a point in the world where food is obviously getting more expensive every day. It's stressing people out. But people will pay you a premium to know that they're going to get that crop off. So, without mentioning names, if you get a seed corn contract, then you're going to need tiled ground in irrigation. And boy, you put that two together.

Tommy Grisafi (22:28):
But I will tell you a story. In Northwest Indiana, my clients, they're a little full of themselves. They have decent ground, it's tiled and they have irrigation, and they're good farmers. But there's one thing that they had never seen happen. I don't know if you remember this, about three or four years ago in Northern Indiana, we had 26 inches of rain in June.

Tommy Grisafi (22:47):
And they can make it rain with the irrigation, but you cannot make water go away. You're as good as your weakest point. So obviously the ground's tiled, but if there's four feet of water in it. It would be the first to drain once the ditch is drained back into the other ditch. But they lost their crop that year to too much water. But other than that, quick three inch rains, it's off.

Tommy Grisafi (23:10):
It gets dry. They complain that they have to go turn on the irrigation but they're turning on money spigots. So between being able to put a little fertilizer in the irrigation system, they can handle not enough rain and then too much rain.

Tommy Grisafi (23:24):
But the extra, extra special, too much rain, that was the one thing that I seen blow up that ground in Northern Indiana, was 20 something inches rain in June. Other than that, they made in that ground, Jamie, is going for about $14,000 now, which you could have bought, a few years ago, it was seven and eight. And I thought they were out of their mind. So don't listen to me when it comes to ground. This thing, I don't know how all this ends.

Tommy Grisafi (23:47):
But you talked about the Ukraine and Russia. Talk about black swans. Here we are, farming prices are good and they just got dramatically better. I had the chance their day to be on several TV stations, Buzz on Fox News. And when you watch a professional thing, Fox has tens of millions of viewers a day.

Tommy Grisafi (24:11):
When you watch their top reporters try to talk about grains and markets, that is not their specialty. They could talk about Rivian or Tesla or policy or interest rates. They start talking about wheat, they get a whole mumble mouth. They don't have a clue what's going on here.

Tommy Grisafi (24:26):
If you ask someone from New York or California or something, "Where's does food come from?" "The store." I mean, people really have no clue where their food's coming from.

Tommy Grisafi (24:35):
Now when it comes to cattle and beef, they realized a few years ago, about two year anniversary now, the pandemic. That when you go to a grocery store and there wasn't beef, then people said, "Oh wow, did you realize 20 miles down the road, there's a butcher and 10 miles down the road there's a guy from there who dropped off that cow or pig? And we could have it processed and you'd get a whole freezer full of beef."

Tommy Grisafi (24:54):
But I think there's an education process happening about where food comes from. And I don't know how tile works into people who grow non-GMO crops. Do you, work with many people who are non-GMO farmers who involve tile?

Jamie Duininck (25:12):
Yeah. We do. In organic farmers. And thing is that, it's mandatory, especially on areas where we're going cover crops. That might be for carbon sequestration. I think there's going to be a lot more of that. And I think that's going to come quickly, especially when you get into places North Dakota.

Jamie Duininck (25:36):
You it said it earlier Tommy, around, we don't have as much time in North Dakota as you do in places like Iowa. You don't have the seasonality. There's, I don't know. You're in Mayville right now, how much snow you got on the ground?

Tommy Grisafi (25:54):
No. There's snow.

Jamie Duininck (25:55):
And there's five feet of frost. And so the point is that, if you don't have black ground, if you have a cover crop on there and trash in the field, that it just can't dry out fast enough that far North or in Minnesota.

Jamie Duininck (26:10):
And so you have to have that tiled in order to have cover crops and get a crop in the next year.

Tommy Grisafi (26:15):
And it's fascinating. You look at somewhere like, I think it's Oslo, Minnesota and that Red River Valley, as you go North, there's people listening to your podcasts from all over.

Tommy Grisafi (26:24):
But of course, we'll remind everyone that the Red River Valley flows North from Fargo to Winnipeg's about 300 miles. And that is because Winnipeg is 300 feet lower than Fargo, which is not much of a grade. If you think you walked for 300 miles and you are only 300 feet lower.

Tommy Grisafi (26:43):
But as you get up into the Northern Valley and all that water, and all that mill pushes from Fargo and South of there, up North, they've pretty much flood every spring.

Tommy Grisafi (26:55):
So not only do they have a short time to get in and get out, but they are going to get water and they need to get that water off. I had an argument with a banker friend up there. And when I had asked him why he wasn't tiling everything, I really think it was shortsightedness on his own. And he had daughters. And I don't think he envisions his kids farming that ground.

Tommy Grisafi (27:20):
But I find it interesting because it is, by far, the number one thing that sets them back every year is, water and managing it.

Jamie Duininck (27:29):
Yep. And I have a little bit of knowledge about what happens in Manitoba. And you get out a little bit further West out toward Winkler and Morton and on that Agasy Beach Ridge where it's sandier and they grow lot of specialty crops and potatoes and high dollar crops. And there's a lot of tiling happening there.

Jamie Duininck (27:48):
But you just get North of the border in the Red River Valley and there's not so much. And I'm convinced and know for a fact that they'd grow better crops. They'd grow better corn, Soybeans there, if they tiled.

Jamie Duininck (28:03):
And it's somewhat of a cultural standpoint there, why they don't. And some do. I'm not saying nobody does, some do. But it isn't like it is literally 10 miles south, if you cross an international border. So it's interesting.

Tommy Grisafi (28:16):
Speaking of Ukraine-Russia, from my understanding, the dirt we have here is very similar to the dirt they have there. But they growing season's a little different. And, this whole thing changed the world. I guess my advice to the farmer is, "Things were good before this, they're really good.

Tommy Grisafi (28:35):
Now, it's going to come at a price. It's going to come at a price that it's very, very expensive to plant a crop. It'll be more expensive next year. And don't forget for those of you listening, who are involved in farming and agriculture, everyone's making great profitability right now.

Tommy Grisafi (28:52):
It's not just American farmers. South American farmers. If there's any rainforest left, there's not going to be much left after this price move. We're currently at $15 on beans. On the recording of this 6.50 east corn. 10.50 Minneapolis spring wheat. Phenomenal prices. Fertilizer's an issue.

Tommy Grisafi (29:10):
But the most important thing would be, in my view, would be to farm the best and ditch the rest. And although we have egos and, "Oh, I farm this much ground." It'd be funny if you had to walk into the bar and say, "I farm this much junk ground."

Tommy Grisafi (29:24):
If there was just something on your head, that said, "This section's an absolute piece of trash." But you still running around telling everyone you farm that much.

Tommy Grisafi (29:33):
And when you look at the time and money and energy that's going to go into farming, I'd really take a pass on some of that. And I had to ask a successful friend of mine just this morning, "Where do you see yourself in 10 years?" He said, "Farming the best ground. Or at least having someone else farm it because it's too expensive."

Jamie Duininck (29:50):
Yep. And you said it. How we say it is, "Farm the best and buffer the rest." And we're saying the same thing. And I just believe that's going to happen. And it's part of solutions where we can get together with the environmental crowd.

Jamie Duininck (30:08):
And I hope that like times this, when prices are high and everybody's struggling a little bit to understand, "Boy, I'm going to pay this much for a steak or I'm going to pay this much for a meal out."

Jamie Duininck (30:22):
It comes back to the feed prices. Prices of hogs are high. Everything is high right now. And I'm hoping that other side understands, "Okay, we got to work together."

Jamie Duininck (30:32):
And that's one way we can, I think, is to say, "Let's take the more marginal ground and let's make it really good for recreation. Let's grow more pheasants on it."

Jamie Duininck (30:43):
We've done podcasts here at The Water Table with pheasants forever. "Let's grow have recreation opportunities."

Jamie Duininck (30:49):
There's a lot of programs through USDA for pollinator programs and bees and things. And that's where we can head and we should head. And just why not have ground 20 years from now where we can grow 400 bushel corn, instead of thinking 300 is great. And it should be possible.

Tommy Grisafi (31:07):
I concur. We're getting to the level here where Iowa's 300 and North Dakota's 200. And mentally, I don't know that people have caught up to that, but the bushels are showing up. And Jamie, you are old enough to remember, last time we had these high prices in 12th, one of the reasons prices went from so high to so low is the technology.

Tommy Grisafi (31:27):
The amount of money that was pumped in the agriculture gave agriculture a chance to expand on its technology. And you're seeing the car industry go through that right now, just in the last few weeks. What's the number one ingredient into making electric cars, it's nickel. And nickel literally quadrupled in two-three days.

Tommy Grisafi (31:48):
And talk about a conundrum to Elon Musk. You see a car company based out of Bloomington, Illinois, Rivian. And Rivian stock price, they did not have the price of nickel going up four times its value in their equation.

Tommy Grisafi (32:04):
And so we're going to have to do more with less and we're going to have to be better. And in agriculture, I don't know how much more you want to talk about. But I asked one of my friends, "If you won the Lotto, what would you do?"

Tommy Grisafi (32:18):
He said, "I'd buy land and I'd tile it all." And he laughed. He said, "Buy good ground and tile it all." I'm like, "I never thought about that, but what a gift to your kids.", it's all I could say.

Tommy Grisafi (32:29):
And I don't own any more ground than the half acre that my nice home's on and I love agriculture. But it's got to be fun for someone you to, I guess, a question I'll throw back at you.

Tommy Grisafi (32:43):
If you're in front of a crowd and you tell them they should, they should tile. Besides the price, what is your number one pushback on why not to do this?

Jamie Duininck (32:53):
I think in areas where, North Dakota is a little bit different because of the seasonality and things. But in areas where you can grow a pretty good crop, you can grow a pretty good crop without it.

Jamie Duininck (33:05):
Especially, I have friends that would say, "You know we live in Illinois. A monkey can grow corn in Illinois or Indiana." And that may or may not be true, that's sarcastic, I get it.

Jamie Duininck (33:17):
But the point is still, why would I spend that kind of money, $1,000 an acre, when I can get 200 bushel corn in Illinois. If you don't get 200 bushel corn, you got a bad crop. And so I think that's mainly the main reason. But what they haven't connected yet is, 15 years ago, when that land was $5,00-$7,000 an acre, and you're going to pay 1,000 bucks to tile it. Okay.

Jamie Duininck (33:45):
But now you're going to pay $15,000, $18,000, an acre and it isn't going to cost you much more to tile it. So I still think that's what it comes down to, is just that mentality around, "I can get a pretty good crop without spending any money."

Jamie Duininck (34:02):
I don't want to think of it that way. That I should spend a 1,000 dollars to get a better crop. But the other thing I thought of in answering that question, moving on a little bit.

Jamie Duininck (34:11):
But what you said earlier is, 300 bushel an acre isn't that uncommon in Iowa and 200 in North Dakota anymore. But if you think back 20 years Tommy, 200 bushels an acre in North Dakota was absolutely unheard of. 300, there was guys that got it on the perfect crop and the perfect conditions in Iowa 20 years ago.

Jamie Duininck (34:34):
But if you got 130 bushels an acre on corn 20 years ago in North Dakota, that was a big deal. So think of how much we've come just in that amount of time and where it can go. And that's what drives me and gets me really excited about the future.

Tommy Grisafi (34:51):
I agree with you.

Tommy Grisafi (34:52):
And if you take in the number one gripe, when it came to North Dakota was, "You don't understand our basis is bad."

Tommy Grisafi (34:57):
And I am telling you with the utmost confidence, we have two years, maybe three. We are a grain deficit here in North Dakota. And when you look at the domestic use and the external demand, and the absolute demand for specialty crops, anything but corn and beans, it's incredible what the cash markets are going to do here.

Tommy Grisafi (35:20):
So I'll leave people with this, not only do we have a hot, hot futures market, but your cash market, where you actually sell the grain, is on fire too. So it's not corn $6, but the basis is a dollar under. We are $6.50 Corn for fall delivery. And it wouldn't surprise me at all if we had a positive basis shortly after harvest here again.

Tommy Grisafi (35:41):
So the amount of money, to your point, 20 years ago, I hate to say it. It might not have been worth it to throw all this money to try to grow a crop, to have that bad of a basis. But as the corn belt changed, if you look at the corn belt, you've seen a lot of maps lately of if you set the Ukraine in America, how big it is.

Tommy Grisafi (36:03):
But the corn belt, I'm an I state guy. So you have Indiana, Illinois and Iowa, the corn belt's much bigger than that. And as you see different seed companies from Indiana starting to advertise, "I live in downtown Fargo." Like, "Look at that. An Indiana seed company advertising in downtown Fargo."

Tommy Grisafi (36:21):
As the technology changes, these shorter day hybrids, the amount of bushels where I'm sitting now, say a typical corn number is like 84 day, 86 day, here in Mayville, North Dakota. To think about the amount of bushels, we talked about North Dakota being 200 bushel an acre, on a good crop. Versus Iowa being 300. What we didn't mention is that Iowa farmers are planting 108 day corn and we're planting 88 day corn. And that Jamie is the miracle of technology right there.

Jamie Duininck (36:54):
Exactly. Exactly.

Jamie Duininck (36:55):
And Tommy, it's been so fun to visit with you today. And actually I'd love to get you back and talk more. I mean, we talked about, didn't ask any questions, but a little bit about canola even. And it's funny, if you could just go across the border, you can get up into Wahl in North Dakota and that area. And not really see any canola.

Jamie Duininck (37:13):
And you go four miles North across the border in July, and all of a sudden, there's all these yellow flowers. It's canola, blooming. And with all this going on, I don't know, is North Dakota going to grow more canola? We don't need to get into that today.

Jamie Duininck (37:28):
But would be fun to continue conversations with you every now and then. And as this war continues and we're going to know a lot more in the next 60 days, how that's going to impact us as is Ukraine.

Jamie Duininck (37:40):
And I know there's a lot of winter wheat there, but are they going to get sprained done? Are they going to have a crop like they do in normal years or not? We don't really know yet, but we'll know that.

Jamie Duininck (37:52):
And so I would be honored to have you come back sometime, but thanks so much for joining us.

Tommy Grisafi (37:57):
Thank you.

Jamie Duininck (37:57):
And Tommy Grisafi with the Ag Bull Media. Appreciate it so much.

Tommy Grisafi (38:02):
Thank you.

Jamie Duininck (38:06):
Thanks for joining us today on The Water Table. You can find us at watertable.ag. Find us on Facebook, you can find us on Twitter and you can also find the podcast on any of your favorite podcast platforms.