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Jun 13 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report. It is the June 2025. I'm extension's Tug Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzlow. He's at globalcomresearch.com out of Atchison, Kansas, and Eric Snodgrass will join us to take a look at the weather forecast.
• 0:21
  If you can stay with us for the full hour, you'll be able to hear on our home station all of our commodity week program with our panelists, including Mike Suzolo, Greg Johnson, and Logan Kimmel. If not, it's up online right now at willag.org, willag.0rg, and many of these radio stations will carry the program over the weekend. We'll lead today with the EPA or the Environmental Protection Agency, which released its proposal for the renewable volume obligations or RVOs for 2026 and '27. Jeff Cooper, the president and CEO of the Renewable Fuels Association, says the numbers are a positive signal for America's ethanol industry and corn farmers.
• 1:03
  Geoff Cooper: The proposed number for 2026, the total is 24 o 2,000,000,000 gallons, which would be the highest renewable fuel standard ever. 15,000,000,000 gallons would be reserved for conventional renewable fuels like corn ethanol, and the other nine point o 2,000,000,000 gallons would be advanced biofuels. And within that, EPA's proposal includes 5,610,000,000 gallons of biomass based diesel, which is a significant increase from what is being required in 2025 and should really help that side of the industry get back up on its feet and start, you know, start increasing volume again.
• 1:41
  Todd Gleason: Again, that's Jeff Cooper from the Renewable Fuels Association. For his part, University of Illinois agricultural economist, member of the FarmDoc team, Scott Irwin, said of the proposal, quote, again, these are just the starting point. We have to know what the SREs are to know the true bottom line RVO. SREs are the small refinery exemptions, and those will make a big difference in how much ethanol is required to be in the gasoline supply for '26 and 2027. July corn in Chicago finished $4.44 and a half, up 6¢ today.
• 2:19
  December at $4.43, 2 and a half higher. July beans jumped 27 and a half cents to finish at $10.69 and three quarters. November new crop at $10.54 and 3 quarters, up 27 and a half cents, and bean oil was up the $3 limit. Mike Zuzolo now joins us from globalcommercesearch.com out of Atchison, Kansas. Hi, Mike.
• 2:40
  Thanks for being with us. I appreciate that.
• 2:42
  Mike Zuzolo: Great to be with you, Todd.
• 2:43
  Todd Gleason: Thanks for having me. Well, yesterday, during our recording of commodity week, there were two things that we discussed that took place either yesterday afternoon or this morning that hadn't taken place, at that point. You made some really important points as it related to the potential for Israel at that time to attack Iran. That happened, not long, actually, after we recorded. How did the marketplace in Chicago and New York, take the attack, and what do you expect for it to continue to do over the next several days?
• 3:24
  Mike Zuzolo: Yeah. That part's really hard to determine right now, Todd, because we don't know exactly how much The United States may or may not have a role in anything future or or moving forward here. I think because the the president and his party in congress are are probably drawing a red line with Iran not doing anything to our embassies or our military in the area. And if they would, that would probably mean that we would be become much more offensive instead of trying to still get a peace deal worked out in a pretty low likelihood environment. To your question, the market reacted as expected in terms of Wall Street broke hard, crude oil broke hard to the upside, and the bean oil market was the one that really changed its dynamic.
• 4:22
  And I don't wanna say erased the WASDE report, but it could have started a shift in the trend for the soybeans. And this is coming from an analyst and person that's recommended being 100% hedged and bought puts as of two and a half to two and a half weeks ago, worried about the tariffs and worried about the export demand and the lack of domestic demand that we were not seeing, especially as it pertained to bean oil. But not only did we get the Israeli attack on Iran to fuel the energy sector, we saw a very big shock in the RFS requirement and the new EPA expectations were, you know, not even close to being met on Thursday, and that's what we talked about as well on commodity week where the idea that biofuel blending mandates would be much lower than what they came out on Friday. And and as a result of that, the bean oil market was able to go limit up, and looks like we're gonna be at an extended limit up, I think, 4 and a half cents now when we come back.
• 5:34
  Because I was not watching overnight, though, I did take a quick look at the marketplace. Did bean oil jump after the Iran attack? Because these two things were separated by, I don't know, more than twelve hours, the release of the RVOs or the renewable volume obligations, which we already have heard about. Those numbers were big, particularly for renewable diesel production. But how did that bean oil react?
• 6:00
  Todd Gleason: Was it up or down after the Iran attack?
• 6:03
  Mike Zuzolo: No. You bring up a good point because I was on the obviously watching the markets after the Iran attack was was televised or or came across the wires. And the the bean oil was still leading the pack, but the bean oil was probably up only about one or one and twenty five at that point in in the top end market that I was looking at. And the soybeans were only up six to seven instead of closing on new monthly highs like we did on Friday afternoon. So I really think that the soybean dynamic because as you say, the big number came from the biomass based diesel and we have a lot to uncover still, but we've essentially gone from a 3,350,000,000 gallon mandate up to a 5,360,000,000 gallon mandate for 2025. And then it jumps excuse me, goes from 3.35 in 2025 to 5.61 in 2026.
• 7:05
  So a 67% increase in that mandate for next year, and we're gonna have to figure out how much of that. We we figure we have a little over 5,000,000,000 gallons of capacity in biomass based diesel at this point. That's coming from a couple different sources, including your own U of I, but also biodiesel magazine. So I'm I'm looking at a situation where are we gonna see a or a 50% increase when it comes to the the July report by USDA, and and USDA bases everything off the Department of Energy. Will the Department of Energy move, or will they wait?
• 7:42
  So a lot of questions, but it could really change this market look in terms of any lost export demand in soybeans could be offset in a good portion by this new update.
• 7:53
  Todd Gleason: Yeah. And so the update also showed 15,000,000,000 gallons for the use of ethanol. It would be corn based. It's not required to be that way, but of course it will be that way. It does not, however, give any indication of what the small refinery exemptions might be, and as you know, Scott Erwin here on campus has said, despite the fact we've seen these numbers, it's the SREs that will really make a difference in what this looks like by the time we get to the usage side.
• 8:23
  Mike Zuzolo: Yeah. Very much excellent points. And I think this is where it goes back to the $10.79 plus area is the February high. That is the 2020 five high in the soybeans. We're not far from that after Friday by getting close to the May highs.
• 8:39
  My take is very simple at this point, Todd. We're in a trading range market until we break through $10.80 on the front end. If we do that, then we've changed the trend. And I also we talked about this on Commodity Week and didn't talk too much in detail because we didn't have a lot of detail on this either. But the big shift in basis from July to November in your part of the country all the way into Central Indiana on Thursday afternoon sent negative shock waves through the soybean complex, the mercantile exchange, but also especially the cash market.
• 9:11
  I wanna see if that comes back now next week since we've gotten this new EPA rule, the proposed rule, and that USDA has formally endorsed. We will be watching it all.
• 9:22
  Todd Gleason: Thank you so much. I appreciate
• 9:23
  Mike Zuzolo: You bet, Todd. Happy Father's Day to you and all the great dads out there listening.
• 9:27
  Todd Gleason: That's Mike Sussolo. He is with globalcommresearch.com out of Acheson, Kansas. Let's turn our attention now to the weather forecast. Eric Snodgrass is here. He's with NutriNet Solutions and Daggerbull.
• 9:39
  Another Good Friday for us today. Thank you much, Eric, for being with us. I have to admit this morning, I was up early and that was the softest, gentlest, most wonderful summer rain I have seen in a long time. It was just beautiful out today.
• 9:56
  Eric Snodgrass: Well, you know, what's interesting about it is it's part of a low that came out of Texas. And so, you know, usually when we transition to June, we stop getting, you know, big low pressure systems or well defined fronts, and everything starts to go over to just a what we call a summer convective pattern. So these are just, you know, thunderstorms distributed where, you know, the instability is right, and there's a little bit of lift in the atmosphere. But, no, this is a big big circulating low, and it's, moving through the state now, and and it'll be around for a lot of the day giving us chances for rain and also knocking the temperatures back a little bit. But you're right.
• 10:29
  It was nice just to get a a gentle rain. It's been a while since it's we I think we felt that way.
• 10:34
  Todd Gleason: Yeah. It was it was fantastic. On on the heat, producers and the crop both would like a little bit of that heat. The overnight lows haven't been terribly low. They haven't dropped back into the fifties.
• 10:45
  I think it was nearly 70 this morning at, I don't know, 05:30, 06:00AM. Can you tell me about what this weather forecast looks like, for the Midwest over the next, oh, I don't know, five to seven days?
• 10:59
  Eric Snodgrass: Yeah. We kind of have our real summer ridge coming in and so it's going to make its way here starting soon and the temperatures are going to respond in kind and we need it to. Mean, we're, you know, it's nice to see that there's a seven day forecast where on average we're going to be three degrees warmer than normal around here and grab about 100 GDDs in the next seven days. But, yeah. So Saturday, touching 80.
• 11:20
  Sunday, low eighties. Monday, mid eighties. And and to see the temperatures come up, we have a chance of rain next Tuesday, Wednesday, but, it's gonna come in on some some warmer conditions before a quick fall off in the temperatures after that. So, yeah, we have some heat coming through. Some parts of the Western Core Belt have already seen it.
• 11:34
  I mean, it was deep in the nineties in Iowa and, in parts of Nebraska, earlier this week. And, Iowa took a pretty hard hit across those northern counties with some severe weather too. So just something to think about there. But, Todd, there's one thing that's gonna change. Okay?
• 11:48
  And as we get into summer, it's gonna be this narrative on, alright. We're gonna stop talking about fronts. We're gonna stop talking about big low pressure systems. We're gonna start talking about ridges and ridge runners and Bermuda highs and Pacific highs and the kinds of things that control summer weather. So that's what I think the second half of of June is gonna look like.
• 12:07
  We're gonna start to see more of that, and it's gonna start to feel a bit more like summer than what it's felt like for a while, which is a legit, you know, prolonged spring. So, yeah, be prepared. It's gonna change.
• 12:17
  Todd Gleason: Well, let's go on vacation. We'll head to Bermuda. Oh, wait. We're gonna talk about the Bermuda High. Tell me about it just a bit.
• 12:25
  Eric Snodgrass: Well, it's it's the time of year where the positional strength of the Bermuda High is everything. Okay? So the Bermuda High, is this high pressure cell that sits mainly between Bermuda and the Azores. So we call that the Central North Atlantic. And when we keep it in that place, we tend to do fine on rainfall because it opens up Gulf moisture transport.
• 12:44
  We tend to have plenty of of, you know, lift in the atmosphere, and we get storms. So it's the years where the Bermuda high begins to weaken or drift or spread out rather than stay a bit more concentrated. And our worst summers where we get really hot and dry are those when the Bermuda high gets way up into the North Atlantic. Now right now, is there risk of that? Sure.
• 13:04
  There's risk of that every year. Do I see it happening like bringing in extremely hot, persistent dry weather? No. Not yet. We're gonna be, for the most part, enjoying, you know, an open gulf and more ridge riding storms for a little while here.
• 13:19
  But there's just this, you know, this thought in the back of our heads that we need to keep an eye on a lot of factors that can control that Bermuda high, and it might start to drift off as we approach July. I think that's just important to know, but it's, there's no guarantee in it. But that's it. You gotta watch the high pressure cells. They ultimately dictate where everything goes.
• 13:38
  Todd Gleason: Is there much of a difference between the Eastern and the Western Corn Belt?
• 13:42
  Eric Snodgrass: There is. So we are already noticing that parts of Texas and Oklahoma, which have been very stormy and very wet, lot of hail, lot of heavy rains, that the new 14 forecast is now pulling them off onto the drier, hotter side of things. And I was getting calls last night from some of our guys down in Texas saying, hey. You know, is it true we're gonna be getting hot and dry? And then earlier this week, I was in I was in Owensboro, Kentucky, and it was the same concern.
• 14:07
  They've been so wet. I mean, Todd, there's a place just out of outside of Owensboro, which is right along the Ohio River south of, like, the Indiana border, where already this year, they've they're approaching 50 inches of rain. So the very thing they wanna know is when is it done? Because they need it now to stay wet. Right?
• 14:25
  That's that's what they need. It's gotta stay wet because if it gets dry, that crop is not going to be able to survive very well in that given that it's been so used to growing with plenty of water right there in the top two to three inches. So they're very concerned about that and and with good reason. Summer can flip on a dime for those areas, and we need to just be paying attention to that Bermuda high to see if it does. So, yeah, a lot lot going on across the country as we now watch spring wrap up and summer start to transition in.
• 14:53
  Todd Gleason: But a lot going on, but no discernible real issues at this point. Is that what you're trying to tell me?
• 15:02
  Eric Snodgrass: Well, I think there are issues. I just don't know that it's the kind that the market cares about. You know? I I so, I mean, I I everybody I've talked to, okay, is said, hey. We've got some problems, uneven emergence.
• 15:15
  We've had cool weather at the May, June. So they're already talking about disease pressure. Right? Because cool wet weather in in in excuse me. In in May, we know what that does for, you know, our our gray leaf spot, what it does for tar spot, what it does for these fungal pressures that can start to move around and cause problems.
• 15:34
  So we're starting to figure out, hey, we need to start defending against this because it could be an issue. And this is a year given where commodity prices are now that we need to do everything we can to maximize yields. So I then see all the wet weather in the Mid South. There's been I mean, do you remember back in April and most of May, they were irrigating the crop in, you know, Nebraska. And, you can't look up in the Northern Plains and just say everything's been real great there either because they had flooding in Central North South Dakota, and they also had some drier weather that hit the Red River Valley at times.
• 16:07
  So I'm looking at this going, where's the garden spot? And if you pin me down and say find it, I would tell you that right now, it's it's probably I 80 from Northern Indiana all the way over to Omaha. But, I would also tell you that those folks will tell you right to your face, hey. We may be the garden spot, but we also don't have a whole lot of extra subsurface soil moisture that's just ready to be, you know, used in the event that we get hot and dry. So I think the crop's vulnerable, but, there's still a lot of time to see if mother nature will provide what it needs.
• 16:41
  Todd Gleason: One last place to check on internationally, though, not too far away, Canada. It's been really dry in parts of the Canadian Prairies. They have had difficulty over a series of years. What kind of conditions do you see for them?
• 16:59
  Eric Snodgrass: Well, the drier and halfway decently warm start means that they actually got a crop in fast. But, you know, we saw all that wildfire smoke. Most of it was actually North Of The Prairie. It was in the forested areas. In fact, there's still some smoke in the sky today from that.
• 17:16
  But as we, you know, go forward, I I've I've got halfway decent chances of storms in the Western Prairie, little drier along The US Canada border with, parts of Montana and North Dakota. But, you know, it they're they're hanging in there as as as we are because that smoke also kept them a little cooler too. So they're they're concerned, though. They still think that one of the years they worry about is 2021 returning. I don't think that's a good worry this year, but they're also feeling quite vulnerable too given the lack of good subsurface soil moisture.
• 17:48
  Todd Gleason: Hey. Thanks much. We'll talk with you again in two weeks.
• 17:52
  Eric Snodgrass: Alright. Sounds good.
• 17:52
  Todd Gleason: Thank you much. That is Eric Snodgrass. He is with Nutrien Ag Solutions and Agrabal. Joined us on this Friday edition of the closing market report that comes to you from Illinois Public Medium. It is public radio for the Farming World online on demand at willag.org.
• 18:07
  That's willag.0rg.