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Feb 21 | Closing Market Report · Closing Market Report

• 0:00
  Speaker 1: From the Lynn Degrand University in Urbana Champaign, Illinois, this is the closing market reported as the February 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzalo. He's a globalcalmresearch.com out of Atchison, Kansas, and Mike will make his way to the All Day Outlook at the Beef House in Covington, Indiana A Week from this coming Tuesday. I hope you can join him.
• 0:26
  The cost is just $40. All of the details of the agenda are online at willag.org. Register now. Don't make me wait to know that you're going to be there. Willag.0rg.
• 0:41
  Coming up this afternoon, we'll also talk with Eric Snodgrass as usual before Friday about the weather forecast, and then we'll turn our attention to Commodity Week. Normally, you would hear all of it. That's not going to be the case today for this hour because I had a very lengthy discussion with Jerry Gohlke. He turned bullish about a month ago. You want to hear it all, you can do that at willag.org.
• 1:06
  A lot of it this afternoon if you can stay with us for the whole hour. Some of it if you cannot, but it's all right there again at willag.0rg. We talk with Jerry Golke for Commodity Week along with Kirk Kimmel and Dave Chatterton.
• 1:21
  Speaker 2: Todd Gleason services are made available to WIL by University of Illinois extension.
• 1:26
  Speaker 1: March corn today settled at $4.91 and a quarter down six and three quarters of a cent. The May at $5.00 5, 7 and 3 quarters lower in December at $4.75, down four and a half. March beans, ten thirty nine and a half, down six. The November new crop down a penny and a half at ten fifty nine and three quarters. Bean meal, a buck 20 lower than bean oil 45¢ lower soft red winter wheat, up four and a half at five ninety.
• 1:51
  The hard red up a penny and three quarters at six zero nine and a quarter. Mike Zuzlow now joins us from GlobalCommerceSearch.com out of batches in Kansas. Hi, Mike. Thanks much for being with us. Can you give me your assessment of this week's trade?
• 2:07
  It's been interesting.
• 2:09
  Speaker 3: It has. And, you know, for the corn and wheat, you can't call it anything other than a bit disappointing because we had made some fresh highs in both. And we're probably gonna see a lower close at this stage of the game, as we get ready for the final bell on Friday, Todd. Meal also closing lower for the week. Soybeans tried to go it alone midweek.
• 2:32
  They probably will finish maybe just a little bit higher on the week. When I look at those price actions, it seems to me that the trade was doing a couple of things, unwrapping the corn bean spread. That would make sense if we're seeing an improvement in Argentine corn belt weather, which we probably are now and expected to be. I think more importantly, I think the trade's getting ready for the agricultural outlook for them next week and maybe laying some groundwork for since we're close to the February, we've done the job of buying the corn acres. Let's unwrap the corn bean spread, especially if USDA comes in with bigger corn acres.
• 3:12
  The final thing I would say about this week that I took note of was there's a lack of bullishness in the South American weather to help compensate the bulls. And I think that then gave the tariff fears, more, an elevated piece of the pie as far as what motivated the trade. And I think those really did reenter the market and the market sentiment. Copper and crude were weaker. The gold made new highs.
• 3:43
  All three of those suggest tariffs are probably coming into the mindset of the market more and more again. So those kind of the quick and dirty things that I saw that, you know, we need to unwrap and see a reversal of this week's trade if we're gonna keep that bullish momentum that we started out the month with.
• 4:01
  Speaker 1: So farmers have gotten themselves probably by this point, and by the end of this hour, I know, feeling pretty bullish about the marketplace. Other than our discussion at this time, what is it that they should be considering in their marketings for old and new crop?
• 4:21
  Speaker 3: Yeah. I'm I'm okay with holding a little bit of the old crop and just have about 25% of the 24 beans and corn left on the cash side. I don't have too much nervousness about that, especially given the weekly export sales we saw on Friday. Still very strong demand in corn. Better demand in the soybeans coming in at the top end of the trade estimates.
• 4:43
  And, I think we're going to see maybe a little bit of a pullback in terms of the production number in soybeans for Brazil and Argentina. But the new crop is probably the biggest issue. And that's where we need to get back up above $6 soft red wheat and $5 corn at this point in the lead month futures to keep that bull spread in play. If we lose the bull spread, I would say, Todd, we're probably going to lose the war, because that bull spread has been so phenomenal to the move up. And it's been such a good indicator of the cash demand and the tight cash supplies.
• 5:18
  Speaker 1: Are you watching Basis to understand whether we're going to lose it or not?
• 5:21
  Speaker 3: I am, but I'm not. I I think the basis is gonna be impacted more by some of the headline news, tariff news, especially when it comes to corn and ethanol and soybeans, when it comes to the crush and HPAI. I I think the Gulf prices against our against, excuse me, the South American cash prices, are probably the best indicators that I could see using right now. I I will say the corn market probably has extra premium because of the e fifteen year round talk and chatter, as well as more recently the idea that we're going to reciprocate with Brazil's, you know, tariff that they have of I think around 18% versus our tariff of about two, those those things I think help the corn market quite a bit. But by the same token, it probably opens the door that the corn has quite a bit more premium.
• 6:14
  And I think at this time of year, especially as we get ready for those acreage numbers next week, I think the corn really needs the wheat a lot more than it has over the past couple months.
• 6:23
  Speaker 1: So you'd be watching the acreage numbers that'll come out at the end of next week. The USDA AG forum is on Thursday and Friday. What else has been on your mind, whether it's with the grains or the livestock?
• 6:34
  Speaker 3: The the new highs in the in the gold has been certainly something that has helped the corn on a six week basis. The corn and the gold lead month futures are running a 90% positive price relationship, Todd. And that may break apart with the new acreage numbers coming from USDA. But if gold would make a high, that also would give me quite a bit more nervousness, in the corn market if we didn't see the wheat come back around. As far as livestock, cattle on feed report on Friday is gonna be very important to stop the bleeding in the cattle market.
• 7:04
  And the packer's really done a good job, it seems to me, of backing up cattle and picking his price and picking his number, and it's really caused some breakdown in the price action. The funds have started to let let go of some logs.
• 7:17
  Speaker 1: And finally, I'm really looking forward to seeing you on Tuesday, March 4, not very far away, a week from this coming Tuesday at the Beef House in Covington, Indiana.
• 7:26
  Speaker 3: I can't wait either. I'm shopping for the Irish Boulevard beer and the leg lamps as we speak.
• 7:32
  Speaker 1: Oh, I forgot about the leg lamps. I can hardly wait. Maybe you'll find them. Maybe you won't. We'll be looking forward to that.
• 7:39
  Hey. Thanks, Mike. I appreciate it. Mike Zuslow, of course, is with GlobalcomResearch.com out of Atchison, Kansas, and you can join us at the Beef House in Covington, Indiana. That's Tuesday, March for the annual All Day Ag Outlook.
• 7:55
  It's our thirty fifth event. Don't wait. Get yourself registered today. The cost is just $40 at least through February, and then it'll go up by $20 a ticket. So register now at willag.org, w I l l a g 0 r g.
• 8:12
  Mike will be there along with Sue Martin and Brian Stark, Alan Dearden, Greg Johnson, Danny Poff, all names and personalities that you hear regularly here on WIL AM five eighty, along with FarmDOG team members Joanna Colusi, Joe Janssen, Scott Erwin, Nick Paulson, Jonathan Koppas, and Gary Schnitke. Don't miss our all day outlook. It's Tuesday, March at the Beef House in Covington, Indiana. You can sign up at wilag.org. And when you're signing up, you'll see that you can pick up some books to bring with you.
• 8:46
  You'll need to buy those, of course, like Tractor Wars and Back to the Futures or The Fault Lines of Farm Policy or Between Soil and Society. Neil Dahlstrom, Scott Irwin, and Jonathan Coppas are the authors, and they'll be signing those books. So make sure you bring those along too for the all day I got look Tuesday, March at the Beef House in Covington, Indiana. Let's turn our attention now to the weather. Eric Snodgrass is here to talk about what's happening in the growing regions across the planet.
• 9:19
  Let's just call that the Western Hemisphere at the moment. Can we start here in North America where there's been a lot of snow, just not where it usually happens? How do you assess what's been taking place?
• 9:32
  Speaker 2: Well, Todd, there's no doubt we've had just complete open access to Arctic air on multiple occasions. Right? And so what's interesting, I was telling a group this this morning. I used to ask my students at the University of Illinois. I say, well, where where where's the driest place on earth?
• 9:45
  I'm just asking. And usually what would happen is my students would just recall fifth grade geography and then shout out whatever desert came to their mind. You know, and like, no, no, no, no, no. You've all got it wrong. It's not the Sahara.
• 9:56
  It's not the Gobi Desert. It's not the Mohave. It's the Arctic, the Arctic and the Antarctic are the driest places on earth. They go, well, well, there's snow there. I'm like, yeah, they get four or five inches of snow a year, but it hasn't melted in in in in five hundred thousand years, you know, so it's it just adds up.
• 10:12
  And so what's problematic about that is where's the big snow's been as of late? Maybe we just watched more snow go through Missouri all the way through Kentucky, which flooded out last week. Then we saw that that that snow get all the way to Virginia just the other day. We had the epic snowstorm that hit the Gulf Coast. We had the wildfires that were in the Southwest.
• 10:30
  All of that points to where the dry air is coming from, where the cold air is coming from. It's been from the Arctic. So we've got a bigger drought problem to be talking about here. And even the places that have gotten snow, we've not been loading up very much water into that snow. And what's really bothered me with all of this, Todd, is, yeah, our next week is dry.
• 10:48
  It is gonna warm up. Thank goodness. But we're not gonna be bringing in any sort of moisture with this warm up. And I think the bigger issue here is that lingering underneath this frost layer in the soil is falls drought. So I'm seeing all this, Todd, because we're about to get into March.
• 11:01
  And I just look at the pattern as it is and where it's going in the near term. And I'm just gonna say this. If we don't get a pretty wild March going and then a wild April, we will be having a serious conversation about drought pressure going through the 2025 growing season. So with that whole narrative out of my mouth now, Todd, you know what I'm worried about just here in the near term.
• 11:20
  Speaker 1: What's that? Oh, you're worried about drought. Sorry. I wasn't paying attention apparently. It's like, what's the pause for?
• 11:30
  You're worried about drought. But I have to ask a question because when you have been telling this story, throughout the winter months, you have talked about the Eastern part of the Corn Belt actually being pretty wet, and you were concerned that that will happen in the spring. Has that changed?
• 11:47
  Speaker 2: I no. It hasn't. And this is what's really interesting about this. Find the Mississippi and just use it as your dividing line. So right now in Memphis, okay, where the Ohio River and the Mississippi come together.
• 11:57
  Okay? If they come together north of that, then it gets to Memphis. The river is in the last two weeks come up 30 feet. St. Louis, it's still three feet below low stage.
• 12:08
  So what are we talking about here? The Eastern Corbel around the Ohio River has had a tremendous amount of rain flooding, then they froze with snow on top of it. And so I'm thinking that this particular pattern, if it is in some sort of persistent mode, means that if you're in parts of Illinois or you get over into Indiana, Ohio, Kentucky, Tennessee, that that Eastern Corn Belt region, we may be talking about tight spring windows with above average precipitation. You get west, we're gonna be watching for drought risk to creep out of the plains. Coming into Nebraska, Iowa, Minnesota, possibly the Dakotas.
• 12:40
  And then the question will be, does the atmosphere lose its momentum in June and July such that that's this risk of being hotter and drier in the plains begins to bleed over toward the Mississippi River? And there are plenty of models out there that'll support that. And it'll all be told to us, Todd, by the time we get into May and June, if the water temperature is not where there's La Nina, but if the water temperatures in the Gulf Of Alaska start cooling off. And I just think that there's, you know, above average risk. So you say, well, what's average risk?
• 13:08
  Well, in Illinois, about one in three springs going into summer have drought risk developing by summer. It's not that's not too high. It's about a third, but the farther west you go, those numbers, well, this year, I think are upwards around 60%. So I'm gonna worry about this, Todd, until I don't have time to worry about it or something changes. And I'm also gonna say this.
• 13:28
  We cannot make any judgment call based on our marketing plan or anything based on what I just said. Don't don't change anything you're doing just yet. I just want everyone to know that there's a couple of bigger things that we need to be paying attention to because the world is waiting for The United States to have a supply side shock. And I think that's what's the narrative gonna be until, till we get to June, July. No no no better or no worse.
• 13:49
  Speaker 1: In South America, are you envisioning any kind of supply side shock there?
• 13:53
  Speaker 2: Well, we we're getting a better idea on the soybeans, and I don't think we're gonna get much good news there. Some of the driest areas of Argentina recently got rains, which they needed. And then we're looking at the safrinha crop, which was slow to go initially, but has really picked up pace because it was dry literally at the right time. So what does that mean? You we we we if we want to see a problem with the safrinha crop, we gotta see happen what happened in 02/2021.
• 14:18
  And that was where the big subtropical high that lives off the coast of Brazil just invades Brazil and gets hot and dry underneath it. That needs to happen about six weeks from now, which means over the next six weeks, you and I need to have a conversation if we're watching drought build in from the East toward the Center West if there's gonna be an issue hitting the Sabrina crop. As it stands right now, conditions are not bad on that crop going in, but it could be problematic later, and that's what I'll be watching.
• 14:43
  Speaker 1: Anything else for the day?
• 14:45
  Speaker 2: No. I think that's about it. La Nina is fading, but that's not a big factor. We just need to see when and where we finally break over to some warmer temperatures. I just will say this to an Illinois farmer.
• 14:54
  You may need to sit on your hands for a while through late March and early April as I think the temperature pattern is gonna stay volatile until we get maybe into that April.
• 15:03
  Speaker 1: Thank you much.
• 15:04
  Speaker 2: Yeah. You bet.
• 15:05
  Speaker 1: That's Eric Snodgrass. He joined us on this Friday edition of the closing market report that came to you from Illinois Public Medium. It's public radio for the farming world online at willag.org where you can pick up those tickets for the Beef House event, the All Day Ag Outlook on Tuesday, March. Right now, the cost is just $40. Up next, our Commodity Week program.
• 15:34
  Speaker 2: Todd Gleason services are made available to WIL by University of Illinois extension.
• 15:40
  Speaker 1: Well, welcome to Commodity Week. I am Todd Gleason. Coming up, we'll talk with our panelists, Dave Chatterton of Strategic Farm Marketing and Kurt Kimmel of agmarket.net about the marketplace, and then we'll hear a very special conversation that I held with Jerry Golke of the Golke Group. We talked at length about the marketplace. You wanna visit our website to hear all of that at willag.org, where, by the way, you can sign up today for the all day ag outlook.
• 16:08
  It's coming up at the Beef House in Covington, Indiana on Tuesday, March. The FarmDoc team will be there. We'll have six commodity analysts, including Sue Martin, on hand with us, and we'll hear from John Reed too. He's the director of the Center for Digital Agriculture on campus. Spent twenty years with John Deere.
• 16:28
  We're going to talk with him about autonomous operations on your farm. We'll do that on the March at the beef house. The cost is $40. Register today at willag.0rg. Now let's begin our conversation with Dave Chatterton and Kurt Kimmel.
• 16:47
  Dave Chatterton, let's begin with you today. When you take a look at the marketplace as a whole, corn, soybeans, and wheat, how do you suppose the fundamentals domestically line up, and then do they differ very much on the global stage?
• 17:06
  Speaker 4: Yeah, Todd. It's a really interesting question. I think they do a little bit. And right now, we're in The US. We're looking at a situation where you have a very kinda corn versus bean situation shaping up here.
• 17:17
  And as we look forward here, when we look at our corn stocks in The US, not not overly tied, but certainly, you know, not, you know, not burdensome at this point, where beans are going the other way. When you put that in terms of where we're at in in the world carryout, the world carryout for soybeans this year, looking to set a new record high with record production in South America, pretty much assured at this particular point. When you look at the global carryout situation or the world situation on corn and the ending stocks there, particularly when you break it down to the exports of corn around the world, so The U. S, Ukraine, Argentina, Brazil, those stocks and those stocks to use ratios are almost as tight as we've seen. I mean, historically, they're, you know, they're the stocks to use ratio that gets you down to a where you just do not have a lot of room for error.
• 18:02
  And there is the fundamental tie into the marketplace. Funds have been long corn. They've been buying. We've rallied more than a dollar since the since the late summer low. And in doing so, we've seen the fund position explode not to a record high, but certainly to a level that gets your attention here.
• 18:18
  And, you know, that's been reflected as the the outside capital has come into our marketplace here. We've had a good exchange with the farmer, but we're now at a point where farmer sales have caught up. And so, you know, if that that flow continues to come, it's favored corn to this point, but we've seen it start to get dispersed into the other grains as well into into wheat and into the soybean complex. So soybeans are very much tied, I think, on on the upside to what corn can do for them. Corn here is in a situation where until we can assure that, we've we've got a good corn crop on the way in Brazil and until we've got the acres that the market is asking for in The US here this spring.
• 18:54
  So somewhere between three and five million additional corn acres that maybe there's not a lot of downside here. So that's the fundamental tie in. I think it's, you know, it's more bullish in corn when you look out particularly on the world stage than what we find in The US and and the opposite in beans.
• 19:08
  Speaker 1: Right. You used a word that we'll hear later too, bullish in corn. Do you have upside potential or targets that you're using?
• 19:16
  Speaker 4: Well, I mean, we're at a level here where a lot of people thought, you know, maybe including myself for a while, we would never get $5 in on the spot. And, you know, we've got the summer contracts above that level. We're still not there on the new crop, but those are numbers that all of a sudden bring profitability back into play. We've certainly done ourselves some favors here in terms of where we're gonna end up on the February spring crop insurance price guarantee. It's gonna actually be probably above where it was last year by a little bit.
• 19:42
  Again, something that we didn't think would happen. So I think the bullish element becomes yeah. I mean, if if we get through that upside, our recent highs or if you go back, you know, into December, that five zero eight level, five zero five level, if we can work, we've been very close to that, but we haven't been able to push through it. If you do push through that, you're looking at the market that goes at least to $5.25 and more likely $5.40 if you can get the funds to come in and and start trailing behind
• 20:07
  Speaker 1: it and buy. Kurt Kimmel, Dave's talking about some numbers that farmers really want to hear. We use the word bullish. We'll hear Jerry Gohlke use that a bit later in the program. Are we three three three for three with you?
• 20:21
  Speaker 5: Well, as far as wanting to hear something on new crop, yes, but old crop, a lot of old crops been sold. So, yeah, if we're gonna keep marching higher here, there's some replacement strategies to, be on board. As far as the old crop March, we're watching this 05/05/2008. Five zero '8 was the May high before we started rolling down into the growing season. Then plus May at five zero eight, that's about 62% back up to the contract high.
• 20:48
  New crop December corn, our next price, target is, $4.90. But there's just a ton of moving parts out there. Yes. You can be bullish corn. But yet too, we gotta remember, we don't export a whole lot of corn percentage wise as bees, but our best customers are Canada and Mexico.
• 21:06
  And if these tariffs would happen to really get going in through here, we make our, trading partners mad. You know, that could, put a little bit of a dim light on exports, even ethanol into Canada. A large percentage of our ethanol exports can go into Canada. So there's a lot of moving parts out there. When you look at the optimism here, we're in the opinion, come in and put some price floors in in case this thing does not giddy up and go here.
• 21:35
  Speaker 1: So tell me about the domestic fundamentals in that case is as you view them because we have now a carryout at one point, what, five five, 10% stocks to use ratio. How much difference does it make that we are at what most agricultural economists would call the midpoints, relatively speaking, for the marketplace, that 10% stocks to use ratio that is, as opposed to what's happening on the global marketplace. When you
• 22:06
  Speaker 5: looked at domestically, feed usage is high even though feed usage is a miscellaneous category. We're feeding a heavier weight, so that continues to be the big consumption here. The other parts of ethanol, they've been trying to downplay ethanol, but ethanol, continues to hang in there. So domestic, consumption is the key to the corn market. But if you go back in May when we started looking at the current supply demand balance sheet, carryout was 2.2, two point one.
• 22:37
  Then all of a sudden here this late fall, early winter, we're down to 1.5. There's some ideas maybe we could be as tight as 1.4. So significantly tighter than where we, started from last May. Now when you project out to the new crop to 25, if the larger acres keep demand the same, they're gonna start talking two two for this new crop possibly. But if this demand stays good and we run into some weather, watch out.
• 23:04
  Speaker 1: You've been listening to a portion of Commodity Week during our closing market report from Illinois Public Media. You may find the whole of that program online right now at willag.org where you can also sign up for the all day ag outlook at the beef house in Covington, Indiana. Again, that's at willag.0rg. I'm extensions, Todd Gleason.