Closing Market Report

announce: 00:00

Todd Gleason services are made available to WILL by University of Illinois Extension.

Todd Gleason: 00:05

Let's continue on at the stage here at the University of Illinois tent. We're glad to welcome a couple of folks to talk about transportation and trade in the global grain markets. With us today is, Colin Waters. He's the director of exports and logistics at the Illinois Corn Growers Association. Good morning to you, Colin.

Todd Gleason: 00:25

Thanks for being with Glad to have you on a panel again. A regular with us as it turns out, somewhat. Yeah. Not an irregular with us, which is good to know. I I appreciate that.

Todd Gleason: 00:35

I'm not I'm not really sure why. That's good. And also with us today is Mark Wilson. He's chairman the of the US Grains and Bioproducts Council, formerly US Grains Council. Thank you very much.

Todd Gleason: 00:49

We appreciate you being here.

Mark Wilson: 00:50

Yeah. It's my pleasure to be here.

Todd Gleason: 00:52

Yeah. And you are from Toulon. You're a Stark County farmer?

Mark Wilson: 00:56

Yeah. I farm up, Toulon, raise corn, soybeans, with some hogs, and, I'm excited for this upcoming year.

Todd Gleason: 01:05

Tell me a little bit about the name change and why that took place.

Mark Wilson: 01:09

Yeah. We were always, for the last thirty years, the US Grains Council, but we're also representing DDGs and ethanol. And when you go around the world and you try to get into a government meeting to talk about ethanol and they see that your US Grains Council, they say, well, why are you here? Why should we invite you? And I and we always say we're representing ethanol.

Mark Wilson: 01:30

So this name change to bioproducts then makes it a lot easier to get into those meetings. And we chose bioproducts rather than biofuels because we're looking in the future. It's not just what we have now, but there are also more products coming down the road made out of corn that we're gonna also ship around the world.

Todd Gleason: 01:49

Later today, we will have the folks from PREMIENT here in Decatur on board to talk about that and from iFAB as well, the working, at the University of Illinois with IBRL in the biofuels and by bioproducts area. So I think it's a great name change. Colin, let's talk a little bit about, transportation at this point really quickly. We have a lot of crop to move. Although it's not clear that logistically we're gonna move it at this point, at least part of it, not the part you represent all the time, but the soybean side, that that will create some issues.

Todd Gleason: 02:27

I know you have had to been thinking about this as it's related to corn basis, maybe even soybean basis. What happens this fall and how elevators in the system deals with it, and how big the ground piles might be?

Collin Watters: 02:41

Yeah. Well, I honestly, that that's a really good question. Right? I I I'm anticipating a lot of ground piles to be perfectly honest, especially throughout Central Illinois. The crop looks fantastic.

Collin Watters: 02:55

Although, just talking with Mark, I think Mark might be trying to help us out on the supply side here with some of the disease issues that we're seeing pop up now. I don't know. It might not be so bad. But, no, I think that logistics wise, river is doing okay. We've had pretty much standard barge traffic moving south and north.

Collin Watters: 03:20

There was a a little bit of a hiccup slowdown earlier in the summer, but it's it's kind of been taking care of itself. Rail seems to be working pretty well too. So I I'm anticipating kind of normal logistics at at harvest time, but it it's gonna be a big crop. So we'll see.

Todd Gleason: 03:41

Mark, and remind me exactly where Toulon is from I-eighty and for those who don't know the state of Illinois.

Mark Wilson: 03:50

Well, if you know where Peoria is and you know where the Quad Cities is, you draw a line between the two. We're about halfway in between. We're 40 miles Northwest of Peoria.

Todd Gleason: 03:58

So in the Galesburg, Knox County, but over one.

Mark Wilson: 04:02

Yeah. Yeah.

Todd Gleason: 04:02

Yeah. They're on Kewaunee. They're on Kewaunee. Excellent. So, I wanna know a little bit about how bad southern rust and or tar spot are in your area currently.

Mark Wilson: 04:14

Well, we have wanna start out with tar spot was on the bottom leaf. I just went out last week. It's all the way on the very top leaf. The plant is still green all the way, but the tar spot is there. And you can see some southern rust here and there.

Mark Wilson: 04:30

I don't know. We did fungicide it early. I don't know how far it's gonna affect us yet, but it's gotta affect us.

Todd Gleason: 04:38

You did an early fungicide application, not a second application. Did you have tar spot at the time you did fungicide the first time around? No. Okay. But it developed, and it is a problem, probably enough to take

Mark Wilson: 04:50

yield off. Yeah. We had it once before, but it came a little later in the season. And on that year, if we didn't spray, I know that year we lost thirty, forty bushel on those crops. So we always spray everything.

Mark Wilson: 05:04

I know tar spot, if you don't spray and it comes early, it can be a 130 to a 160 bushel an acre.

Todd Gleason: 05:09

Yeah. So you sprayed early, still have an issue. Not much in the way of southern rust. I was wondering whether that would be case or not. I was on my own farm recently, which is near Springfield.

Todd Gleason: 05:22

I chose not to have it sprayed. Maybe got lucky. May because I have neither in any real issue at this point. And and looking at a extraordinarily good crop across the state of Illinois, Colin, what are you hearing from farmers to top from top to bottom? And let's start in the in the southern part of the state because there, it may be diseases somewhat, but it's really about the weather for them.

Collin Watters: 05:52

Yeah. I I the the spring and and early summer that that we experienced in Southern Illinois was pretty, pretty rough. Right? So there's a lot of guys that had to replant multiple times, and there's a, I know, some guys that took prevent plant, they, you know, don't want to do that, but they had to. So so it's a really mixed bag, you know, south of by 70.

Collin Watters: 06:18

It gets it it it's really variable. So some of those really low spots that just got flooded out or just gone. But there's there's some areas that are gonna have a good yield, but it's it's a real mixed bag.

Todd Gleason: 06:31

And they turn from incredibly wet to the through the spring had to be prevent plant and just bone dry.

Collin Watters: 06:37

Yep. Exactly. So so it's gonna be, it's gonna be interesting in in kind of the southern part of the state. Central looks really good. I think as you get further north, like, you know, Henry, Knox, Stark, Bureau, things are good.

Collin Watters: 06:55

But it's not maybe not as what not as much as we thought. We you know, it was looking like a real record year. And so that that top end has probably come off. So I don't know if it's gonna be a replay of 2021 again. I don't know that that's gonna be the case.

Collin Watters: 07:12

But I think there's gonna be some guys that get in the field and realize that, wait a second. This isn't this is not what I was anticipating. Everything that I've heard out of Northern Illinois is pretty positive. But I I have heard that you get up into, you know, further up into Wisconsin and it's it's pretty rough.

Todd Gleason: 07:29

Yeah. It's surprising that Northern Illinois, particularly the Northwestern part of the state, is sounding better because they were so dry.

Collin Watters: 07:36

They were dry.

Todd Gleason: 07:37

They were extraordinarily dry early on. Okay. So let's talk about some of the business that, US Grains does. When you are headed overseas or you have delegations that are in country here, what do you talk to them about to convince them that coming to The United States is the most important decision that they can make for their, grain needs, whether it's corn or wheat or other grains? Well, the main

Mark Wilson: 08:11

thing we do is we have offices around the world, so we're starting to build that relationship all the time. Relationships are what makes trade. And having them come over, having to meet the farmer, and show them that we're not these big corporate farmers, that we are just average farmers who are families, run and raise our family on the farm, and they can see that we care about what we do. We care about the land. We care about the crop we're we're growing, and they can see that what we're producing is number one corn.

Mark Wilson: 08:43

And it's all about, like I said earlier, it's all about relationship and showing them that we can have corn to their spot anytime, any week of the year. You know, our southern competitors, they only market one one major time a year where we can bring a load of corn anytime of the year to wherever they want it.

Todd Gleason: 09:03

Let's start with some rapid fire. Export market for corn been very good for this marketing year. Yep. Expectations from USDA, they will be even better for the coming marketing year.

Collin Watters: 09:14

That's right. Yeah. That's what USDA says, and I I fully anticipate that. If you just look at kind of stocks to use right now, it's prices are gonna be low. Right?

Collin Watters: 09:26

You know, farmers aren't excited about that, obviously, but that's gonna drive a lot of export business. And we need to get this corn. We need to get all the grain off the market right now. So that that's about the, you know thank thank goodness the export market exists and and thank goodness it's gone so well because right now, I I mean, if you put all of that corn back on the market, we would be in a really, really tough spot. But, you know, U.

Collin Watters: 09:50

S. Corn has been incredibly competitive against the Brazilian corn and that's why we're that's really why we're seeing such such big numbers. We we haven't seen any, you know, major shifts out of, you know, that you could attribute to trade policy or anything like that. So so really, this is a supply and demand function in my mind.

Todd Gleason: 10:09

Yeah. Not yet. And I'll ask both of you to comment on this. But Mexico is the number one export destination for US corn. Still working through a deal.

Todd Gleason: 10:20

Yep. They have had drought conditions that have limited their corn production there. Should we be concerned in the new crop marketing year?

Collin Watters: 10:31

Well, I'll I don't I don't think so. Well, just purely on the on the basis of, just just the economics of it. We're we are by far the, you know, we're we are neighbors. We we we provide a lot of corn every year to to the to the Mexican feeders, pretty pretty much. Right?

Collin Watters: 10:53

So in those feedlots, a lot of them are growing at like a 7% compound annual growth rate. So they're they just keep getting bigger and bigger. And I don't necessarily see the I I don't see an end in the near term to that. So I I think that their demand for for feed corn is gonna be significant going forward, and I would certainly anticipate that in the coming marketing year.

Mark Wilson: 11:17

Yeah. I don't see any change to that either. I mean, they they bought the most corn of any country ever, more than China bought in their heyday. So that's just gonna continue to grow. They they have a good relationship with us.

Mark Wilson: 11:30

They like our corn. It goes right there. It's pretty fast and economical. Does do The U I'm I'm sure you do, but

Todd Gleason: 11:38

when you talk about US policy as it's related to exports, how often do you discuss tariffs and the issues that it will create? And what are the what is the bottom line kind of problem? Is it just that the The US may or may not become, a reliable source? You think that's the word you probably use And the longer term impact, or are there other things?

Mark Wilson: 12:06

Well, Grains Council, we try to stay away from, the trade issues. We we we wanna just make sure that they wanna buy our products, and and we they know where they can go and how they can get them. And and we really promote the the use of our products and growing demand through chickens and poultry and or in all other ways they can raise corn.

Todd Gleason: 12:29

I heard a story, and I'd like to know if you've heard this one and if there are other stories like it, that in the nineteen sixties, as Japan, had not been importing much US corn, that the Grains Council decided that the best way to potentially get that to happen was to create a livestock market there. They looked at it and said, well, the Japanese housewife is picking up one egg a at day or two or three for the week. But if we could get them in the grocery stores just to put eggs in by the dozen, by default, more would be sold and more corn would be need needed to be shipped to Japan to grow those layers out.

Mark Wilson: 13:15

Yeah. And you look in Tunisia and, Morocco, we've got schools set up there where we're teaching Africans how to raise chickens. The other school is teaching them how to feed chickens. And we went to Senegal in Africa a year ago, and we actually went to some farmers' farms where they went to these schools, and now they're raising chickens to feed their family. And then they're selling those eggs on the market, and they're really growing.

Mark Wilson: 13:42

And then we went to a feed mill where he had went through this school, and now he was importing DDGs, which they had never done before. And now they're putting DDGs in their feed rations. So all these things I'm not saying Africa is gonna be an overnight market, but that's a growing market. And if we can continue to get them to eat more meat and use our products, that's what we're after.

Todd Gleason: 14:06

Let's come back to some of the domestic uses. Start with the livestock sector, and I wanna take them by sector. Poultry eats more corn than any of the other any of the other sectors. There is a problem in both the spring and the fall as it's related to avian influenza. Do you expect that to be a problem this year, and can you see that in the feed usage numbers if you can divine them out?

Collin Watters: 14:35

Yeah. So there has been you can see that in the numbers just a little bit. And yeah, I guess I don't see how we get past it, you know, a 100%. So I I do think that that that will be problematic going for the next at least the next year into the next marketing year. And it's also that has also showed up in the export numbers for for poultry.

Collin Watters: 15:02

So U. S. Poultry is off and it's been a growing market for The U. S. Over, I don't know, over the last probably ten years, I suppose.

Collin Watters: 15:13

And oftentimes those export markets are really the the key markets for for margin. Right? So so those packers, processors are able to sell chicken feet. Chicken you know, like, all the bits of the chicken that, we wouldn't necessarily wanna be eating here. Well, there there's a market elsewhere.

Todd Gleason: 15:31

Pork production is the second largest user for feed. Yep. Doesn't appear to have problems. It's very steady

Mark Wilson: 15:40

Very steady.

Todd Gleason: 15:40

Quarter after quarter.

Collin Watters: 15:41

Yep. Yep. Pretty much static. The again, on the export side, we are selling more more pork into the world market. Mexico, again, is just a huge market for for also the poultry growers too.

Collin Watters: 15:56

So so those when you're talking about policy, a lot of that policy stuff can be really it can make or break. And, you know, on poultry side, when there's an outbreak, the they basically, they they have to notice everybody and then there's a a pretty much a radius drawn around that farm. And there's no birds can be leaving. And there's certain countries that use their trade policy, not necessarily as a, you know, to to protect the sanitary kind of final phytotan sanitary situation. It's more of a trade barrier.

Collin Watters: 16:33

But, you know, that thankfully, we've we've been able to work through those policy issues with the USDA and and our and our trade partners as well. And finally, beef production, probably is under pressure from two things. The number

Todd Gleason: 16:49

of beef cattle continues to drop And new world screwworm, which had another surprise just this week.

Collin Watters: 16:59

Yeah. Yes. So so, yeah, the the the herd size is is incredibly low right now and I think anybody who's gone just gone to the supermarket to buy some hamburger recently understands that there's short supply and the screwworm issue is really, really concerning. And so, don't know what I really hope that all the efforts that USDA and others are going through to develop the facilities in Texas and so forth, I hope really, really hope that that works out. But that could be problematic, kind of across the board.

Collin Watters: 17:41

I'll come back

Todd Gleason: 17:41

to you for ethanol domestically in just a moment, but ethanol is one of the places that US corn manages to escape the country. A lot

Mark Wilson: 17:52

of it goes north to Canada. Again, that is an issue related to this policy. Can you tell me just about how much ethanol is used outside of The United States from US corn. Yeah. We set a record this last year with ethanol exports around 2,100,000,000 gallons, and we see that just doing nothing but growing.

Mark Wilson: 18:15

China or not China, Canada is our number one competitor or number one consumer, and it's over 700,000,000 gallons, and that's still going up, to this day. We just worked, in 02/2018, we had 0% of the ethanol going into Japan. Through efforts with the Illinois Core Marketing Board and Oyos Grains and others, we've able to move that up. And now we have a 100%. We are access a 100% of that market, and they are switching to e 10, and that's a billion gallon market.

Mark Wilson: 18:50

And they're gonna be at that by 02/1930. But we're trying to get them to move that up. Guatemala is another place that just put in a 10% down there. And so that's a 40,000,000 gallon market. Costa Rica, Panama, those are all moving that direction.

Mark Wilson: 19:06

The Philippines is going to e 20. Vietnam is going to e 10. Those are huge markets that are all moving that way. And we have the cheapest, best ethanol out there. And we look at ethanol growth just skyrocketing from here.

Todd Gleason: 19:20

From the Illinois corn growers' perspective, domestic demand plus the export market, but domestic usage, You expect to meet the USDA figures in the coming marketing year?

Collin Watters: 19:31

Well, so so the I the way that I look at it is that we we peaked in 2019 in terms of domestic ethanol consumption. And so we're gonna probably see the slow erosion over time as, you know, just as as vehicles become more efficient. I mean, this is totally discounting the, you know, electric vehicles, but your car gets more efficient or the new cars as they come on, they're more efficient than the previous generation. So we really see this if the status quo really not working out all that well for corn farmer going going forward. So so I think that policy wise, you know, that's one area where where where policymakers in Washington, D.

Collin Watters: 20:18

C. And in state capitals can potentially make a huge difference for farmers in a fairly short amount of time. You know, that's right now, we've got a supply we have a demand problem. Right? We really don't have a supply problem.

Collin Watters: 20:34

We've got too much of it, but the demand is static to declining. So that's why we see the export markets being so critical. That's about the only relief valve that we have. And I mean, honestly, you know, coming back to this, you know, if we had if we had all that corn back on the market, we we would be in really, really tough shape. So so, yeah, I'm I'm hopeful that I'm hopeful that domestic ethanol still keeps it can expand, but I I think that it's gonna be really, really hard to do that short of really significant change in DC.

Todd Gleason: 21:09

I'll get a final word from each of you. I'm gonna start with you, Mark. But Colin Waters, who you just heard, is with the Illinois Corn Growers Association. Mark Wilson is with the US Grains and Bioproducts Council. Mark, a final word for the program today.

Todd Gleason: 21:26

One thing

Mark Wilson: 21:26

about the US Grains and Biopancil, we are working day and night because the light never goes out on our offices. We have offices in 27 countries around the world and we're always working for The US farmer. We're trying to get the products out there. We're trying to build demand. We're trying to enable the trade and improve lives, which is our mission statement.

Todd Gleason: 21:47

And Colin Waters, your final word?

Collin Watters: 21:49

Yeah. I pretty much the same thing as Mark. You know, the the Illinois corn growers, we're focused on farmer profitability, and we we know that times are really, really tough. So we're trying to pull every demand lever that we possibly can. And and and honestly, we can I I would say that looking forward, you look around the tent here, we there's so much energy and excitement around production agriculture?

Collin Watters: 22:10

We will keep getting better and better at making more and more. This is this is a long term issue. We we really need to develop deeper, larger markets for for our our our products. And whether that's in domestic markets or foreign markets, you know, we that's that's what's driving us. So pretty much, you know, tagging on to what Mark said, we we know that farmers are hurting right now and we are doing everything that we can to improve that situation.

Todd Gleason: 22:39

Well, thank you very much for joining me on stage here at the University of Illinois. Tint, you've of course been listening to the closing market report on this Tuesday. You can find us online at willag.org, but more importantly, you can visit us at the Farm Progress Show tomorrow and on Thursday. When you walk in the main gate, turn to the right, and in about a block, you'll see the big orange gable banner that says college of aces. Come in and see us.

Todd Gleason: 23:05

You have a great afternoon. I'm Illinois Extension's Todd Gleeson.