Closing Market Report

Todd Gleason 0:00
From the Land of Grant University in Urbana, Champaign, Illinois. This is the Closing Market Report. It is the 29th day of January 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Greg Johnson. He's from Total Grain Marketing. That's the FS elevator located here in Champaign County, Illinois. And then we'll take a look at the weather forecast for the planet. We'll do that in the growing regions of South America and here in the United States for the wheat crop, too, with Drew Lerner at World Weather Inc. in Kansas City. We're celebrating 40 years of the closing market report, 10,000 episodes and 30,000 interviews.

announcer 0:44
Todd Gleason Services are made available to WILL by University of Illinois Extension.

Todd Gleason 0:48
March corn for the day settled at $4.97 up a Laverton three quarters may have five, seven and a half, 11 and a half higher in December. Futures $4.66 and three quarters five and three quarters higher. March Soybeans $10.60 and a half up 15 and a half to May at 1075 and a quarter 15 and three quarters higher in November, 1063 and a half, up $0.16, being milk futures up $8.20. The bean oil at 4497, down $0.16 on the afternoon. The heart breadwinner wheat at 580 and a quarter up 19 and a quarter. The soft bread at 562 and a half, up 17 and a quarter cents for the day. Greg Johnson from GM, that's total grain marketing. The first grain elevator here in Champaign County now joins us to take a look at the marketplace. Hi, Greg. Thanks for being with us. It looks like beans have decided they might want to go higher again. Well, we've.

Greg Johnson 1:46
Had a little bit drier forecast for Argentina. That forecast kind of flop flip flops back and forth. At one point last week, we thought that there was little going to be a little bit more rain in the forecast. But now the forecast this morning says they kind of returned to a drier pattern and there's a long ways to go. The beans just got planted. So, you know, we you know, it's not a critical pot setting or pot filling stage yet. That's still a month and a half, two months away. But, you know, the trend is what's concerning in the trend is that we're just in a dry pattern down there. And then that's got the traders a little concerned about if it if it stays this way, you know that obviously that would would and could reduce the Argentine crop. And so then, you know, the question becomes, is the Brazil crop good enough to offset the the decline in the Argentine bean.

Todd Gleason 2:35
Crop in the midst of a drought? The farmer always says to himself, if only I had soybeans to sell, that would be a good deal. Wait a second. We're in the northern hemisphere. We do have soybeans sell well, what are you telling producers when they call and are and are they considering additional sales at this point?

Greg Johnson 2:53
Well, most of the farmers are. You know, I've been to several meetings and, you know, we've kind of taken a census of the of the room and it feels like farmers are in that 65 to 75% sold category on both old crop corn and old crop beans. So they still have some bushels left to sell. But with the dry weather down there and with our own weather to worry about this summer, it feels like they've pulled back on the selling stick for a little bit. You know, waiting to see what happens. The funds have been big buyers and that makes the market look good. Yes, we have the Trump potential tariffs that could be announced as early as Saturday, February 1st. But right now, I think the weather has trumped that. And the fact that they're, you know, pretty heavily sold as opposed to the last couple of years, I think they feel like they've gotten enough sold and they don't want to get too far out over their skis until we know a little bit more information about South America and the tariffs and how many acres that we may plant ourselves here in the U.S. this spring.

Todd Gleason 4:00
You know, I was thinking that the next step in this series was probably the end of March and the acreage figures. But of course, we have the February and the March USDA monthly reports to go through. And whatever happens out of Washington, D.C.. So how do you think about this from the marketing perspective at this point on those old crop bushels for both corn and soybeans, when you consider what storage costs are going forward?

Greg Johnson 4:33
I think you have to look at what's the risk, the potential risk higher versus the potential risk lower if it would stay drier in Argentina, yes, we can lower their crop by two, 3 million metric tons, but in my mind that could be easily offset by a bigger increase in the Brazilian bean crop. And more importantly, is the trade talks or not trade talks. But the trade rumors coming out of Washington, you know, if tariffs are put on and other countries retaliate, we know what happened in 2018. And so I think there's quite a bit of potential downside in soybeans. So if I'm holding on to old crop beans, I guess I have to take that into account. That if I don't sell those beans and we do get some tariff announcements, that things could drop quite a bit. We're up over a dollar 25 from where we were at harvest time. So, you know, how much more do we want to hold on to? You know, how much more do we think is in this market without severe weather problems? I think, like I say, there's probably more downside than upside. And I would encourage farmers to probably keep on selling into this rally.

Todd Gleason 5:45
Last week when we were talking and maybe the week before as well, you were talking on corn about making some additional sales, particularly of new crop. Actually, the first set of sales for a new crop. We're still at that place. Have things changed enough in two weeks that if you didn't make them, you would, would or would not make them Now?

Greg Johnson 6:06
I still would make that first sale 20%. I mean, realizing that there's still 80% left to sell. And and I know farmers don't like to sell that first 20%, only to see the market go higher immediately thereafter. But I try to, you know, remind them that you want the market to go higher. You still have 80% to sell. You're better off if the market goes higher rather than have that first 20% be your best sale. So that's kind of the ballpark we're in right now. The funds are still aggressive buyers of both corn and soybeans. And so we could go a little bit higher based on just the fund buying alone. And then, you know, the dry weather down in South America into the equation. And, you know, we can go a little bit higher. We don't know how many acres of corn we're going to plant. We get a number from the USDA on March 31st. We might start getting some private estimates. We get the ag outlook form in February, So we might get some indications. But, you know, we really do need at least 92 and a half million acres. And, you know, with the with the rally, maybe we'll get a little bit more than that. But nobody knows for sure. So with all this uncertainty, we could go a little bit higher. So I guess I'm willing to be patient hog as far as making any additional new crop corn sales. But if you haven't made any, I don't think this is a bad place to get that first 20% sold and then wait and see what happens with the acreage as we go on and see what the South American weather is going to be, because Brazil is just now starting to harvest beans. They'll double crop the corn right after that. So we've got the whole growing season of Brazilian corn to go through yet. So there's a lot of unknowns. And until we have some answers, I think the corn market could be fairly supported at these levels.

Todd Gleason 7:46
What are you thinking about as it's related to new crop soybean sales?

Greg Johnson 7:50
Well, that's the one that concerns me. Even if we plant less acres, I think Brazil can more than make up for that. So unless you tell me that Argentina is going to be extremely dry and that we drop more than two or 3 million metric tons off of their crop, I think Brazil can make up for that. And then all we have to do is grow enough beans to supply the pipeline for six months. And then before you know it, Brazil and South and Argentina are back in line again and they could plant some more. So again, it's, you know, percentage chance of going higher versus percentage chance of going lower. And I still think at this point there's more of a chance of beans being lower this fall than than higher, you know, November beans or 1060 on the board. I think they could have a nine in front of them this fall versus an 11. Not to say they can't have an 11 in front of them, but I just think the odds are higher that we have something with a nine in front of them this fall, assuming some kind of normal whether.

Todd Gleason 8:47
Farmers in Argentina, Brazil and the United States will be thinking about exports to China, the potential of tariff issues with that nation. I'm wondering, though, about the Chinese economy and whether it tells you anything as it's related to what they would import even without a tariff problem?

Greg Johnson 9:11
Well, I think they've invested in the South American infrastructure. I think they're planning to buy as many being from Brazil and Argentina as they can, I think were the seller of last resort when it comes to China. I mean, if we're cheaper or if like now the beans aren't being harvested just quite yet and they're not in the pipeline down there, China will buy beans from us. But as soon as they're available, we know they'll be cheaper out of South America than they will be here. So, you know, I think China will buy as many beans from South America as they can and then only use North American beans to fill in what they can't get from South America. But I think they're the number one choice.

Todd Gleason 9:51
Thank you much, Greg.

Greg Johnson 9:52
Hey, thank you, Todd.

Todd Gleason 9:53
Greg Johnson is with GM. That's total grain marketing dot com and will be one of eight analysts to join us for the All Day Ag Outlook at the Beef House in Covington, Indiana, along with the farm doc team. And so much more. You can find details on our website and register now at willag.org. Again, register for the All Day Ag Outlook today Last night the University of Illinois extension hosted an event kicking off the Everything Local Conference taking place in Springfield this week. It highlighted the work of Extension, the Illinois Department of Human Resources and the Illinois Department of Agriculture to leverage a federally funded program to spur economic development in rural areas while feeding people in need. It's called Illinois Eats (IL-EATS) and started at the beginning of 2024. I asked the director of agriculture for the state of Illinois, Jerry Costello, about Illinois Eats and how the Trump administration's directive to freeze all federal funding, which has since been rescinded, impacts agriculture in these kinds of programs. I thought it might be worth hearing, even though that directive is no longer in place.

Jerry Costello 11:14
If you look at that program in particular, there have been 883 recipients. So when I say that food banks, schools of local foods grown by I believe it's just over 100 are right around 180 growers in the state of Illinois, underserved farmers providing food. They're getting paid market value. They're providing that food to food insecure communities all across the state. That program is about $43.5 million. Now, the initial allocation of 28.8 and then recently, under the Biden administration, USDA, we were awarded 14.7 million. So I mean, there's $43.5 million that's, you know, possibly in the win for the state of Illinois just in that program alone there are you know, probably hundreds of millions of dollars.

Todd Gleason 12:11
One of the goals of this program is to help young, beginning, diversified farmers of all types. And I've been on many of their farms over the last six months. I know full well that these new and beginning farmers of all types will struggle and probably maybe not even be able to go any further without this kind of funding because it helps them to find a foothold in a space that takes up way too much capital to get started. So this is this is a way to get people started to produce local food that can be put into the system for those in that area to consume.

Jerry Costello 12:53
To do your point. So 22% of these growers are producers are what we consider new farmers, new producers. So that means they're 1 to 3 years in production. So three years are under those folks don't typically have the liquidity or ability to be able to struggle through and make it out to the other side. Should those these funds be pulled.

Todd Gleason 13:21
Thank you very much.

Jerry Costello 13:21
I appreciate it. It's my pleasure. And always good to see you.

Todd Gleason 13:24
Jerry Costello is the director of the Illinois Department of Agriculture. President Trump's OMB guidance freeze on federal funding assistance now rescinded, may have pulled Illinois Eats funding because it's not direct to individuals, but rather delivered via partner organizations. Illinois Eats, in broad terms, provides funding to food banks and feeding programs to purchase locally grown foods in hopes of spurring economic development by providing a market where one may not exist or may not be accessible to the farmer in much the same way that fresh and locally grown fruits, vegetables and meats are out of the economic means or logistical reach of those in need. The OMB guidance was issued to ensure that previous executive orders delivered by President Trump would be executed. The guidance was too broad and caused widespread confusion. Even some fear within the affected programs across the whole of the U.S. government.

Let's turn our attention to the growing regions across the planet. We're now joined by Drew Lerner to explore them. Hydrow, how are you today?

Drew Lerner 14:43
I'm not too bad. I hope you're doing the same.

Todd Gleason 14:46
I'm doing very well. The weather is a little warmer. The snow that we've had is still on the ground, but melting away. I like that idea. We'll come back to the United States and see whether that will continue to be the case or not and what issues that might cause, particularly in some of the hard red winter wheat growing regions. But let's begin in South America today. In Argentina, a great deal of debate about how much of an issue the weather has been there. Can you detail it for me, please?

Drew Lerner 15:18
Absolutely. You know, it's been the talk of the town for the last two or three weeks. But when you go back and you look at the data, we've only really been dry for two weeks. And if it were to rain tomorrow, the crop would rebound really quite well in most cases. There have been periodic showers and thunderstorms in this past week in particular that have been pretty impressive. I think a small part of a northeastern La Pampa, southern Cordoba, Northwestern one series. They all had at least some of that region had multiple inches of rain. Well, that's part of the most important production area. And Cordoba in general has done well throughout most of the growing season. It's really the rest of the country that has had a little bit more dryness than what they want. And when you step back and you look at the vegetative Health index, you can see that we really didn't start deteriorating the crop condition until the second week in January. So here we are at the end of January. We are seeing some stress showing up in the imagery, you know, but it takes a little bit longer time to really hurt that crop in a big way. Now, we have shaved off some yield. I don't have much doubt about that. And I do think that still we have some struggles still yet ahead this next week is going to be quite dry as we get into the second week of the forecast. I think we'll start seeing a little bit more shower and thunderstorm activity once again. And at the moment, it looks like that's probably going to be more central and north. So we're going to still have some problems going on in the south. The bottom line is, yeah, it's going to be a smaller crop. It's nowhere near the disastrous crops that we saw in the early 2020s when we had that multiyear La Nina that was really a strong La Nina. This one is borderline at best. And so I really can't get too excited about a real serious problem. But we'll continue to monitor it because if we miss rain for the next few weeks and it gets hot, obviously everything changes.

Todd Gleason 17:30
Can you tell me a bit about Brazil as well? Early harvest in Mato Grosso been slowed down, or at least had been by rainfall. Will they have better options going forward?

Drew Lerner 17:43
Yes and no. First, no, then yes, I guess is what I said. We've had five or six actually six days, I think now of halfway decent weather. The precipitation has been less wet and we have had enough warmth and sunshine in between a few showers that the ground is firming up. Now, the rumor is that the the soybeans, early soybeans are just not mature yet. And that that's coming up here in the next week and a half or so. And if that's the case, then it wouldn't matter if it quit raining yesterday or, you know, in two or three days, the crops will need some time to finish. Now, there are a few crops that are done and they are harvesting, but it's a very small proportion. So far it looks like we're going to have some rainy weather from tomorrow all the way through Tuesday of next week. Some pretty healthy amounts of rain. It'll be the first time they've had substantial rains in central west Brazil in almost a week. So it'll be a setback, but not the end of the world. Now, immediately after that, we are expecting to see at least seven days of dry or biased weather again. And this time, instead of just being in center, West is going to be in the center south crop areas as well. And if it's true that most of these crops were just going to be getting ready to fully be mature and another week to ten days, then the weather is going to change at just the right time and they should be able to get those beans out pretty quickly and then suffering. The corn will go in pretty quick afterwards. And besides all of that, the suffering of corn crop will have a chance for getting a little bit of late season shower activity in late April. I do think that the monsoon season is not going to pull out early for sure and probably will be just a tad bit late. So I think we can expect maybe some trouble, but it's not going to be any big disaster.

Todd Gleason 19:40
Either here in the United States. What are your expectations for the hard bread winter wheat crop and how it's made its way through the winter season?

Drew Lerner 19:48
You know, there's been a lot of debate in the past couple of weeks as to whether or not we did serious damage to that crop from the bitter cold that evolved a week or so ago. And, you know, I think the crop, even besides the cold, there was some chatter out there about not enough precipitation occurring, too. But I've always been in disagreement with that because of the fact that we did get good moisture in November. And that turned out to be extremely well time for the crop to be well established. So the drying that occurred in December and early January and even now in my opinion, isn't a big issue because the crop did turn dormant after establishing, well, now the cold we had a week or so ago was pretty punishing. We saw negative teens and negative single digits occurring in some of the hardware winter wheat areas. And you know, if it was spring, if we had taken away winter hardiness and the crop was beginning to develop and we had that kind of cold, it would be a disaster. But we had waves of cold that came and wet before we got into the extremely cold temperatures. And I just can't get to excited about a serious production. Cut some damage. Yes. And how serious probably won't be known for quite a little while. But you know, that wheat crop is the smartest crop in the whole world. And if it isn't dead, it and it wakes up and finds out it's hurt, it will start to set new tillers and develop new root systems as long as there is moisture at that time. So the key, I think, to this whole equation is what happens when that crop starts to wake up. If we're still dry, then that might be an issue and we might lose more crop. But if it starts raining and we have mild temperatures for a few weeks and then when the crop is first waking up, I think it will recover very nicely.

Todd Gleason 21:44
The secondary story we've been following over the last couple of weeks with you is in China, the southern part of that nation where rapeseed had had some dryness issues. Are they getting better?

Drew Lerner 21:55
They are. Since we talked last week, there was a nice rain event that occurred over the weekend and we saw some half to one and a half inch rains and some local totals getting up close to two inches. And we're right in the heart of their rapeseed production area that doesn't put their moisture profile back to normal. But it's certainly moistened the topsoil so that when the crop tries to wake up one little bit a little later in February, there will be moisture for it to use. Now, in addition to that, there are two more opportunity for rain. One will be coming up here at the end of this week, going into the weekend and another one during mid-week next week. And if if both of those events occur as advertised, they will be sitting pretty, at least for a while.

Todd Gleason 22:39
Thank you much. I appreciate it.

Drew Lerner 22:40
You bet. Have a good day.

Todd Gleason 22:41
You, too. Drew Lerner is with World Weather Incorporated in Kansas City, joined us on this Wednesday edition of the Closing Market Report that came to you from Illinois Public Media. Find us online at willag.org, where right now today you can register for our March 4, that's a Tuesday, All Day Ag Outlook at the Beef House in Covington, Indiana. Don't wait. Find all the information online at W-I-L-L A-G dot O-R-G. I'm extensions. Todd Gleason.