Latest / Closing Market Report / Nov 25 | Closing Market Report

Transcript

Nov 25 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report coming to you today from the Illinois Corn Growers Association's annual meeting in Bloomington. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Naomi Bloem. She's at totalfarmmarketing.com. Dan O'Brien will join us from K State to take a look at the agricultural energies, ethanol in particular, and then we'll close out our time by taking a look at the weather forecast with Don Day, a day weather in Cheyenne, Wyoming, all on this Tuesday edition of the closing market report from Illinois Public Media.
• 0:34
  We're right now online at willag.org, willag.org. You may sign up for the farm assets conference coming up the December. That's a Friday in Bloomington right here at the Agra Center, the home of the Illinois corn growers.
• 0:52
  announce: Todd Gleason services are made available to WILL by
• 0:57
  Todd Gleason: December corn for the day settled at $4.23 and a half. It was down a quarter of a cent on the afternoon. The March contract at $4.38 and a quarter, a penny and a half higher, and May futures at $4.46 and 3 quarters, up 2 and a half cents. January beans, eleven twenty four and three quarters, up a penny and a half a bushel. The March of $11.34 and three quarters, up two and three quarters, and November beans, up 2 and a half cents at $11.19 and a quarter.
• 1:24
  Wheat futures were up about a nickel for the day. Naomi Bloem from totalfarmmarketing.com out of West Bend, Wisconsin now joins us. Hey, Naomi. Thank you for being with us, and thank you so much for joining me at the National Association of Farm Broadcasting Convention in Kansas City last week, and all the farm broadcasters for that matter, particularly for recording commodity week, which I thought was a pretty extraordinary program. Folks can still listen to that online at willag.org.
• 1:53
  I hope you had a good time while you were in Kansas City.
• 1:56
  Naomi Blohm: Yeah. Absolutely. It was just great to visit with, different folks from across the country and and just stay current with events and and share the things that are affecting agriculture right now.
• 2:07
  Todd Gleason: It's okay to see other farm broadcasters names too, but that's alright. Let's It's go fine. Let's talk about the marketplace today. I really haven't had a chance to see the market. So I saw a text come up on my phone with the what I think were the end of the day.
• 2:25
  It didn't look like a lot happened. Was it a quiet day in Chicago?
• 2:28
  Naomi Blohm: Yes. Very quiet. I think we're already seeing some pre holiday trade already. But also corn, soybeans, and wheat are sitting on some important short term technical support levels. So with the March corn, that number is the four thirty five area.
• 2:44
  With the March Chicago wheat, it was the five thirty five area and beans sitting on, the twenty one day moving average. So we didn't have a lot of fresh news today. There were not any flash sales announced from the USDA, and we're still sifting through some of that old data in terms of export sales and then also the commitment of traders report. The probably the bigger feature, and I would even scramble to call it a feature, is that first notice day is approaching for the December grain contract. So people who are long futures contracts need to be out of those actually by tomorrow even though first notice day is Friday.
• 3:26
  But with the markets being closed Thursday, we're seeing some position squaring with that. That, of course, affects producers with their cash grain market. So they have probably already needed to price or roll those contracts. And we're we're just kinda waiting for some news. The South American crop is getting planted.
• 3:44
  The weather's not perfect, but it's not dismal. So we're in a little bit of a holding pattern waiting to see if China has any big sales coming up, from The United States, any purchases of soybeans, and just trying to, you know, just stay on top of the markets.
• 4:01
  Todd Gleason: So the market looking forward to the Thanksgiving Day off. That's Thursday. Trade is shortened on Friday. I'll be out of the office both of those days, actually. We'll record Commodity Week tomorrow afternoon.
• 4:14
  That'll be up on the website then, and then, of course, we'll run during this slot, the closing market report slot on Friday for those who are interested to know when that might show up. I do wanna know a bit more about China. This week has been odd, listening to what, has been taking place. Secretary Rollins, of course, talking about, hey. We have to finish the deal up, which we kinda thought the 12,000,000 metric tons was a finished deal.
• 4:43
  Maybe it's just writing it down. And then the Chinese president Xi, Well, talking about Taiwan as well. And so it just seems like things are up. But timing is everything for those, at least that's the way it's been put through the end of the calendar year. It won't leave much time to get those deals hammered out and the sales actually made.
• 5:09
  They don't have to be delivered, of course. But do you think that China will be in that deep into the marketplace by the end of the year?
• 5:15
  Naomi Blohm: I still am of the opinion that China is waiting for the soybean markets to come down just a little bit in pricing. If we could see an additional slight technical pullback lower for prices, the bean market could drop about 25 to 30¢, still be in a bigger picture uptrend, but have a nice correction from the rally we've had. Then I do think China will, come in and buy some of the beans that they said that they were going to, and then the market will be, I think, just excited about that and will respond with higher values. But I think China is trying to get this on sale a little bit here, so we'll see if they do any purchases over the next couple days, with holiday trade maybe being part of that factor as well.
• 6:00
  Todd Gleason: So going back to the I think it was $4.35 you mentioned was the technical support for corn. Do you think that that will hold and it can manage to follow soybeans up in that case?
• 6:12
  Naomi Blohm: Absolutely. I think that corn is gonna hold this $4.35 area for the March contract. It's just because we still have such fantastic demand for exports and for ethanol. Of course, we know that the feed number could be changed in the future, but I think in general, we're gonna see the the corn market start to work higher. The funds are still, from what we estimate, still short, most likely around a 100,000 contracts.
• 6:36
  Of course, we're not totally for sure on that with the commitment of traders report. It's not released. But if if we can get some friendly news, I think people are just waiting for something friendly to happen for corn, then we'll see the funds exit those short positions. Something that's been kind of brewing here lately, in China, the price of corn futures on the Medallion Exchange has been actually starting to increase higher and just went above its downtrend line. So it actually negated the downtrend line, and it's starting to work a little bit higher.
• 7:06
  So that's interesting because we had heard China had a decent crop. Some places, had a little bit of a harvest issue, but the fact that their futures market is rallying is something to be watching. And then there's the very, big corn soybean seasonal that suggests starting December 1, corn and soybean prices have a tendency to start to trade higher as we get closer to the end of the year.
• 7:29
  Todd Gleason: And thanks so much. We will talk with you again next week.
• 7:33
  Naomi Blohm: Alright. Thank you.
• 7:34
  Todd Gleason: Naomi Bloem is with totalfarmmarketing.com from West Bend, Wisconsin joined us on this Tuesday edition of the closing market report that came to you from Illinois Public Media online on demand at willag.org, where today you should actually take time right now and get yourself registered for either the Illinois Farm Economic Summits or the Farm Assets Conference. They're coming up in the middle of the month of December. We have a great line up for you, which includes the PharmDoc team at all of those conferences, along with members of the Illinois Soybean Association and the Illinois Corn Growers Association. Oh, and at the Farm Assets Conference, Scott Irwin will be with us as well to talk about biofuels. You'll want to sign up today.
• 8:17
  Registration is just $80. They all include your noon hour meal. The Farm Assets conference is in Bloomington. The IFA series is the following week on December 15. That's a Monday in DeKalb, Tuesday in Peoria, and Wednesday in Mount Vernon.
• 8:39
  You know, one of the great things about associations like the Illinois Corn Growers is they support agricultural education, particularly with scholarships. Kaylee Gerlach is here now. She is an agricultural communications major at the University of Illinois and a recipient of a scholarship. I asked her to tell me about what that really means to her and how it's impacted her life at the U of I.
• 9:06
  ICGA Scholarship Winner: So I'm currently a sophomore at the university, and through scholarships, I've really found that they really help aid, my education and honestly gave me a firm foundation of, how so how much support I am receiving, as a student that is going into agriculture. Specifically, Illinois corn has really gave me a firm foundation of what their program is and trying to get, Us scholarship recipients a sneak peek of what Illinois corn is and how their, company really supports students and upcoming, agriculturalists and farmers within the community, all over Illinois. So scholarships have really been, something amazing that I've gotten to experience during my time, at the University of Illinois.
• 9:46
  Todd Gleason: It sounds as if this would be unusual in terms of scholarship, meaning that it it is financial help, but it really is more than that. It's about being able to be involved in some way and learning about the kinds of things you might do in the future.
• 10:01
  ICGA Scholarship Winner: Yeah. So I would say scholarships, I mean, of course, they help, financially. They especially at the university, they really help tremendously. But, also, I feel like with scholarships that they really, are showing you that they are putting the time and effort into investing in you, and they get you just a sneak peek. It's kind of like an internship.
• 10:20
  They kind of give you, like, okay. Here's a sneak peek. You can come, to these different events, especially with Illinois corn. That's why I was invited here today. And, honestly, I've noticed that this is an amazing opportunity that scholarship recipients get to attend, and now I get to better understand their company and just see where they can take me also in the future with having them supporting me in, whatever endeavors I may have.
• 10:44
  Todd Gleason: I'm a 1986 ag communications grad broadcast option. I know the reasons I decided to come to the University of Illinois. Why did you pick the U of I?
• 10:54
  ICGA Scholarship Winner: So my sister originally went to the U of I for her undergrad, and I really got a sneak peek of what U of I is. For the longest time, I swore off I would never go there because that's where my sister went to school. But little did I know that I would go and I would tour. And I have a cousin that's a professor, at the U of I. And I just really I visited campus so much that it felt like a second home to me, and I knew that there was nowhere else I'd rather be.
• 11:20
  I'm also in a sorority, four h house cooperative sorority, where I really have found my friends and my connection that really pushed me to go to U of I, but also the programs and the connections just that the university gives you is unmatched to me compared to other universities. Like, it's something that I didn't wanna, leave an empty opportunity there. So I really felt that, U of I was where I needed to be and where I could call home.
• 11:45
  Todd Gleason: How many people were in your high school or in your class, and how was the transition to a university where there are more than 50,000 students?
• 11:53
  ICGA Scholarship Winner: Yes. So originally, my hometown is about 200 people counting cats and dogs, I like to say. A lot of people are very surprised whenever I say that, especially, a lot of students are from Chicago. But for my graduating class, I had 27 in my graduating class, so very small high school. Honestly, whenever I was graduating and looking at college options, I wanted somewhere that have variety and where I can meet a diverse amount of people and really open up my eyes to, okay.
• 12:21
  This person has different views. How can I take their views and help shape my ideas and my perspectives and what I can do and how can I better educate them on maybe what they don't know? So I honestly I really like the big sized school because I also, it's easy, especially for the College of Aces to find a home even if it's in a big crowd.
• 12:40
  Todd Gleason: Carly Gerlach is a sophomore at the University of Illinois studying agricultural communications and a recipient of a scholarship from the Illinois Corn Growers Association. Let's check-in on the agricultural energies now. Dan O'Brien is here. He is with Kansas State University Extension. Thanks, Dan, for being with us.
• 13:00
  Once a month, you put together for your own folks there, and your website, a look at agricultural energies, particularly ethanol and how that is moving. We'll get to how profitability in ethanol as we close out our time together. There were a couple of slides that folks, and you can tell them where to find this online, can see. One of them I was interested in was total capacity for production of ethanol in The United States. And then I wanna talk about how that's used, particularly as it's related to ethanol, and how much is domestically used in corn in general.
• 13:38
  Dan O'Brien: Yeah. The record, put out by the USDA Economic Research Service in a quarterly set of of data tables, shows with their their latest figures that that were, projected to have about 18,300,000,000 gal billion gallons per year of ethanol capacity and are producing at about 90% of that, at least by the USDA numbers. So we're looking at about 60,500,000,000 gallons of of ethanol produced according again, following the the official data that's out there. And, surprisingly, you know, you go back to to the years 2021, 2223, we were we were at capacity by 17.5, seventeen point four, seventeen point seven. So, in the last couple of years, we've we've grown in terms of capacity, and the the actual usage has shown more of a positive trend.
• 14:33
  Part the actual, the capacity is at 18.3. The actual production, again, at 60.5, but but going back to, say, the low in 2020 of 13.9. Well, the next year, 21, 15,000,000,000 gallons, 50.4, 22, 50.6, 23, 16.2, and 24 are now 16.5. And it's still showing for two zero one plants that are out there in The US that are producing ethanol that we have about about, well, a 150,000,000 gallons worth of capacity coming on, you know, that's being constructed. So some of that's no doubt old plants going out, being replaced by new plants coming in, but still interesting to see the the growth.
• 15:20
  And I I think it's generally thought that ethanol overall, if you ask the the common agriculturalists, they say, well, it's a pretty mature industry. You know? Not a lot of change. But but the numbers show that that's not entirely true. There is some growth, and, that's I'm sure that's welcomed by corn growers and, of course, the ethanol industry folks.
• 15:37
  Todd Gleason: Yeah. So there's growth both in total capacity, meaning new plant capacity has come on, and then there has been growth as well in utilization of that capacity because I was thinking mostly when we ran it, about 80% utilization as opposed to 90%. So those plants are really, managing to chew through a lot of corn. The newer the plants also on the flip side, they've also gotten far more efficient, at producing gallons per bushel, something like two two point two to begin with. They surpass two and a half and are closer to three gallons, I think, per bushel these days.
• 16:16
  So let's put that in kind of the supply and demand table very quickly. How much of the corn that you produced in The United States annually is used for ethanol production?
• 16:30
  Dan O'Brien: Well, again, latest numbers out of the USDA in their November 14 WASI report was 5,600,000,000 gallons billion bushels being used. And, actually, that just comes in just slightly below, back in 2017, 2018, 5,605,000,000 gallons or billion bushels. Pardon me. So so we're back up essentially tied with the record high, and and a lot of that no doubt has to do with anticipation of fuel usage on the one hand and relative and moderate to low price corn stocks on the other. I would also say, Todd, that right here in the Western Corn Belt that we've seen growth in grain sorghum being used in these Western plants also for, for, ethanol production.
• 17:17
  So it's not near as big an amount as the as for corn, but out here in the West, it's it's an important issue, particularly as grain sorghum exports have been struggling.
• 17:27
  Todd Gleason: Yeah. So the other thing is that in the supply and demand tables, DTGs would be in a separate category. That's coming out of those ethanol plants as well.
• 17:37
  Dan O'Brien: Yeah. By the time we calculate that out, although that that number is not directly given in in the, USDA WASDE supply demand tables, you can back that out using regular relationships, you know, per bushel of corn. You you make assumptions of how many how many, what what capacity or what amount of DDGs used. So right now, when you bring everything back to a per bushel of of of weight basis, you're you know, back in 02/1920 marketing year, we had little a little under a billion, gallon bushels, pardon me, of of, corn used equivalent basis as as DDGs in the livestock feed. But and here, we're looking twenty five, twenty six marketing, about 1,159,000,000 gallon billion bushels worth.
• 18:25
  Sorry. Anyway, so interesting to see that. And, also, we've got DDG export figures some somewhere around 450 to 475,000,000 corn bushel equivalents weight wise. So we're we're both shifting, but we're using DDGs internally, of course, in livestock feeding, exporting some as well, and, thought provoking. When you look at and and that amount comes to about ten, eleven, 12% of of total US, I I guess, DDG production actually being shipped out of the country.
• 19:05
  We don't bring much in, hardly any, but but we are shipping some out. So thought provoking.
• 19:11
  Todd Gleason: And and then maybe thirty seconds to amend it on profitability currently and looking forward for an ethanol plant in The United States.
• 19:18
  Dan O'Brien: Well, the last, basically six, seven months, we've been at least covering costs and making some making some money back in, in it would be in October. We by our estimates, using Iowa State University model and and, bringing everything forward, made about 30¢, a gallon of ethanol produced as a as a profit over costs. And here in the latest figures in November through about three or four weeks, we're still making money at 14¢ a gallon. And and, you know, those are, by by the time we made money for about six months, that offsets the time when we were breakeven or below for about six months. So so it's kind of a of a seasonal or more, I guess, more of a year by year roller coaster ride in terms of profitability of those plants.
• 20:07
  But but no doubt, lower corn prices this year and and at least moderate demand on the fuel side has has brought profitability to ethanol plants and, for for ethanol plant owners and really for the corn industry overall, and for corn producers in turn as a signal to continued corn ethanol usage, that's those are those are positive outcomes.
• 20:28
  Todd Gleason: Thank you much, Dan. I appreciate it.
• 20:30
  Dan O'Brien: Thanks, Todd. Take care.
• 20:31
  Todd Gleason: You too. Dan O'Brien is with Kansas State University Extension. Let's check the weather forecast now with Dundee. He's a day weather in Cheyenne, Wyoming. Hello, Don.
• 20:52
  Thanks for being with us. Let's get right into the Thanksgiving weather forecast. I take it it won't be horrible on Thanksgiving. It might be a little cool, but it starts to get way colder as we get deeper into the weekend. Can you tell me about that to begin with?
• 21:09
  Don Day: Yeah. Our biggest problems in terms of travel conditions is certainly gonna be coming after Thanksgiving as we get into the weekend and early next week. We've already seen a little bit of a saddle, kind of a sneak peek at what's to come. We saw some very wintry weather overnight and earlier today across North Dakota, parts of South Dakota and Minnesota with some winter storm conditions. That's going to head up into the northern part of the Great Lakes over the next couple of days, and that will spread in some colder temperatures for Thanksgiving into the Midwest and the Corn Belt, but at least the first salvo of real wintery weather will go to our north.
• 21:47
  But then another let's say Canada's gonna reload and send another shot of Canadian air. This is probably the coldest air of the season. I think it's a safe bet to say that. That'll be coming on in as we get into especially Saturday late into Sunday and Monday. That will bring in the coldest temperatures of the season.
• 22:06
  We see temperatures as cold as single digits by early next week. And that cold is gonna stay it's gonna be sticky, sticky cold. A lot of the Central United States, East Of The Rockies will hold on to this cold air well into next week.
• 22:22
  Todd Gleason: Who gets the overnight lows in the single digits?
• 22:25
  Don Day: Well, I could see Wisconsin, parts of Iowa, Minnesota. I could even see you know, it depends on if there's some snow cover because snow cover will allow those temperatures to get colder. I wouldn't be surprised if parts of Northern Illinois, parts of Iowa get into the single digits.
• 22:41
  Todd Gleason: Alright. Hey. Thanks much. We'll talk with you again next week.
• 22:45
  Don Day: See you then. Happy Thanksgiving.
• 22:47
  Todd Gleason: Dundee is with Dayweather. He is in Cheyenne, Wyoming. Joined us on this Tuesday edition of the closing market report that came to you today from the Illinois Corn Growers Association's annual meeting in Bloomington. Be sure to join us tomorrow for the CMR, and then on Thursday, the markets will be closed. We'll take Friday off because it's a university holiday as well.
• 23:07
  I'm extension's Todd Gleason.