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Apr 01 | Closing Market Report · Closing Market Report

• cmr260401 Todd Gleason: From the Land Grant University in Urbana-Champaign, Illinois, this is the closing market report. It is the first day of April 2026. I'm Todd Gleason. Coming up, we'll talk about the commodity markets with Greg Johnson. He's at TGM. We'll hear from Joe Janzen and Scott Irwin, agricultural economists with the farmdoc team, about updated RVOs and the impact they'll have on soybean demand going forward. And then we'll wrap up our time by discussing the agricultural weather with Drew Lerner at World Weather Incorporated on this Wednesday edition of the closing market report. 00:47 Ag Markets with Greg Johnson Todd Gleason: May corn settled three and a half lower at 454 and a quarter, December 481 and a quarter, down three. May beans two and a half lower at 1168 and a half, and November down two at 1155 and a half. Greg Johnson from TGM, that's totalgrainmarketing.com, from here in Champaign County now joins us to take a look at the marketplace. Hi, Greg, thanks for being with us. Yesterday, the trade looked at the prospective plantings and the grain stocks reports and said, "Hey, let's go higher." Today, it seems to have changed its mind. Greg Johnson: Well, the report yesterday I would say was neutral corn, not quite as low of acres as what the analysts were hoping for or expecting, but then the stocks number was lower than expected. So all in all, I would say the corn was a neutral report. Soybeans I would say were slightly friendly with less acres, even though the stocks number was a little higher than what traders anticipated. I think overall you would have to say that the bean reports in general were slightly friendly. So that was yesterday. Now today we go back to trading headlines again, and we're seeing money flowing out of commodities and into equities. The rumor is, the expectation is, that President Trump's speech tonight may indicate that we're coming closer to an end in the Middle East tensions. And so optimism in the equities, and money flowing out of commodities. I think that's probably the biggest news today. The report was a one-day event. We'd like to think it would be more than that, but I guess it was close enough to the numbers that traders were expecting that we didn't spend very much time focusing on that and now we've gone back to trading the headlines again. Todd Gleason: If tonight's announcement is a cessation of military operations, but does not include opening up the Strait of Hormuz, or only partially opening it, how does the market react? Greg Johnson: Probably you'll see more of a difference in the oil spreads. The Brent oil will probably go back up. The West Texas, which is the US benchmark, probably would follow but not to the extent. So you would see Brent go up more than you would see West Texas go up. I don't know that it would necessarily go down. I think both are trading just a little bit over $100 a barrel right around, give or take right now. So you could see the Brent go back up to the $110, $120 area. If the stories tonight say that we're going to hold off on the armed conflict but the Strait of Hormuz is still going to be controlled by Iran, obviously that impacts Asia and Africa and Europe to a much greater degree than it does the United States, since we generate most of our own oil and energy supply here. So I think if that is the announcement, you probably would see oil prices steady, but Brent prices probably work back up a little bit higher. Todd Gleason: Even if the strait were to reopen, a great deal of damage has been done to the infrastructure there, both for production of crude oil and diesel fuel, along with LNG, or liquid natural gas, which is a primary input for nitrogen fertilizers. And that'll all take time. The natural gas, apparently three to five years. Greg Johnson: Exactly. That would probably have a bigger impact on inflation because as you said, everything that we buy, whether it's grocery stores or products in Walmart, that has to be transported from point A to point B. And with $5 diesel instead of $4 diesel, that's going to make the cost of all those products much higher, and that's probably going to be reflected in the inflation rate. So from a Federal Reserve point of view, there was hope that we would see one to two more interest rate reductions this year. That seems to be off the table for now. Now we're back to combating inflation versus trying to stimulate the economy again. So yes, you're right. This is going to be a longer-term deal. Even if it stays at $100, that's still elevated from where it was in the $60 and $70 range not more than just a few months ago. So definitely something to keep an eye on, higher input costs for everybody, including farmers. Todd Gleason: From a practical perspective, Greg, did yesterday's USDA reports change the way you think about new or old crop sales that farmers can make for corn or soybeans? Greg Johnson: No, unfortunately, it kind of makes us think that it's all going to boil down to yield. Those are enough acres for both corn and beans that if you attach an average or trendline yield to those numbers, we should have enough corn. It's going to be a 1.9 billion, 2.0 billion bushel carryout. It's going to be a 400 million bushel plus carryout on soybeans if you assume normal trendline yields. So those acres are enough. And so basically it's going to boil down to what kind of yield do you attach to those acres. And obviously, with very little planted so far, it's going to be next to impossible to come up with that number yet. So at this point, we don't have a problem, we don't have a story, and so we'll see if the funds—and that's probably the next biggest thing—what will the funds do in reaction to this? Because the funds at the beginning of the year were extremely short commodities. And in a relatively short period of time, just basically three months, they've gone from being extremely short to almost a record long. In fact, in soybeans, when the Commitment of Traders report comes out this Friday, I would not be surprised to see that number be at a record length for soybeans. And they've added to their corn and wheat positions as well. So what will the funds do in the absence of a lot of bullish underlying fundamental news? Will they continue to stay long trading headline news or will they get tired of trading the headline news, especially if Trump announces that basically the invasion is over for the time being. So I think we definitely need to keep an eye on the funds. But you know, I try to remind people that we've had a nice rally up to this point. November beans, not too many months ago, were trading as low as 10.50. They traded as high as 11.70. So if you take the average, that's 11.10. And today we're at 11.50. So we're still in the upper half of the range for new crop soybeans. I think that's still an attractive place to get beans sold. At the beginning of the year, farmers wanted to sell something with an 11 in front of it. The question was will we get a chance to do that or not. Well, here we are, and with the acres number being relatively high, unless you think we're going to have a drought somewhere or unless you think the talks in May between President Trump and President Xi are going to result in lots of soybeans being purchased by China, chances are we probably should be selling beans in the mid-11s. Todd Gleason: Thank you much, Greg. Greg Johnson: All right, thanks Todd. Todd Gleason: Greg Johnson is with TGM. That's Total Grain Marketing, from right here in Champaign County, Illinois. He joined us on this Wednesday afternoon edition of the closing market report. Our theme music is written, performed, produced, and courtesy of Logan County, Illinois farmer Tim Gleason. Find us online at willag.org, where you can read all kinds of information from the farmdoc team, the crop scientists, and the animal scientists on the Urbana-Champaign campus of the U of I. And listen to our content on demand anytime you'd like. Or you can just search it out by name. Look for the closing market report in your favorite podcast applications. 08:43 How Much Soybean Demand will the RVO Create Todd Gleason: Yesterday, during the one o'clock hour, the farmdoc team, in this case Joe Janzen and Scott Irwin, both agricultural economists here on the Urbana-Champaign campus of the U of I, hosted a webinar outlining the changes that took place in the prospective plantings and grain stocks numbers. And then they talked at length about the RVO announcement from last week and the impact it may have on the soybean balance sheet this coming growing season, the one that's about to start, and the following one. We'll pick up with Joe Janzen in this six-minute excerpt from the hour-long program. Joe Janzen: Scott, you have a lot of optimism about US soybean crush and we've built that into our numbers here with a fairly decent-sized increase in US soybean crush, that we're going to be pushing US soybean crush capacity to the limit in 26/27. At least that's your expectation? Scott Irwin: Yeah, and I'll comment on that just briefly. This is all being driven by the new renewable volume obligations or RVOs for short, that were announced last week by the US Environmental Protection Agency. We've had a—and first off, the key category is what we call biomass-based diesel, which is largely, mostly made up of traditional FAME biodiesel and the newer fuel renewable diesel. And there'd been a lot of political pressure to increase the biomass-based diesel mandate for the US, and the EPA awarded that pressure. So for 2026, the calendar year we're currently in, and 2027, the mandates over just 2025 are up about 60%. Huge increases in those mandate levels. And so when you bring it back to what's that mean for the soybean sector? Well, it all has to kind of start off, well, how much feedstock are we going to need to feed those mandates in the 26 and 27 calendar years? And these are kind of rough estimates right now, I'm working to refine them better, but right now it looks like we'll need about 50 billion pounds of feedstock in 2026 to meet those mandates. And that'll jump to over 60 billion pounds in 2027. Now, those may sound like, well, they're just numbers. Well, the 60 billion pounds in 2027 represents roughly half of all global fats and oils supply that can be used to make biomass-based diesel. You have to let that number sink in a little bit. Half. You know, so the US is just exploding our demand for vegetable oils and animal fats and waste greases to be made into FAME biodiesel and renewable diesel. And so there's a big debate about okay, how much of that increase in feedstock demand is going to go to domestic US soybean oil versus imports of other kinds of fats and oils? The bottom line is the overall number is so big that whether the US in essence gets that feedstock business or somebody else, it's going to move global markets. And basically, the message is, particularly as we get into the 26/27 marketing year, whatever new capacity comes online, it's going to see tremendous pressures to bring it on as fast as possible, ramp it up as fast as possible, and for the US to just make as much crush, as many soybeans as we can in order to contribute to these tremendous increases in demand for fats and oils to make biofuels. And so, can we make, you know, almost 2.8 billion in 26/27? That's probably a little bit heroic, given where we think capacity is, but I think the incentives are going to be there if anything for continued surprises because the market pressures are just going to be enormous as we go through the next 18 months, particularly once we get to the second half of calendar year 2026. And that's the wind now behind the sails of the corn and soybean sector in the US. And you can talk about it being reflected in our price forecast here, Joe. Joe Janzen: Yeah, I think so. I think the thing to it is part of this like longer run pivot in the US soybean market towards domestic demand and away from export demand. And so if anything, I kind of view that export number USDA has in the outlook form as being, you know, a little bit heroic given the large Brazilian crop that we see coming to market, you know, right now. The state of US soybean pricing relative to its competition in Brazil, if we look at the spread between say New Orleans port values and port values down in Brazil, Brazil is a lot cheaper and all of that maybe puts a little bit of, you know, the headwind here is, you know, we've got to fight against that and the expectation that export numbers are going to maybe be a little bit disappointing compared to the next year. Scott Irwin: And especially, you know, if the biofuels policy basically raises the value of soybeans in the US through the soybean oil channel, that makes our exports even more expensive and a little less competitive on the whole soybean side. Joe Janzen: Indeed. And so this is obviously sort of I think bullish for prices, but, you know, nothing comes for free as economists like to say. There's no free lunches. And so we do see sort of a little bit give and take in the balance sheet overall, but the general idea being that in our projections here that ending stocks need to come down a little bit in the 26/27 marketing year, stocks-to-use situation tightens up a little bit more, and we get, you know, what are really, I think, substantially higher prices. That $11 soybean price really kind of, I think, makes a huge difference if you look at the kinds of crop budget numbers that our colleagues on the farmdoc team put out. That really sort of changes the game in terms of soybean profitability. Todd Gleason: That was Joe Janzen. He was talking with Scott Irwin, both agricultural economists from the U of I. They were hosting yesterday's webinar on the prospective plantings and grain stocks report released by USDA. You may find it in its entirety, an hour-long program on our website at willag.org. The $11 figure that Joe mentioned as he was closing out those comments is the season's average cash price that the farmdoc team is now using for new crop soybeans. 16:21 Ag Weather with Drew Lerner Todd Gleason: Let's turn our attention now to the weather forecast. Drew Lerner is here from World Weather Incorporated in Kansas City to help us look at the global growing regions. Hi Drew, thank you for being with us. Let's start in South America, Brazil and Argentina, in the final stages of parts of their growing seasons. It looks like the soybean crop out of Brazil was harvested and had done well. Safrinha or second crop corn is in the ground at this point. I'd like to know about it. And then of course, Argentina, late in its growing season, what can you tell me about each of them? Drew Lerner: Yeah, in the case of Brazil, safrinha corn country, the north, which is in my book will be Mato Grosso and northern parts of Mato Grosso do Sul and Goias. And those three areas are totally dependent on this monsoonal moisture. And as you know, usually get into early April, usually by the second week, the monsoon is pretty much winding down in a normal year. And so it's really important that when the monsoon ends in those areas that we have a pretty full moisture profile in the soil so that crops can cruise right on through reproduction and filling without being dependent upon any leftover rains. And I think they're in fair shape. They are not as saturated as they ought to be at this point in the growing season, but they're in pretty good shape. The crop is well established. I think we're going to be able to do fairly well. Now, to the south of that, the southern safrinha corn areas are definitely dry. But the difference between these southern areas and the north is that the southern parts of the production region are still able to pick up moisture from mid-latitude frontal systems as they come out of Argentina during April and May. So even though they're fairly dry right now, and if they weren't going to have an opportunity for more rain, this would be a concern. But I do think that there's potential for rain, and there's even some rain already advertised for next week. So I think this safrinha corn is in good shape and will probably stay in good shape for quite a little while yet. Argentina, they've had a little bit of a change in patterns here, and with La Niña going away, it's now raining in areas that were pretty dry earlier in the summer. And parts of central Buenos Aires are a little bit too wet right now. And it looks like we're going to have more rain later this day and on into the day tomorrow, and then a bigger, broader-based precipitation event for the weekend. And putting all that together on top of heavy rain that occurred last weekend is going to leave about half of Argentina pretty darn wet. So there's a sunseed crop that's waiting to be harvested, and they've got about a third of it—actually they got more than that, nationwide they've got about 50% or 60% of it done—but in these wetter areas of the south, only about a third of the crop has been taken from the fields. So there is a potential for quality problem there. Todd Gleason: Turn your attention now to growing conditions in the United States today. What are conditions like from west to east? Drew Lerner: Yeah, today they're good. Tomorrow not so great. You know, it is that time of the year we try to get out and get into these fields in that first few days in April. And there is field work that has occurred in the Delta. And unfortunately for some of those folks in the lower parts of the Delta, they got freeze damage about 10 days ago, and so they're replanting some of the crop down there. But the focus of attention is on the lower Midwest and the northern Delta right now. And you know, there's been a lot of chatter for months about how dry it has been at times, and it really wasn't a terrible profile, but we definitely had shortages down deep in the ground. I believe some counties in Indiana claim that it's dry down about 15 feet in a few spots. Now that's not the general rule, but certainly significant. Well, we do have rain coming up. Two waves of notable rain between now and the first of next week. And both of those waves will bring in at least 1 to 3 inches of rain total. There will be some spots in parts of Missouri and on the west side of the Delta that'll probably come in with maybe 4 or 5 inches. And there's a slight chance we could get some heavier rains in parts of Illinois too. So the ground's going to be a lot wetter. And because there's going to be an event here over the next couple of days, and another one later this weekend into early next week, we will not be able to get into the fields as quickly as we'd like. And the temperatures will be sliding downward a little bit, so we're probably going to keep the wet and coolness around in the soil for a while longer beyond that. So there's going to be some frustration out there as we go forward through this period. There's a possibility of one more storm system at the end of next week. I don't have a lot of confidence in that event, but it does come with a reinforcing shot of cooler air. So we may be a little slow getting out of these starting gates. Todd Gleason: Do you suppose areas from Texas to Nebraska will recover? Drew Lerner: Boy, that is the million-dollar question. You know, it has been such a shocker out there with the temperature extremes and the lack of precipitation. First off, no, there's not going to be any serious moisture in West Texas, the Texas Panhandle, or western Kansas, and eastern Colorado, or at least the east-central and southeast part of Colorado. Those areas will go at least another full week, and probably 10 days, without any kind of serious moisture. But they will get away from all this excessive heat that they've had, and get a little bit of a cool down. But it does not look like the dryland crop areas out there are really going to get that much relief out of this. When we get done with this period of 10 days, it's going to be important that they don't get excessively hot, and that somehow we get some moisture into this region. And it's really—it doesn't look that great right now to be real honest with you. I think the prevailing pattern of the winter is likely to come back again. So those areas are going to not do all that well. Now, the only thing that changes is we lose La Niña. And by losing La Niña, we do lose some of the intensity of the dry and the heat. So maybe they can eke out a little rain at some point in time down the road. But for right now it doesn't look that great for them. Todd Gleason: Hey, thank you much, Drew. Drew Lerner: Have a good day. Todd Gleason: You too. Drew Lerner is with World Weather Incorporated in Kansas City. He joined us on this Wednesday edition of the closing market report that came to you from Illinois Public Media. It is public radio for the farming world online on demand at willag.org. I'm University of Illinois Extension's Todd Gleason.