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Jul 18 | 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 July. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzlow. He's at globalcomresearch.com out of Atchison, Kansas.
• 0:17
  If you'll stay with us for the whole of the hour, you'll hear more from Mike as he joined our commodity week program recorded yesterday afternoon along with Naomi Blohm of totalfarmmarketing.com and Jim McCormick from agmarket.net. If not, it's up online already for you to listen to it will ag.org and many of these radio stations will carry it over the weekend. After Mike in the beginning of our program, the closing market report, we'll take a look at what's happening in today's agricultural news. And then as we close out the first part of the day, we'll discuss the agricultural weather forecast with Eric Snodgrass. He's at Nutrien Ag Solutions and Agrabal, and we'll do all of that on the programming that comes to you from Illinois Public Media.
• 1:03
  It is public radio for the farming world online, on demand, anytime you'd like at willag.org.
• 1:14
  announce: Todd Gleason services are made available to WILL by University of Illinois Extension.
• 1:19
  Todd Gleason: December corn for the day at four twenty seven three quarters, six and three quarters higher. The March at four forty four and three quarters, up six and a half cents. November beans, ten thirty five and three quarters, 9 and a quarter cents higher. Bean meal up $5.30. The bean oil, 40¢ lower.
• 1:35
  Soft red winter wheat in the December up twelve and three quarters settled at $5.67, and the hard red at $5.51 and a half cents a bushel finished 11 and a half higher. Mike Zuzlow, globalcomresearch.com out of Atchison, Kansas now joins us to discuss the marketplace. Hi, Mike. Thanks for being with us today and for recording commodity week with us yesterday too. I appreciate that.
• 1:57
  Mike Zuzolo: You bet, Todd. Great to be with you.
• 1:59
  Todd Gleason: Let's start, with what's happening in the marketplace. There was a bounce in the corn today. Why did that take place?
• 2:06
  Mike Zuzolo: Well, I think the big thing that we noticed was the corn was released from the wheat complex, and it was really the wheat that had been dragging the row crops, trying to drag them lower. In the case of corn, it was succeeding. In the case of beans, not so much because we had the products underneath us. Wheat changed with the crude oil, and the crude oil and the dollar seemed to work really well together, something we discussed on the commodity week program this week. That to me, Todd, is an indication or at least a strong piece of the puzzle for this maybe being more about demand and versus supply and weather as far as the turnaround and the fact that Decor and Nove beans are now both inching into those gaps left from the July 4 holiday.
• 2:52
  Another key piece of that was earlier in this week when we started to see a little bit better headlines on trade, specifically US China negotiations and the possibility of the two presidents of those countries getting together. It seemed like to me, this is the third or fourth time now since before July 4 that the trade has tried to price in improving trade mindsets or sentiment, and that we're gonna get some trade deals. And so it's a pretty critical weekend like it was going into the July 4 holiday, both in terms of rainfall and also the trade negotiations. So very similar in my mind to that three day weekend.
• 3:29
  Todd Gleason: Now as it happens, Mike, and I did not plan it this way, but those of those listeners who are live and listening on the air will hear the last, thing that said is you, underscoring that you think that possibly the lows have been put in place, at least, you go on to say temporarily, but that lows have been put in place. I suppose that today's trade felt pretty good too in that case.
• 3:58
  Mike Zuzolo: Yeah. It really was necessary for the analysis because if you're gonna go up on weather, you're gonna have a really sharp rally typically. And and as I said, we talk about this a lot in the commodity week program that we we really aren't really getting excited about weather yet. Maybe at the very end of the week, we saw some forecasts suggesting hot and dry or August outlooks from meteorologists, but they they got really burned in July. So I'm not so sure the trades are really buying into that.
• 4:24
  And so the beans leading the upside, the meal leading the upside, prices at, you know, anywhere from three close to three year lows in the case of the wheat, nine year lows in the case of the meal. And then you see the WASDE report numbers. Why were we going lower? Was it all just the supply and weather, or was it negative trade sentiment? So that's kind of what I'm trying to put together.
• 4:44
  Todd Gleason: And when you think about that, you really are looking at the demand side and saying we've gone low enough and we're building demand?
• 4:52
  Mike Zuzolo: Yeah. I think we're holding on to the demand thanks to the weak dollar and because of some of the trade deals that we have gotten so far. The trade, I think, is priced in some negative demand. And one of the comparisons that I like to look at right now, Todd, is we're making record highs on Wall Street. They seem fearless about the tariffs, whereas LaSalle Street is, as I said, working towards lows.
• 5:11
  And when you look at the world supply demand and you look at the fact that we got around $3.95 and almost filled the gap to the downside on the weekly corn chart last week, you know, that puts me at about a 2,200,000,000.0 bushel carryover in terms of what I think the trade is probably trading or pricing in. So we had plenty of either better yield projections or weakening demand projections, however you wanna look at it. I I do think there is a window here between now and the August report that if we can get some solid trade negotiation updates, and we don't see any, outside market fluctuations, like a really sharply lower crude oil, sharply higher dollar, we can come off these lows and maybe do better than filling the gap and breaking through some resistance levels.
• 5:56
  Todd Gleason: Yeah. So if that were to happen, you might see traveling higher, maybe even through harvest, I suppose.
• 6:02
  Mike Zuzolo: I'm not sure I'd go through harvest. I think a lot will depend upon what USD gives us for the August yield. I do think we need to feed the bull some with some weather, whether it's Ukrainian weather, or whether it's US weather in terms of corn, especially. I still see the beans as maybe the leader to the downside because the supply demand fundamentals minus the yield. I mean, if we came in with a lot lower yield in the soybeans, then I'd have to recalibrate and and refigure that.
• 6:28
  But, my take is this is a a key crucial step to a low because it would be a demand low and that then theoretically would be like a thirty, forty degree angle where you have higher highs, higher lows, build trend lines, so on and so forth. And it seems like this time of the year with the demand that we have, if we get trade deals, that would seem likely or logical at least. But heavens knows we have not been logical in this very much.
• 6:53
  Todd Gleason: So between now and the USDA report, we'll have, the August deadline date. Tariffs, maybe some trade deals, you, I suppose, are telling producers to fulfill their cash needs to make cash sales once those highs sort of come when we get to the top of the gaps?
• 7:15
  Mike Zuzolo: Yeah. That's exactly right. I I think one of the things that we have to deal with right now in the short term is do we need to protect our crop insurance base price from a rally at this stage of the game? But you have to balance that with what you cannot store and whether your cash basis is good or bad right now. So I think that's exactly right.
• 7:31
  You get above the gaps, or you you fill the gaps, you test the resistance levels. If you can't push through those resistance levels before the August WASDE report, you really wanna start thinking about what your next plan is as far as protecting the downside.
• 7:45
  Todd Gleason: Thank you very much, and I appreciate you being on our commodity week program.
• 7:48
  Mike Zuzolo: Thank you again, Todd. It's great to be with you.
• 7:50
  Todd Gleason: Mhmm. That is Mike Zusalo. He's at globalcolumnresearch.com in Batcheson, Kansas. In today's agricultural news, president Trump claims Coca Cola has agreed to change its recipe and the corn industry is giving him an earful. Trump wrote on True Social that Coca Cola executives have agreed to go Mexican and switch from high fructose corn syrup in Coke to cane sugar.
• 8:20
  That may be the real thing to Trump who drinks Diet Coke, but not for the Corn Refiners Association and its president and CEO, John Bodhi.
• 8:30
  John Bodie: Replacing HFCS with cane sugar would be devastating blow to thousands of manufacturing jobs in American agriculture, and it would depress farm prices, and it would add to our trade deficit because every bit of HFCS that is replaced with cane sugar would be imported cane sugar.
• 8:53
  Todd Gleason: All of that would undermine the president's stance on farmers, manufacturers, and the trade deficit. As for the economic impact on The US corn industry, Bodhi cited a study by North Dakota State University.
• 9:06
  John Bodie: The immediate impact on corn prices nationally would be 15 to 34¢ per bushel, a devastating blow to American agriculture. And once again, this tweet was talking about cane sugar, so there's not any consolation for the beet growers.
• 9:25
  Todd Gleason: A MAHA commission report in May argued high fructose corn syrup is a factor in obesity and related diseases, but a Washington Post story says scientists say there is little nutritional difference between sugar and high fructose corn syrup. Still unclear from Trump's comments is just how much US Coke will be made with cane sugar. The next MAHA commission report is due out in August. Let's stay with the Trump administration. It says there will not be a crackdown on pesticide use in The United States.
• 9:59
  Politico says that's despite a report from the Make America Healthy Again committee that called crop protection products dangerous to people's health. During a recent policy roundtable in DC, seven out of the 10 mentioned how important pesticides and fertilizers are in modern agricultural production systems. Agriculture industry lobbyists have been pushing back against the Make America Healthy Again committee report, which linked pesticides to cancers and other diseases. A White House official speaking anonymously says a plan for acting on that report is due in August and will not include new policies on pesticide use. And finally today, there is a candidate for the chief ag negotiator position at USTR.
• 10:47
  Julie Callahan, the assistant US trade representative for agricultural affairs and commodity policy, is President Trump's nominee for the role of Chief Ag Negotiator. Callahan has been with the agency since 2016, serving as Senior Director for Agricultural Affairs before being promoted to Deputy USTR position in 2020. The president has now nominated people to serve in all USTR deputy roles. And that's a look at today's agricultural news. Let's turn our attention on this Friday to the weather.
• 11:33
  Eric Snodgrass is here. He's with Nutrien Ag Solutions and Agribal Meteorologist. Thank you much, Eric, for taking some time with us. We haven't talked in a bit, so maybe we should look backwards before we look forwards. How did June and July play out for you?
• 11:51
  Eric Snodgrass: Well, I I I guess it's more how did it play out for everybody else other than Illinois? So I don't know how far your signal reaches, Todd here. I do know you're on the Internet, so I guess it reaches everywhere. But, man, these guys in Iowa and Nebraska are kinda kicking our butts with really, really good weather.
• 12:09
  Todd Gleason: I guess they are.
• 12:10
  Eric Snodgrass: I mean, it's now they've had holes. They've had they've had some severe weather, but if you look at it on the whole, they're gonna be setting new records for the NDVI, the Normalized Difference Vegetation Index. That's a plant health indicator from satellite. It's the best that they've seen since 2001 when some of these records began. And then you come over to Illinois and parts, especially Northern Indiana, and you're going to start to find some holes in the precipitation over the last, not just two to three weeks, but even going back farther than that.
• 12:39
  And so I think you're going to have some folks that are, you know, in, let's call it Central, East Central, North Central Illinois that are just going, gosh. We we missed out on what everybody else was getting. Now you rewind the clock a week ago, and we watched really heavy rains move into Northern Illinois. And then over that same weekend, you know, I got a call from Matt Bennett saying that he just got he just had a million dollar rain hit his stuff down in Southern Illinois. But, Todd, I don't know about you, but even though we've had some heavy dew in the morning, we've had some rain come by, it's a tenth.
• 13:14
  It's two tenths of an inch in some spots around here. And we evaporate that relatively quickly. To be honest, we need a good soaker in this area to ensure that the crop is going to just really hit it out of the park here. So here's the long story short. It is hard to find expansive problems in the Corn Belt right now.
• 13:32
  Now that's not talking about disease pressures. I know there's a lot of folks seeing tar spot and other diseases. But when it comes to the weather, we've, you know, well, the whole Corn Belt has got the highest in DVI I've seen since I've been doing professional weather forecasting. So that's even better than 'nine and 'fourteen and some of those years that were, you know, pretty spectacular. But as you know, what has also happened since we last talked is the overnight low temperatures have been pretty high.
• 13:59
  So you can have a crop that looks good from space when you're staring at, well, really just how much chlorophyll's in the thing and still have some issues there. And if you go from East Central Illinois all the way across Indiana and Ohio, the last month has been like top five warmest for overnight low temperatures since records began, which those began back in 1893. So there's a lot of discussion right now about maybe what's going on in pollination with the crop being a little stressed, even though it looks good from the road. And we just want to know if that's going to be a factor. Todd, tell me, have you heard a lot about this, what
• 14:37
  Todd Gleason: do
• 14:37
  Eric Snodgrass: they call it? Tight, something about the way the silk is coming out, that yours kinda tight not letting it come out. Have you heard about this?
• 14:46
  Todd Gleason: I have not.
• 14:48
  Eric Snodgrass: I have I've had a lot of folks and I I know that people are gonna be listening to us right now going, come on, idiots. You know, we all know what this is called. I forgot. But it's they've had some trouble with, you know, some of the process of pollination, specifically with the ear being kind of tight and the way that the silk has been able to get out. So there's been some suggestions of that and they're relating it to hot overnight low temperatures.
• 15:13
  So that's where we've been and I need to look that up and tell you again so maybe you can mention it on there some other time but that's been something that's been kinda new for me.
• 15:21
  Todd Gleason: Yeah. So so the trick the best trick that I know about pollination at least is once once you believe pollination has taken place, if you go out and you shuck the air open Mhmm. If if if all of that falls off, every the ones that are left are not pollinated.
• 15:40
  Eric Snodgrass: Ah, I didn't know that.
• 15:41
  Todd Gleason: Right? Yeah. If you flip it upside down and she all falls off, you've got a crop coming. That's for sure.
• 15:47
  Eric Snodgrass: So Very interesting. Yeah.
• 15:49
  Todd Gleason: Yeah. Yeah. We'll we'll see how that goes. Speaking of which, crop coming. We'll need that rain.
• 15:54
  We need a soaker. Do you see anything more than just little dribs and drabs here as things pass by?
• 16:01
  Eric Snodgrass: I actually see quite a bit more. So we are watching a pretty sizable ridge build into the first into the Southeast and moving to the Southern Plains. We will likely sit on the periphery of it, giving us these daily chances for storms. The flow is gonna come out of the Northwest. There is moisture in the atmosphere.
• 16:18
  No problem with that. And so as a consequence, I think we're looking more at, you know, a a hot stormy setup. And I do mean hot. You know, I was just looking here. Next week by Wednesday, we're talking about heat index values, which again are pushed upwards because of the humidity.
• 16:38
  But 110 heat index. Good. Todd, you and I are both going to want to go back to Wisconsin, where we've both recently been, just to escape, what some of this heat's gonna look like. So be prepared for that. The worst of it's gonna be to our south and east initially, then south and west after that.
• 16:56
  So we do have some very hot conditions coming through, very hot overnight low temperatures, but it's gonna storm, and that's the difference maker. If you can get the storm in, brings in a little bit of cooler conditions temporarily, and that could really help, you know, mitigate some of the losses due to excessive heat.
• 17:12
  Todd Gleason: Alright. Anything else before I let you go for the day?
• 17:14
  Eric Snodgrass: I just say watch out for August. I know we're gonna finish July on a hot note, but I wanna know is that ridge gonna keep moving to the west? If it does, that could bring in very favorable August conditions for us. However, if the ridge goes back to, like, Cairo over toward, you know, Nashville, we've got a story on our hands which could be giving on some late growing season stresses in August. And then finally, Todd, we are gonna have to start talking at length about the potential for a fall La Nina, what that could mean for fall moisture levels and harvest and then the upcoming winter.
• 17:50
  So we're getting through it pretty quick.
• 17:51
  Todd Gleason: Hey. Thanks much. We'll talk with you again soon.
• 17:54
  Eric Snodgrass: Yeah. You bet.
• 17:54
  Todd Gleason: Eric Stodgrass is with Nutrient Ag Solutions. Dagger will join us on this Friday edition of the closing market report that came to you from Illinois Public Media. It is public radio for the farming world online on demand at willag.org. That's willag.0rg. Up next is our commodity week program.
• 18:15
  If you can stay with us, you'll hear all of that program through the top of the hour. Otherwise, many of these radio stations will carry it over the weekend.
• 18:30
  Jim McCormick: Todd Gleason services are made available to WILL by University of Illinois Extension.
• 18:36
  Todd Gleason: Well welcome to Commodity Week, I am Todd Gleason. Our panelists for the day include Naomi Blooms, at totalfarmmarketing.com out of West Bend, Wisconsin. Jim McCormick is here at agmarket.net in Barrington, Illinois. And Mike Zusolo joins us from globalcomresearch.com in Atchison, Kansas. Thank you all for being with us.
• 18:56
  I think we'll start with a list of items that we might want to discuss for the day. Mike Suslow, I'll start with you. What's on your mind this week?
• 19:06
  Mike Zuzolo: You know, post July 4 and post WASDE report, we've seen the market try and lurch towards a low and wondering whether this might not be maybe a commodity demand low in general as trade confidence starts to grow a little bit more, it seems, Todd. So maybe we want
• 19:24
  Todd Gleason: to discuss that. Jim McCormick from agmarket.net.
• 19:27
  Jim McCormick: Well, I know I think a big conversation with the clients we have is, you know, this crop is definitely bigger than trend by most accounts. And what are what are producers gonna do, especially with those bushels that they store, you know, into the fall, and they're gonna have to make a decision to the pay commercial storage, dump it, maybe something they should be thinking about before harvest ramps up.
• 19:47
  Todd Gleason: And Naomi Bloom from totalfarmmarketing.com on your list.
• 19:51
  Naomi Blohm: Yes. So let's definitely echo, what these two gentlemen have said and talking about getting ready for what marketplace might bring for the next month for the grains. And then also looking at cattle market a little bit, we've got a cattle on feed and cattle inventory next week report next Friday. So we want to gear up and get ready for that.
• 20:12
  Todd Gleason: Okay, let's start Mike with you. Post WASDE in July, what are the possibilities, and I have started to ask this question from time to time, that a contract low in corn made earlier in this week might be an actual low. Can this marketplace climb higher through the harvest season? And what would be in place that would cause such a thing to happen?
• 20:38
  Mike Zuzolo: Yeah. My take right now, Todd, is it's not likely that it's gonna continue all the way through the harvest season. I I think what I would be looking at is to get back up to a value level. First stop would be those gaps left over from the July 4 holiday around 04:33 in Decor and $10.44 plus and Nove beans. Get those gaps filled and then see if we've got some trade deals done.
• 21:04
  And in specific trade deals related to agriculture, I'd like to hear what Naomi and Jim have to say about this as well. But the two major things I'm hearing on LaSalle Street or anyone affiliated with ag commodities is I'm not going to buy if I'm an investor fund. I'm not going to cover shorts if I'm an investor fund. And I'm not going to buy out if I'm an end user commercial because of the fact that we don't have enough details in these trade deals. Agriculture has been a sticking point with Japan, with South Korea, with India.
• 21:35
  And so the trade, very nervous. But I also would say clients have been calling in saying, do I need to protect my crop insurance base price at this point, in case we get a decent price action that can give us a retracement in this in this market. And the USDA WASDE numbers kept demand at least the same or better worldwide, and we're still getting tighter and tighter on corn and wheat supplies. And while, yes, we've got a big crop coming on here in the August report and most likely going to get bigger yields, My price model would say at the 3.95 corn price, we're at a 2,200,000,000.0 bushel crop anyway at this stage. So I'm going to say it this way.
• 22:18
  I think the demand low could be in if we continue to get some good news in the next week or two by the end of the this month. And that as long as we don't take out four zero seven and a half and nine eighty eight a quarter, those are our our July 14 lows. I'm gonna say a low is in at this point.
• 22:35
  Todd Gleason: That's Mike Zuzolo. He's at globalcommresearch.com out of Atchison, Kansas. Joined us on our commodity week program along with Naomi Bloom of totalfarmmarketing.com. She's in West Bend, Wisconsin. And Jim McCormick out of Barrington, Illinois and agmarket.net.
• 22:53
  You may hear the whole of that program up on our website right now at willag.org. That's willag.0rg. The closing market report and commodity week are productions of Illinois Public Media and University of Illinois Extension. You have a great afternoon. I'm Todd Gleason.