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Jul 31 | Commodity Week · Commodity Week

• 0:00
  Todd Gleason: This is the July 31 edition of Commodity Week. Todd Gleason's services are made available to WILL by University of Illinois Extension. Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Matt Bennett of agmarket.net.
• 0:18
  He's in Windsor, Illinois. Ellen Dearden joins us from RAG Review in Morton, Illinois. And Logan Kimmel is here from Roach Ag. He is in Naperville, Illinois. Commodity week, of course, is a production of Illinois public medium.
• 0:31
  It's public radio for the farming world online on demand at willag.org. Let's get a list of items that we should discuss for the day. Ellen Deirden at AgReview, I'll start with you. What have you been thinking about?
• 0:45
  Ellen Dearden: I've really been thinking about, what the USDA will dole out on the next WASDE report. There's been an awful lot of talk about higher corn yields and it'll be interesting to see if USDA raises those in the August report. Typically it isn't real, prevalent to see that And also what are they going to do with ethanol and feed demand for the twenty five-twenty six marketing year.
• 1:13
  Todd Gleason: Matt Bennett on your list?
• 1:15
  Matt Bennett: Yeah, I mean, I think, growers are trying to figure out what to do, with some of these bushels that have to come to town. It's been probably my most talked about topic here lately and just different ideas and how to approach that with kind of crop we're looking at, a lot of folks feel like basis and myself included could get awfully interesting this fall. So I don't want to get into a situation there, but I'd be very interested to hear what these guys have to say about that. And yeah, of course, I think we would need to talk about yields, Not just what we think yields are, but, you know, what's the number gonna be in August.
• 1:50
  Todd Gleason: And then Logan Kimmel from Rojag Marketing. Anything that, they didn't discuss that you have on your list?
• 1:56
  Logan Kimmel: Yeah. I think it's a good time of the year to wrap up and discuss, folks sweeping out the bins, what to do, remain old crop, bushels and bushels that need a home here this fall. There's also been some volatility in some outside markets, in metals, currencies, but also today in the livestock market, specifically cattle, for folks that have risk in the livestock department, we can touch on that as well.
• 2:24
  Todd Gleason: Okay, so I will come back to you on that one in just a second, but I do with that. We'll begin with Ellen Dearden. And all three of you actually, I think, follow, the beef cattle market much more closely than I do. I was flabbergasted when I read those live on the air for the first time because I had not seen that number on Thursday afternoon. What took place, do you think, Ellen Deirden, in the marketplace that made the beef cattle market drop so precipitously?
• 2:53
  Ellen Dearden: I'm really not sure other than the fact that we saw the fed cattle cash market fall apart. The call for the week had been for higher cash prices and we've not been able to see them but I was flabbergasted. It looks like there's a lot of air under this market. You know, we've been making new contract highs in the lives and the feeders, and we just couldn't keep the the ball rolling uphill.
• 3:21
  Todd Gleason: And Logan Kimmel, your review of the marketplace on Thursday.
• 3:25
  Logan Kimmel: Yeah. I think the large swing has become almost standard now. Cattle market's been strong, fundamentals have been strong, but I think it's been important and today's a good example of at these lofty prices, yeah, the scenario seems still friendly. But the amount of money flow that I think has been in the market and can come out of this market from the spec funds, I think today shows that. And I agree 100%.
• 3:56
  The air underneath this market, it can be quite frightening. That I believe is if you have the risk along this move here and along the way, it's been, I think, an opportunity to layer off some of that with downside protection for days like today. And I do think there's a lot of volatility in some of these outside markets. Copper, for an example, is just that it had a massive, massive reversal. So that would be, I guess, something to watch going forward.
• 4:28
  We have seen the hog market pull back as well from its highs, and maybe started a seasonal decline. So the conversations we've been having while, A, it's a great run here, and it might still continue. But when you start having $6 or $8 swings, and you've got the risk in those markets, I think it's important to look at big picture where we're at and protect that.
• 4:53
  Todd Gleason: Yeah. The live cattle and the feeder cattle doing those 6 and $8 swings, Matt Bennett on Thursday during the day trade. How did you view it, and have you heard anything about that marketplace?
• 5:04
  Matt Bennett: Well, you know, we we heard about some of these folks kinda backing off their basis as far as buying some of these fats. I mean, obviously, when you talk 2 forties and even heard a few rumblings of 2 fifties in places, you're getting awfully rich. And so they've kind of back off of the what they're paying just a little bit. And and clearly it shows you there's a, you know, a few dents in the armor, so to speak. So, you know, I think when you look at this thing, I mean, you're coming here in three or four days, three out of four days, you make a new high in the cattle market, you know you're going to be subsequent to a sell off somewhere in here.
• 5:42
  And as Logan said, mean, funds have been super long for quite some time. I guess the question that all three of us have probably been asked quite a bit is when this cattle market is going to top out. And obviously nobody knows that, but the easy answer for me has been, it's gonna top out before anybody expects it. And I'm not calling a top here. We didn't go make a new high today and close lower.
• 6:05
  Yesterday's high held impact, but at the same time, you gotta understand that when the funds do lose interest here, it's gonna be a mass exodus, at least for a time. There's there's a heck of a lot, as both of these guys said, a heck of a lot of air under this market. And, you know, you get the the gates won't be open far enough. Know, always say the door on the futures, but with grains, but I think with cattle, got to say you could have two twenty foot gates sitting there and it's not going be big enough to let everyone out at once. So keeping a cautious tone here, especially for anybody who's got any risk whatsoever, is something that's gotta be, considered very strongly, anytime you're making new highs in the market.
• 6:48
  Todd Gleason: Ellen, could you put this week's trade, and the moves through highs for the cattle market before we had the drop on Thursday into perspective of the reports from USDA last Friday. And then, if you could, I'd like you to turn that right through to feed demand and what that might mean to you going into the WASDE.
• 7:11
  Ellen Dearden: The cattle inventory report which is a semi annual report came out along with the cattle on feed report last Friday. I don't think there was any real surprises there. Maybe one of the things that have blunted what we're looking at in this cattle inventory is that there was no report last year, no report in July. Therefore our comparisons were for 2025 being compared to 2023. So when we looked at the number of cattle and calves being lower, you know, they were down 99% in the you know big inventory numbers.
• 7:57
  But, you know, were we in comparison to last year? But the numbers I don't think there was any surprises there. So therefore we go back to trading whatever we've been trading and as Matt pointed out these funds have been just so super long the live cattle and also the feeders. So therefore, you know the cattle numbers not being there, tonnage is, per parkas is up a little bit. But, you know from my perspective we've got feed demand has really fallen off.
• 8:36
  We've got hog numbers that aren't growing. We've got cattle numbers that are declining. The only thing we've got that's eating more corn and meal is the chickens and certainly we can ramp them up pretty easily and quickly. You know we've got news this week that China is reducing their hog herd again. So I think we've got to be looking at feed demand both on the corn side and the meal side is probably going to be down in subsequent reports to even to this next August report.
• 9:12
  Todd Gleason: Matt Bennett on the news from China that came along with reports that not only were the hog numbers down, but that was driven at least the report I saw potentially by a lack of demand by the populace there that might be cause for concern as it relates to the economy. You can maybe tell me more. And a glut of bean meal that, they have crushed mostly or almost all, I suppose, from soybeans imported from Brazil. What can you tell me about that marketplace as you see it?
• 9:46
  Matt Bennett: I mean, clearly, this Chinese economy has been somewhat shaky. They've tried to shore it up several times in here, but there's definitely some question marks there. And anytime you see that, of course, it's a population that has essentially improved their diets significantly over the last thirty, forty years. And if you're hitting on some tough times, I mean, it might be tougher to expect them to be able to have a protein rich diet there, at least to the tune that they have been. So if demand's backing off, it would make sense with some of the question marks on their economy.
• 10:26
  As far as this meal market goes, I mean, overall, the world's gonna have plenty of meal in here. There's no doubt China's bought a lot of beets off Brazil, crushing those for meal. But you look at The US for instance, and no doubt that if you're gonna continue to crush more beans than what you have crushed historically, you're gonna have a whole lot of meal on hand. Yes, we're gonna try to export some of that meal, but it's certainly gonna keep that protein source very cheap. And so I do think that could provide some opportunities actually for some folks that are feeding hogs here in The US.
• 11:01
  But the meal market, in my opinion, that's a tough one to try to get bullish on. Yes, we're looking at multi year lows, there's no question, but at the same time, from a supply and demand standpoint, I think it's gonna have a tough road to hoe if you really wanna see that market rally.
• 11:16
  Todd Gleason: Let's stay with the global landscape, Logan Kimmel. Mexico and The United States have agreed to extend the trade talks they have. This doesn't have really an impact on the ability to move product because that's covered by the USMCA, at least corn and ag products are in general. Beef cattle's different function because of the screwworm. However, I'm wondering, given that ninety day extension, how you and the marketplace views it related to the rest of the trade deals that Trump administration has or is trying to put into place at this point?
• 11:57
  Logan Kimmel: Yeah. I mean, I guess at this point, it's been par for the course. It seems to continue to have these extensions. I don't know, it can be a little aggravating just when you want to see a trade deal come through, especially with China. And then you've got a separate negotiation and tactic with Mexico.
• 12:20
  I think it's positive to see that with Mexico because they're a massive buyer of US corn. But when it comes to China, I mean, yeah, that's the hope is to continue to see negotiations. That would be exactly what we need in the marketplace, a trade deal struck. However, I wouldn't hold my breath or base my marketing plan around that given that we're already almost into harvest and we haven't quite seen that pop up in the marketplace yet. So do think extensions, negotiations probably are helpful to work towards a trade deal, but that would be, yes, what the marketplace would want to see is something in the works, a second round trade deal with China.
• 13:06
  Because especially in regards to the soybean market would be exactly what we need from these prices given the crop we have.
• 13:15
  Todd Gleason: Ellen Deirdre, now let's put that into context with soybean exports from The United States to China, none to speak of. At this point for the fall in 2018, they did not take any, and it appears Brazil may have an early planting season based on La Nina. We don't know that will be the case, of course, at this time, which could shorten up the window, for the export market from The United States to China. How are how are you taking all of this in, and can you plan for that as we move into the fall harvest season?
• 13:49
  Ellen Dearden: I do not believe we can make a plan based on improved exports at all on beans and I think that the timing of of sales is we're already past the beginning point of selling stuff into Asia big time being sales into Asia So I'm, very concerned about exports and the export pace and how things could actually even back up into the country.
• 14:24
  Todd Gleason: Let's talk about trying to raise cash out of the fall for bills that will need to be paid prior to December. Logan, I'd like to start with the old crop as it relates to bushels, probably corn for you first, and what kind of plan producers ought to have in place to get rid of whatever they have left at this time?
• 14:48
  Logan Kimmel: Yeah, I mean at this point for the old crop, you've got a couple of things of running against you. One, just the calendar. Here we are almost our progress show right around the corner. So I guess if you're hanging on to your last bit of old crop, there hasn't been a ton of opportunities. But if you do happen to catch maybe a basis push here in the next two weeks, then maybe end user calls you up.
• 15:17
  Think use any basis push or pop to go ahead and wrap that up. Because I think what we're going to run into, and a lot of folks have mentioned, is maybe larger crop coming in new crop wise than what she had marketed for, budgeted for, and essentially what you have space for. So I think that's in very short order, need to be taken advantage of. To make room for the new crop as well, because I think that could be a problem, as Matt mentioned, is basis levels in three to four weeks as we see some harvest begin in the Delta. I think, yeah, up against the clock, but any opportunities for the old crop if you're still hanging on, use those here in the next two weeks and then we can start focusing on the new crop marketing.
• 16:07
  Todd Gleason: From the JSA side, the elevator manager side, Matt, when you are looking forward to a soybean crop that will probably have to be stored for much longer than maybe you are thinking normally because the Chinese are not in the marketplace or may not be in the marketplace, and you have a very large corn crop, at least at this point, that's coming in. What will they do? And I suppose break bases is the answer, but how how how do they handle that? I mean, they they've they've gotta probably find a place for corn on the ground. We haven't seen a lot of piles for years.
• 16:45
  This may be one of those years that that happens.
• 16:48
  Matt Bennett: Yeah. I mean, there's there's no doubt that storage space, even though we've added a lot of storage, is gonna be an issue, especially in, you know, some of these areas that, you if you're going to call for a 184, 185 yield, which we hear a lot on, if you're calling for that, then obviously there's gonna be a lot of counties that are going to be posting well above record yields. And so it's going to be tough to find space. And so you know, what are they going to do there? I mean, that's that's a tough call.
• 17:16
  I do think that the grower is going to, in my opinion, be a little more willing to sell soybeans than corn. I mean, it's a phenomenon we see most years. I mean, lot of growers don't necessarily like to store soybeans. We don't see a lot of that storage on the farm. Whenever you look at the corn situation, you could see a little bit of a shift in sentiment at some point in here, you know, with what we talked about just a little bit ago as far as, yeah, you know, corn fertilizer price ratio, just liquidity of the farmer, acreage should be lower next year.
• 17:50
  But that causes me some concern when I look over soybeans, because acres could actually creep up somewhat. We know Brazil's gonna plant more beans. So, yes, some of these beans may be stored for a while. The export situation is problematic. I mean, as of this time last year, China hadn't bought hardly any beans.
• 18:09
  And so clearly, they bought a ton in the fall. I have a lot of confidence there that that's going to happen this year with no trade agreement in place, but certainly that can happen in very short order. And so that brings me to the grower. You know, if the grower is trying to figure out what to do here, clearly, it's going to be, you know, it's going to be different for everyone. But those that can store corn on the farm, I think that it would be wise to hold on to some ownership corn there.
• 18:36
  I think that's the only place I'd really want to do it would be on the farm. Whereas on soybeans, you know, it's a tough call, Todd, because quite frankly, you know, at sub $10 cash levels, you've got to have some pretty massive bean yields to call this a win. And unfortunately, I think that some growers may, you know, throw their hands up and maybe cast their lot on seeing some sort of a corn rally and calling beans what it is for the time being because I don't know that their appetite for storing those beans commercially is gonna be there.
• 19:06
  Todd Gleason: Ellen Dearden, what are you talking to your producers about as it's related to the fall storage issues?
• 19:12
  Ellen Dearden: Well, I I think that, Matt's exactly right that, moving beans at harvest seems to be the bent of most growers, even looking at the wide basis on the beans. I think the fears are there that basis will turn wider yet. There may be some opportunities for early harvest corn to see a little bit of a basis play if old crop gets moved here in the next two weeks but the early corn in September may have some opportunities and I would sure recommend anybody that's in the in the situation they have hybrids ready early, to market that corn sell it right across the scales don't deliver it on any contracts you know and get that done but beans I don't know I'm just I hate to sell beans for deferred delivery and store them in town but this may be a year to do that.
• 20:13
  Todd Gleason: And finally, Logan Kimmel, we started with you on this round, but based on old crop, what do you see for new crop?
• 20:19
  Logan Kimmel: I think for producers that have bin space and can store on farm, there might be some opportunities with the carry in the market. If you're sitting here looking out to East March, East May or even July, I mean out to May dollars 0.27. December, July, $0.03 3. So if you've got the bin space and can hold the bushels, I think there's a potential for a setup maybe for a better market here post harvest into the winter with the demand pace we're on. So take advantage of that and look at the carry.
• 21:02
  You got the bins for a reason. But I would say for new crop on farm, that might be the opportunity for producers this winter if you can hang on to the physical bushels. Also on the new crop sitting down this time of the year and maybe running new break evens with a higher yield. If you're confident in an area that you think you're going to have a higher bushel or APH number than maybe you planned for this spring, run those numbers across your balance sheet and you might be surprised a little bit on no, the price isn't great right now, but if you do got 25, 30 more bushel an acre on corn, that might make those selling decisions a little bit easier. So, I'd say those are the things folks can be doing here on new crop right now at this point in time.
• 21:50
  Todd Gleason: Ellen Dearden, on the August, that's a Tuesday at 11AM central time, USDA will release its first crop production report of the year. You've suggested that more often than not, they're kind of in the range of what, this time of year at least, what, they have been using that would be 181 as a yield for corn. And you also wanted to talk about demand, particularly as it's related to ethanol. Pick up with, where you think corn yield might come out in August and if that grows I suppose from there if 181 is dropped.
• 22:29
  Ellen Dearden: My guess is that USDA will bump up that 181 yield a little bit. You know it wasn't too many weeks ago when we were talking 181 will never get that high and now you know the numbers up around 184, 185 maybe some even higher than that but I think they'll probably bump it up maybe a bushel. I do anticipate that ethanol demand will go up about 15,000,000 bushel on the demand side of things but I'm afraid feed will drop 15,000,000. So the total use will remain unchanged even while the supplies could rise leaving a carryout maybe at that 1,900,000,000 bushel. Anything under 2,000,000,000 bushel may be a win on this report.
• 23:14
  Todd Gleason: This would be the carryout, in the 2026 not of course for the 2025 calendar year. Matt Bennett, what numbers are you plugging in?
• 23:26
  Matt Bennett: And so, you know, right now, whenever you look at these crop condition ratings, which I'm not a huge fan of, we're significantly better than what we were a year ago on corn. Obviously the USDA had, you know, maybe a little egg on your face coming in in the 183, almost 184 range, August through October, November. But, you know, are they gonna come in as hot and heavy as what they did a year ago? And, you know, I I sure hope Ellen's right that they don't come in. But if I'm gonna guess today, and this is not an official estimate from our team, I feel like they're going to come in closer to where they were a year ago, maybe even a shade above it.
• 24:06
  I think when you look at these thermal imaging maps, the NDVI, I mean, there's some awfully good rated crops out here. I did a video with snodgrass today, and we were just looking through that. And I tell you what, it's running well ahead of any year we've seen in a long time. And so with that being the case, I'd probably guess they're gonna come in somewhere between 183.5 and 184 for corn. And if I was gonna guess on soybeans, I don't know that they'll change it much.
• 24:37
  I mean, it's just really hard as of August 1 to know what you've got. So I would assume they'll leave that August bean yield the same, but that's just me.
• 24:44
  Todd Gleason: And, Logan, do you have an estimate from Roach Ag?
• 24:47
  Logan Kimmel: No. I mean, not an official estimate, I agree with Ellen and Matt. I do think you'd see the core number bumped up here, just given the growing season we've had, the conversations we're having. There just really isn't hardly any folks experiencing a widespread crop issue. In fact, a lot of producers we're talking to, truly believe they're going to have one of the better crops on record for their farm.
• 25:18
  So just gathering those conversations, the general consensus, at least on the corn side is probably seeing a bump in the yield. And I do think on from what the trade right now, given what the trade is trading, probably is a little bit higher than 183 or 184 given September future prices at $3.94 and these at $4.13 We just haven't seen any excitement in this corn market because I think the trade is assuming a higher yield already. Now on the soybeans, it's still got some time here. The month of August is important. I think folks are confident in their bean crop, but no, even going back to last year, things can get a little hot and dry in August and that matters for the beans.
• 26:05
  So, we're pretty in line with, or I'm in line with, Ellen and Matt on that.
• 26:10
  Todd Gleason: Let's wrap up now. I'll get a final word from each of you. Matt Bennett from agmarket dot net. What's your final word for the day?
• 26:18
  Matt Bennett: Well, right now things look pretty rough. I mean, there's no question about it. I think that the sentiment of growers isn't exactly rosy whenever it comes to picture prices. But, you know, at the same time, obviously, it looks like we've got a pretty decent yield coming here. My biggest thing is to be prepared and know exactly what your plan is going into harvest, how much money you're gonna need, how many bushels you need to move, and try to make those decisions before you have to.
• 26:45
  Todd Gleason: That's Matt Bennett. He is with agmarket.net. He'll be driving to Des Moines, for the Friday afternoon taping of Market to Market, which you can watch on our companion station, WILL channel twelve, Sunday morning at 11:30AM. Logan Kimmel of Roach Ag Marketing has also joined us here on commodity week from Illinois Public Media. What's your final word for the day, Logan?
• 27:09
  Logan Kimmel: Talked a little bit on some outside markets. One, I forgot to mention that I think it's important for in the grain industry for folks to be watching here is the U. S. Dollar. It started to creep back up here and reverse on the month.
• 27:24
  Guess it makes it that much more important going forward for marketing opportunities, know, take advantage of them because a dollar moving back higher might be a headwind here in the grain markets for producers.
• 27:39
  Todd Gleason: And finally, Ellen Dearden from AgReview out of Morton, Illinois. Your final word for the day.
• 27:44
  Ellen Dearden: I noticed that the most recent, drought monitor for The US shows a shrinking area of drought and dryness on both corn and beans this week. However, at the same time, Mexican drought seems to be holding on. If that Mexican drought expands, watch for, more exports in corn to Mexico even even with the good good ones already on the book.
• 28:10
  Todd Gleason: Commodity week, of course, is a production of Illinois Public Media. It's public radio for the farming world. You may listen to the whole of the program anytime you'd like at willag.org, willag.0rg. Our thanks go to our panelists this week including Logan Kimmel, Ellen Dearden, and Matt Bennett. I'm University of Illinois Extension's Todd Lewis.