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Mar 10 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the Land Grant University in Urbana Champaign, Illinois, this is the closing market reported as the March 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Kurt Kimmel from agmarket.net, and we'll hear from Frane Olson, agricultural economist at North Dakota State University Extension. I discuss with him how to use bins and the cost of storage on the farm. You'll wanna hear that.
• 0:29
  And along the way, I'll remind you to tune in to our companion station tomorrow evening. That's WILL TV channel twelve at 7PM when tractor wars, the documentary will air. You'll know if you've been listening for a while that last week the author of the book Tractor Wars, Neil Dahlstrom, joined us at the all day Ag Outlook at the Beef House in Covington, Indiana. And tomorrow night, we'll air Tractor Wars on our companion station. Again, that's at 07:00 Tractor Wars on WILL TV channel twelve.
• 1:04
  Now stay with us for today's closing market report here on Illinois Public Media. It is public radio for the farming world online on demand at willag.0rg celebrating forty years of this program and some 10,000 episodes.
• 1:24
  announcer: Todd Gleason services are made available to W ILL by University of Illinois Extension.
• 1:29
  Todd Gleason: Just as an FYI, if you missed last week's All Day Ag Outlook, the audio is on our web page at willag.org, w I l l a g 0 r g. It's in the blog or the highlighted areas from, the FarmDoc team. You'll see it says twenty twenty five All Day at Outlook right there. So you can go ahead and click on that. You'll find the whole of the day there.
• 1:52
  Remember, there are no PowerPoints, so these are just audio and you can listen to them in the car or the tractor or just while you're sitting at home. Now let's turn our attention to the marketplace. What happened on this Monday? May corn at $4.72 up two and three quarters. July quarters higher at $4.78 and a half, and December at $4.55, 3 quarters higher.
• 2:12
  May soybeans off 11¢, settled at $10.14. July 10 20 8 and a quarter, down 10 and a half. And November, soybeans at $10.17 and 3 quarters, down seven and three quarters. Bean meal, $2.10 lower. The bean oil, down a dollar 16.
• 2:27
  Wheat futures, soft red, up 11 and a quarter. Settlement price there at $5.62 and a half into May. July at $5.77 at a quarter, up eleven and three quarters in the hard red harvest month July, up 14¢. It settled at $5.91 and a quarter cents. Live cattle futures at $200.57 and a half cents, up 30¢.
• 2:47
  Feeders $2.77 92 and a half, down 22 and a half. And Lean Hogs eighty eight dollars thirty cents, up 95¢. Crude oil a buck lower for the day. Diesel fuel down 3 and a half cents. And gasoline at $2.09 and 9 tenths of a cent, a penny and 7 tenths of a cent lower on the wholesale price, the RBOB.
• 3:06
  Thank you much for being with us today. Kurt Kimmel from agmarket.net out of Normal, Illinois. I bet you would like to be out of the office on a beautiful Monday afternoon.
• 3:18
  Curt Kimmel: Go ahead. Oh, man. Yeah. This weather forecast is just perfect in through here. If you just tell them to turn the wind the wind down just a little bit, Todd.
• 3:28
  Todd Gleason: Oh, it would be good to do that. So tell me what happened in Chicago today. I think there were a couple of interesting things that took place. Can you start with the soybeans? Yeah.
• 3:37
  Curt Kimmel: Soybeans finished lower on the day. November, soybeans actually had a little price reversal to the downside. This uncertainty on trade and the, South American crop coming online has really kinda kept the beans in checks. Spread activity, buying corn, selling beans, buying wheat, selling beans. Bean oil, down over a dollar.
• 4:06
  I think that's a little bit of spillover from the crude oil, the energy market, being a little a little softer in here. But beans has just kinda been, the anchor in through here. A lot of people are kinda, wondering why beans aren't a whole lot lower, and, the bean market's kinda in question here, particularly here if this tariff talk continues to escalate.
• 4:31
  Todd Gleason: So I did make note that, overnight, there were a 42 deliveries against the Mark's soybeans. J. P. Morgan customer apparently delivering the Bunge House account, was the one who stopped that. That was interesting to me.
• 4:45
  Also, I wanna talk a little bit about the corn market, for the day too. Because while beans were off, corn managed not to be too bad, and wheat futures were higher for the day. What'd you see in those two places?
• 4:58
  Curt Kimmel: Yeah. The the coal market held in there. The thing is on the managed money position, they're now long about a little over 200,000 contracts. So they liquidated over a hundred, a 20,000 contracts. And and but back to a more manageable, level.
• 5:17
  Did see a 22 26,000 ton corn sell to Japan, and there was a 95,000 being sold at no. But that did not, help the market. Shipments, we continue to ship out corn. We shipped out 1,800,000 metric tons. They were looking for about 1.2, so these corn shipments are strong.
• 5:38
  These shipments were fairly good at 400 844 versus expectations of 650. But overall, the core market's probably putting in a low weather premium. As you look at that second crop in the Southern Hemisphere, that forecast is, starting to show a little bit of concern on on dry conditions there, Todd.
• 6:00
  Todd Gleason: Yeah. So we'll be watching that very closely, though. That continues to be a good sized crop tomorrow. USDA releases agricultural supply and demand estimates. And then I believe on Thursday morning of this week, CONAB, the counterpart to USDA and Brazil, will bring out their updates.
• 6:19
  You'll be watching both sets of those numbers, I suppose.
• 6:22
  Curt Kimmel: Yeah. We're kinda dialed in to maybe some slight changes, particularly on The US numbers. This demand situation, this tariff is just uncertain. I mean, there's just extreme uncertainty there. So I don't know if they're going to, move much off center there until, we move a little further down the road.
• 6:43
  But you're correct. We'll probably see if that South American crop, has a little bit more of a solid number as far as air production goes. But, whenever I say slight changes, watch out. There could be something happen, tomorrow, that could be a surprise.
• 7:00
  Todd Gleason: And then, because your team was out at Commodity Classic in Denver last week, I'm wondering when they came back if they had a better feeling for what US Farmers believe they will plant this year in terms of acreage. We have that USDA acreage report to look forward to at the end of the month. Corn.
• 7:21
  Curt Kimmel: I I I don't I I feel sorry for these guys that sell bean seed. I don't think they sold one bag, god. It's heavy, heavy corn. I yeah. They were really, surprised.
• 7:34
  There's a whole list of, different reasons on it, but, boy, this corn number could be fairly large.
• 7:40
  Todd Gleason: Does that tell you that you need to market earlier rather than later or that you can ride this one out for a while?
• 7:46
  Curt Kimmel: Well, I I tell you what. If you wanna be right and flexible, what we've been doing is putting in some price floors. That way, if we run into some hot dry weather and this corn runs to $6.06 and a half, you can, you know, manage that position to participate. But if these tariffs kick in, we have large acres, favorable weather, and we go back below $4, you've got some downside protection. So, these price floors are the best, strategy here to give you some flexibility and some extremely volatile markets that's gonna be coming at us, John.
• 8:22
  Todd Gleason: Thank you very much. We appreciate you taking so much time with us today, Kirk.
• 8:26
  Curt Kimmel: You bet. Take care.
• 8:27
  Todd Gleason: You too. Kirk Kimmel is with agmarket.net, joined us here on the closing market report for this Monday afternoon. You can hear it again if you'd like at willag.0rg or in your favorite podcast applications. Just a quick note about the weather today as Mark Russo is away, and we won't be talking with him at the end of this program. Taking a look at what's happening in South America, the weather looks like the end of summer there with temperatures in the mid to upper eighties across most of the continent, along with rainfall.
• 9:07
  About an 80% chance today and tomorrow, and then again on Friday and Saturday too in Brazil. The middle of the week will provide some rainfall maybe for Argentina, and temperatures will be slightly lower. But things look fairly decent for the crop there that is now maturing. I'm University of Illinois Extension's Todd Gleason. We're now joined by Frane Olson, agricultural economist with North Dakota State University Extension.
• 9:49
  He's in Fargo. Thank you very much, Frank, for being with us. We have a fantastic week for weather on tap here. Is it colder in the Northwestern Part of the Corn Belt?
• 10:01
  Frayne Olson: You know, actually, we're gonna have a beautiful day today. We're gonna be early
• 10:06
  Curt Kimmel: part of the week. We're gonna
• 10:06
  Frayne Olson: be in the low sixties, which is exceptionally warm for us. Unfortunately, the forecast right now is for potential blizzard by the time we get into the weekend. So welcome welcome to March in the Northland. You can have you can have sunny days in in sixties, and you can have a blizzard showing up in, a week later. So who knows?
• 10:26
  We're gonna have to watch this this new system coming through pretty clear carefully. But for right now, everybody is sitting back and then really enjoying the beautiful weather. Weather.
• 10:33
  Todd Gleason: It sounds a little bit like, trading tariffs and volatility in the commodity markets for that matter. So so let's do talk a little bit about that. We'll begin with tomorrow's USDA monthly World Ag supply and demand estimates. Will that include anything in terms of policy that has been set in place, and is there policy that should be included?
• 10:58
  Frayne Olson: Well, that's that's a great question. So the the USDA has a pretty hard standing rule that when they do their analysis, especially for the WASDE reports, that they consider the policies that are in place the time that they do the analysis. So if there are existing tariffs or if there are existing trade, issues going on, they will try and include those, but they're not gonna try and get into this speculation game. They're not gonna try and and say, well, if this were to happen, this what this is what it might look like. So we do not expect to see any major adjustments.
• 11:34
  Obviously, on the production side, we're we're done with that argument on the consumption side of of the ledger. We don't expect any any updates because of rumors or potential tariffs going on. I do think they might adjust export sales forecast a little bit based on, you know, what we've actually seen so far this marketing year, But we're really not expecting any major adjustments. When I look at what the, industry, the pre pre report or, yeah, the pre report industry estimates, you know, none of the private forecasters or or analysts are really expecting big changes. And so we have to keep that in mind.
• 12:15
  We will be watching the numbers, obviously, because there's always things that can change. But, right now, we're not anticipating any major adjustments in in the USDA numbers based on on, you know, discussions about, tariffs and trade wars and reciprocal tariffs and retaliatory tariffs and all the things we've been talking about the last several months.
• 12:35
  Todd Gleason: History with the Trump administration in its first go around tells us that volatility in the marketplace will be around, particularly for agricultural products as, the president has a tendency to want to talk about them. And that moves the marketplace. How should producers organize themselves as it's related to marketing their crops?
• 12:58
  Frayne Olson: Yeah. And that yeah. That's a really common question I'm getting as I'm finishing up my my winter meeting season here. Obviously, the the first concern is let's understand what's going on, what are the proposals, what are the potential implications. And then the follow-up to that, and then there's a lot of anxiety right now for a lot of the farmers that I'm talking talking to, not only to try and figure a plan or strategy for their old crop marketings, but also to thinking about new crop and new crop marketing.
• 13:24
  You know? And and the question is how do we given this volatility and given the huge level of uncertainty, how do we try to plan around this? And and I guess my my recommendation is I like to use the KISS rule. Keep it simple, stupid. Let's let's go back to some core basic strategies that we can we can pull out of the out of the bag for our our marketing plans.
• 13:44
  And and one of those is to recognize that number one, you as a farm manager are not fast enough to chase the marketplace. Things are happening so quickly. The volatility is so high that you can't chase the market. And and so the the challenge then is how do we try and get in front of this? And the simplest strategy that I have found and and in working with, again, farm managers as well as other industry people that are making recommendations to farmers is sit down, put a plan together, and say, at what price would you be willing to sell more?
• 14:17
  K. And and a lot of that's obviously based on your cost of production, the cost of storage. Those are things that you know and have have much much more direct control over. So given those levels, at what price would you be willing to sell additional crop? And then put the orders in ahead of time.
• 14:34
  If you wanna work with a broker and do futures only, that's great. If you wanna work with a processor or an a local elevator and do a cash based sale where you lock in basis as well, you know, that's great. But put the orders in ahead of time. Pick those values and say, at this price level, I would be willing to sell x thousand bushels and put the order in ahead of time. And then if those price levels are tripped or those targets are placed, are hit, at least you made some sales, and you can do that ahead of time while you're you're calm and and have a chance to be able to do the math on it ahead of time rather than getting caught up in the emotion of the moment and in the kind of the the excitement of what's happening or the fear of what might be happening.
• 15:18
  Now the challenge with that strategy and it can be adjusted, obviously. You can adjust your plans as you go forward if depending upon what happens and conditions are changing. But the the temptation is, alright, once you get close to those price levels, I know of several farmers that would would suddenly say, well, we're gonna pull that order. We're gonna increase the order just a little bit higher. And, unfortunately, sometimes those those orders never fill.
• 15:40
  So just be very cautious. If you if you put it together, and in a calm moment, you said, I would be willing to sell more at this price level, it reaches those price levels, you've made those sales. So rather than you chasing the market, you're putting the targets in and let the market come to you.
• 15:56
  Todd Gleason: Now because only 15% of farmers use futures trade in any form, can we talk just a little about what to do as it's related to the cash side of this, and how they might manage some of those cash sales. Particularly, I wanna know about, you know, fall delivery versus futures months. I think it was you and I that had a discussion and and you told me that that the cost of keeping grain for a month, if rather than using your bin or if you wanted to know what your bin cost, just just take a look at what your elevator's charging you. And and that that was probably pretty close. I wanna know if that's if I'm accurate on that.
• 16:45
  And then given that, what does the marketplace tell you as it's related to making cash sales for fall or futures delivery for new crop for corn and soybeans both?
• 16:58
  Frayne Olson: Okay. So so break this into pieces. So first, yes. When I when I have done the math on calculating at it from a farm manager's perspective, calculating the cost of holding grain on farm. And the big challenge is how do you how do you cost out the bins themselves.
• 17:14
  And I guess in when I'm doing my analysis, I'm saying, well, you already own the bins. You you probably put those up to try and increase harvest efficiency, and so it's not something that, like, a storage enterprise or storage function would have to pay for. So if we exclude the cost of the bin themselves and you just look at what is the cost of of carrying the inventory, as far as an opportunity cost on your interest, on on the money you have invested, when you think about the cost of loading and unloading that bin, potentially some extra transportation costs from the bin into the elevator. When I look at the at what we call the marginal cost, the additional cost of storing that grain for an additional month, The cost at the farm level are very similar to the costs at the elevator level. And so if you're looking for a really quick proxy, if you look rather than going through all the math yourself, if you wanna look for a really quick indicator, I usually point to what is the cost that the elevator charges you for for their storage.
• 18:13
  And that's gonna come pretty close to the cost that you're gonna have on farms. So that's a really quick reference point. Now coming back to old crop sales versus new crop sales. Well, if you're looking at new crop sales, and in in most cases, you're thinking harvest delivery for that. So if you're looking at harvest delivery, the additional storage costs are gonna be, you know, basically zero.
• 18:36
  You're just delivering directly into the processor, into local elevator. Now if you're thinking about pricing, for example, old crop grain to be delivered in, let's say, you know, July or August, yeah, then you need to start thinking about, well, what's the price difference if I would deliver today versus the the prices that I would receive if I delivered in, let's say, in August? K. And in that case, yes, the futures market will pay for some of that storage cost, but typically not a %. So the other part of that is to look at is there a change in the local basis levels.
• 19:13
  So, yeah, we can look at the carry in the futures market. As you as you look at the deferred months in the futures, they're typically higher than they are at for the nearby, which then is an indication of how badly or, essentially, what is the futures market willing to pay for storage. But there's also the cash dynamics to it, and and so there can be, improvement in basis levels depending upon, for example, when a processor needs to have additional grain delivered. There's also some differences, especially up here in the North when we get into seasonal shipments. The export market out of the PNW tends to be very, very seasonal, and so we tend to have some basis improvement at harvest or shortly after harvest to try and get those trains filled and move through the system.
• 19:57
  So looking at the differences in the cash price, and does that add that additional, improvement in cash prices cover for your cover the cost of storage. In some cases, they do, in some cases, they do not. But we wanna separate marketing old crop grain from marketing new crop grain. And if you're marketing new crop grain and you wanna deliver harvest, that's pretty straightforward. If you're looking at at pricing new crop green for delivery later on, then it gets a little bit more complicated because you have to bring those those on farm storage costs back into play.
• 20:34
  Todd Gleason: That was my discussion point there was that I was thinking if I had a bin, do I use it at fall? And how do you make that decision?
• 20:46
  Frayne Olson: So, again, in my thought process, the if you have the bin, whether it's paid for or not, if you have the bin, the bin is going to be there. That's in economics term, we call that a sunk cost. Whether you use it or you don't use it, that cost is there. And I know for a lot of farm managers, the reason they've put up that additional storage capacity is, again, for harvest, efficiency. It's it's a lot quicker and easier typically to go from the field to your own bin versus going from the field into a a grain elevator or a processor, especially during harvest and the peak of harvest.
• 21:20
  So a lot of that is is you know, that investment is to try and keep the combine flowing and to make sure that the grain doesn't back up. Well, once you have it in the bin, all of a sudden now the math changes. It's, well, how long do I store it? And then you look at what is the additional cost of storing the grain versus what is the additional value or price that I can pick up in the marketplace. Essentially, is the market paying me to store grain and deliver later to try and regulate this flow of grain through time?
• 21:50
  Or are are they saying, no. We we want the grain to flow today. We're not gonna pay you an incentive to go to deliver in the future. If you wanna put it in the bin and store it, then you're then you're speculating the cash market, which is fine, but just recognizing that you're speculating the cash market and that the futures market or we should prephrase. The futures and the local cash market are not gonna pay you just to store the grain, and deliver it later.
• 22:15
  Todd Gleason: Thank you very much, Frane. I appreciate it.
• 22:18
  Frayne Olson: Always a pleasure to visit. Always something new to talk about.
• 22:21
  Todd Gleason: Indeed. There is. Frane Olson is with NDSU. He's an extension agricultural economist on the Fargo campus there. Just a reminder that tomorrow, USDA will release the monthly World Agricultural Supply and Demand estimates.
• 22:35
  That happens at 11AM central time. And then tomorrow night, Tractor Wars will air on WILL TV channel twelve. This is the documentary based on Neil Dahlstrom's book called Tractor Wars. We had a book signing with Neil last week at the all day Ag Outlook. Again, tomorrow night you can catch Tractor Wars on WILL TV channel twelve at 7PM Central Time.
• 23:02
  You've been listening to the Closing Market Report on this Monday afternoon. I'm the Illinois Extensions, Todd Gleeson.