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Mar 12 | Commodity Week · Commodity Week

• 0:00
  Todd Gleason: This is the March 12 edition of Commodity Week. Well, welcome to Commodity Week. I am Todd Gleeson. Our program today comes from the March 3 all day I got looked at the corn panel. I checked with each of them to see if things had really changed in the marketplace as it relates to corn fundamentals.
• 0:22
  They agreed it had not. Our panelists of the day included Mike Zuzolo. He's at globalcomresearch.com out of Atchison, Kansas. Matt Bennett from agmarket.net in Windsor, Illinois. Brian Stark of the Andersons in Mansfield, Illinois, and Kurt Kimmel from Normal, Illinois and agmarket.net.
• 0:45
  Now here's the corn panel from the All Day Ag Outlook. So they're gonna talk to
• 0:52
  Todd Gleason: us about the marketplace. Think, Mike, I'll have you set us up. What is the landscape for corn like today across the planet?
• 1:02
  Mike Zuzolo: Well, it's just a great time to be here. Thank you, Todd, for having us again this year. It it's wonderful to see all of you too. I I would say very briefly that the corn landscape has one big problem. And it's not the wheat for a change.
• 1:22
  It's the soybeans for a change. I continue to straddle the supply demand fundamentals with the policy. And ever since before harvest, when we were talking, I was very vocal about the idea of storing corn over beans. It was better in the bin to have corn because of supply demand fundamentals. And the policy has made that completely the opposite when it comes to, especially, the futures market.
• 1:52
  But I also feel as though that's going to swing back around or could swing back around. And I'm still very worried about a 2018 style type move in the beans. Very sharp, very quick down move, maybe this spring, maybe after the crop is planted. But that being something that would create the corn to go down with it in sympathy, and there is a gap in the weekly corn chart at four zero five on lead month futures. That would be my downside objective on corn versus lead futures right now.
• 2:26
  People said, how much downside do we have in corn? I'd say the gap at four zero five is what I would see as the top end downside at this point, and I'm thinking that it's probably gonna be because of the soybeans that we would go down and fill that gap. Don't let me forget to ask why for soybeans later. Not now. Not now.
• 2:46
  I I wanna I wanna wanna save that for just a bit.
• 2:51
  Todd Gleason: Your view of the marketplace for Cord, Brian.
• 2:54
  Brian Stark: Yeah. I think the the challenge, obviously, as others have stated here, as we've talked many topics so far today, the overabundant supply and the need for a a growing demand base to work through some of the production that we've been able to continue to build upon year after year with genetics. And I think we haven't really run into a crop growing season problem. So yet then it becomes how do we find more demand? You know, the positive outlook is is that exports continue to be very, very strong.
• 3:26
  I think that's the good thing. But when you're starting with such a big carryout, and it's kind of a cyclical piece that kind kinds of be to be self fulfilling that when you have low prices, most farmers like to plant corn to outyield the price problem. So then it becomes this circular effect where if we don't find the more demand for an ever growing production, we never kinda get out of that cycle. So I think right now, there's a lot of things that are influencing. The positives are strong export demand, strong ethanol demand.
• 4:03
  The feed aspect, I think, on the side of corn is concerning because cattle are at seventy five year lows. We know it takes a a while to build back the herd. So I think that's the one component of demand that has me concerned if it's too high, from a usage standpoint in the balance sheet currently.
• 4:24
  Todd Gleason: Remind me to ask you about beef and whether it is just a luxury item or something different these days because of the small herd size. I wanna come back to that too. Curt Kimmel from agmarket.net.
• 4:42
  Curt Kimmel: I wanna just follow-up on Greg's point earlier here on the bean panel. There's so many world events going on. The volatility is just screaming through the roof here. The JSA team has a price model they run after every report. We don't have the new crop parameters to work with.
• 5:00
  The goalpost on July corn futures, the upper end $4.75, and the lower end at $3.75. So that's something our team puts together to try to follow. Short term, full moon high here today. Maybe we'll pull back for a little while. But longer term, I think the corn market's well in their life.
• 5:20
  Todd Gleason: Blood boon high, not just a full boon high. Oh. Very nice. How about that?
• 5:24
  Curt Kimmel: You're up on me.
• 5:25
  Todd Gleason: Matt Bent.
• 5:26
  Matt Bennett: Yeah. There's a lot of things to talk about with the corn market. I mean, we talk acres after a while. You know, right now, you've got big time demand. So when you look at the world, you know, when you look at the USDA's balance sheet, US had the biggest crop ever last year, 17,000,000,000 bushel crop.
• 5:42
  The forecast is that Brazil will be bordering a record crop. Yet we actually drew down, according to the balance sheet from the USDA, stocks drew down about 5,000,000 tons for this marketing year. That's what the forecast is, which is a notable thing, Todd, whenever we're producing like we are. And I agree with Brian, there's some question marks with that feed and residual usage category on The US balance sheet. But I, you know, the thing is, is that if we, if any of us could figure out exactly what the USDA does with the feed and residual usage category, I think that we could make ourselves some money because sometimes it doesn't always make sense.
• 6:18
  You look at where we're at a year ago. Last year was the first time in fifty years, you know, that you set a crop insurance average in February, and then you didn't go back and revisit it. I mean, we haven't seen that happen. It's happened one time in my lifetime, and it's been last year. So it made it a tough year to market, whereas who actually started the month of March above the February average for December corn, which is at least we don't have to worry about again.
• 6:46
  But I do think the market's offered us some opportunities here recently, but at the same time, again, would echo what was said in the previous panel is that I do think there could be a significant amount of volatility this year because when you have massive demand like we have, the current forecast for demand on USDA's balance sheet is sixteen-four-seven. We've raised a crop bigger than that one time in our history, and so whenever you have massive demand, that necessitates that you have big production. If you run into a hiccup there, then there's no question in my mind that volatility could enter this marketplace. So does that mean I'm sitting on my hands doing nothing? Absolutely not.
• 7:28
  I'm actually marketing some corn above 4.7 on Dees, and we can go into details on that later. But I still want to be pretty flexible if I get too overextended on my sales.
• 7:37
  Todd Gleason: As a reminder, this edition of Commodity Week was recorded on the March at the Beef House in Covington, Indiana. Our panelists included Matt Bennett, whom you just heard, along with Mike Zusolo, Brian Stark, and Kurt Kimmel. There was audience participation as you'll
• 7:55
  Todd Gleason: hear. I wanna take up feed and residual, but I wanna check something with you. How many of you have cattle, raise cattle, have cattle on the farm at the moment? Raise your hands up. Okay.
• 8:07
  That's kinda what I thought. Alright. Did so I wanna come back to the beef, but let's start with just feed and residual because I'm hearing that residual might be a lot in that number as opposed to, you know, the feed usage. So what is the loss? You're in the elevator operation system.
• 8:33
  How much loss is there in that supply chain that kind of runs through the residual side?
• 8:39
  Brian Stark: I think Matt hit it on the head. If we we knew the answer to that, we'd all be, in a better spot. The residual piece, I think, is what creates the volatility we've all talked about because it's really hard to to measure. I think from stock report to stock report, we've seen the government struggle with the ability to really have a good handle on, you know, is the crop understated, overstated, and how that blends into true feed usage, especially when we've seen so many substitutes. In the past twelve months up until we started to see relaxation of our disputes with China, you know, we didn't touch exporting milo out of the Western Corn Belt.
• 9:22
  Alright? That has impact to corn feed usage, and we saw where milo couldn't be given away out in the West. You know, flip it to today, where now we're back exporting Milo, and so now you may see a scenario where the feed actually represents a bigger percentage than residual. But I don't know if there's a great answer for how you calculate the actual loss through that residual figure.
• 9:50
  Todd Gleason: And then on the beef side, and we probably won't come back to this very much, but is the transition, and, Mike, you might might want to jump in on this given your proximity to the beef herd, but is the transition of the closing of plants in The United States, the opening of plants in Mexico, is that going to cause the beef herd in The United States to stay relatively small as it is? Now it's at it's at really small levels. I don't know. Either one of you could take that up for Yeah.
• 10:29
  Mike Zuzolo: I'll just say physiologically, yes. It's gonna take at least two years to get back to a sizable herd.
• 10:36
  Todd Gleason: Well, that would just be that would just be normal cycle how long it takes to build the herd. But I I mean, is is has the demand curve demand for animals in The United States been lessened enough that they actually will just be fed out Mexico? And does that really mean anything, think
• 10:57
  Mike Zuzolo: for the for the for the feed and residual number? Because it appears,
• 11:00
  Todd Gleason: and you've talked about this, that both the corn's being counted as an export and as a feed both doubly some somehow.
• 11:07
  Mike Zuzolo: Yeah. I don't see it for two reasons, Todd. One, the weights are, you know, what, 900 plus, 960,000. Right. 960 pounds dressed at this point.
• 11:15
  Some, you know, crazy number that we'd probably never thought we'd get to at this point. Number two, the Ag Attache just put out a new livestock update for Mexico, and they're gonna pump out 6% more beef exports. That screwworm has changed their livestock industry permanently. They are going to start retaining. They are going to start growing and finishing cattle instead of sending feeders across the border at this point.
• 11:41
  That that that Adichie wrote it in no uncertain terms that that pattern, that change is a permanent change undergoing, but they're sending most of those exports to The United States. So the beef consumption is not going down. The demand's not going down. We're just gonna get it from other places. And and we're feeding heavier cattle.
• 11:59
  So I
• 11:59
  Todd Gleason: think what you're maybe telling me, and, Matt, you might have a good handle on this too, is that for and just trying to get a better handle on this for myself maybe over time, but is that pounds of production. While animal number of animals may go down, pounds of production may not be impacted as much.
• 12:20
  Mike Zuzolo: Yeah. I'll say just very plainly, I don't like the feed and residual number. It is a catchall. It is a bucket, and it's whatever left over. And I wish USDA in this open comment period, maybe I will stick my neck out and ask USDA to reevaluate that, because I think the exports you had asked me about the beans versus corn.
• 12:41
  Year to date accumulated sales right now in corn are up 44%. USDA's got us up 15.4 for the marketing year. Beans down they've got us down, 14%. For the USDA, we're down 32%. I think it's a trade off.
• 12:56
  We'll keep seeing bigger exports, but they'll keep pulling down feed and residual.
• 13:01
  Matt Bennett: I I don't think that beef's a luxury item, Todd, because, I mean, here in the last couple months, we've seen several days where actually Select was bordering on choice and but, you know, what does that tell you? It tells you that people, are not afraid of buying $6.50 a pound hamburger. I mean, it's it's incredible what beef consumption has been. If you look at the cattle numbers, and I know this is a corn panel, but it's very important. There's no doubt in my mind that you'd talk to a typical rancher out West and they've dried out again in parts of the West.
• 13:35
  You know, if you want to hand them $3,500 for someone else to either calve as heifer out or to put her in the feedlot, I mean, why wouldn't you do that? It's going to be hard to build numbers whenever you're throwing cash at these guys that they've never seen in their entire career. So I don't see the cattle numbers building anytime soon. It's just unlikely in my opinion. Now, it's not your number one consumer of corn though.
• 13:59
  It comes to animals, it's chickens. Right. So that's something that we can't forget. We haven't had a massive bird flu outbreak this year, which but like these guys said, we can't make sense of it. You could say feeding residual is too high if you're basing it just on feed.
• 14:15
  But again, we don't know exactly what they're doing there. But like Mike indicated, if you look, their 15% increase or fourteen six, I don't have the exact number for export shipments, you know, that's what they're forecasting at 3.3. Yeah. You're up almost 45%. So you could say exports, if you do pace analysis, is is is too low right now.
• 14:36
  Is it front loaded? That's what we were told last year is front loaded. But last year, it wasn't front loaded. It ended up being strong the whole year.
• 14:43
  Curt Kimmel: Feed usage from day one is, you know, anytime you have a large carryout, large production, feed usage is high, lower carryout, lower production, feed usage is low. What some of the answers have done, I've not seen a whole lot of studies or it, tried to get true feed usage. What they've done is they take total red meat production here in The US, take that, then work it backwards to figure out how many pounds of of feed has been actually fed as an indicator. But what we're seeing is, as you mentioned, we're feeding the higher weights. The way I understand it is you just feed the higher weights, the conversion from grain to weight goes down.
• 15:23
  So you're actually, you know, feeding a lot more to those higher weights. Then two, with China, the amino acids and lysines, the feed rations has changed in some of these. And so the feed ration is something to figure in there too. But I I think feed usage is strong. Feed usage is moving to Mexico as indicated.
• 15:45
  They've built processing plants. I don't know if I can put a name on it. McDonald's. Some of these fast food companies are moving carcasses or meat into The US, so I'm not quite for sure that the beef production has moved to Mexico.
• 16:00
  Todd Gleason: When you were talking to producers in San Antonio, what did they tell you about their old crop sales and the corn that they have left?
• 16:08
  Matt Bennett: Yeah. I mean, the number one question that I got all week was, what do we do with all this old corn? And so there's, you know, there's clearly a fair amount of old corn. We woke up this morning. Corn's up 5¢.
• 16:20
  You know, why do we think corn sold off today? You know, Brian could tell you and Greg could tell you how much corn was sold today. A significant chunk. And so if I've got old crop corn, I've got to understand something. We could get some sort of a bullish market this year.
• 16:36
  There's no doubt with the big demand. You could see the corn board rally, but at the same time, you know, what's Brian going to tell you if he's got lines all day for a week he's going to have to do? What does he have to do? Widen his basis? I mean, and that is what we're gonna be up against on old crop corn.
• 16:52
  So I made the comment down there that and and hear me correctly here because it's a little bit confusing, but my personal thought is that I I could see December corn actually staying stronger than cash corn. Alright? Now I'm talking futures versus cash. Why? Because if you get a bull market, what are you gonna see?
• 17:12
  Some bull spreading, most likely. But if July corn takes off, let's say you get a 50¢ rally. I don't think that you're gonna get more than 25¢ of it whenever you've got 17,000,000,000 plus a billion and a half of carry out to chew through. So I think basis is gonna widen anytime that you see this market take off and go.
• 17:32
  Todd Gleason: Any comment from the elevator guy?
• 17:34
  Brian Stark: Sure. No. I I I've been a a consistent communicator, I think, the radio with Tide and to my customers and to everyone I have a chance to speak with that, you know, futures and cash have to be managed independently. You know, I think the easy thing that we focus on, to Matt's point, is we wanna sell when the board rallies, but that doesn't mean we can't look for opportunity to manage the other component basis during times where you don't see that heavy movement. Right now, we're kind of in the second season of movement.
• 18:12
  You know? January, maybe not as much, but February in the beginning stages of March, I could tell you across the footprint I cover, corn movement has been extremely heavy. Ethanol plants end users are full. Rail movement has been very, very slow and and not as high in velocity. And so what do you see?
• 18:31
  Weakening, widening basis. I've always communicated there's a couple times during the year for those of us that have on farm storage that it makes a ton of sense where end users are really hungry and need grain. So whether the board rallies or not, BASIS tends to rally in those periods. December's one, right after harvest. Your bin door's shut.
• 18:54
  I don't wanna open my bin. I just got done with harvest. End user still needs grain. The other time is April, May when you guys are wanting to focus on planting. We have to figure out how to multitask in our jobs because sometimes the times we're the busiest or when we don't wanna move grain is the best time to do so.
• 19:15
  Todd Gleason: At the farm assets conference in Bloomington, Scott Irwin was talking about 45 z at that point. 45 z will cause ethanol plants. And I think I asked you this question already, probably on the air at some point. I'm I'm positive that in January, Scott Irwin was going to go to his, ethanol producer in Iowa in January and say, hey. 45 z is gonna pay out really well.
• 19:42
  Are you gonna pay me a premium, or do I get some of that that you're going to get? So first, I'm pretty sure the helicopter's cash are arriving. How will how will the industry share that?
• 19:56
  Brian Stark: I think that's a great question. I think the rules, we're still waiting on clarity and what that means from a definition standpoint, but there's gonna be some sort of, value to sustainable practice on the farm and be able to tie that to low carbon ethanol or biofuel. So how that gets cascaded, I think Scott's on the right track. I think we as an industry are all trying to figure out what that means for the grower, but there is gonna be some potential value depending on what those rules and regulations from a 45 z tax credit mean for the industry. Low low carbon biofuel is something that's gonna be continued to be focused on moving forward.
• 20:40
  And so I I certainly think there's certainly opportunity. I don't know if there's a way to quantify that today.
• 20:45
  Todd Gleason: You're right. Now, Mike, I wanna come back to the question upfront. What in the soybeans is going to drag the corn?
• 20:53
  Mike Zuzolo: Yeah. I mean, for me, we've we've answered part of it. It's the export side of the equation, Todd. The other part of it is if I just look at the markets over the last sixty five days as The US crop, gets dialed up a little bit through exports going down in soybeans, we see the South American crop get honed in, Brazil at about $1.77, $1.80. US prices become $40.50 dollars a ton more expensive than Brazil as they ramp up with heavy numbers coming online in the export market, and yet the soybeans continue to rally.
• 21:28
  So you can partition off and say, some of that was due to the biofuel policy and the trade in general in the futures market saying e 15 didn't get what it wanted, but the renewable diesel did. So we see the beans rally and the corn go down. We see the bull spread work and the beans and the bear spread work in the corn. Same thing with what we're seeing in some of the other things with the export market, with with the the the mindset, and I'm gonna call it, Trump g premium. I think there's 50 to 75¢ of premium in the soybeans right now because of the 45 z policy being taken so well by the bean oil market and so poorly by the corn and also the idea that China's gonna come across and do another six, eight million tons of soybeans on top of their 12.
• 22:20
  I'm picking up right now in Asia that the two intermediaries of both countries are meeting this week. And if that doesn't go well, they may scrap the meeting and call it a delay. So I would offer this in the very short term of the next two weeks between now and the April 1 when the meeting's supposed to happen. How do you handle that in your marketing plan? If that meeting is scrapped, does that pull premium out of the soybeans?
• 22:44
  And my answer would be, I think it would. So that's that's why I feel like there's there's so much more premium in the beans than there is the corn for a variety of reasons.
• 22:52
  Todd Gleason: And when that happens, you see corn dumping along with them.
• 22:55
  Mike Zuzolo: I not maybe percentage to percentage, but it will I think unless wheat and crude oil fight it, then the corn will go down in sympathy like it typically does.
• 23:05
  Todd Gleason: Again, this edition of Commodity Week was recorded the March.
• 23:09
  Todd Gleason: And, Matt, when they asked about new crop, what were you telling producers?
• 23:13
  Matt Bennett: Keep in mind that December corn over the last couple of years has spent very little time above four seventy. And so if you look at let's say you got bushels that are gonna go into the bin this next fall. All right, if you hedged at 4.7, you know, and you look at what was the carry in the market last fall, the carry in the market last fall fluttered from 30 to 35¢ from December to July, most of the fall. That was with a 1,500,000,000 bushel carry. Right now, it looks for all intents and purposes, a very good chance we're going to have at least a 2,000,000,000 bushel carry coming into this next year, which should indicate that carry might actually be a little stouter than last year.
• 23:56
  But if you just take 30¢ for instance, Todd, you know, if you if you hedge at $4.70, you get a decent July out to 30¢, roll it out to the July, now you got $5 corn basis to July, the only thing you've got left to do is set basis. So that's one thing we've been doing. Like Kurt said, the more aggressive a person gets, we want to cover that with a call. You know, especially if you get in a situation where, for instance, you end up with less than 95,000,000 acres. If you had the outlook forum's number of 94, my personal opinion is that's a little bit friendly whenever you look at the balance sheet.
• 24:32
  Todd Gleason: If you've got questions, hold your hands up. I'll get the mic to you. I've got a question, for you about the export window and the safrinha crop. It has closed for soybeans because the and for corn both because the safrinha crop comes in. And that crop for corn gets exported out of the out of Brazil, almost all of it.
• 24:55
  How much competition really is it?
• 24:57
  Brian Stark: Well, I think it's certainly from a timing perspective. You know, we we saw, you know, exports to Matt's point earlier last year assumed we were gonna top off, and we continued to maintain some steady demand. And I I think this year could be very similar. Even if, you know, you have this large safrinha crop, you know, there's still some competitive advantages The US has started, and I I don't see our exports just falling off a cliff here the balance of the year. I think that'll continue to support, some old crop potential market depending on how the balance sheet looks here as we move forward.
• 25:31
  Todd Gleason: At this point, we turn to the audience for questions, and they wanted to know whether volatility had been priced into the options at this time. Matt Bennett's answer today would differ sharply from the answer he gave on the March. Back then, not so much volatility. Today, a whole lot. Here's his answer the March.
• 25:57
  Matt Bennett: There's not a lot of volatility in the oceans right now, quite frankly. It's just pretty it's pretty dead. So I mean, you get it's part of the reason why, you know, when we were selling some corn around 04:60, we were actually buying August short dated $5 calls for 9 or 10¢, you know? And the thought process there is, let's say this market, you know, you leave a little on the table, right, between $4.60 and 5 or $5.00 9, whatever it is. I get that.
• 26:24
  Most growers aren't necessarily concerned about missing out on the small rally. They don't wanna miss out on a run to 5 fifty or six if they get more aggressive in their marketing plan. And so we were told them that you get very aggressive, you you at least need to cover some of those sales because of how cheap those calls were. Now as of this morning, when the market was up, those August short days were trading for around 16¢. Now I assume they settled back off to 14 or something like that, but I saw a fair amount of guys this morning and gals, you know, buying $4.90 and $5 August short days, they were spending, anywhere from 16 to 21¢.
• 27:01
  Brian Stark: And I think Matt's point's accurate. I think the the idea of coverage in what he's describing is the more aggressive we get. Right? Most farmers today, I I can't speak to the other guy's customer deck, but I would say they may be five to 10% sold in new crop corn. And I think I I love Matt's and and Kurt's comments that anytime you you have an opportunity to start at $4.70, which we have not seen in the past few years, we need to take advantage of that, especially with you know, the other thing I'll add, I think it's important, you know, lead into kinda what Gary's gonna talk about here in a little bit.
• 27:37
  But with the big beautiful bill, insurance for your cheapest revenue put that we have available to our enterprise is most likely gonna be 5 to $10 an acre cheaper because of the subsidy, changes in the big beautiful bill. That's the best floor, revenue floor, we can create, and then it's up to us to start taking chips off the table, something that these guys have talked about.
• 28:02
  Curt Kimmel: Option volatility was right around 15% here last fall, but as the markets moved higher in through here, that volatility goes up as the market goes higher. And we're looking at 25% volatility. When you look at the deferred contracts, there's more volatility there because there's more time. But the key is if you're gonna be an option buyer, you need to do it fairly quickly here because as we get into the growing season, volatility is gonna pick up. Your yard's gonna turn brown.
• 28:31
  You're gonna buy a $6 call for 50¢, and it's not gonna work. So you need to be an option buyer sooner than later. Now some of the strategies, it mentioned earlier, we're doing some of that ourselves is do a a call spread or a put spread to cheapen it up. That's one strategy. I know it's two trades.
• 28:49
  It's the extra penny, but it's worth looking at.
• 28:53
  Todd Gleason: Mike, I think it's about time to start wrap on wrapping up. But I do wanna hear from you about Iran, Venezuela, China, Taiwan, Russia as well, and Ukraine, lots of big topics, but the geopolitics and how you are viewing that at the moment.
• 29:12
  Mike Zuzolo: Yeah. I mean, this fits into what the guys were just talking about with the options and being long, whether it's because you're worried about drought or whether you think the market's turning. I I think the trade right now, Todd, is putting on a clinic for what we wanna be watching for the next six months. In other words, we saw a weak dollar against very strong precious metals prices, and it started to get the attention of the end users in the world. And they started talking about instead of, just just in time covering themselves for a little bit more and extending coverage out there in some of the key commodities.
• 29:46
  What we've seen here since the Iran strike though is the unwinding of what I would call, like, an inflationary mindset. We've seen the dollar spike with the crude oil, and it's really taken a lot of luster off of the grain markets. And today, especially, when I saw 15% lower in the gold and silver markets, that is not a good sign for the long term. And so what I wanted to bring to the table today for all of you this year is the research that I've done, which say last year when we talked, president Trump's tariffs were in in coordination or very similar to what president Reagan did in the nineteen eighties to push the dollar lower. Reagan did it with Japan.
• 30:26
  President Trump is doing with China and others, but primarily China. And it's been successful because they have been coming in and other Asian countries have been coming in and buying a lot of US agriculture exports. The second wave of president Trump's policy, I think, in in continuing to press the dollar lower is to change the Federal Reserve. And I think that's why he's pounded on Jay Powell. That's why he is gonna put in Kevin Walsh.
• 30:53
  That's why he put in Merrin in the and on the on the executive committee or on the board. But his goal, I think, ultimately, is as far as both foreign policy and economic policy, and this is where commodities come into play, is if he can push the dollar down another leg, that breeds more inflation. And I think then you wanna be less of a seller, or if you sold at a profitable level, look at buying back.
• 31:19
  Todd Gleason: When do you know that that's happened? Or
• 31:21
  Mike Zuzolo: I I think we could know by the end of this month because if that straight Hormuz does not get shut down or pipelines or oil infrastructure does not get hit, I have a hard time seeing crude going above $80.81 bucks. Final comments.
• 31:36
  Matt Bennett: We never talked about acreage. I wanna hear what these guys think in their final comments.
• 31:40
  Curt Kimmel: So Well, I'll let her like, you're right. I'm sorry.
• 31:42
  Matt Bennett: No. I I know. Just reserve give me your numbers, by the way, because I haven't given our official estimate out yet, so I wanna lean on you guys some too. The acreage discussion is so complex this year because insurance is cheaper. You can cover more revenue for a cheaper amount of money.
• 32:01
  Obviously, you look at the farm dock numbers and corn beets beans beat corn in all four regions. So clearly in Illinois, that's a discussion that's going to be warranted. Now in Central Illinois, we've looked at some salty bean yields the last few years. You move into Iowa where the APH is 10 bushel less, it's a different discussion. And so I think that acreage is certainly going to be a regional type discussion.
• 32:25
  But whenever I look at corn, there's no doubt that availability of funds in part of the country, I think, is going to enter into the scope of a discussion. But then we just got a bridge payment. All right? So bridge payment showed up just in time. You guys may not like me for saying this, but I know a lot of us need government money, but I don't think that we're doing ourselves any favor by continuing to throw money at the farmer.
• 32:50
  I would rather see them throw that money towards domestic usage options. Let's use more of what we're growing here in The US and quit throwing checks at the grower. That's my personal opinion. I am a farmer, and I am gonna cash the check, by the way. Acreage.
• 33:06
  Outlook form at 94 in my opinion. If it comes in at 94 on March 31, I think that's a friendly number. Okay? My personal opinion right now, and this is not an official estimate because we haven't discussed it deeply enough as a team, I'm around 95. And I and I think that you're gonna see even a ninety five, I think soybean acres come in at eighty five because you're gonna lose a few cotton acres.
• 33:27
  You're gonna lose some rice acres, and I think you're gonna come in at one eighty again.
• 33:31
  Curt Kimmel: Quick survey. How many of you are gonna stick to rotation? K. How many is gonna be a little heavier corn? How many is gonna be a little heavier soybeans?
• 33:46
  Looks like rotation wins. So I got a comment.
• 33:49
  Matt Bennett: I got one comment on that. I don't wanna interrupt him. But if you look last year, every state in the Corn Belt planted less soybeans. So if we stick to rotation, what does that tell you bean acres are going to do?
• 34:01
  Todd Gleason: Go down.
• 34:02
  Matt Bennett: Yeah. Bean acres should go up because they were down last year. If it's corn to beans, beans to corn, that's naturally gonna but I I didn't wanna interrupt, but I thought that was a very interesting point. If you look at that map, every state was red.
• 34:14
  Curt Kimmel: Yeah. I'm we're listen to the same brokers, elevators, and everything, but I I I believe the corn acres, like Matt, is gonna be probably a little higher than 94, maybe 95. What we're hearing though is in the Western Corn Belt. One is they just got bombarded from a bad basis, uncertainty about bean demand. Bean yields are just tear well, not terrible, but not as good as here in the East.
• 34:39
  So we're leaning a little heavier corn, plus they had a little bit of corn yield than probably what's indicated from last year. So I I I'd lean towards 95 on planted, but, you know, it's going to depend on weather, and there's just a ton of moving parts. As far as the other things, volatility is crazy. You know, who would have thought silver would go over a $100, so anything can happen. I think the theme is to hedge and to defend.
• 35:03
  Try to do better than breakeven. This year, the horse, not only the horse, but the fire horse.
• 35:09
  Todd Gleason: Brian Stark?
• 35:10
  Brian Stark: Okay. So we'll start with Acres. A couple of things. I think, you know, to my points earlier and kinda agree with what Matt and Kurt have said so far, I'm we are kinda in the 94,000,000, not to sound can by the Outlook Forum, but part of it just thinking, don't we don't believe corn acres change a lot in the central part of the Corn Belt. That's, you know, to my point earlier, when prices are low, farmers tend to wanna plant corn because we can try and out yield the price problem.
• 35:39
  Alright? But where we all got kind of thrown off in this national yield, we saw lack of rain, southern rust. You know, we talked about this on commodity wheat quite a bit during harvest, expecting the January yield to come down. We underestimated some of the crops grown in these fringe states and how big they were. Kansas, Texas, Missouri.
• 36:04
  Those states, customer or farmers all tell you that that some of the best corn crops they've ever raised, highly unlikely they repeat that again. I think that's where we see some of that acreage come back to beans. I I respect Kurt's comment. I think there's certain areas of the Dakotas that probably won't do that because of the really nasty wide basis Ellen mentioned earlier, but I do think there's gonna be enough of a swing just simply because economics and because the banker may tell you that you have to play in more beans in certain, desires. So I I think we're probably 94.
• 36:41
  I wouldn't argue 95. I think, you know, ninety eight eight record, production, as Matt mentioned, we're definitely gonna be down three to 4,000,000 acres in our opinion. Beans are probably gonna be somewhere between, you know, 85 to 86. I agree. I think there was a lot of prevent put cotton last year, so we might differ in that regard.
• 37:02
  And maybe spring wheat's gonna be a little lower to offset maybe some of the the bean acreage increases. As far as my recommendations on on the corn side, I think the biggest focus, if you're struggling with the flat price available to you in your marketplace for old crop corn, take advantage of looking at those four seventy levels in new crop to start. You you can't tackle it's hard to tackle both marketing both crop years. Start with one. There's gonna be a lot of basis opportunities if you're around a processor market where I think you may have a chance at four sixty, four sixty five, four seventy on old crop as we get into spring.
• 37:37
  So those are my recommendations at this time.
• 37:41
  Mike Zuzolo: After the, acreage update from USDA with the Ag Outlook Forum, I I took a half a million acres out of beans and gave it back to corn. Still at 93.5 corn and 87 on beans. You know, to the idea of what these guys were talking about in 2022, we're at 87.5 in beans. 2024, I think we're at 87.2 on beans. With 98,800,000 corn acres last year, I I think that we will see more beans relative to what USDA gave us.
• 38:13
  Currently, 55% sold in 2025 corn. Been very active the last three weeks. About 15% sold in cash corn for 2026. Last I think that sale was done back in November. Itching to get Dec corn up to about four eighty five, thinking that the, the wheat market can carry us to that point.
• 38:33
  Todd Gleason: This has been a special edition of Commodity Week, the Corn Panel from the All Day Ag Outlook. It was recorded March 3. I did check with the analysts, and they believe that the fundamentals of the corn market, supply and demand, really have not changed despite the Iran war. You may listen to the whole of the program again anytime you'd like on our website at willag.org, willag.org. Our panelists included Matt Bennett from agmarket.net along with his colleague Kurt Kimmel, Brian Stark of The Andersons, and Mike Zuzla of globalcomresearch.com.
• 39:12
  I'm University of Illinois Extension's Todd Gleason.