Jun 24 | Closing Market Report
From the land to Grant University in Urbana Champaign, Illinois, this is the closing market report. It is the June 2025. I'm extensions Todd Gleason. We're coming up on the end of our fiscal year. By June 30, we need to have all the money that we'll be spending in the next fiscal year starting July 1 in the bank.
Todd Gleason:You can help us out right now today by making your pledge, your donation at willgive.0rg. Coming up in this program, the closing market report today, we'll talk with Naomi Blum. She's at totalfarmmarketing.com. We'll hear from Dan O'Brien about the agricultural energies from K State University Extension, and we'll talk with Don Day at Day Weather in Cheyenne, Wyoming. Todd Gleason's services are made available to WILL by University of Illinois Extension.
Todd Gleason:July corn for the day settled at $4.16 and a quarter, 3¢ lower. September down five and a quarter at $4.12 and a quarter in December at $4.29 down four and three quarters of a cent July soybeans 12¢ lower $10.46 and three quarters new crop November at $10.37 down nine and three quarters of a cent bean meal off 1.9 at 2 and $80.5 the bean oil at $52.17 a buck and 7¢ lower. Wheat futures for the soft red down 17 today and the July at 5.353 quarters, The hard red at five thirty four and three quarters down 15 and a quarter cents. Live cattle futures in Chicago finished 17 and a half cents higher, and lean hogs were down $2.10. Naomi Bloom from totalfarmmarketing.com now joins us to discuss another down day at the CME Group in Chicago.
Todd Gleason:Corn, soybeans, wheat, all lower for the day. What happened?
Naomi Blohm:Well, I think it's a combination of things. We have with The Middle East issue mostly resolved at the moment in crude oil lure that stole a little bit of thunder from grain markets that were maybe hoping to get a little bit of a bounce if the flare up continued in The Middle East because if crude oil would rally, it might take corn along with it. But, with crude oil now down another $4, that market is kind of weighing on some of the grains. Plus, we've got seasonal selling. Usually, after June 20, grain prices have a tendency to grind lower until the end of the month.
Naomi Blohm:We also have had decent rain across a lot of portions of the Midwest, and so the ideas of these large yields being possible also weighing on the market as well. And you add to it some technical selling. It's just this recipe for lower prices.
Todd Gleason:Soybean oil's off about a buck. Why is that the case?
Naomi Blohm:Well, I think part of that too is a little bit of of technical selling going on there. We're just at that point where the market yesterday went below the five day moving average. It had posted a bearish reversal last week on Friday, so a little bit of technical action and without any, again, excitement out of the energy market, the path of least resistance right now is lower.
Todd Gleason:In the corn futures, July corn yesterday made a new, life of contract low, and I don't have the daily up in front of me at the moment to know whether that was, again, the case today. But still, it is lower. Actually, it appears, yes, that is should be a new life of the contract low for that contract again today. That can't be good news.
Naomi Blohm:Well and that's really frustrating because even though we have that tight carryout, 1,300,000,000 bushels for old crop, traders just continue to ignore it on the hopes of this large crop that's in the ground right now. Fund traders still selling corn, over a 180,000 contracts short now based on the latest commitment of traders report. And we have first notice day approaching for July corn futures next Monday, so anyone still long July corn has to be out by Friday's close or that risk of delivery. And a lot of times, unfortunately, prices have a tendency to trade lower into first notice day. So it wouldn't surprise me if we see, corn futures for that July contract just to inch a little bit lower into Friday.
Todd Gleason:So as you talk to producers, what are their largest concerns at this point? And actually, what are they telling you about the crop and conditions for them in each of their respective home sites?
Naomi Blohm:For the most part, people are telling me that the crop is good, and I'm not hearing a lot of complaining. Portions of Nebraska are starting to dry out. Portions of Ohio still remain a little too soggy, but everything in between seems like it's doing okay. They've had just enough rain to keep the crop moving along, and so now we're gonna be watching to see what the weather forecast is for next week and then into July. So there could still be some volatility to the market or some potential upside if the weather forecast turns to hotter and drier for July.
Naomi Blohm:That would be reason to give us that nice old school traditional fourth of July bounce. But, again, we have to first get through first notice day, then we have to get through Monday, which is also the acreage report and the quarterly grain stocks report, plus a holiday trading week next week. I think it's gonna just be a lot of volatility ahead and just be ready for anything.
Todd Gleason:You need to be ready for anything. Are you mostly concerned about upside or downside at this time?
Naomi Blohm:I guess my bias is that prices probably continue to grind lower. I don't think crash and burn, but grind lower on corn. I feel like soybean prices will start to trade sideways because they have the reduced acres. It'll just really take a dramatic surprise on Monday's report or a dramatic shift in the weather in July to get the market to move higher and for those fund traders to have a reason to exit those short positions. When you look at history, where we are short right now with 180,000 contracts is quite similar to 2020 and also 2024, where they continued to be sellers into the market.
Naomi Blohm:They, amassed a very large short position near 300 to 350,000 contracts short into the July, started to unwind those positions in August of those years, and the market found a very deep low and a firm low in mid to late August in those years. So that's what we're going to be watching for. We're going to, of course, now that The Middle East has simmered down, we're going to go back to probably looking at what other trade negotiations might happen around the world. We're still curious to see how China fits into all of this. So plenty of things to talk about, but right now, the bottom line is that funds are short corn and wheat, and they probably are content to hold that short position now.
Naomi Blohm:They're a little bit neutral to slightly long in the soybeans. Soybeans have reason to work higher for sure because of those lower acres, and then especially if the weather turns hotter and drier for August. So, short term, stay defensive, and, we'll see what next Monday brings.
Todd Gleason:Last week, wheat futures gained in the soft red about 60¢. They have, since Friday, lost 45¢. There was some hope that we could lead. Has that dissipated?
Naomi Blohm:Yeah. It has. And and I'm sorry to be so blunt, but the market last week for Kansas, wheat, and Chicago, wheat got up to the hundred, two hundred day moving averages. That was a major resistance area. The market was able to work higher on the delayed harvest, which still is a factor, but it's been priced into the market right now.
Naomi Blohm:So the winter wheat harvest is still slower than normal. Harvest is only 19% done versus the five year average of 28%. Last year, of course, it was rocking and rolling at 38% harvested at this time, but I think some of that's priced into now. So we have had a dramatic price pullback on the wheat market. We're now sitting nestled on some moving averages of support at these lower values.
Naomi Blohm:Hopefully, we see that continue to hold as a support area, but we'll see how the rest of this week finishes out as we wrap up the end of the month and the end of the quarter.
Todd Gleason:Hey. Thanks so much. We'll talk with you again next week.
Naomi Blohm:Okay. Sounds great. Thanks.
Todd Gleason:You're welcome. That's Naomi Bloom. She is with totalfarmmarketing.com out of West Bend, Wisconsin. I'm University of Illinois Extension's Todd Gleason. We're now joined by Dan O'Brien, Kansas State University Extension agricultural economist, discuss the ag energies for the day.
Todd Gleason:Hi Dan, thank you for being with us. There's been so much happening in the energy market along with what's happening in The Middle East. We have RVOs, a couple of other things. Where do you want to start today?
Dan O'Brien:Well, let's start on the easiest one, a measured quantity of profitability or lack thereof in the ethanol industry. With preliminary calculations for the first two weeks of June it looks like we're almost exactly at zero or just about 02% positive of a net profit margin for ethanol plants using kind of a standard Iowa ethanol plant and you've got the breakeven price at about 1.62 or 63 and the selling price of ethanol just about $0.2 above that. So, the overall net's basically breakeven and that compared to the last five or six months really is better than where we'd been. We had been losing as much as $0.10 to $0.15 $0.16 since about the middle of the year so now we're at a more profitable situation. And of course the low price well we refer to it right now in our current context as a low selling price for corn has been helping the profitability of plants here of late and especially as things have fallen off and with an eye towards the corn markets right now with no major worries yet with regard to a short crop that again could still develop with July and August in front of us but as of right now no major concerns.
Dan O'Brien:So, I guess these factors all into play you've got a fairly profitable pardon me a breakeven at least ethanol plant more profitable than it was and when you look at the amount of ethanol being produced in the stocks, you've got a situation where the actual production of ethanol has been pretty steady. The stocks haven't accumulating in a major manner and ethanol industry watchers we realize there's seasonality in these production cycles on an annual basis and of course with seasonal demand for traveling, gasoline demand heating up, we're pretty anxious to see if there's any shortfall indicating a consumer's lack of enthusiasm for traveling, spending money for gasoline, etcetera. But overall, we seem to be unless there's something out there happening that could really upset the energy markets, I. E. Like a war someplace, unless that happens, right now it looks like we're doing okay.
Dan O'Brien:So we'll be watching. Of course, our other eye is cast on the oil market because of, as we mentioned, geopolitical conflicts. Yeah, there's a threat of disruption of the Strait Of Hormuz over in The Middle East which would cause problems in the energy markets would raise the price of oil, impact the price of gasoline. And as one of my colleagues I've been talking with here recently about all this, it raised a warning flag that, hey, in general you can kill the golden goose if the price of gasoline goes up and ethanol being pulled up with it to a point where it chokes off consumer demand. But so far, we're not seeing that.
Dan O'Brien:In my neck of the woods and Todd you can tell me what you see in yours over there in Illinois out here in Kansas we've seen gasoline prices go up a little bit of late but we're still generally below $3 and lots of travel going on. And I guess we'll see where we go the rest of the summer, and hopefully, won't have a major energy market disruption to have to deal with down the line.
Todd Gleason:We are not generally below $3
Dan O'Brien:You're not? No.
Todd Gleason:We we are we are not generally below $3. I do want to ask about total production capacity. The last time that the total capacity in The United States to produce ethanol was only about 15,000,000,000 gallons. President Trump was in office in his first term, and the RVO that was announced about a week and a half ago or week and a few days ago put the ethanol target at 15,000,000,000 gallons, but we've been building out production since then. How much production and capacity do we have and how much do we actually use in The United States?
Dan O'Brien:Well, the Renewable Fuels Association puts out information and they state how much capacity each plant has. So it's a kind of an exercise of, again, trusting that their data is accurate and we have no reason to think it's not. And that by the time you add all that up we've been growing in capacity for ethanol. In 2023 we ended up the year at about 70,700,000,000 gallons per year of capacity 18.1 in 2024, now projected in this year to be 18.3 and actual production has been climbing somewhat at least by the official numbers that we have and also that the USDA ERS has a nice report that comes out and they give official government numbers probably from the Department of Energy EIA, their Energy Information Agency. So, all in all, it looks like we're going decently in terms of the actual production.
Dan O'Brien:The capacity that's actually used when you dig back behind those numbers is about 90%. And again, during the early heady days of ethanol production I remember hearing quite a bit of discussion about how, yes, we have our name plate, our boiler plate capacity, but we can't push it to that or beyond. So I've always been kind of surprised to see that in the overall aggregate that at least we're showing about 90% of capacity with all plants thrown together. Of course, that's what's happening on the ethanol side. The big news that came out here of late, if I just add on real quickly, is that EPA has proposed a sharp increase in renewable diesel production or, again, biodiesel production or at least what they'll allow through the renewable fuel standard.
Dan O'Brien:And gosh, in 2025 we project the biomass based diesel amount the volume mandate for that was about 3,350,000,000 gallons. Here what's been proposed is to increase that to about 5,610,000,000 gallons. So that's not just a shaving up around the edge or a 5% increase or something like that. That's 50%, 60%, 70% increase. So I remember I think you remember too the discussions we were having about two, two and a half years ago when the EPA had came out and given their last set of projections and it was about $3,350,000,000 and the industry had been building towards something closer to what has been proposed now.
Dan O'Brien:So, of course, the response to that and those figures came out about June 12, June 13, thereabouts, and very positively received by any industry anybody in the industry that would have a hand in or would possibly benefit from increased biodiesel production. And that plays into soybean crush, It gives us a little better support for soybeans in The U. S. From the domestic side. So there are a lot of positives in that.
Dan O'Brien:One bit of information kind of buried behind that is that there's a reduction in biomass based diesel imports coming into the country. So that makes some room for this, no doubt. And it's interesting to watch how with one announcement which was sort of well, was kind of surprising that the prospects and enthusiasm turned on a dime. In fact, this coalition of oil and biofuel groups came together, which maybe is part of the reason for the success. They weren't battling one another when they made this request.
Dan O'Brien:They had asked for about 5,250,000,000 gallons of diesel blending volume in 2026. The year they got 5.6, which is a great thing for them. And again, that's up from 3.35 in 2025. So overall, if a person digs into these numbers and if you're like you and I, and the folks in Illinois and in Kansas, we're always looking out for the usage side of these corn and soybean supply demand balance sheets. This number for soybeans is a real positive and gives us some, some better support going into the future.
Todd Gleason:Right now we, see meal and oil priced, in the supply and demand tables. We don't see it broken out quite that way. Be kind of interesting over time to see if USDA puts a biomass number in the S and D tables for soybeans Yeah.
Dan O'Brien:We'll see it. And of course, it's hard to miss the strength that we've had in soybean oil markets of late. And some of that's come about because other countries have been using their soybean oil in their domestic fuel consumption. We've got Brazil planning to use more of their corn for ethanol production. So as this goes forward, it starts to shift around the flows and the capacity of who could ship and who's buying in the international corn market.
Todd Gleason:Thank you much. I appreciate it.
Dan O'Brien:Thanks, Todd. Take care.
Todd Gleason:You too. Dan O'Brien is with Kansas State University Extension. Let's check the weather forecast now with Don Day. He's a meteorologist at Day Weather in Cheyenne, Wyoming. Hi, Don.
Todd Gleason:Thank you for for being with us on Tuesday. I want to jump right into this. It's been hot, really hot. Can you tell me about the weather and current conditions across the Corn Belt?
Don Day:Well, yeah, the heat dome that developed over the weekend is going to be robust and rather stagnant. So the heat and the humidity is going to continue here for a little bit longer. Now we do have an interesting scenario developing here in the coming days though where we have what meteorologists term the ring of fire developing. We're seeing an early start to what we call the North American monsoon. This is subtropical moisture coming up out of Mexico and Central America and into New Mexico, Arizona, West Texas.
Don Day:And this moisture is gonna get caught up in the clockwise circulation around the high in the Midwest. And around the edge of the high, we get a ring of thunderstorm activity that develops in that deeper moisture, and this is gonna concentrate a frequent opportunity for rain and heavy thunderstorm activity in the Northwest Corn Belt, Iowa, Eastern Kansas, Eastern Nebraska, Eastern South Dakota, a good chunk of Minnesota, as well as Wisconsin. And part of this could clip Northern Illinois is gonna see frequent rain chances and thunderstorm chances. Now those areas will cool off a bit because of the additional clouds and the precipitation, but the heat in the Central And Eastern Corn Belt is really gonna continue.
Todd Gleason:This clockwise movement, brings that that moisture up from the Gulf Coast and around through the top. What pushes it off to the East then?
Don Day:When we get these ring of fires, okay, they can last two or three days. They can go extended. We're seeing this as like a three or four day period. And then as we see a system come out of the West, it'll kind of cut off that moisture flow. But this is an interesting development because likely what has happened in years past when we've seen these scenarios is they come back.
Don Day:So there will be a break in this as we get into, let's say, past five days from now. But what I'm seeing is the is the opportunity that as we get into the month of July, we'll probably see it come back again. And this is going to could play a role in the overall big picture of summer which means that the drier areas of Northwest Corn Belt will start to be getting some rain and it also could throttle back temperatures a bit. And it can shift west. It can shift east.
Don Day:It is something that will come back again and something that we'll need to watch.
Todd Gleason:We will ask you again next week when we talk to you. Thanks much. I appreciate it.
Dan O'Brien:Thank you.
Todd Gleason:Donde is with Dayweather. He's in Cheyenne, Wyoming. Joined us on this Tuesday edition of the closing market report that came to you from Illinois public media. It is public radio for the farming world. We're coming up on the end of our fiscal year at the end of this month.
Todd Gleason:All the money that we'll be using next year needs to be in the bank by June 30. You can help us out right now. Do that at willgive.0rg or will ag dot org, and then hit donate at the top of the page. And thank you. I'm University of Illinois Extension's Todd Gleason.
