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Mar 14 | Closing Market Report · Closing Market Report

• 0:00
  Speaker 1: From the land grant university in Urbana Champaign, Illinois, this is the closing market report for the March 2025. I'm extensionist Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzlow. We'll hear excerpts from yesterday's farm doc webinar with Joanna Clousey laying out South American crop production prospects and the updates that came from there this week, and we'll discuss the weather forecast too with Eric Snodgrass from Nutrien Ag Solutions. And then if you can stay with us for the whole of the hour, you'll hear all of our commodity week program.
• 0:33
  Otherwise, you can look for it right now on our website at willag.org, and many of these radio stations will carry it over the weekend. Todd Gleason services are made available to WILL by University of Illinois Extension. May corn for the day settled at $4.58 and a half, down six and three quarters. December at $4.51, a penny and a quarter lower. May beans at $10.16, up 5 and a quarter cents.
• 0:57
  In November, '10 '18, '6 and a quarter higher. Bean meal, down a dollar 20. Bean oil, 31¢ higher. Soft red winter wheat in the July at $5.73, down five and a quarter, and the hard red July finished at $5.98 and three quarters, two lower on this Friday afternoon. Mike Zuzlow, GlobalCom Research dot com out of Atchison, Kansas joins us on this Friday afternoon to take a look at the marketplace.
• 1:22
  Mike, first, thank you for joining us on commodity week yesterday. Really good show. Folks who are listening to our home station can hear all of it this afternoon. Otherwise, they'll hear it tomorrow on many of these radio stations. I thought you and, your other panelists did a great job.
• 1:38
  Speaker 2: Thank you. And and, you know, we have great leadership, and then that's you, You really keep us on ball on the ball and on track, and it it really shows up on some of these shows that we do. I enjoyed it thoroughly. A great group of people as always.
• 1:51
  Speaker 1: Tell me about today's trade.
• 1:53
  Speaker 2: Yeah. You know, this week as a whole Friday wasn't any different. You know, big unknown export sales reported in the corn early in the morning this morning on Friday, we had little if any impact on the trade. In fact, corn was the leader to the downside with March expiration, we were down over 2%, almost 2.6% as we closed up the March contract, going to settle probably down about 2.2 and set up about a 12 to 13¢ discount against the now lead month May futures. So that's something we're going to contend with on Monday.
• 2:29
  But Friday, a lot like the trading week, as I said, was more about the funds and the traders, I think, running to the spreads in the row crops. The July corn spread, July no bean spread both gave way. They weakened July losing to the new crop. That's the South American harvest pressure. Think, Todd, the weak corn spread was very active.
• 2:49
  Wheat gaining on corn in lead month soft red. We're looking at now close to a dollar spread again between the two. I think that was your weather and drought potential playing out in some of the soft red wheat markets. And then the no bean, dec corn ratio. Heard a lot towards the end of the week, and we talked about this on the commodity week program about what are those acres gonna be as far as bigger corn and smaller beans in part due to potentially very dry Western corn belt.
• 3:17
  So that bean corn ratio really made some gains this week.
• 3:20
  Speaker 1: Can you return to that first comment you made as it related to the March expiration going off the board and having to contend with it on Monday? What is your historical experience when there is such a difference between, the two lead months, the one expiring and the one about to become the lead, and whether they step down to meet or step up to meet what the previous month was and that meaning if the previous month was higher or the previous month was lower than where the next one is trading. I know that's a bit confusing on the other end, but what's the historical context there?
• 3:59
  Speaker 2: Yeah. What you're describing is a gap in the daily continuation chart and a gap to the downside because the May will now start off higher than where the March contract high was on Friday. And so that's what is the biggest issue. You don't fill the gaps immediately. You don't automatically, typically in my experience, Todd, take the, in this case, May down to the March right away.
• 4:24
  But I think eventually you do, especially if you don't have some fresh news out there to help support the market. Maybe the most surprising thing to me this week was, at least one of them, was the fact that we had very strong exports. We had daily export sales reported. We had a return of a strong corn basis and farmers are not needing to sell right now. But that still did not help the March contract and it felt more like the March was seeing the funds completely liquidate out of the market.
• 4:56
  So this makes the commitment to traders report very important on Friday even though it's as of Tuesday. My my hunch is if we don't continue on weak dollar, strong wheat type price action that we started this week out with and ended this week with, we're probably gonna have to fill those gaps relatively soon.
• 5:14
  Speaker 1: If we fill them relatively soon and we still have the strong corn basis, does that mean we're just essentially running down, filling the gap? And then the the strong corn basis is interesting to me because, there was so much that was sold on those last rallies in corn, then I think there was some expectation that basis would not return this quickly, and it has.
• 5:37
  Speaker 2: I think you're % right. And we didn't have an expectation that Mexico and China would not be part of the negative price action for the tariffs. They've actually been supportive in terms of not getting any negative news. And so yeah, I think the answer right now, especially given the big drop by the Rosario exchange on the Argentine corn production number going down to 44,000,000 metric tons, 44 and a half, versus USDA's fifty for Argentina's corn production. If we'd fill the gap, that may be a potential futures buying opportunity.
• 6:13
  A lot of people are talking about bigger corn acres. I don't have any problem with taking corn acres up if we stay dry in the Western Corn Belt. But like this gap talk that we're talking about, eventually, we stay dry, the market's going to see that as even with the big acres as giving away a potential 180 national yield. And I think that too would be more supportive to the price as we get into the early part of summer.
• 6:36
  Speaker 1: You know, what's interesting about that Argentine number particularly is that the acreage is down, though, according to those same Rosario numbers I believe this is where that came from, and Joanna Colucci talked about it yesterday in a webinar we'll hear more about that in just a second was that the acreage was lower expected to be lower based off of a disease they had in corn last year there, but down 30%. It was only down 14%. Yet the number coming in from the Rosario Grain Exchange is off sharply from USDA.
• 7:11
  Speaker 2: Yeah, and I think there's a reason for that, you know, USDA has got a 7.8 yield tonnes per hectare. And that's way up there towards the top end of seven point nine eight point one eight point three is the record if I remember right, from about twenty seventeen twenty eighteen. I just think we've had too tough of a year to be able to get in the upper 20 of the yield potential at this stage. I talked to my South American colleague this week, after you know, hearing Joanna's fantastic presentation at the all day outlook meeting. I talked to him this week on our normal program, and they reported 78 inches of rain in three or four days in part of that primary corn belt.
• 7:52
  And you know, we're getting ready to see the harvest in that part of the country now, as we get deeper into March, and especially into April. So I'm just not there. And I'm probably much closer to that 44 being at around 47, 40 seven and a half right now.
• 8:07
  Speaker 1: We'll talk with you next week. It'll be interesting to see if or when that gap between the March and the May has that expiration has taken place is filled or not. We'll talk to you then.
• 8:19
  Speaker 2: Sounds great. We've got it in corn, beans, and wheat, so lots to discuss.
• 8:23
  Speaker 1: Indeed. That's Mike Zuzlow. He's at GlobalForumResearch.com out of Atchison, Kansas. Yesterday afternoon, the FarmDoc team hosted a webinar highlighting crop production in South America. Joanna Colusi and a colleague from Argentina discussed Uruguay, Paraguay, Brazil, and Argentina as it's related to both corn and soybean production.
• 8:52
  You may find and listen to the whole of that webinar on the PharmDoc website. Look for it in the archive section under webinars at pharmdocdaily..illinois.edu. I pulled some excerpts from the question and answer session. The audience wanted to know if the PharmDoc team had done a comparison of production cost between The United States and Brazil. As it happens, they had, said Joanna Colucci.
• 9:22
  Speaker 3: Actually, we published two farm doc dailies about that comparing the soybean cost production in Brazil, actually in Illinois and in Mato Grosso. I don't have the numbers in the top of my mind, but I remember that we have some, when you think about soybeans, we have some difference. For Brazilians, the fertilizers, it represents much more than here in The United States because Brazil imports around 85% of its fertilizers consumption. But when you compare chemicals for Brazilians is more expensive because it's quoted in dollar. But when you compare seeds for Brazilians is cheaper than here in The United States.
• 10:11
  On the average, have very similar with the soybean in Mato Grosso, at least comparing with Illinois, a little bit lower the cost production. And when you compare corn, we cannot do this direct correlation. Mean, we can compare, but remember that when you think about yields, soybeans in The United States and Brazil, they are very similar in terms of yields, around fifty-sixty bushels per acre. But when you compare the yields in corn in Brazil and The United States, Brazil is half than The United States. So, we did this comparison per unit per acre.
• 10:48
  It's pretty similar than soybeans in terms of the inputs. Fertilizers and chemicals are more expensive for Brazilians. The seeds are more expensive for Americans, but we also have the cost of the farmland. We also have the cost of crop insurance that we don't have almost crop insurance in Brazil. I mean, we have, but there is few subsidies from the government.
• 11:15
  So, we have some difference between two environments. Maybe you take more time than that to explain. But if you look in the FarmDoc Daily, you can find these articles. They were published in January 2024.
• 11:28
  Speaker 1: The corn production direct cost comparison article was published in January of twenty twenty four. The soybean comparison article was posted two months earlier in November 2023. Search Farm Doc Daily by author clicking on Joanna Colucci and then scrolling back by day to the comparing direct production costs articles. Direct costs include fertilizer, seeds, pesticides, herbicides, insecticides, fungicides, and costs associated with drying, storage, and crop insurance. Now total direct costs for soybean production in Mato Grosso in 2023 was $390 per acre.
• 12:05
  It was $295 in Illinois. Because the average yield is about the same in Illinois and Mato Grosso, those numbers are fairly solid. However, Mato Grosso's per acre corn yield is roughly half that of Illinois. On a per acre basis, direct costs for corn have been higher in The United States relative to Brazil, but adjusting for differences in corn yields by examining cost on a per bushel basis illustrates a cost advantage for Illinois producers that has been primarily driven by higher fertilizer costs in Montegrosso. The costs are a dollar 98 per bushel in Illinois and $2.24 in Montegrosso.
• 12:47
  There were two other questions asked at the end of yesterday's webinar I thought you'd find of interest. Both were about Brazil's ability to compete in the export market. The first asked, given the historical trend, how much more farmland could come into production over the next five years? Joanna had an answer.
• 13:06
  Speaker 3: Yeah, I mean, we know that expansion, when you talk about that, there are a lot of factors at play land availability, also international markets, the Brazilian currents, also the demand from China. But there are some projections that indicate that Brazil could increase at least in the next decade, 30% of the production of corn and 20%, twenty five % the production of soybeans. If you look just the availability of land in Brazil, there is still new agriculture from here in the Northeast Of Brazil, in some parts of the Center West States. There is a study from the in BRAPA that show in BRAPA is the Brazilian research corporation in Brazil is equivalent to INTA in Argentina. And this study shows that there is a potential to convert 70,000,000 acres from degraded pasture land into cropland.
• 14:09
  Plus, there is the potential to increase the double cropping in Brazil. Remember, when you talk about soybeans, soybeans in Brazil are planted during the summertime and the corn is planted during the fallwinter time. There is one additional 40,000,000 acres that could be incorporated to the Brazilian agriculture with just double cropping. I mean, occupying the soybean area nowadays to plant corn. So, but I would say that the international demand, domestic demand will give us this answer.
• 14:45
  But in terms of land, there is availability for that.
• 14:49
  Speaker 1: Finally, and this surprisingly was the last question asked, the audience watching the webinar wanted to know if the tariffs deployed by president Trump presented any opportunity for Brazilian farmers.
• 15:01
  Speaker 3: Yeah. I was surprised that we have not received a question related to tariffs today. For sure, I think these tariffs will open a new window for Brazil to explore even the European Union and also in China. You remember 2018 when the trade war started, Brazil was not so much important international market related to corn. China opened its market to Brazilian corn in 2022.
• 15:34
  So, now I would say that Brazil will be able to get even more room in the international market, especially in corn, given all this situation and also the demand from from this product, either from European Union or China.
• 15:53
  Speaker 1: If you would like to watch the PharmDoc webinar highlighting the current season corn and soybean production prospects across the South American continent, it is available now on YouTube. Look for it at YouTube dot com slash at PharmDoc. That's youtube.com/the@signfarmdoc. Eric Snodgrass is now here. He is with NutriNet Solutions in Dagrabble.
• 16:29
  Hi, Eric. We have a lot of ground to cover, and we'll need to start just today. Severe weather tonight, I believe, across the area. Can you tell me about what that looks like, maybe throughout the Midwest?
• 16:43
  Speaker 4: Yeah. This is a pretty powerful system. Just in the last few days alone, it dumped up to four feet of snow in the Sierra Nevada Mountains. It's now produced a very large dust storm in Texas where things continue to be dry. And we're gonna be watching all day long for this storm system start to move toward Missouri, Iowa, and Illinois.
• 16:59
  Now here's the thing about this storm. It's it's gonna be a it's gonna be a day of waiting here on Friday under very, very windy conditions. We've got high wind watches, advisories warnings, and then red flag warnings which are all kind of associated with the really tight pressure grading around this system which is what's kicking up these winds. So here it is. Starting around, let's say, it'd be late in the evening, maybe 09:00.
• 17:20
  They're gonna be crossing the Mississippi going right through Central Illinois by ten, eleven o'clock, maybe being over toward us here in Eastern Illinois. Maybe between eleven and midnight, that's the current timing. But, again, we have to wait and see when the storms pop up on radar to see how fast they're gonna move. The real issue, Todd, is that the atmosphere is so cranked right now, so strongly forced that there's likely going to be the risk of some of these storms to rotate. And that means these they could produce tornadoes, but also straight line wind damage and hail.
• 17:49
  Now what's interesting is, know, all of that being said, that gets a lot of folks concerned and worried, and we just need to be cautious with this tonight, but it's gonna be fast. It's not like this is gonna be hours and hours of storms. It's it's gonna blast through us and just as it comes through bringing that risk. So I'm I'm quite concerned about this evening. We're under a moderate risk of severe weather.
• 18:09
  That's four out of five on the storm prediction center scale. And then tomorrow, the severe weather moves down until, like, Mississippi, Alabama, Georgia. So, it's a potent system. And on the backside, there is some snow that'll hit the Upper Midwest, which has been in a snow deficit this winter.
• 18:23
  Speaker 1: Well, in the Upper Midwest, that's good news because I was thinking we're gonna get warm again tomorrow.
• 18:28
  Speaker 4: I was kinda looking forward to good Saturday, are we? Yeah. I mean, the the temperatures behind this one don't drop off like a rock. That may be about a week from now. We have another system that's gonna come, next Wednesday, Thursday.
• 18:43
  Again, out ahead of it, it's gonna build up to these very warm conditions again. It'll be behind it that, things drop pretty quickly. That one made make some snow coming out of Nebraska into Iowa, Wisconsin. I cannot rule out that we might see a little bit of the white stuff here just yet. Hopefully, the time we're talking next week, we'll know the answer to that.
• 19:00
  But but here's the thing, Todd. These systems, these spring storm systems, they're not fun. Incredibly windy, a lot of severe weather. They're not fun. But if we could get more of these between now and the first two weeks of April, that would be that would be what we need to beat back all of this talk that you and I have been having for the last, I mean, several months about summer twenty twenty five drought risk.
• 19:27
  And so I would call this system number two in March. The first one was just after commodity classic. I need I need four or five more, to be honest with you. If we don't wanna worry about drought, keep cranking these systems through.
• 19:38
  Speaker 1: And what does the March, end of, April look like?
• 19:42
  Speaker 4: Well, I I I think March is gonna stay active. No doubt about it. But there was an interesting comment that one of my friends and colleagues who's a climatologist out of Nebraska said the other day. He said, text me last night. I'm driving home from Wisconsin.
• 19:54
  He says, I'm sitting on my porch. It's like 78 degrees. I'm having a beer at 08:00 at night. And he goes, remember the last time we did this? And I was like, oh, shoot.
• 20:03
  Don't say it. You're don't you say it. But 2012 had a really warm March, Todd. And I'm not drawing a parallel. So don't please, we we just have to be careful not to go, oh, crap.
• 20:12
  Snodgrass said 2012. But it's just something to think about that if if these systems don't continue and if March and April don't bring back the precip, we have subsurface soil moisture deficits that have not been undone yet. And that gives us an increased risk for summer drought. I'm talking July and August though. So what do I see?
• 20:30
  I don't like the April, to be honest with you. There's been some longer term signals that while we have a lot of mild days here in March with only brief cool downs, looks like the first week to ten days of April has a cooler bias to it at this point, and that's gonna slow some of us down. But the question is, do we blow the doors wide open after that, or do we see tight windows? And I think right now, I'm gonna air on the side of tighter windows through May. If there's drought risk for us, I think it's in summer, like July and August.
• 20:57
  Speaker 1: Well, tell me about that. Is there any new long range forecast that can help you out?
• 21:01
  Speaker 4: There is. And there's a suite of models run-in The US and Canada. They're called the NMME. That's what the suite of models is called. So the NMME just came out and dropped a bomb over the Central US.
• 21:12
  Now what do I mean? Hot, like very hot and very dry. It's kind of using the dying La Nina and it's kind of using these other factors like the low subsurface soil moisture to just really pump in the heat and drop. Here's the good news, Todd. Okay, listen, this model is not very good.
• 21:29
  So we don't we don't have to look at it and go, oh, this is what it's gonna be. It's not very good. The European model, which is much higher performing, is much, much, much less in terms of the excessive heat and drought stress starting in the Western Corn Belt coming toward the Mississippi by July. So I am not overly overly worried about it yet, but, boy, there's gonna be a lot of folks that are gonna use those model runs to tout a narrative to tell you to get really long in the markets. Just to be careful when you see that because that model run was quite extreme, and it's not a model that I tend to trust.
• 22:01
  Speaker 1: What about South America at this point?
• 22:02
  Speaker 4: Well, there's drought in Eastern Brazil. The safrinha crop is in in Mato Grosso, but the drought area in Eastern Brazil is the place to watch. If we see the drought reform there or get worse in early April, that could ding about 15 to 20% of the safrinha corn. And if that's the case, that could be time to write about the day we're gonna know how many acres of corn are going gonna go in here in The US and, how the start of the season will be and the worry about drought. So big storms in Argentina, no major problems in the Center West to be found.
• 22:32
  Southern Brazil seems to be doing okay. Just watch Eastern Brazil in early April to see if they dry back out again. That could be a nice little bump in a market activity if it's hitting enough acres.
• 22:43
  Speaker 1: Hey. Thank you much. I appreciate it.
• 22:45
  Speaker 4: Yeah. You
• 22:45
  Speaker 1: bet. Eric Snodgrass is with Nutrien Ag Solutions joins us each and every Friday here on the closing market report that comes to you from Illinois Public Media. It is public radio online on demand anytime you'd like at willag.0rg. I'm extensions Todd Gleason.