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Feb 06 | 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 February 2026. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zusalo. He's at globalcomresearch.com out of Atchison, Kansas.
• 0:16
  Giovanni Prezipontes will join us to discuss how you can use conservation tillage in the fall in front of your corn crop, and then we'll turn around, talk about the weather forecast too, and that corn crop soybeans as well, and what conditions might be like in The United States going forward into Argentina and Brazil as well. We'll do that with Eric Snodgrass on this Friday edition of the closing market report from Illinois Public Media. It was an interesting week in Chicago context. Will be important, but first, don't forget to purchase your tickets for the All Day Ag Outlook. It's coming up the March.
• 0:55
  That's a Tuesday. The cost is just $40. Willag.org to make those purchases. In Chicago, corn and soybeans, old and new crop, all settled with outside up weeks. Mike Zuzalone now joins us from globalcomresearch.com.
• 1:09
  He is in Atchison, Kansas. Hey, Mike. Thank you for being with us. It's been a while since we've talked. I appreciate you, not being with me because I took some vacation time, and I just had a ball while we were in New York City in Boston.
• 1:24
  My wife, Claire Ann, and I went there. However, by the time I arrived back to go on the air Thursday yesterday, a whole lot had happened. Can you tell me about how you saw this last, I don't know, five to seven days in the marketplace?
• 1:37
  Mike Zuzolo: Yeah. I mean, it was a big week because we had for a second week in a row a lot in the soy complex, a dramatic price. I guess I would classify it, Todd, as a price determination shift. What moved the markets? And we went from fundamentals to start the week with Argentina, Brazil, exports being too expensive at our Gulf versus South America, things like that, back to policy again.
• 2:07
  And we had the 45Z announcement from the US Treasury that really didn't get us anywhere after one, one and a half days as far as bean oil led rally. And I put that to the point probably because it was a mixed reaction in the biofuel industry. So the the trade didn't sink its teeth into that, but it did really sink its teeth into the second policy move, and that was president Trump announcing those Chinese purchase increases from 12 to 20,000,000 metric tons for US beans. That essentially took us from $10.50 March futures to $11.40 ish, and in November, took us from about just under $10.70 to just over $11. Notice, though, on Friday, I think we went back to more of an issue of maybe buying the rumor and selling the fact because we had not gotten any validations from China in terms of press release, nor had we gotten any physical bushels purchased in US export sales.
• 3:10
  And we're recognizing we're bumping up against Tuesday's WASDE report. And so I put that as 75% of the market with the bull spread very active in beans. The other 20 five-thirty percent though is probably the most disconcerting. We didn't see the wheat and corn really follow the beans very well at all, except on Thursday, and it was a very out of sync market as we closed the week. We had a lot of reasons to go higher in the outside markets: gold back up 4%, silver up 8%, equities new all time high, dollar was down, crude was up.
• 3:44
  Not much, but we had the makings of coming back around. I would say net net, agricultural futures, both grains and grains and cattle, were pretty disappointing on Friday's close. So we don't wanna slip into a sentiment shift here, and that's kind of what I'm getting at with the funds. I'd like to see a really good Monday in terms of the closing market.
• 4:05
  Todd Gleason: So by that you mean the January final reports is kind of the tone we're set with still?
• 4:11
  Mike Zuzolo: Yeah, I think so. I think this is where, you know, at the end of the day, we're buying beans and selling corn right now because of this news. Not as much in the new crop, but we're just making our beans more expensive. And and we do have the supreme court coming back on Feb twenty, and I would expect that they will probably talk about the tariffs. And so I think president Trump's policy you know, I don't know this.
• 4:39
  This is my analytical mind working, but I think president Trump and his people are very aware this is the base crop base crop insurance time for figuring for crop insurance for corn and beans. And I think they're making policy moves to try and keep the futures market well supported. Will WASDE, will South America, will the Supreme Court allow for that support to continue? That's where I'm very much in the camp of doing short term hedges on new crop beans, and did some more 25 sales. I've got about 10% more left to sell on 25 beans, but I was really thankful for the rally.
• 5:15
  But it's just, are we on thin ice or not?
• 5:18
  Todd Gleason: Yeah. So I know that you must have looked at the calendar for the Supreme Court, see that opinions next time are due on the twentieth. I kind of thought that they would come again sooner than that, but they're not not until then that and they may or may not come out with an opinion. Hopefully, they'll have, I guess, an opinion. Who knows?
• 5:36
  Mike Zuzolo: Yeah. There's a lot of writing there's a lot of writing in Washington saying the exact same thing or suggesting the same thing that you are as what's going on? Why the delay?
• 5:44
  Todd Gleason: Right. Yeah. And we don't know. South America, the drought you discussed there looks like there might be rainfall that takes care of some of that. Do we know how badly the Argentine crop has been hurt, corn and or soybeans, and how much of a difference it really makes?
• 5:58
  Mike Zuzolo: Yeah. I think it I think we do know more and more, and I think this might be why the meal market gave us some support to us late in the week and and why I was also disappointed with the corn. Because in in states like provinces like Rosario, the thirty day precip has been less than 30% of normal, and we're talking about 100 degree temperatures. In Buenos Aires, that province looking at thirty day precip levels of about 55, 60% of normal and very hot, dry conditions there. I'm picking up that we've got, in some areas of Argentina, if these expected rains, as you know, don't come through, I've got expectations that we'll see some 2012 type looking corn, like what we had in 2012, be seen in some of the key provinces of Argentina.
• 6:47
  I would also suggest that what I've seen in the models, both private forecasters and what I look at myself as the models are in very much disagreement. So not a lot of rain the next five days is supposed to really come on, though, after that. That's going to be, I think, a big piece of the puzzle with the WASDE report in terms of the supply demand fundamentals, not the policy fundamentals next week.
• 7:08
  Todd Gleason: Anything else before I let you go?
• 7:10
  Mike Zuzolo: I would say this, Todd, that there is a bigger and bigger disconnect between cash, wheat and corn, and it is getting wider and wider. Near three month highs in Russian wheat, near three month highs in European grain cash markets, and three month highs when it comes to or two to three month highs in Ukraine corn prices at the export market. Is that war? Is that supply? It could be a combination, but there's something of a whistling past the graveyard in the futures market, it seems to me, Chicago versus what's happening out there.
• 7:38
  So I still very much feel like the corn market's got some upside to it.
• 7:42
  Todd Gleason: Hey. Thanks much. We'll talk with you again next week.
• 7:44
  Mike Zuzolo: Thanks, Todd. Have a great weekend, and have a nice Super Bowl, buddy.
• 7:47
  Todd Gleason: You too. That's Mike Zuzolo. He's at globalcommresearch.com in Atchison, Kansas. There's a new article on the Crop Central web site. You can find that by searching cropcentralcommaillinois.edu.
• 8:06
  It should be one of the first things to pop up, sometimes called the Bulletin. This one's titled Evaluating Soybean Performance in Conservation Systems, a project report. Giovanni Prezefontes is the lead on it. So you were looking at soybean production in different ways, for instance, no till, conventional till, strip till, and cover crops involved, I think, in just the no till portion of it. Can you tell me why you looked at those and what some of the outcomes might have been?
• 8:37
  Giovani Preza Fontes: Sure. Yeah. So, you know, when we think about soil erosion, right, either by wind and water, Conservation practices such as reduced tillage and cover crops, they are well established. Right? So we know there's a a body of work in the literature showing they're very effective at reducing soil erosion.
• 8:58
  And not only that, but there's also many other, what we used to call agroecosystem benefits from those practices. Right? So you're keeping the soil covered for most of the time. If with the cover crops, you know, there's evidence that they're helping suppress weeds, breaking past disease cycles, improving nutrient cycling. Cover crops is a big component of our Illinois nutrient loss reduction strategy.
• 9:25
  There's a lot of work that shows that we can reduce nitrate leaching losses and tile drainage with a grass cover crop. So we know all the benefits, but then when we look at adoption, it's it's relatively low. My student Federico Rolle, he he's the one leading this project with me. So he looked at the USDA and Illinois Department of Ag data on percentage of no till fields in the Midwest and Illinois. So just focus on on Illinois.
• 9:57
  We can see that the the percentage of no till cropland, it's relatively low. It's about 15% on corn and about 35% on soybeans. And, again, we know the the benefits, but I think when I talk to people, there's this, you know, perception that these practices are somewhat risky, mainly because they're often associated with potential, yield penalties.
• 10:23
  Todd Gleason: You took a look at, five different fields, in Illinois and Iowa. What did you find?
• 10:30
  Giovani Preza Fontes: Yeah. So, again, we looked at different combinations of tillage systems, with starter fertilizer. So a total of 12 treatments just to briefly list them. So we looked at conventional till. It's a two pass, right, a fall chisel with a spring cultivator.
• 10:49
  That's what most people are doing. Then a strip till in the fall, a no till, and a no till with a cereal rye cover crop. Each of those systems were paired with starter fertilizer strategy. We also have an untreated control where we don't have any fertilizer. We had a treatment where we applied, nitrogen as UAN and another treatment where we applied nitrogen plus sulfur as a blend of UAN and ATS.
• 11:17
  Todd Gleason: Once you've done that, really what we wanna know is how well the soil stayed in place, but also for this, we're looking at the economics of production, isolating just the tillage portion of this and the things that are surrounding the different methods. Did you come up with a net return of any sort? And I know it'll be a partial net return because it doesn't include anything, but Mhmm. What what did that net return look like, and which practices held up best?
• 11:49
  Giovani Preza Fontes: Yeah. So just quickly before we get to that, we did see some early season responses as we would expect to see. Like, on average, the soybeans that received starter fertilizer, they tended to look greener, and they produce a little, bore a little bit more, biomass early in the season. We we took, soybean, samples early in the season, mid season to kind of see, how they performed throughout the season. We did see those early season effects, but then at mid season, they kind of disappeared.
• 12:23
  We took tissue testing, at r two, and by that point, we did not see any significantly difference in and we looked at nitrogen and sulfur concentrations on those tissue testing that we did. And an important point here too is that when we look at those concentrations, they were all above the the critical level that we we often see in the literature. So the data pretty much suggest that, you know, by that time, mid season, the the soybeans, they were not nitrogen and sulfur deficient, even even the ones that we did not apply nitrogen. When we look at yields, again, even though we saw those early season starter fertilizer effect that did not translate to yield, so meaning that we did not see any yield increases when we had the starter fertilizers, but we did see differences in the tillage system practices. So on average across six sites in two years, we saw that, basically, we're we were able to maintain soybean yields when we moved to some of those reduced tillage practices.
• 13:36
  So there's a figure four in the article. If you look at the average yield, statistically, we did not see any significantly differences among the conventional till, the strip till, and the no till. We saw a slight slightly lower yields when we had the no till with the Sierra rye, but numerically, that was just like two bushels compared to the conventional till. So they all average about 60 76 to 78 bushels to the acre.
• 14:05
  Todd Gleason: And when you put down just the brass tacks, because no till didn't have a cost related to tillage, and the others did. Honestly, the no till, once you took the gross revenue, might have had a lower gross revenue than both strip till and conventional till, but once you take out the cost of doing the tillage pass, it did better.
• 14:30
  Giovani Preza Fontes: Exactly. Yeah. So we we used, like, those cost of tillage that our colleagues in in the Ag Econ. Right? So they have this handbook with the college of field cost of of tillage prices.
• 14:45
  So, again, we only did this as a partial net return, so we were only taking into consideration the cost of the tillage. Right? So if you look at at the the partial net return, we did see higher returns with no till and exactly as you said, just because there is no expenses with no tilling, followed by strip till and conventional till. We did see the lowest partial net return with the no till with the cereal rye cover crop, and that was mainly associated with the higher cost associated with cover crop management.
• 15:20
  Todd Gleason: And that would have been the cost of the seed in the past to get it on.
• 15:23
  Giovani Preza Fontes: Exactly. So, yeah, planting cost of planting seed and termination, and estimated at $55 per acre versus strip till, for example, is estimated at $26 per acre. But, again, we try to make the argument that, you know, like, we know there are and farmers know. Right? Everything we do in the field costs money.
• 15:48
  I know we know there's a big push for cover crops. We know the benefits and why we're promoting it. But, again, I think this is something that farmers usually ask me a lot on the economic side. So, again, this is just partial net return on this, but it gives an indication that, you know, like, some of those conservation practices may come at an additional cost, and I think there's there's need to be some discussion there. There are a lot of state and federal cost share programs that can help offset some of those costs, and and I guess I'll I'll I'll just leave those conversations to the ag economists.
• 16:26
  Todd Gleason: That's Giovanni Prezafontes. He is an agronomist in the Department of Crop Sciences at the University of Illinois. You may see this research online, the article that he's penned. It's titled Evaluating Soybean Performance in A Project Report. It's in the Crop Central website.
• 16:46
  The bulletin, just search it out, Crop Central and Farm Doc Daily. Let's take a look now at what's happening in the world of agricultural growing regions. Eric Songras joins us. Hi, Eric. Thanks for being with us, of course, with Nutrien Ag Solutions.
• 17:14
  I'm wanting to know about the cold weather that we have had and the warm weather that we have today. I had 37, 40 degrees. Feels pretty darn good at the moment, I suppose, even under cloudy skies.
• 17:26
  Eric Snodgrass: Yeah. I mean, I'm on my way through Peoria right now as we're talking, and the car says it's 43 degrees outside. I left my jacket at home, honestly. I just, I have, a quarter zip on, and it's plenty plenty nice, and and it's such a far cry from where we have been. So what's going on here is that the January up until about two days ago has, really brought in some arctic air.
• 17:48
  It's come out of the arctic tide of what's been so mild and so dry in the West. But now we're starting to see a little bit of a turnaround in that pattern. It's going to replace all this incredibly dry air that we've been dealing with with better chances of moisture. And the jet stream starts to make the turn and come out of the Southwest, Todd, we could start to work against, the dryness we've experienced. And even though there's snow on the ground, you gotta understand something.
• 18:11
  There's not much water in that snow. And below it, the the subsurface soil moisture issues are still lingering from falls drought. So I would like nothing more than to warm up and get some rain on top of this, and there's better better chances as we go toward the middle of the month that we're gonna see that.
• 18:27
  Todd Gleason: We are behind. And while the folks in the South are talking about being Southern Illinois that is about being dry, it's really right where we live is kind of the the center of how dry things have been. You think mid June or mid February really can change things up for us?
• 18:45
  Eric Snodgrass: I hope mid June too, Todd, since you dropped that in there. But no, I I do. I think that the I think there's more and more evidence that as we go into the February and then get into March, April, we're gonna we're gonna see a quick revival of soil moisture. If it doesn't happen, and that's always a possibility. We know that.
• 19:03
  If it doesn't happen, then that means a lot of these signals we're keeping an eye on right now, we really don't understand them. And what I mean by that is all of them are kind of pointing toward a more active Ohio and Mississippi Valley setup to finish this winter and start spring. And again, I'll give you some years to think about, the same three years I've looked at for a while, but this 2018, 2014, and 2009. And I think, Todd, that using those years to get us out of winter and into spring is probably pretty good advice on finding some analogs, at least a blend of those years. And the question will be is once we get farther out into the spring, do those years still hang on?
• 19:40
  Todd Gleason: So longer term, what are we hearing about for The United States?
• 19:45
  Eric Snodgrass: Yeah. Well, actually, our story in The United States might start somewhere in the Pacific, like the Equatorial Pacific. And here's the new story. This just came out on the fifth, Todd. We have a brand new long range update, from the European model.
• 19:58
  And I to be honest with you, I was a bit shocked to see that the model increased the likelihood of not just an El Nino, but a strong El Nino by by midsummer, mid to late summer. And when you look at how the model is handling that, it's keeping much of the Delta, the Mid South, Midwest, including the Mississippi and Ohio river basins very wet, always through the Great Lakes in the spring and summer. So based off of that, plus my analogs, I would say, hey, we do need to probably be talking about tighter windows. And Todd, in a month from now when we're talking together over at the Beef House at your all day Ag Outlook, I think it'll be much clearer at that point what spring may hold. So this back half of February will be very telling as we watch La Nina collapse and La Nina build, and then how all the little subseasonal features, you know, kind of jockey position around that bigger factor.
• 20:51
  Todd Gleason: We will look forward to hearing about that in the growing season here, but, really, it's about the growing season in South America at the moment. Argentina has been dry. Are they going to have some relief?
• 21:02
  Eric Snodgrass: Oh, they already did. On the fourth, it stormed in Buenos Aires Province, and then they had storms last night in Cordoba, Santa Fe, and then the northern growing areas. And right now the forecast for the next two weeks, well next week, it's looking really nice in some areas down there in Argentina. And Brazil, I'm waiting to see what the harvest progress looks like. They'll send out those numbers later on the afternoon on Friday.
• 21:24
  But I'm guessing, since last week, they were double the pace of the average five year harvest progress in soybeans and Mato Grosso, but they will probably, you know, still be near the top of the distribution. Sabrina Corn is going in a little slow. Maybe they made more, speed up this last week, but it was a little behind. That's something interesting to watch. But the reality, Todd, is that we are now entering the eighth straight week where the NDVI values across Brazil that's plant health measured from space.
• 21:54
  Okay? Where they are now in, eight straight weeks of record high values. And so you have to imagine that the soybean crop coming out is as big as some of those estimates would suggest.
• 22:04
  Todd Gleason: Indeed. Thank you much. We appreciate it. We'll talk with you again. Look forward to having you at the Beef House too.
• 22:10
  Eric Snodgrass: Yeah. It'd be a lot of fun. I am looking forward to it as well. And, hopefully, you get a a packed house there, and we all get to enjoy some good cinnamon rolls, coffee, and discussion of markets, weather, and all the other good stuff.
• 22:20
  Todd Gleason: All of that stuff, thank you much. Folks can come and see you and the rest of the PharmDoc team, the Will Ag analyst at the Beef House. That is Tuesday, March 3. The cost is just $40. It's a bargain, for the day.
• 22:35
  You'll love it. Get yourself registered. You can do it on our website right now, willagg.org, willag.org. But don't wait. I didn't start marketing this until, you know, we're three and a half weeks out.
• 22:47
  So just go ahead and get yourself registered today. Don't wait, and we'll look forward to seeing Eric and you at the Beef House. Thanks for listening to us here on the, afternoon with the closing market report.
• 22:59
  Eric Snodgrass: If you
• 22:59
  Todd Gleason: can stay with Us, commodity week is next. If not, you can hear it online at willag.org. I'm University of Illinois Extension's Todd Gleason.