Latest / Closing Market Report / Feb 12 | Closing Market Report

Transcript

Feb 12 | 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 February 2026. Happy birthday to my lovely bride Claire Ann. Coming up, we'll talk about the commodity markets with Matt Bennett of agmarket.net. Gary Schnitke, ag economist from the University of Illinois, will be here to discuss crop insurance decisions. They've changed this year.
• 0:23
  And then we'll turn our attention to the weather forecast with Mike Tenure at T Storm Weather, all on this Thursday edition of the closing market report from Illinois Public Media. It is public radio for the farming world. Todd Gleason services are made available to WILL by University of Illinois Extension. March corn for the day settled at $4.31 and a quarter, three and three quarters higher. The May futures, four forty one and three quarters, up five and a quarter.
• 0:49
  In December, $4.64, four and a quarter higher. March beans, up 13 and a quarter. Settlement price, $11.37 at a quarter. New crop November at $11.16 and a quarter, up five and three quarters. Matt Bennett from agmarket.net now joins us to take a look at a marketplace that moved higher for the day.
• 1:08
  Hi, Matt. Thanks much. I hear you are driving back from Iowa. How did your day go there?
• 1:14
  Matt Bennett: Yeah. I had a meeting with growers. There was, probably, I don't know, 250 growers or so. It was very interesting. Of course, I asked them like I've been asking people lately, you know, where their heads are at.
• 1:26
  Know, to be honest, I think most people are feeling like, you know, the corn acres are gonna come down a decent amount. But the number that we all settled on in that room was 95. And being in the state of Iowa, you know, it surprised me. I thought maybe it'd be a little higher, but regardless, nice group, little more upbeat after this little rally we've been able to experience here lately.
• 1:49
  Todd Gleason: Tell me about the bean market jump, please.
• 1:52
  Matt Bennett: Yeah. I mean, you look at the bean market, Todd, and I mean, you know, yes, it's been on a nice little run since president Trump said that China might, you know, buy 8,000,000 tons of beans, which clearly might doesn't mean a whole lot to me, but it's meant a lot to people when they start looking at, you know, what's another 300,000,000 bushels exports look like. Well, I think we all know with US beans being a dollar higher than Brazil that, you know, if China does buy it for political reasons or for, you know, tariff type reasons, you know, we're probably not gonna sell anybody else in the world. So, you know, what I've been trying to impression upon growers is this a nice rally, unexpected rally, and it's for reasons that don't change the global balance sheet one iota. You know?
• 2:38
  It might tighten up The US balance sheet, so to speak. You know? But it doesn't change the fact Brazil's got a massive, massive bean crop on the way. You know? And so we should at least respect this rally enough to, you know, reward it with sales here and there.
• 2:51
  Todd Gleason: Old and new crop both?
• 2:53
  Matt Bennett: Yes. In all honesty, old crop, yes, resolutely. You know, because most of the growers I talked to were able to get back into some black ink with a new crop. It all depends. You know, if you're a grower that you know you can make this work, and I would say most of growers we talked to feel like they can make these types of price over $11 based support work, then you've got to consider it.
• 3:15
  You know, but I would say that if it's pretty shaky and you don't know if you can make it work, yeah, you're still eight months from harvest. So we gotta understand that, you know, in some instances, you hate to lock in some sort of a loss this far away from harvest. My general impression is 3040% anyway would be a good place for a grower to get at least protected, you know, just in case this thing turns the other way based on huge global production.
• 3:41
  Todd Gleason: If Iowa farmers were thinking about a 95,000,000 acre corn crop, Are they also thinking about making sales ahead of that for the fall as well or sometime?
• 3:54
  Matt Bennett: Yeah. I mean, in asking if anybody had done much marketing, I I would say that it was pretty thin. You know, I asked him. I said, how did it work out last year, you know, to not market early in the year, you know, and they all kinda laughed. And, you know, I I said we should at least consider, you know, maybe hedging some of our stuff that's going in the bin next year, you know, with the thoughts we can maybe take advantage of that carry from December to July that it was pretty strong here this last fall, we would expect it to be maybe even a little better this year, consider we're gonna carry more corn in.
• 4:25
  But yeah. I mean, there's no doubt that in my opinion, they're probably a little undersold compared to maybe what they should be if they're still gonna plant a lot of corn. I would say that there was a fair amount of folks that said they'd have more beans than a year ago, but at least two different guys said, you know, we gotta remember we were pretty heavy corn last year, you know, and then they've got a lot of disease issues. So I think there's a lot of people that kinda wanna rotate some stuff around a little bit just to try to get away from some of that disease.
• 4:53
  Todd Gleason: You know, Gary Schnicki was on a webinar this morning. We'll follow you up in just a bit here on our own radio station. I talked to him and hosted that webinar, talking about crop insurance. He too will be on the All Day Ag Outlook with you on Tuesday, March 3. Ticket's available now.
• 5:09
  Willag.org, just $40 at the Beef House. Discussion there was about the the changes that came particularly in ECO and SEO and the cost, and using RPECO and SEO, particularly ECO together, to maximize, the ability to cover that crop. Have you thought much about how to incorporate that into the marketing plans?
• 5:35
  Matt Bennett: Yeah. No doubt about it. So, I mean, in a nutshell, you know, Gary would agree that essentially what we're talking about is being able to guarantee more revenue for less dollars invested. And so, you know, you're essentially gonna put yourself in a spot where, you know, you could be a little more covered to where some sort of insurance payout for even decent production is certainly more likely this year, you know. And so if you've got more insured bushels, if you will, then we've got to understand that, you know, we can step in if we get into a little bit better situation on on price versus for instance, our breakeven.
• 6:10
  You we can be a little more aggressive this year knowing we've got that safety net of insured bushels.
• 6:15
  Todd Gleason: Hey, thanks much. We'll talk to you again soon enough.
• 6:17
  Matt Bennett: Oh, absolutely. Thanks, Todd.
• 6:19
  Todd Gleason: Mhmm. Matt Bennett is with agmarket.net. Crop insurance time is upon us. We're now joined by Gary Schnitkem, agricultural economist at the U of I, to talk about some of the early crop insurance, issues that you might find of interest as the March mid March time frame comes to us when those final decisions have to be made. First, Gary, let's start with the basics on crop insurance.
• 6:49
  We're in the midst of the month where the crop insurance prices are set.
• 6:53
  Gary Schnitkey: Right now, if we were setting those prices, we would be looking at a $4.58 price for corn. That's about not quite halfway through the month. That would be a little bit below last year, so yeah, we would be setting our projected pricing guarantees a little bit lower. For soybeans, we're looking at $10.93 right now. That would be slightly higher than last year, just a bit.
• 7:22
  It was $10.54 last year. So corn guarantees down a little bit, soybean guarantees up a little bit. I find it interesting that if we're looking at where the futures markets are, everybody's talking about good large corn crops, but the the futures markets are suggesting soybeans are more profitable this year than last year.
• 7:45
  Todd Gleason: No. We can talk about that too, but we do need to talk about the One Big Beautiful Bill Act. That, of course, was passed last summer. There were some changes in it that impact what, the agents will be talking to farmers about when they actually go in to discuss picking up crop insurance. Can you tell me what some of those were and how they impact the crop insurance decisions for the 2026 growing season for corn and soybeans?
• 8:14
  Gary Schnitkey: So this year, or the one big beautiful bill, the big change that's impacting this year is that they increase the subsidy levels on all the combo products and on SCL and ECL. The One Big Beautiful Bill Act increased the subsidy level for SCL and RMA administratively, and also increased the ECL subsidy level. Those are now at 80%, up from 65, and that that will cause that decision to look at ECO and SCO. I would suggest that all farmers take a look at ECO and SCO. That 80% subsidy will lower the premiums.
• 8:57
  And when we look at our insurance evaluator, combinations of ECO and even lowering our underlying IRP coverage levels will result in lower lower premiums and about the same risk gains as if you had a had a RP at 85% coverage level last year.
• 9:21
  Todd Gleason: Let's break down a couple of those. First, quick question. Did RP subsidy change as well, or did it stay the same?
• 9:28
  Gary Schnitkey: RP subsidy levels also went up. They went up on both basic and optional units and on enterprise units. So this year you will see lower premiums, if all else is equal, for combo products. The increase is less for the basic optional and enterprise units of the combo product. That that increase on SEO is worth looking at.
• 10:00
  Todd Gleason: Now that we have that out of the way, so it it sounds as if, just based on all things equal, that, if we were to buy the same product, this year and had last year prices, it would be cheaper, to do so. And because we have lower prices, it's actually depending, I suppose, on volatility and how things end up going to be cheaper as well. Is that a deuce there that, you know, two times that you'll get a reduction in total crop insurance, costs?
• 10:33
  Gary Schnitkey: Yeah. So and you're exactly right. By the way, we're we're we're not to the point where we're setting the volatility that's only the last five days of the month. So but if you looked at it, particularly for corn, it would be lower, and that will lower premiums for combo product and SCO. So yes, that will have an impact.
• 10:58
  It will, if you have the same APH, likely lower your premium costs this year versus last year. There's some other things that go on too. They change the rates, so we haven't really looked at whether those rate changes have increased or decreased costs this year. But overall, you can expect a bit, a bit lower premiums for those those combo RP products.
• 11:24
  Todd Gleason: Let's drill down on highly productive soils in Central Illinois. Corn and soybeans, when we get to that point where we need to make a decision, we're going to do what with RP and ECO, SEO?
• 11:39
  Gary Schnitkey: Alright. So if you're in Central Illinois, you're probably at the 80 or 85% coverage level for RP. The first thing that I would suggest looking at is adding ECO at the 95% level. The 95% level is, and and that'll add to your premium, by the way. So just adding that, you're gonna probably add $45 to your premium.
• 12:05
  Todd Gleason: I will make note that this was the same recommendation you had last year, but you were like, you can do it, but this year the subsidy makes it worthwhile. The extra subsidy makes it worthwhile.
• 12:14
  Gary Schnitkey: The extra subsidy makes it worthwhile. And also, RMA increased, expected yields across the state, and those expected yield increases were pretty large. So this combination of that 80% and those higher expected yields caused that to look like something you should look at. Alright, so now you're thinking 80, adding ECO 85%, and you're at RP 80 or 85%. I would think about lowering that coverage level to maybe 75%, maybe 65%.
• 12:56
  Just take a look. Here's what you're doing. You're increasing the subsidy level because the subsidy level goes up as you increase that coverage level, so you're increasing that. And you'll find that with the combination of that, and even if you add SCO, you'll be at the same premium level as last year. And our insurance evaluator says you'll have roughly the same downside risk.
• 13:32
  If you really want to maximize everything, stay at R P 85% and add ECO 95% to it, you're adding to the cost, but that will be your quote, unquote, best risk level. But if you wanna lower those, you can get a pretty good lower end risk.
• 13:54
  Todd Gleason: If you're at 85 plus the a ECO, to 95 or you're skipping 1% in there with the SEO. Is that correct? From $80.85 to 86. Yeah.
• 14:03
  Gary Schnitkey: I I that's almost, secondary issue. I mean, honestly, that's
• 14:10
  Todd Gleason: But but my question is, if you are say, go to 65, how much are you skipping?
• 14:16
  Gary Schnitkey: Alright. So first yes. You would be skipping some, and then SCL begins adding adding adding risk protection. But your big risk protection comes by adding that 95% on top. And if you think about it, in Illinois, Central Illinois, it takes a lot to trigger losses, and 5% loss is easier to trigger than 85 or 75% loss.
• 14:44
  So, and, again, if you want to keep your premiums within some range, you can do it by lowering the RP coverage level.
• 14:54
  Todd Gleason: Finally, folks can go online. There is a brand new tool, an updated tool, connected to the PharmDoc website.
• 15:02
  Gary Schnitkey: We have the insurance evaluator. It was specifically designed to look at SCO and ECO combinations with your combo product. So you put in your RP product, maybe you put in what you did last year, and then we can compare what what some alternatives are.
• 15:19
  Todd Gleason: Good in all the counties around the nation?
• 15:21
  Gary Schnitkey: Good in from Ohio to Indiana, Illinois, Iowa, and Minnesota. We're working on releasing it to other counties, but we feel really comfortable in the midst of the Corn Belt.
• 15:33
  Todd Gleason: Thanks much. That's Gary Schnicki. He joined us here on the closing market report from Illinois Public Medium. You can see Gary at the All DAG Outlook, by the way. That's coming up on the March.
• 15:43
  It's a Tuesday. Go to our website, willag.org, willag.org, right now. And on Tuesday, March 3, Gary and Nick Paulson and many others will be there for you to ask a whole bunch of questions if you like about crop insurance and so much more. The full details and agenda are online. The cost is just $40 and includes your beef house lunch at the noon hour.
• 16:19
  Let's take a look at what's been happening in the global growing regions. Mike Tenure is here. He's the president and CEO at t storm weather. That's tstorm.net online. He's out of Naperville, Illinois.
• 16:31
  Hi, Mike. Thanks for being with us today. I'd like to start in Argentina. Tell me about the weather there. They had been dry.
• 16:40
  Are they still that way? They've been getting rainfall. What's happening?
• 16:44
  Mike Tannura: Well, they're still pretty dry for the most part. There was a big thunderstorm cluster overnight, and that aided about 20% of corn and soybeans. But the big story there is that we're going to see more of these clusters. There's several waves of energy that are moving eastward, and they will pass through the end of next week. And by the time you add up all the rain that's coming up, we think that about half to two thirds of the corn and soybean crop there will end up being wetter than normal over the next two weeks, and that's primarily from rainfall over the first half of that period.
• 17:14
  So some pretty good totals are on the way. In the southern areas, the rains might not be quite as good, but there is a little bit of rain ahead. And once you put it all together, this story in Argentina is going to be one of diminishing dryness as they move into late February.
• 17:29
  Todd Gleason: Does that account as well for parts of Paraguay and maybe Southern Brazil?
• 17:34
  Mike Tannura: Well, of those storms will certainly make their way into those regions, and they also need some rain. They haven't been as dry as in Argentina, but it still has been drying out over the last thirty to forty five days. So this is going to help to stabilize soil moisture there and that's very helpful for Rio Grande do Sul in particular. That state grows about 15% of Brazil's soybeans and they also are planted the latest. And because of that, these these rains that are coming up will help to aid some of those soybeans that could still benefit from it.
• 18:07
  In other parts of Southern Brazil and Paraguay, while rains are still helpful, they're a little bit closer to maturity and even with some harvesting taking place, so the rains won't quite be as beneficial there.
• 18:18
  Todd Gleason: In other parts of Brazil, the Center West, some of the northern growing regions, what do you see?
• 18:22
  Mike Tannura: Well, it's kind of a mixed bag. They'll be a little bit drier than normal over the next five to seven days, and that's primarily because upper level high pressure is forming. Once we get beyond that period, the cool front moves through, and that should bring some thunderstorms to varying areas. Overall, in this region, it's kind of a different story where there is harvesting taking place in the central areas, but the northern areas are planted later so they could still benefit from rain. Now the rains aren't going to be super heavy, so it shouldn't slow down harvesting all that much, but they should be heavy enough to at least keep soil moisture okay in those areas that can still benefit.
• 18:59
  Also, Todd, one thing we haven't talked about in a while is corn in Brazil. They're starting to plant second crop corn now, and this mixed bag of some areas of rain, some areas of dryness is pretty much fine for getting corn planted. And so we don't see any major problems in that regard over the next couple of weeks.
• 19:17
  Todd Gleason: Just give me a reminder as to the timing to when the rainy season ends in the second crop growing regions or the Center West areas of, Brazil. That that usually comes, what, mid April. Is that right? To late, to early May?
• 19:34
  Mike Tannura: Yeah. Once you get beyond about April 15, you're fair game for the dry season to start. But until we get there, it is pretty wet in the month of February. It's actually the wettest period of the year if you look at it in fourteen day intervals. So we're still at the peak of the rainy season right now.
• 19:51
  As we move into March, rains start to diminish fairly quickly as you move from the beginning of the month to the end of the month. And then once you're in April, again, the same kind of scenario. The April will still get some thunderstorms here and there, but by the end of the month, rains are usually pretty light. So it's going to be one of these games of the timing of when the dry season starts. If it starts on April 30, well, that's not really too big of a deal.
• 20:15
  They'll get the rains that they need. If it starts on April 5 or April 10, that's a big problem. So the exact timing is very important. But, you know, at this point in time, there's no real reason to think that we're going to have an early end of the rainy season. So as of today, things look fine.
• 20:33
  Todd Gleason: You mentioned soil moisture conditions, which reminds me that here in Champaign County, East Central Illinois, we're in one of the driest areas of the nation at this point. Snowmelt has come. It appears that most of that is actually soaking straight in rather than running off of the soil profile. A lot of warm temperatures across the middle part of The United States, including areas, like, oh, the Plain States and Kansas wheat growing places. Tell me about what you're thinking as it's related to early spring, or current conditions and the drought that is in place.
• 21:12
  Mike Tannura: Well, I think that's the big story is the drought. Rainfall over the last hundred and eighty days has been pretty far below normal to the South of Interstate 80, and this includes most of the Corn Belt And Plains. The only state that would be removed from that, would be Kansas, which is important because they grow so much hard red winter wheat. But outside of those area that state, there's a pretty big drought in place. If you look at soft red winter wheat production, at least what we expect to be produced, 74 of that crop was drier than normal over the last hundred and eighty days.
• 21:45
  That's according to our proprietary data. That is by far the highest of any year in February going back more than twelve years. It's not even close. It just gives you some idea of how extensive this dryness story is for the Mid South and the Southern Corn Belt and then extending into parts of Oklahoma and Texas. Now softwood winter wheat, Tide, as you know, is not that big of a crop for The United States, but it is important.
• 22:09
  And hard red winter wheat is generally a much larger crop. Only 16% of that crop is included, so 16% versus 74 gives you an idea of where this drought is located. Now there are some rains ahead over the next few days, a pretty big one too for parts of the Mid South and maybe even into Far Southern Illinois. As we get into next week, there are some additional chances for rain, and that's why we're not overly concerned about this yet. Even if those rains somehow missed, what really matters is what does it look like in March and especially April and May, and then for corn and soybean producers after that.
• 22:46
  I mean, all big droughts have to start somewhere, but it's just way too early to really think that this might be that. Instead, we just need to watch it and make sure that we start to get some rains or that will be a story.
• 22:56
  Todd Gleason: Thank you very much, Mike. I appreciate it.
• 22:58
  Mike Tannura: Yeah. Sure thing, Todd. We'll talk next week.
• 23:00
  Todd Gleason: Indeed, we will. Mike Tenaris with T Storm Weather joined us and helped us to wrap up this Thursday edition of the closing market report from Illinois Public Media. I'm Todd Gleason.