Latest / Commodity Week / Feb 06 | Commodity Week

Transcript

Feb 06 | Commodity Week · Commodity Week

• 0:00
  Todd Gleason: This is the February 6 edition of Commodity Week.
• 0:08
  Announcer: Todd Gleason's services are made available to WILL by University of Illinois extension.
• 0:14
  Todd Gleason: Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Aaron Curtis. He's with Midco. In Bloomington, Illinois, Greg Johnson joins us from TGM in Champaign, Illinois, and Jim McCormick is here at agmarket.net.
• 0:28
  He is in Barrington, Illinois. Commodity Week is a production of Illinois Public Media. It's public radio, the farming world. We're online right now at our website, willag.org. You can register for the All Day Ag Outlook.
• 0:42
  It's the thirty fifth annual event. It's coming up at the Beef House in Covington, Indiana. Many of the analysts that you hear regularly on the air at W I L L will be there along with the bulk of the farmdoc team and a few surprises as well, like Neil Dahlstrom, who is the author of Tractor Wars. Oh, and that Tractor Wars documentary that PBS in Iowa produced will be airing on W I L L TV channel twelve in the month of March. If you buy one of Neil's books, Tractor Wars, and bring it with you, he'll be there to do a book signing along with Scott Irwin, who will sign his Back to the Futures books.
• 1:21
  And Jonathan Coppas has a couple books as well. It's all at willag.org and the information about the All Day I Got luck, we hope to see you there. The cost is just $40. That's for the Tuesday, March 4 event. Now let's turn our attention to Commodity Week and get a few things we should discuss from our panel of analyst, Jim McCormick at ag market dot net.
• 1:41
  What's on your list this week?
• 1:44
  Jim McCormick: Well, a couple things. I think first thing, we're definitely gonna talk about tariffs. I mean, we know how the market started out on Sunday, Todd, a lot of volatility, then kind of a little bit of a ceasefire, but a lot of uncertainty still hanging with us as well as China. And then maybe a little bit about the WASDE report coming out next week. We're not expecting very big adjustments on this number, but probably something we ought to talk about.
• 2:04
  Todd Gleason: Greg Johnson from TGM Total Grain Marketing.
• 2:07
  Greg Johnson: With the carryout being, tightened up to 1,500,000,000, I think a lot of attention is being focused on getting enough acres of corn planted, this coming spring and, you know, what number will it take, what number will the market feel comfortable with, and what should farmers do ahead of that March 31 report.
• 2:26
  Todd Gleason: And Aaron Curtis from Midco.
• 2:28
  Aaron Curtis: Trying to follow the money this week, Todd. The funds continue just to plow money into the corn market and, you know, we're not too far away from, you know, record length and, corn overall position. And you compare that to last summer, we're up, you know, almost 750,000 contracts from a record net short last summer to, you know, approaching net long here. So, should we be concerned at all that the funds got this much length and, what may not trying to be a devil's advocate here, but what may spook them out of that position here as we move forward?
• 3:02
  Todd Gleason: Okay. So I want to start with the carryout at 1,500,000,000 bushels, Greg Johnson, and then rolling that forward into the number of acres. So let's start with 1.5, and the stocks to use ratio for this year. And maybe, Aaron and Jim, you can jump in on this somewhere along the lines because it's, what, at about 10%, Greg, stocks to use ratio. And that feels like 9.9 or something along those lines.
• 3:33
  Right? Yeah. So I think that's kind of a comfort level historically, 10% right midpoint kind of place, and I I hear a lot about the 1.5. I'm not sure that it's something other than, you know, we're 500,000,000 below or 700,000,000 below where we were last year that it's something to jump up and down about. Make the case for me that it is or that it's not or it's a midpoint.
• 4:01
  I I'm just not sure what to make of it.
• 4:03
  Greg Johnson: It it's certainly not burdensome. When we started, I think when USDA came out back in June or July, the expectation was 2.1, maybe even 2.2. So the trend is and every month since then the carryout has gotten smaller and it got smaller again this month. So the trend is your friend theory would say that maybe we could tighten it up even more. And even if we don't, even if 1.5 is as tight as it gets, we really don't have the buffer that we've had the last two years.
• 4:36
  Each of the last two years, the market did not get too excited with acreage or weather because we had a 2,000,000,000 bushel buffer roughly and now we don't have that. So I think the market may be more in tune or attuned concerned with how many acres we do get planted because we basically have upped the demand usage to 15,100,000,000 bushels. And so now we have to get the acres and yield to get a 15,100,000,000 bushel crop.
• 5:07
  Todd Gleason: And how many acres do we need to do that?
• 5:09
  Greg Johnson: I think 93,500,000 acres with a trend line yield would get us 15,200,000,000 bushel. So we need at least 93.5 and probably wouldn't hurt to have a little bit more than that just as a little bit of a cushion.
• 5:23
  Todd Gleason: So here here's the the secondary question then. And, Aaron, maybe you can pick up where where and anybody can jump just jump in here because I I'm trying to explore a topic. So if you go back to May of last year, and I pulled the WASDE, from May of last year, and it was, what, 2.1, two point two billion bushel carryout. And we had a and we were in that five twenty range, 5.1 I think maybe for December corn. I'm wondering what's missing at this point this year, at this time, when we're down at 1.5 in the old crop and how and even lower for new crop?
• 6:09
  Greg Johnson: Well, I'll just jump in real quick and say that we were still in our transitioning from $6 corn two years ago, $5 corn a year ago back down to $4 corn. So the prices were higher even though, the carryout at 1.5 was roughly the same, but I think it's because we were still trying to work off of those higher prices that we had seen the previous two years.
• 6:32
  Todd Gleason: Yeah. That was that was the answer I was expecting that it was it was about the transition and not about and not as much about what the norm would be or the long run average would be. So, Greg, I think what you're telling me is that now we're looking at more long run average, four sixty at 1.5. Well, we're we're there right now.
• 6:53
  Greg Johnson: Exactly. So we we just can't we it's not that we can't afford a hiccup, but a hiccup would tighten it up even more. So I think the market is gonna be more responsive to perceived problems, whether it's less acres, a problem with our let's say, we have a wet spring, let's say Brazil's double crop corn gets planted three weeks late and they run into some problems. So any issue, I think, might elist a better, a more pronounced response in the price than maybe what we would have seen a year ago or even two years ago.
• 7:27
  Todd Gleason: Okay. So now I'm gonna try to make things really simple, and I know this isn't quite the way it works, but a limit mover 40¢ in corn probably should be worth a one or or in this should be, about a 1% change in in the stocks to use ratio or 150,000,000 bushels. Right? Or thereabouts, I think. That's the least the way I think about it on it.
• 7:53
  Quite sure that it's all in that space, but it's it's that that's where I think. And the further you get away from it, the the bigger the changes are because the more the more money you need to try to move things back to center. So we're at that tipping point. I guess that's the way I'm going to explain it. Aaron or or Jim and maybe, Aaron, I'll start with you.
• 8:13
  Do do you have a different view of of what I've tried to lay out? And I'm no analyst, but I'm I'm trying just to to get us to a center here as to where we are, and what we might look forward to because I'm hearing lots of different versions of where this marketplace is today.
• 8:36
  Jim McCormick: There's two things, Todd. The first thing on acres. Okay? We're gonna come into so the crop acreage number says here in February, we're doing the insurance. There we're talking 93 like like John must have 93,000,000 acres.
• 8:51
  I think when it's all said and done, don't overthink it. We're gonna be pushing close to 95,000,000 acres, if not more. Part of it's the rotation. Just two years ago, when you look at the amount of acres we planted in The United States, we were pushing what 94,600,000 acres of corn. Okay.
• 9:10
  So just the rotation is going to bring us back toward 94.6. The acreage or the lack of profitability, we just had our conference down in Nashville and almost every farmer down there said the same thing. I can't make money on beans, corn gets interesting, it costs more, but I've got a better shot. So I think you've got the acres right there, but it's all gonna come down to weather. Eric Snodgrass is still a little bit nervous about that dry you know, about the current weather patterns we've seen this winter.
• 9:39
  And if we do not transition away from it, it potentially opens up a risk for dryness issues, especially in the Western Corn Belt as that drought that's been raging down to Mexico creeps its way further North and East. So our group's looking for big acres right there. Cotton acres also look like they're not gonna be there from our clients down in the South. They're all saying they're gonna plant more corn as well. So I think you're going to get the acres.
• 10:03
  As for the pricing we're at for the old crop right now, the funds went from this massive short position, Todd, to this $350,000 contract long position. When they did it, the farmer sold massively hard into it. Now you look at the commercial position, it's one of the biggest shorts they've had for this time of year in the last ten years. So the way we're looking at it, the way I'm looking at it is we've kind of hit at equilibrium. We've the best estimates our research has is we've got 30% left of the corn crop to sell.
• 10:34
  And I would guess nine out of 10 farmers are not gonna sell that 30% until July 4 weekend and they see how this year's crop, spring crop looks. On the other hand, the end users have got all their needs covered through fourth of July into so they're sitting on the high you know, sitting on the sidelines. It's all going to come down to the funds. If the funds want to add to a record position and continue to plow this higher, they're going to bid it tied into a vacuum. And if we stall getting our crop planted too wet, safrinha crop shrinks, I think this market screams a lot higher.
• 11:09
  On the other hand, we get into a trade war battle or in essence, the funds just get out for whatever reason, they're going to sell off into a bid like the cattle market did and there isn't going to be no one to buy that offer if they decide to get out. And you can see a pretty quick 50¢ break. So it's really going to come down to the funds. But right now, at these price levels right about $5 I would say we're at fair value for what we know at the moment. But the weather in the spring is going to have a huge direction you know, determining factor which direction we break out from this $5 level.
• 11:43
  Todd Gleason: So simplified version for you is the only people left in the marketplace to move the marketplace are the speculators.
• 11:48
  Jim McCormick: Pretty much. I think the farmer is done for the most part and so is the end user. It's up to the funds, which is kinda scary because if they really wanna drive it, if your short corn is a speculator or have hedges on, it could really, you know if they wanna push us to all time highs, 450,000, I don't see a fundamental reason why they want to, Todd, but they're building some pretty big positions in some of these commodities. Are they playing the inflation game? Are they playing the fact that tariffs potentially that Trump wants to put on are inflationary?
• 12:18
  Are they playing the fact that if you continue to do ice rates and you continue to take the working force out of the marketplace that does the hard work, they're not replaceable. The only way you're going to replace it is bid up your pay and try to steal your worker from somebody else. That's inflationary. Is that part of the reason why the funds are bidding into these markets? Even though, like, on the beans, I'd say nine out of 10 people would tell you the beans probably shouldn't be trading here based on this monster world crop.
• 12:47
  But yet here are the funds reversing from a short position to a long position just like the corn did earlier in the year or late last year.
• 12:53
  Todd Gleason: Aaron Curtis, what's your view on the marketplace?
• 12:56
  Aaron Curtis: Well, we're obviously on the cash side. The cash tells a completely different story. You know, Nearby cash is very weak, especially along the river. I mean, a farmer since, well, you start with the December crop report and then it just got escalated during the January crop report and farmer has contributed a lot of the, his ownership back to the commercial side. So we've seen the end user pretty well comfortable like Jim said.
• 13:21
  I don't agree, I guess, at the July. I think it's more like sixty days out at this point, but you see spreads, March made a new low here today. March, May bean spreads trading near full storage carry, nearby river values continue to be pretty weak, a lot of cash carry in that river system right now. So definitely a different tone when you look at the cash market. I think there is opportunities for the cash market to get better as we move forward because you look at the balance sheet demand continues to be pretty robust.
• 13:50
  We've got eight fifty million bushels of corn on the export side that still needs to be sourced based off the export sales report this morning. Ethanol numbers here on Wednesday were shockingly good and we're running about 90,000,000 bushels ahead of last year in terms of cumulative pace so far. So that's a positive story even though ethanol margins out the curve look a little bit weaker. So opportunity for basis to get better I think as we get into the spring, the farmer goes to the field, but definitely been a different opinions between what the cash market's done and what futures are doing. So we'll see kind of who wins that battle here as we move forward, but the funds continue to add to the length and they got the most money.
• 14:38
  So until that changes, it looks like the futures market is going to continue to stay well supported. But I would agree with Jim, I think the velocity of sales from the farmer is going to slow down greatly. We've already seen that here over these last couple of weeks, still buying a little bit of stuff on up days, but those volumes are continuing to get less and less. And I think that hopefully offers a little support to the cash market here as we move into the spring.
• 15:05
  Todd Gleason: Greg, anything to follow-up on in this part of the discussion? And I'd say that you started us down this rabbit hole, but really, it probably was me a little bit. So so so so what what have you made of it so far?
• 15:17
  Greg Johnson: Well, I think they hit it right on the head. The the funds, started buying corn back in September, October, and they're almost to a record length and the funds by their long almost 2,000,000,000 with a B, 2,000,000,000 bushels of corn, and the farmers sell millions of bushels, but the funds buy billions. And so in the short run, the funds are going to win out. And as Jim said, whatever the funds decide to do, that's probably what we're going to see in the short run. And farmers are 70%, seventy five %, eighty % sold and they were kind of kicking themselves because they sold too soon in their minds.
• 15:54
  So they don't want to make that same mistake and they're probably going to hold on to that last 20% until we see probably pollination. They may hold on to it into the summer. So, yes, we've got, a vacuum in here and we could move this market, you know, with a 1.5 carryout. We could see some pretty good swings.
• 16:13
  Todd Gleason: Well, let's talk about what farmers should do. I think you've all agreed that farmers are unlikely to do anything with old crop. I won't ask you what they should or should not do, but let's turn your attention to new crop. And I'm going to ask, should they make a sale and up to what level so that if they need to make catch up sales, where where do you think they should be in? I I guess, I'll start with Greg, you on that one and then move, to Jim and finally Aaron.
• 16:42
  Greg Johnson: I think they should have at least 20% sold flat price, and I hope that's the lowest sale they make all year. But I'm not real, you know, and that doesn't mean I'm negative corn. The fact that they're only 20% sold means they still have 80% left to sell. And I think I want to wait and see, a, what the funds do, b, what the South American double crop corn situation gets off, what kind of start it gets off to and C, the acres report, I kind of agree it could be $94,000,000 plus, but we won't know that till March 31. So we've got six weeks before that number comes out.
• 17:16
  So I think we've got a little bit of time here to see if this market can go a little bit higher. So I'm content to be 20% sold and wait and see what happens here over the next six weeks.
• 17:25
  Jim McCormick: Right now, I think officially we're 25% sold with in the futures market, and then we've got another 25% protected with some options. I'm I like the 20%, twenty five % sold. If those are your worst sales at these levels, congratulations. It meant it's gonna be more likely gonna be a good year. I am trying to spread some risk off though, Todd, going into the report at the March.
• 17:48
  I'm also a little bit leery about how the trade war can happen. Trying to trade this trade potential is almost insane. I mean, when you look at a crop report, Todd, you know how it is. The crop report comes out and you don't know what it says. You just see how the market reacts and it moves.
• 18:10
  It feels like we're on that kind of a move every second of the trading day because president Trump being he likes to use Twitter or x as well as make comments constantly. You just don't know when you're gonna get a comment out of the blue either pro you know, that could be pro markets or negative markets depending on what it is on these tariffs. So how I'm encouraging clients to just kind of mitigate that risk, go out, use that May short dated puts. It puts a floor in place. If we get big acres, like I said, I'm anticipating big acres, you've got it floored.
• 18:43
  If this trade war gets ugly fast, you got a floor. But on the other hand, the mark the funds decide they wanna just keep pushing this market higher because that is their goal. You didn't spend a lot of money, but you did have some protection through the report and into the springtime.
• 18:57
  Todd Gleason: And, Darren, where do we stand on new crop sales?
• 19:00
  Aaron Curtis: Well, I think the 25¢ inverse we have between March and these is always a limiting factor for the producer. Right? So that always kind of stalls everybody on wanting to sell any more new crop, but 10% sold at this point. But as an average across the Midwest, it's much less than that, right? Maybe 3% to 5% has been sold at this point.
• 19:22
  So I think the farmer has been pretty patient and I would assume they'll continue to do that. But up around this between this 4.8%, four point nine zero % area on Dec corn, probably add to that sale a little bit, but really would like to get into that 25% to 30% sold area by the time you get into that April through June timeframe when you typically see seasonal charts kind of peak out a little bit. If you've got a seasonal average price program that your elevator offers, I'd throw a little bit of bushels in that because that usually is a strong performer year over year. So trying to be a little bit patient right in here, but still looking at that, you know, spring, early summer timeframe to get to that 25% to 30%, sold. So wanted to be a little bit, patient right here, Todd.
• 20:13
  Todd Gleason: On the volatility side, I'm wondering how much of an issue soybeans might be, Aaron, for corn and the volatility itself because it feels like it could remain an anchor though it's higher price than you thought it might be for sure at this time?
• 20:33
  Aaron Curtis: Yes, definitely beans have performed better than what most people thought. I mean, there's a lot of bearishness this winter and probably still is, even if Paraguay and Argentina have a little less crop, it looks like Brazil is going to be in that low 170 mark. So from the worldwide balance sheet standpoint, it's still pretty bearish here moving forward. Just so many unknowns obviously with the tariffs and what's going to happen to bean oil. I mean, bean oil market has been as volatile as anything here last week or so.
• 21:06
  So I would expect that to continue with the unknowns on biofuel policy and tariffs as well. So, I still think we'll get into sometime in late March and we'll worry about bean acres being too low. We always do, it seems like every year, we've already talked about how high can corn acres go that means bean acres are going to suffer as a result. So, I guess I'd still see November soybeans surprising us at some point with some higher values. I guess the question is from what level that comes, but I still think we're going to get into some scenario where we have to talk about needing some being acres as silly as that sounds with the world balance sheet.
• 21:48
  Obviously, a lot of unknowns here with weather not only in Argentina, but we're too wet in Brazil right now trying to get some harvest done. So that continues to offer some support. Just seems like back to that comment that Jim makes, it just seems like the funds want to be on the long side. I mean, look at what we've done here over the last couple of weeks, that's probably the most bearish market there is out of the three and they've been buying or short covering that market as well. So, it just seems like they want to be long here right now and despite what we may think in terms of world production and tariffs, but suggest that probably continue to be somewhat supported here in the short term as silly as that sounds on the bean side, Todd.
• 22:36
  Todd Gleason: You know, from the three of you, and I don't know who will have an answer for this, why why would we be supported at this point? Is that a the war in Ukraine ends? I I I I can't come up with an event.
• 22:49
  Jim McCormick: I think well, here's one. One could just be I think we do have some cold weather coming in, Todd. That that's part of it. I think that's part of today's but you can make a theory. And I don't know if I buy into into the theory, but the theory has been proposed or pushed out there, Todd.
• 23:07
  If you actually had an ending to the war, okay, what might happen is Russia's been theory people believe Russia has been selling wheat very aggressive below market value in essence to fund the war machine. You get the war ended, even though theoretically long run, you may bring more wheat back in production from the Ukraine, but you might actually have Russia back away from selling wheat so aggressively at a discount trying to buy friends that you can allow the wheat to rally. I don't know if I buy into it. I've heard people talk about it. I think some of it just maybe the fact that the funds are long corn.
• 23:45
  They were short beans. They're now long beans. Are they just are we just building them, getting out of this wheat position more because it's we're looking at it as a farmer, Todd. We're looking at the economic analysis. The funds are looking as an asset class saying, stock market's at all time highs.
• 24:01
  We have a President that may be putting tariffs on that could be inflationary. We've got a Fed that's maybe worried more about inflation, they've been saying the last couple of weeks. Gold's at all time highs. Let's just buy food because it is relatively cheap compared to at least some asset classes. And that's why they want to own it, not necessarily a fundamental reason, an asset class reason.
• 24:24
  Todd Gleason: Greg, can you tell me about the global numbers for soybeans and what that supply and demand, chart looks like to you?
• 24:31
  Greg Johnson: Yes. If you just look at The US, stocks report, you would feel very friendly prices, 9%, ten % stock to use ratio. But when you flip over to the world stocks number, it's 32%. So basically one out of every three soybeans doesn't have a home and is going to be stored. So that is very negative.
• 24:53
  And we've just addressed why the funds want to be long when we have this much of a world supply. And it's the inflation thing. It's maybe the flip side of the China tariff talk. What happens if they agree to some kind of a deal like they did the last time where they're supposed to buy so many billion dollars worth of U. S.
• 25:11
  Commodities that they didn't follow through on, but at least on paper, that would be psychologically supportive. So, but just strictly from a world point of view, there's plenty of beans out there and I understand Argentina's crop could get cut 3,000,000, four million metric tons, but I think Brazil probably could be raised by 2,000,000 or 3,000,000 metric tons and more just about offset any loss that we see in Argentina. So it's hard to come up with anything from a world supply point of view that's, extremely bullish.
• 25:40
  Todd Gleason: Are there beans in farmers' hands yet to sell?
• 25:42
  Jim McCormick: The best estimate I can give you, Todd, is around 30%. That's the best estimate our survey has found. But, you know, take it for what it's worth. It's just a survey.
• 25:51
  Todd Gleason: Aaron, Greg, you think it's that high?
• 25:53
  Aaron Curtis: That that's the number we're using. We we think 65 to 70% of the beans have been sold. So 35%, left to go here. And beans obviously a little typically are slower sell that last 5% to 10% of beans, right, typically get carried into the summer. So I think the farmer stays pretty quiet on sales here, at least in the short term.
• 26:16
  Greg Johnson: I would agree with that. And as we talked about with corn, that inverse between old crop and new crop has really not encouraged us real aggressive on selling new crop beans. You know, why would I want to sell $10.5 new crop beans when old crop beans are $10.75 that type of, you know, theory. So, you know, percent crop and probably 10% if that sold on the new crop is where we're seeing those farmers.
• 26:44
  Todd Gleason: So we have talked and we started with this. I think we should end with it, as well about the funds, the volatility, that speculation without others involved in the marketplace probably could push into both corn and soybeans, wheat as well. Aaron, if we follow the money and the funds, how concerned how concerned should we be that they're they're they happen to be the only players and they and could reverse tactics?
• 27:12
  Aaron Curtis: Well, we always kind of cost the funds when they're selling, right? But I think we need to take out opportunities when they're buying. And I would say, probably if you surveyed most producers, three months ago and said, you know, July corn at $5 and July beans at 10.9, most of them would take that all day. So I think we got to be careful right getting too friendly here with the funds at plus $380,000 contracts right that would make for a little bit of nervousness here going forward how much room do they continue to have to add. So I would continue to be somewhat proactive in ratcheting up sales as we if we continue to move higher here and try not to get too greedy with some of these prices, with the funds already haven't accomplished what they accomplished.
• 28:01
  So where is the next wave of buying come from if funds are already this heavily long?
• 28:09
  Todd Gleason: Jim, you just came out of the agmarket.netconference in Nashville. Did any of your speakers, Dan Bossy or anybody else, talk about the fund position? I know they did. But the reasons behind it and why they might change where that is or when they change?
• 28:26
  Jim McCormick: Well, I mean, the change is hard. I mean, the funds tend to be you know, in general, we talked about it. The corn one, like we've talked, it is near record position. We're not there yet, but they could be there very, very quick. And like I said, the reason being is some of it's inflationary, some of it is tight supply type of situation.
• 28:43
  But I think in general, though, we are a little bit concerned about it. I mean, the demand is where it all when it where the rubber meets the road. I mean, we've seen some very good demand for the corn market specifically here, okay, and good for the bean market. But we're in that window where we stop selling beans to the world, so that could change on a dime. The corn, the argument has been very good.
• 29:04
  We've sold a lot of corn, Todd, but a lot of it hasn't been shipped. Has it been front loaded? Did the government underestimate demand early, overestimate it mid, or they got to under you know, come back and cut it? Only time will tell. The thing what I've I've kinda learned from the funds that I've noticed is people are worried, Todd, about what are the funds going to do.
• 29:23
  And it's a situation, and you gotta ride with them until they pull the plug. But what you've gotta understand is when they pull the plug, the way we trade nowadays, it happens in what used to take months takes weeks. What used to take weeks takes days of liquidation. And what used to take in days, we do in hours, I. E.
• 29:41
  Look at the livestock market. When the funds went out, they just they run for the exits very, very hard. So I know a lot of people out there saying, well, the funds obviously aren't too concerned about the tariffs. Well, maybe they're not too concerned about it because they'll trade the tariffs tomorrow when they get it, but when they get that tariff or they get that sell signal, it is just so vicious. So that's why our argument is to try to defend profitability whenever you have a chance because, you give the funds an inch, it'll take a mile both ways.
• 30:11
  Todd Gleason: And your view, Greg?
• 30:13
  Greg Johnson: Jim just brought up a good point. At some point, we can't try to outguess the funds. We just have to say, can we make money at these levels and let's take a little bit of risk off the table. And I was just figuring, we're not that far from $10.5 for new crop beans, for example, I think we're $0.15 away from that. And if you multiply that by a 70 bushel yield, that's $735 an acre.
• 30:36
  And I think most farmers can make money at $735 an acre on beans. And I think the same rationale can be applied to corn. Farmers just need to say at some point, how much is enough? I mean, we're not saying sell at all, but we can't outguess the funds. So let's if we can make money, if we can sell $4.5 corn, for example, and we know what our APH is, does that make us money?
• 30:59
  And if it does, we probably should sell a little bit there.
• 31:02
  Todd Gleason: Let's get a final word now from each of you. Aaron Curtis from Midco, your final word for the day.
• 31:08
  Aaron Curtis: Yes. A lot of unknowns we've talked about today between tariffs, got a crop report next week, both USDA and CONAV as well. A lot of weather still to come both in
• 31:19
  Greg Johnson: The U.
• 31:20
  Aaron Curtis: S. And still in South America. So would expect continued volatility as we move forward, especially with what we've already talked about the funds being and their positions, right, we're going to continue to see a lot of volatility. So I think we use that to your advantage when you get to profitable levels, make sure you're continuing to add to your risk management plan.
• 31:40
  Todd Gleason: Greg Johnson from Total Grain Marketing.
• 31:42
  Greg Johnson: Yes, the stock to use ratio is tied on corn. So I think that buys us a little bit of time, but that doesn't mean don't make any sales, it just means have offers in. And on beans, I think the bell is ringing even louder. I think we want to get a bigger percentage of beans sold just because there's probably more potential downside in the beans if everything works. If South America comes through with a big crop, if we have tariffs, there's a lot more potential negative things in the bean market.
• 32:11
  So that argues for me to get a little bit bigger percentage of new crop being sold.
• 32:15
  Todd Gleason: And Jim McCormick from agmarket.net.
• 32:19
  Jim McCormick: I'm in the same camp. I think the beans, we are on borrowed time. The funds are giving us a little bit of a gift. I think rallying despite the world crop projected stocks at record levels. My argument is sell when it's profitable.
• 32:33
  And then if you want to defend that down the line, that's where the Board of Trade is for. Same thing for new crop corn, You get the opportunity to start laying off risk. I'm gonna encourage you to lay off the risk top, plain and simple. We are in the transition of a new presidency. We've been in it less than a month.
• 32:48
  There's a lot of stuff President Trump's throwing at us. The renewable fuel situation could change dramatically depending on how this all plays out. So property profitability in '25 is the key. If you've got a chance to take it may be profitable, don't let it slip.
• 33:04
  Todd Gleason: Commodity Week is a production of Illinois Public Media. You may find and listen to the whole of the program anytime you'd like. You can do that at wilag.org or search it out in your favorite podcast application. Our thanks go to our panelists this week, including Aaron Curtis, Greg Johnson, and Jim McCormick. On Illinois Extensions.
• 33:22
  Top Gleeson.