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Jan 31 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the Land Grant University in Urbana Champaign, Illinois, this is the closing market reported as the January, 2025 by my extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuslow. He's a globalcalmresearch.com. We'll get an update on the agricultural news for the afternoon and hear from Eric Snodgrass too from Conduit Ag about the weather forecast here and in South America. You can stay with us for the whole of the hour.
• 0:28
  You'll hear all of our Commodity Week program with guests Naomi Blohm, Chip Nellinger, and Sherman Nuland. If not, it's up online right now at willag.org, and many of these radio stations will carry it over the weekend. We'll do all of that on this Friday edition of the closing market report from Illinois Public Media. It is public radio for the farming world since 1985 with more than 10000 episodes and 30000 interviews. Todd Gleason services are made available to WIL by University of Illinois extension.
• 1:05
  March corn for the day settled at four eighty two. It was eight and a quarter lower on the settlement price. The May 0 contract at $4.93 finished eight and a half lower, and the Dec. 0 at $4.60 and a quarter, down four. March beans at $10.42, 2 lower.
• 1:20
  And the May 0 contract at $10.57 and a half, down two and a quarter for the day. Mike Zuzilo now joins us from globalcommercesearch.com out of Atchison, Kansas. Hi, Mike. Thanks for being with us today.
• 1:32
  Mike Zuzolo: Thanks, Todd. Happy Friday to you, sir.
• 1:35
  Todd Gleason: Happy Friday to you too. I usually look forward to the weekends. However, this time around, there could be a lot happening. But before we get to the Trump tariff potential, why don't you tell me about what you saw for the bulk of this week in Chicago?
• 1:52
  Mike Zuzolo: I I think the two primary drivers, the one the demand side or perceived demand side is the tariff threat. And just as importantly, the retaliatory, scope of the countries that we put potentially tariffs in place upon, Canada and Mexico are extremely important agriculture, sectors for us as we all know. And so they combined are every bit as important as China in terms of the ag sector by itself, especially with the supply chain changing quite a bit in the last five years since the, since right before in the onslaught of onslaught of COVID. I think the other thing is the supply side and the weather. And this has a couple of facets to it, Todd.
• 2:39
  The negotiating strength or weakness by Canada or by Mexico, for instance, in corn or by China in soybeans, if tariffs would be put in place against them by us is directly related to the ongoing weather concerns all over the world. And and we have this week joining from the fray, India and Southeast Asia as far as wheat and and oilseed weather becoming very hot, very dry in some key areas at the very wrong time. And so it's a tug of war. It's a push pull. What do the tariffs actually say?
• 3:19
  And then how does the weather look? I think that's how I'm gonna walk into Sunday night's trade if those tariffs are put in place by the president on Saturday. And with the tariffs specifically, we've talked about it, before. The best gauge we have right now is the currency market in in terms of the whether the dollar goes scooting higher and sharply higher as a safe haven. To your question, this week, it was about gold.
• 3:47
  Gold became the safe haven. New record highs, I think at least twice this week were made as we prepared for the tariffs and the tariff threat while the dollar kinda stayed subdued. So that's gonna be an interesting dynamic, and I think a good canary in the coal mine as to whether the funds pull their plug on a lot of their long commodities that they've built up.
• 4:07
  Todd Gleason: Am I correct that gold also had to do with the BRICS nations and their continued possible push towards creating or using something other than the dollar to base, their trade off of?
• 4:22
  Mike Zuzolo: It does. And and this is where they are working very aggressively for more bilateral trade. They're probably not going to do any kind of an index or, currency weighted system like we have right now, but they are trying hard to do more bilateral trade. This feeds right back into the tariff protectionism threat as they see it. And so they're all interrelated right now, and there's there's a huge global push pull going on right now in these financial markets and and with commodities at the very tip of the spear.
• 4:56
  Todd Gleason: So now let's put some of this into places related to today's trade. Was this was the drop in the corn market just a reaction to the news that the president did intend at least last night and through the bulk of today to put a tariff on Mexico and Canada if they did not meet some requirements he had set forth as it was related to fentanyl and immigration.
• 5:21
  Mike Zuzolo: I think that's exactly right. I mean, we we still have a situation in terms of dollar terms and in volume, bulk terms. Mexico is our number one buyer of both corn and wheat. And to the earlier point, the USDA agatache, you'd asked me not long ago whether Mexico has been buying ahead in corn. I think so in anticipation of this, but maybe not as much as I had established in my mind, thirty days ago because an report came out just about a week ago today and said that the drought has impacted them so badly.
• 5:54
  The production was cut and the imports for corn from Mexico was increased from 24500000.0 metric tons to 25000000 metric tons. So that negotiating power is is they're more at a disadvantage to go ahead and reciprocate and retaliate on a tariff against us when it comes to corn. Whereas with the wheat, they may be more susceptible to do that because they can get it from other countries. I I'd say pork is the other big feature in this market. I don't think we've appreciated in the livestock market that Jan.
• 6:25
  0 through Nov. 0, Mexico's taken about a million metric tons of our pork, and that's about 40% of the total that we ship out, to the world. And if they would and they've talked about putting to potentially retaliate territory tariffs on us when it comes to pork. That's a lot of pork that we would have to come back into this country and consume. So it really caused, I think, a supply issue, and and prices for pork here in The States could actually drop pretty rapidly and affect the other meats potentially.
• 6:56
  Todd Gleason: And then how how do you view the idea, from the president that this is, I won't call it round one, but this is a fentanyl immigration tariff. And then on April 1, he's going to impose a second set or potentially, increase or first time, whatever happens, as it relates to trade. And I'm wondering whether Canada and or Mexico have any reason to care about the first set.
• 7:25
  Mike Zuzolo: I I think they do because, you know, we have to realize that over 80% of all the goods shipped to The United States is what Mexico sends, and about 75% of all Canadian goods and services come to The United States. You know, in Mexico, there's estimates out there that we are equal to about one third of their GDP, and it's probably closer to one half because of the financial ties that we have. Doesn't mean it won't hurt us, but I I think they're very, I think they're gonna work very, very hard to meet this first deadline so that we don't have to get to a second deadline. And that's kinda my answer to your question is president Trump is making it very clear to our trading partners. You think this is bad.
• 8:09
  If you don't do the easy, quote, easy stuff, wait till we get down the road to the spring and summer. And, again, his tariff policy and his foreign policy truly are one and the same, and we keep seeing that over and over again.
• 8:21
  Todd Gleason: Couple of other things we should probably take up. You and I are are talking prior to the 02:00 release, central time that is, of the candle inventory numbers. So we do not know what those said. However, I bet you have an idea of what you're expecting.
• 8:38
  Mike Zuzolo: Yeah. And the key is, you know, our year to date slaughter right now for for cattle, calendar year, is down 9% as of Friday's weekly red meat production sheet. The on feed monthly number that we just received about a week ago is 99% of last year or right around 11800000.0 head. There's a big disconnect out there, Todd, as far as why aren't we killing more at record high prices when we know the weights are up and so we aren't, you know, keeping marketings backed up. We're very current, I think.
• 9:12
  But how are we still behind 9% on year to date slaughter right now? And I think this is what the inventory report's gonna need to show me is which number is correct. Or do we have beef cows on '20 08/00 02/00 head? How much lower is that? All cattle on cattle and calves, 87200000.0 head a year ago.
• 9:32
  How much lower are we on that so that I can then go back and look at which number is right? Do we really have roughly 12000000 head on feed and we still have close to last year's slaughter? Why are we down 9% right now year to date?
• 9:46
  Todd Gleason: Thanks, Mike. That's Mike Zizlow. He's at GlobalCalmResearch.com out of Atchison, Kansas. In today's agricultural news, the ethanol industry is confident that just confirmed US EPA chief Lee Zeldin will be supportive of its top issues. Zeldin, a former New York representative, has been critical of ethanol in the past, but the industry is confident that that will change now that the senate confirmed EPA chief must answer to the president.
• 10:20
  Troy Bradenkamp is with Renewable Fuels Association.
• 10:23
  Troy Bradenkamp: So what we heard at the confirmation hearing was a guy that said, you know, I may have not always been the most supportive person in the past, but I know who I work for, and that's Donald j Trump. And he is a supporter of ethanol in e fifteen, so I'm going to be that as well.
• 10:39
  Todd Gleason: Zeldin told senators that year round sales nationally will be up to Congress to decide. Speaking of ethanol, the Energy Information Administration, or EIA, says ethanol production dropped to its lowest level in almost three months and inventories declined during the week ending January. Output declined to an average of 1015000.000 barrels a day that's down from the 1099000.000 the previous week and the lowest level since the week that ended September. The EIA says Midwest production plunged to an average of 964000 barrels a day, down from 1042000.000 the week before. That's also the lowest level since Sept.
• 11:24
  0. Ethanol inventories in total were down 25720000.00 barrels. That's 25800000.0 barrels lower than the previous week. And finally today, Mexico's President Claudia Sheinbaum said she does not believe The US will impose tariffs tomorrow, February, as President Donald Trump has pledged. Reuters says her administration has already put a response plan in place if it becomes needed.
• 11:51
  The report says retaliatory tariffs would initially exempt the auto industry, sparing what has become Mexico's most important manufacturing sector and one closely integrated with The United States. The retaliatory tariffs would likely hit pork products, cheese, apples, grapes, potatoes, cranberries, and bourbon whiskey, as well as manufactured steel and aluminum. Of note, corn is not on the list. And that's a look at today's agricultural news. Let's check-in now with Eric Snodgrass.
• 12:25
  He is a Conduit Ag. Hi, Eric. Good Friday to you.
• 12:29
  Eric Snodgrass: Yeah. Same to
• 12:30
  Todd Gleason: you. So let's start. I suppose here in the Midwest, we've had some rainfall. It's warmer. Can we expect more?
• 12:40
  Eric Snodgrass: Yeah. This will be an interesting go of it. I mean, just or excuse me. Jan. 0 was such a cold month when it when we kinda wind it all back and look at the stats at the end of it for the country.
• 12:49
  I think we're gonna end up with one of our coldest on record. It won't be what we had 1982. I looked back. That was one of our really brutally cold, winters, but, we're gonna be up there. And what's interesting about that is this rain at the end only happened when we started to get mild again.
• 13:06
  So my point here is that so much of Jan. 0 tapped into Arctic air. And and to be honest with you, Todd, the rain at the end of the month's been great. Here it is. And it's that's soaking right into the topsoil, which is where we we do need it given the mild conditions.
• 13:19
  But I just still wonder if that fall drought is lurking underneath all of this in the depth of our, depth of our moisture profile in the soil.
• 13:27
  Todd Gleason: Well, what tells you about that, or continues to tell you that kind of story in our weather conditions?
• 13:33
  Eric Snodgrass: Yeah. I mean, I I look there's a lot of things to look at. The big one is I look at the rivers. Okay? So when I go see the Mississippi River at Saint Louis and at Memphis not making major recoveries, I mean, at at St.
• 13:43
  Louis, I think it's still three feet below low stage. That tells me the whole upper tributaries of the of the Missouri River and also the Upper Mississippi are still low. Plus I can there's some great maps out there that I look at from, NASA that just kind of, I think, do a good job at kinda giving the macro scale view, and we've got issues. And it's, you know, some of the ranks in terms of how dry, this past Jan. 0 was or this Jan.
• 14:08
  0 is, excuse me, Parts of Iowa, Wisconsin, Northern Illinois, Minnesota, Nebraska, the Dakotas. I mean, that is most of our Central And Western Corn Belt. We've got several client reporting districts in there that are showing a top five driest with several right around the Wisconsin, Iowa, Minnesota border that just had their driest on record because they did not get the moisture that we just saw.
• 14:29
  Todd Gleason: Did you see, by the way, the note about the Ogallala Aquifer being more than a foot lower this year than it was last year?
• 14:38
  Eric Snodgrass: You know, I'll just say this. I'm not surprised by that information. Even though parts of the, you know, the the the Southwestern And High Plains had a ton of moisture in in Nov. 0, I talked to those growers. I saw some of them just this last week, and they said, look.
• 14:51
  That was great moisture. It's sitting in the top, you know, foot, foot and a half. But that is much deeper than that. And we look at how that whole, you know, aquifer system has been changing with time. And you look back at the pressure put on it, during the drought, in 2024, the one that lasted two and a half months out there.
• 15:11
  And I'm not surprised, that it was, that it's it's shown up that much lower compared to a year ago.
• 15:16
  Todd Gleason: Now bring this back to the transition from, well, Jan. 0 to Feb. 0, which happens over the next few hours, what does Feb. 0 look like?
• 15:25
  Eric Snodgrass: Well, Feb. 0 is gonna look like a redistribution of high pressure. Now what does that mean? We've had parked off the West Coast Of North America a huge Pacific high. I think it's gonna move.
• 15:33
  I think it's gonna move to the Bering Sea. You say, what does that do? Well, that repositions all of the coldest air back into the Canadian Prairie, back into the Northwest, and back into parts of the Northern Plains. We're gonna see more chances in the next ten plus days of mild weather than we are gonna see cold. Now I don't think that lasts.
• 15:50
  I actually foresee a pretty big turn probably the middle end of the month of Feb. 0 toward another pretty big socket cold air and maybe some shifts around in the polar vortex. I know that's not a term everybody wants to talk about right now, but there is a chance that that thing could get disrupted pretty well. But here's the long and short of it. I think the pattern is gonna go active.
• 16:07
  I think we have multiple chances of seeing precipitation in Feb. 0, and I want every bit of it because I'm still concerned about the risk of redevelopment of drought as we get into summer. But, of course, spring's in the middle there, Todd. And here's my latest thought on spring. If you're in the Ohio Valley in the Mid And Lower Mississippi River Valley, there's a lot of indications of wet.
• 16:27
  And I don't wanna talk about tight planting windows followed by drought risks because that is a one two punch that, is still renting some space in my head, but none of us want to endure. So there are some lead indicators out there on that, Todd. And until I have some, you know, overwhelming evidence to change that narrative, I I gotta stick with it.
• 16:44
  Todd Gleason: Oh, sure. Just put the fear into us and then leave us hanging. Thank you.
• 16:49
  Eric Snodgrass: That's what we're good for. Right, Todd? I just my job is to ruin everybody's Friday afternoon, and then we just slide into the weekend, and I hope you all forget. So that's
• 16:57
  Todd Gleason: Oh, yeah. Yeah. That's true. So you're gonna ruin it, by telling us South America has, rainfall in Argentina too.
• 17:04
  Eric Snodgrass: Well, in Buenos Aires. But that's not where the biggest drought area has been. It's been up along the Uruguay River and also along that's hard to say, Uruguay River and also along the Parana River and north, but those aren't the big producing areas in Argentina. To be honest, if we wanted a major bump in our markets, we need to push the drought back over to Cordoba, but this week, I saw big storms roll through Cordoba. Alright.
• 17:27
  Going forward, Southern Brazil starts to pick up some rains. The epicenter drought in Brazil has been Madagrosso Do Sol, while Madagrosso, just to the north of it, has actually been so wet. I'm sure you saw their harvesting of beans and then their planting of safrinha corn is off, about 10 plus percent behind where they were a year ago. And the new forecast keeps that area wet, which could continue to delay significant progress in those areas. So I think there is a bit more of a weather story coming out, but it's one of those weather stories where it's like, alright.
• 17:57
  Time to really watch these key areas and see if they get any better or any worse. And then if it does, the premium gets built in the market, but it's not there right now.
• 18:05
  Todd Gleason: K. Thank you much. We'll talk with you again next week.
• 18:07
  Eric Snodgrass: Yeah. You bet.
• 18:08
  Todd Gleason: Eric Snodgrass is with Conduit Ag, joined us on this Friday edition of the closing market report that came to you from Illinois Public Medium. It is public radio for the farming world where right now if you visit our website, you'll be able to register for the All Day Outlook. That's coming up on Tuesday, March, just a bit more than a month away. The cost is just $40. But don't wait, sign up today.
• 18:32
  And, there is a special guest this year, actually, two. Sue Martin will be with us. She's flying in from Iowa for us, and we'll also have Neil Dahlstrom. Now, Sue's name you'll recognize. Neil's, you may if you are a fan of the book, Tractor Wars.
• 18:50
  He'll be doing a book signing that day, so if you have a book, bring it with you to the all day outlook at the beef house in Covington, Indiana, when on Tuesday, March,. Also, in the month of March 0, 12/00 will be airing the Tractor Wars documentary that's based on that book by Neil Dahlstrom. It should be a fantastic day. A book signing for Tractor Wars will have all of the folks you're used to hearing on W I L L. The farmdoc team will be there.
• 19:23
  All that information is online at willag.org today. That's willag.0rg. Don't wait. Register now. Commodity Week is next.
• 19:35
  You'll hear all of that program if you can stay with us here on our home station. Otherwise, many of these stations will carry it over the weekend. And again, it's up on the website too, or in your favorite podcast applications already.