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Aug 29 | 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 for Friday, the twenty ninth, August in Chicago today. Corn futures rallied. They finished 12 and a half cents higher in the September contract. December at 4 20 and a quarter, up 10 and a quarter, and the March at four thirty seven and three quarters, 10 and a quarter higher.
• 0:21
  September soybeans, eight and a half higher. November, ten fifty four and a half, up six and a half. In January, ten seventy two and a half, up five and three quarters of a cent, bean meal down $2.70, bean oil 28¢, lower December wheat up five and a quarter at $5.34 and a quarter, and the hard red up 6¢ at $5.92 and 3 quarters of a cent. Mike Zuzula at GlobalCom Research dot com out of Atchison, Kansas now joins us to discuss the marketplace. What a day today.
• 0:55
  Friday, Mike, up, I don't know, $8.09, $10.11 cents, for the corn. Soybeans, half that much, maybe a little less than that. Wheat had a little rally in it too. Surprising, I guess. I think you and I were both kind of of the mind that that we might have found a low in the last couple of weeks for the corn market.
• 1:19
  We also maybe both thought it might have been early, and we kinda were hopeful. I know I was. Yeah. I I I gotta say I gotta say, Mike, I know I was because like everybody else, I just don't have enough soul. I got a lot.
• 1:34
  I'm like, well, I need a little rally to get this done.
• 1:40
  Mike Zuzolo: If you're not hopeful if you're in agriculture, you're not hopeful. You're in the wrong industry.
• 1:46
  No. It was it was a it was a true nail biter. This week, Todd, had another repeat week where the gave up and fell apart, and we needed this week to come together to keep with that twenty twenty four seasonal after that USDA WASDE report low that we put in in the soybeans. And and then we had this drier, cooler weather that the trade didn't know what to do with, quite honestly. But it seemed like to me we were really gunning for the delivery and if delivery wasn't negative then the corn had a shot and I think Friday's closed above $3.95 in September.
• 2:25
  And and we have to say corn, wheat, beans, meal, bean oil in the September contract now is effectively the cash price in The United States. Now it's in delivery. So it takes on an added importance for me that September corn got above $3.95 because that did a lot of good in terms of supporting the idea that we've got a low in place now, as you say, technically speaking, on the charts. And so I today because The US China trade relationship and negotiations, I'm actually glad they didn't go up as much as the corn did on a percentage basis just because they were respectful of what was going on with the geopolitics and the trade negotiations.
• 3:06
  Todd Gleason: So here's what I wanna know. Can we get follow through after a long Labor Day weekend on Tuesday of next week? And even at this point, is it is this price tag for corn particularly going across the scale that needs to go across the scale someplace if farmers are way behind that they need to think about making at least some beginning sales again?
• 3:32
  Mike Zuzolo: If they do, I would buy it back right away, Todd, because the charts would suggest that and the way we close this market at the August would suggest that between now and the September, we had a really nice rally, a rally strong enough last year that it was worth buying back into. And I think you know at this stage where the big lows are at this point. So I think it's a manageable risk to buy back. I actually talked to a lot of farmers this week. I'm sure all the commodity analysts did because this was the week to have to either let it go or roll it.
• 4:05
  I just don't see a lot of corn coming to market at this stage unless it's new crop off the combine on some early crop that's literally dying or something like that. But I I really think that because of the crop situation, the weather situation, the disease pressure, I think farmers are gearing to sell more beans and store the corn. Today's rally would support that mindset. To answer your question about next week is it it really does go back to what happens with Russia and The United States and does wheat and crude oil come in and support us and does the ability of the commercial, do they come in and start buying an extended amount of needs? Because from what I understand, they've been sitting on their hands.
• 4:51
  Todd Gleason: Are you of a mind that if there is no negotiated end to the Russo Ukraine war that the marketplace will take a stance on that?
• 5:02
  Mike Zuzolo: Yes. I I think that the crude oil market has priced in a peace initiative and a bit of oversupply, a supply glut almost. But if if we would actually target Russia's oil, I would be thinking that the oil would rally and that the wheat would pick up on that rally. The question mark in my mind is would the dollar become a safe haven buy? But as we talked about before, if the crude oil and the dollar rally up together, that's okay with me as long as the crude oil is going higher without the dollar going higher by itself.
• 5:35
  But, again, the the demand low you talked about at the beginning of our conversation, we have to reiterate that dollar has stayed down, and we are picking up more business. And what kicked off our rally on Friday, I think, was the Thursday export sales again for new crop corn and beans, and and then the Europeans cutting so dramatically the European corn crop. And I think it opened the eyes to the trade. Maybe it's not as great in Ukraine as we think it is. We'll see.
• 6:04
  Todd Gleason: Yeah. Ukraine. And then, of course, I can only imagine that the weather forecast looking forward and the drought maps suggesting parts of the Eastern Corn Belt, even here where I live, have been awfully dry. And I would think the trade might be worried going into long weekend that if that doesn't change, things could move quickly on Tuesday, Wednesday.
• 6:26
  Mike Zuzolo: I think you're right. And in fact, I'm driving to a family reunion in Indiana, and I'm coming out of Springfield right now. And that flash drought that you're talking about is very apparent from the windshield. As soon as you get across the Illinois River and East of Hall, it it seems to get progressively worse. And I do think that we'll have some early harvest, but that's actually gonna be probably a more price supportive feature than a negative feature.
• 6:51
  And it's probably gonna encourage farmers to store even more because they're gonna have more bin space if this disease and flash drought issue really hit Illinois like many of us think it can.
• 7:02
  Todd Gleason: Yeah. And as you drive through this area, because I've driven some of it, it is of course it's hard to tell because there's southern rust in some, it appears hybrids to me, where there'll be fields that are green and then just a field that looks like it's well dried out but not quite the right color, but it's also dried out. It clearly has dried out, there are lots of things happening here that, at the end of the season that, may maintain this rally through, I don't know, however long it takes, I guess. However, I do wonder about one last thing. Are you worried at all that USDA in August increased the exports to Mexico while also increasing feed and residual use at the same time, and that they might actually not be offsetting that because they're both up, and that they increase because feeders aren't coming across the border to The United States, but if they're not coming to The United States feed feed usage maybe shouldn't have gone up.
• 8:09
  Mike Zuzolo: Yeah. Yeah. I that's a great point to bring up, and I think this is why to answer an earlier question, you get up around 04/25, April corn, I'm still in the mindset letting some cash bushels go off the combine bushels go and get that get that cat off your back. But, yes, I think we've maxed out on the '25, 26 total demand number for corn. So if yield comes down, I'm expecting they'll pull demand down with it.
• 8:33
  Todd Gleason: Okay. Hey. Thanks much. I appreciate it, Mike. Thank you for being with us, and have a great drive.
• 8:39
  Mike Zuzolo: Have a great Labor Day, Todd.
• 8:40
  Todd Gleason: You too, and thank you much, Mike. That's Mike Zuzlow. He's at globalcomresearch.com out of Atchison, Kansas. You're listening to the closing market report on this Friday afternoon. Don't forget Monday, the markets are closed in observance of the Labor Day holiday.
• 8:56
  Up next, we'll hear from the Farm Progress Show earlier in the week. I talked with the University of Illinois Extension agronomist. We're now joined by Extension agronomist Gio Preza Fontes. Thank you Gio for being with us again today. What do you think has happened to this crop since USDA took its yields the first time around on August 1, mostly satellite based, some survey numbers.
• 9:28
  Has it really decreased in size?
• 9:34
  Giovani Preza Fontes: Think the crop ratings kind of reflect, I would say, the the dryness that we've had so far in August. If you look from August 1 to date, I think nearly across most of the state, it's been one to three inches below normal. So soils are starting to dry it out, and I think that's it's likely reflecting on the the deep decline on on the crop ratings.
• 10:02
  Todd Gleason: Is there a better correlation for soybeans or because soybeans tend to mature later, is it worse? I would say it's
• 10:12
  Giovani Preza Fontes: a little worse for soybeans just because, you know, if you think about the old adage that August and September make soybeans, I think that has been the case and it will continue to be the case. So any yield projections for soybean in August is, like, shooting from the hip. Right? We can we can go out and count number of pots, which is gives us a sense of how the crop has been developed. But I think the the the pot filling and the final seed weight, I think that's what it it's more impactful for our final yield.
• 10:50
  Todd Gleason: What would you suggest to producers about the things they should do in the fall related to agronomy, whether it's corn or soybeans and paying attention to what's coming into the machine and what frankly field conditions are like and how that might impact next season?
• 11:09
  Giovani Preza Fontes: Yeah. So thinking agronomically, and I always try to put some I always try to put a spin on the economic side. Right? We know that margins are tight. So I can't stress enough for farmers and maybe a lot of people don't like me, me saying that because it's, I always say, like, make sure that you have your basics covered.
• 11:32
  Right? Especially in years like this where corn and soybean prices are very low. So there are a few things that we can make sure that we cover the basics to set up a a crop for 2025 off to a good start. So I would encourage farmers to, once they harvest, take soil samples to see soil nutrient, soil testing levels in their field. Because we know from research that if you're above the critical level for p and k, depending how far you are, if you're in the sufficiency level, which is, you know, about 60 to 70 pounds of of p two zero five per acre in Illinois, you may not need or maybe you can go by with one or two years without applying p and k because you you you have enough in the soil to cover the next crop.
• 12:25
  So that's already maybe can alleviate some of the input prices that you you get. The other thing that is stressed is is talking to your seed dealer. First thing, make sure that you, you know, select the the a hybrid or a variety that has a good yield potential for your area. But then pay attention on the seeding rate because you can also save a little bit of more money there.
• 12:49
  Todd Gleason: When you're paying attention to seeding rate, what are the suggestions? Do they vary much from one end of the state to the other or even in Central Illinois from the highly productive soils to the low productivity soils?
• 13:01
  Giovani Preza Fontes: Yeah. And this is it's an interesting question. And I was a little bit surprised when I got data from doctor Emerson Abseger. He did three years and I think 25 locations across the three years going from North To Southern Illinois looking at corn yield response to plant population density. So it was surprising to see that we didn't see any differences between the regions if you look at the response.
• 13:28
  So that tells us that, you know, maybe we can pull the data together and provide a a general recommendation for the state. So, again, if you look at the economic optimum plant density, which takes into account the price of grain and the price of the seed that you're paying for, we see that most of the time, you know, we only need about 34 to 36,000 plants per acre at at harvest to maximize profitability in corn.
• 14:03
  Todd Gleason: So that probably puts planting population at 36, maybe as high as 38, I suppose. Is that in the range?
• 14:13
  Giovani Preza Fontes: You know, in corn, I'm I'm not very much concerned with emergency and percent establishment for corn because, you know, we most of the the technology that we have now in the planters, they're the best we've ever had. We often see maybe 95% emergence, so I would start with that. So maybe planting 36, 37, thousand seeds per per acre per corn will be a good start. And farmers know farmers know their field, and they know their fields that need a little bit more or a little bit less. So but I think that that's a good starting point to for to keep in mind.
• 14:54
  Todd Gleason: Advice for soybeans and what you should watch?
• 14:57
  Giovani Preza Fontes: Yes. For soybeans, again, we have data across the state covering all the three regions, and it's similar. And we see, we don't see any impact within regions. So when we look at the data overall, with current prices, like accounting, maybe soybeans at $10.10 dollars per acre, I think that, you know, having a final plant population of about a 110 to a 120, plants per acre, that's that's why we see maximum return on on seed. So a good a good thing rule of thumb, it's it's to assume 85% establishment.
• 15:37
  So if you do that, we you're probably planting one one bag per acre, which is about a 140,000 seeds per acre.
• 15:45
  Todd Gleason: It was Giovanni Prezofontas. We spoke with him during this week's Farm Progress Show in Decatur. On this Friday afternoon, let's check-in with Eric Snodgrass. He's with Nutrien Ag Solutions and Agrabal. Good afternoon to you, Eric.
• 16:11
  Thanks for being with us again.
• 16:12
  Eric Snodgrass: Yeah. You bet. Good to be back on.
• 16:14
  Todd Gleason: So let's talk about the cool weather that we have in place now. What could you tell me about how it
• 16:19
  caused, and more importantly, how long it's gonna stick around?
• 16:24
  Eric Snodgrass: Well, I'll tell you this. It was terribly forecast. I mean, if you look at all the forecast from back in, you know, the August or even the July for this time period, every single model out there was predicting this just to continue to be hot. But about a week ago, we saw the temperatures back off. Actually, more than that.
• 16:39
  Mike Zuzolo: So all the way
• 16:40
  Eric Snodgrass: back to last Wednesday, and now if you look back at the last seven or eight days in Central Illinois, compared to the data we got going back to 1893, this is a top five coldest final weeks of of August. And, yeah, it's it's it's night I mean, it's absolutely amazing. I I personally love it. Promise it's been so dry, but I'll I'll say this before we talk a bit more at the rainfall. It's amazing how quickly you'll find ridiculous news articles about things, Todd.
• 17:09
  And I I saw it was sent one this morning, maybe by a friend of yours, Jeff Nalley. Do you know Jeff out of the I do
• 17:14
  Todd Gleason: know Jeff.
• 17:15
  Eric Snodgrass: Yeah. Sure. So Jeff sends me a message this morning. He's like, what is this? Is this for real?
• 17:19
  And the article was blaming the cold air that we have now and the cold air that's coming again next week behind another front on the polar vortex. And I'm like, good lord. Just quit hunting for headlines, folks. And the reality is, you know, the the the air is coming from the Canadian Archipelago. That's that's in the Arctic.
• 17:38
  But you gotta remember, that's a place that's had sunshine now for, like, six months. Right? So this is it's cool, but it is not the same as when we have the polar vortex, which sets up in November and December and then starts to work its way in and out of being strong and weak. So just a interesting thing, but it's one of those headline grabbing things. And so Todd, the reality is is that we've got cool air in place, and there's a couple of warm days coming through, but we might get all the way through the first ten, twelve days of September on a colder stretch.
• 18:09
  But the big thing everyone wants to know is is there frost coming? And right now, I have no evidence of an early frost like we had in '74 when the first frost was, what, on September 6, I think in that year. I don't know. Wasn't born, but I've been told by a lot of folks that that was a crazy year to try to grow our crop because of that early, early frost.
• 18:28
  Todd Gleason: No. Trent Ford, the Illinois state climatologist sends me, some programming each and every Friday morning. In it today, he made note that Champaign County is the driest it has been. I think he said for the last three month period, or maybe thirty days. I don't remember.
• 18:47
  But since 1988. Yeah. It's been it's been really dry. So is there rain sometime for the Corn Belt in the next two weeks?
• 18:57
  Eric Snodgrass: Not for us. Not very much for us, but I know why Trent Ford's telling you that. I live by him. I've seen his lawn, and I'm sure he's wanting rain just as bad
• 19:05
  Todd Gleason: as as I do. But Tell you what? Irrigate. Well, that's
• 19:09
  Eric Snodgrass: not bad. No. It you know, I I do make light of it, but it's it's actually quite serious. The flash drought that's taken hold at the end of this growing season has targeted the Mid South, the Ohio Valley, and our part of the Midwest. And, unfortunately, the forecast is trying to put more rain down into Iowa, little bit in Wisconsin, more into Minnesota, some even in parts of Missouri, but it seems to not wanna fill in this Central Illinois hole, meaning that we are gonna continue to see the drier conditions.
• 19:38
  And, Todd, I drove past some fields this morning that were South of Champaign. And if I didn't know any better, I'd say they're ready to harvest. They are so dried out. And I had a one guy that told me that he already saw some moisture levels down to 20%. And so it's it's one of those things where, yeah, dry falls, okay, but we can't go this dry again.
• 19:58
  And all that area I just described to you funnels into the Mississippi River, which this morning was just three quarters of a foot above low stage. And gosh, in April, it was nearly 40 feet above low stage. So that just shows you how quickly the water cycle works.
• 20:15
  Todd Gleason: Yeah. I was asking about that while we were at Farm Progress Show concerned about logistics, trying to move grain, and especially when we have so much of it this fall. Yeah. We may not have much of an export market going to the P And W, but I would we'll have something going out the Mississippi River. We will.
• 20:35
  We always do. But, backing it up even on the Mississippi when you can't fill the toes is just going to add to the bass's woes. So we'll have to worry about that. Now turn your attention to South America. They will begin planting when?
• 20:52
  Eric Snodgrass: Yeah, some of them at the end of the weekend. So I did finally find out that on September 1, Parana can start planting. That's pretty that's on the very southern edge of the Cerrado. And then you have Goias, Mato Grosso, and Mato Grosso do Sol all capable of planting on the seventh, and then we the whole country can plant on the fourteenth. So none of them I think are gonna do it.
• 21:15
  It's a dry forecast, for those areas through the next fifteen days, so the monsoon is not starting early, and they will not plant into dust under just hopes of rain. They typically wait on about two inches of rain before they start going. But where all that rain is is it's parked on a cold front that's down in Argentina and very, very southern pockets of Brazil like Rio Grande do Sul, where we're expecting several inches of rain going forward. Now here's what's interesting, Todd. It's dry North and wet South right now when you look at South America.
• 21:44
  But if this La Nina that's still trying to build, if it gives us its typical precipitation patterns, we expect that to flip by the time we get into December, January, February. In other words, wetter north and drier into Argentina and Southern Brazil, which is what we're all gonna be watching going forward just to know if they are going to state of the crop calendar and if they're gonna, you know, produce what they're capable of producing given a normal acreage increase. And to be honest, I know a lot of growers I spoke for this last week are asking me to, like, invent a weather disaster for Brazil. And I'm telling you, I can't control this stuff, but that just I mean, that that echoes the sentiment of just the farmer right now. Right?
• 22:21
  They're we're at a point that we're looking for a black swan, and sometimes weather can deliver, but I don't see it in the near term happening in South America.
• 22:29
  Todd Gleason: We will check to see if a black swan develops before next Friday with you. I suspect not. Not in the weather anyway, but it could be. I suppose there are a couple of things that could happen. Could have a big wind.
• 22:42
  That would that would do the trick. Has done in the past. So but it feels like that's not in the offing. Hey. Thank you much.
• 22:48
  Eric, you bet. Talk with you again next week. Eric Snodgrass is with Nutrien Ag Solutions and Agribal joins us here on the closing market report from Public Media. If you can stay with us, commodity week is next. If not, you can hear it on many of these radio stations over the weekend, and it's up online at willag.0rg right now.