Latest / Closing Market Report / Dec 04 | Closing Market Report

Transcript

Dec 04 | Closing Market Report · Closing Market Report

• 0:00
  Todd Gleason: From the land to Grant University, Interpana Champaign, Illinois. This is the closing market report. It is the December 2025. I'm extension's Todd Gleason reminding you to visit our website to sign up. Don't wait.
• 0:12
  Do it right now for the Farm Assets Conference and the Illinois Farm Economic Summits. They start in just about a week next week for the Farm Assets Conference on Friday, the following one for the Illinois Farm Economic Summits on Monday, Tuesday, or Wednesday. All your choice. I think you should go to both farm assets and the Illinois Farm Economic Summits. You can sign up again at willag.org right now.
• 0:36
  Coming up in this half hour, we'll talk about the commodity markets, of course. We'll do that with Matt Bennett from agmarket.net. We'll turn our attention to the weather forecast with Mike Tanorum. Mike will tell us about some changes that have been developing in South America, particularly in Brazil and Argentina as it's related to row crops there. And along the way, I'll introduce you to the winner of the Mike Plummer Environmental Excellence Award from the Illinois Corn Growers Association.
• 1:05
  And we'll hear again from Gerald Michonghi, ag economist, part of the FarmDoc team about the financial condition of the Federal Reserve districts in Chicago and St. Louis, all on this Thursday edition of the closing market report from Illinois Public Media. Is public radio for the farming world online on demand at willag.org.
• 1:30
  announce: Todd Gleason's services are made available to WILL by University of Illinois Extension.
• 1:35
  Todd Gleason: No update of the commodity markets as Matt Bennett and I both have things that we're doing outside of our normal duties for the day. Hi, Matt. Thanks for being with us. I know you are in Peoria like I was yesterday at the farm show. Hope you've had a good day and are looking for a really nice finish to the day too.
• 1:53
  Matt Bennett: Yeah. Yeah. Went over there to check it out. I've been there for a couple years, so certainly was able to get around and see several things, talk to a few people. So nice show.
• 2:05
  As far as the markets go, you know, it's nice to kinda look and see a little grain on the screen. So, got some good markets going today as well.
• 2:11
  Todd Gleason: Yeah. $1.02, maybe 4¢ in corn depending on how it finishes out. Soybeans had a better rally than that. What's in the marketplace for the day?
• 2:19
  Matt Bennett: You know, we're hearing a few different things, but, there's some interest out of the EU, you know, for some US corn. They're talking, some of that's coming out of Great Lakes. So, that would be coming, mostly from, you know, actually, US side of things. I hear a lot of interest there in Ohio and Michigan. And then, of course, this morning, you know, we had a a flash sales in Colombia and Mexico.
• 2:41
  And, you know, I mean, definitely, this demand thing is fantastic. Now as far as the FAS export sales, I mean, you know, we're still got October 30. You know? So we're we're over a month behind still, but they keep rolling in, and the numbers we got this morning was huge again, you know, 1,900,000 tons. And we all kinda knew that these exports were were running really strong, but it's kinda nice to see not only the news that's a little bit old, but the here and now.
• 3:10
  You know? We're getting a fair amount of export interest still. So really good export demand at this point. And so it's definitely a stabilizing thing. I don't think that we're gonna race to the moon necessarily, but by all means, it's certainly stabilizing.
• 3:25
  Todd Gleason: I know that the folks that are at the World Agricultural Outlook Board will be intensely trying to get hold of some extra numbers as they get to Tuesday of next week when they need to put out the World Ag Supply and Demand Estimates or the WASDE reports. Do you think there will be an update to the export markets for corn?
• 3:41
  Matt Bennett: Yeah. That's that's the big question, you know, because there's no question that if you would take what we're doing right now, you know, we we've exceeded the pace that we would need to get to the USDA goal by a a fair margin. I mean, you could you could take that export number up solely based on what we've done so far, but gotta keep in mind, we're early in the marketing year still. And, you know, there's been a lot of talk that maybe Mexico was front loading, you know, some of this demand. But at the same time, you know, you hear there's another screwworm case within a 100 miles of the border.
• 4:11
  And so that tells you most likely the cattle are gonna be staying south of the border here for a little bit longer. You know, that being the case, you know, they've been taking a lot of corn out of The US to feed to that, you know, 30,000 head a week or so that was heading north of the border before this all happened and having to feed those cattle. So, you know, the USDA could make, you know, an adjustment there. But in my opinion, I don't think they will just yet. It'd be interesting to see, Todd, as you've witnessed in your career, typically, there's no changes made.
• 4:44
  But, you know, since we didn't have an October report, you've gotta assume maybe December would have a little more action, you know, as far as adjustments being made. And so we're hopeful that we get some adjustments there, know, that I don't know if they'll adjust demand. I don't know if they'll adjust yield just yet, but I'm sure hoping they make some adjustments here.
• 5:04
  Todd Gleason: If they do on the export side, particularly if it's related to Mexico, the screwworm and corn having to go south of the border to feed livestock out, will they also make a counterbalancing adjustment within the feed and residual number, which most all year long have said has been awfully rich to this point.
• 5:25
  Matt Bennett: Yeah. It's it's plenty rich. There's no doubt about that. I think there's certainly gonna be an offset there. I think that if they don't make an export adjustment, then they probably leave feed and residual alone.
• 5:36
  And whether that makes sense or not is that's not up to me and you, but, you know, that's probably the direction I would expect. Now if they do increase exports, I I have a real hard time believing that they don't take your feed and residual lower. So I I would assume if one gets adjusted, the other one will as well. I think where the big question mark is, do we start to whittle down the yield just a little bit? You know?
• 6:00
  Just the most of the evidence that we've seen would suggest that maybe they're a little bit high still. You know? I mean, some people are arguing they're very high, but if that gets adjusted, they they still have wiggle room there. You know, they still could take quite a bit of air out of that feed and residual balloon, if you will. But it'll be interesting to see, Todd, because one thing that could definitely change the trajectory of this is if you go ahead and take yield down, maybe you have to raise exports.
• 6:30
  Maybe there's not enough in that feed and residual, you know, to keep you from maybe working closer to that 2,000,000,000 or below, which I think would be an important thing to do is to get under that at some point. I think it's a possibility.
• 6:42
  Todd Gleason: One last thing. Do you think that China can make the end of the calendar year? The Ag Economist surveyed about three quarters of them said, no way. And some of them are really of the idea that they won't make 12,000,000 metric tons even for the year.
• 6:57
  Matt Bennett: Yeah. I mean, it's tough to tell, Todd. I mean, you've got to ask yourself if they don't, you know, what are the ramifications for them? And the ramifications clearly would be that, you know, there could be tariffs on goods coming into The US, which is a much bigger situation with them financially than paying a little bit more for beans, you know, than what they can get them out of South America. So I'm assuming they will buy them at some point.
• 7:21
  Are they gonna do it by the end of the calendar year? You know, I think with every passing day, I would say that looks less and less likely. I don't expect it to occur, but I do think that there's gonna be a fair amount of pressure for them to do it after the first year. I would expect similar sales as what we've seen so far, kind of trickling along. I don't see any massive announcements, but at the same time, nothing would surprise me.
• 7:45
  Todd Gleason: Hey. Thanks much. We appreciate it.
• 7:46
  Matt Bennett: Absolutely. Thank you.
• 7:48
  Todd Gleason: Matt Bennett is with agmarket.net. In today's agricultural news, the 27 member states in the European Union approved the European Commission's trade agreement with The United States. However, Mexico Business News says the European Parliament will challenge the elements it considers to be unfair after president Donald Trump tripled tariffs on EU products, while Brussels eliminated duties on US imports. In late November, the EU countries agreed to lower tariffs on US imports under a deal struck last summer between the commission and the White House. Critics said the deal presents multiple disadvantages to EU exports.
• 8:34
  A proposal to introduce a sunset clause that would end the tariff cuts after five years if the deal does not get renewed was debated and eventually shot down in discussions. The Commission said the deal was the best achievable and to reject it would have caused the EU even greater disadvantages. Both the council and parliament must agree on the final text by next spring. Well, farmers have become ensnared in the political fight over extending the pandemic hike in Obamacare subsidies as competition heats up for the red state midterm votes next year. The fight over extending just the pandemic increases in Affordable Care Act subsidies to insurers took on a rural flavor as the twenty twenty six midterm races near, says top ag democrat Amy Klobuchar.
• 9:23
  Amy Klobuchar: 27% of farmers are on these plants. So that's why you start seeing these cracks in people in the house and in the senate. Some Republicans saying, why don't we just extend the
• 9:35
  Todd Gleason: But senate Republicans refused that democrat demand at the heart of the forty three day shutdown fight, promising democrats only a vote next week on the plan of their choice as insurers lock in new rates. Top senate Democrat Chuck Schumer insist on a straight extension of the subsidies, but retiring number two senate Democrat, Illinois' Dick Durbin, a different note on GOP proposed ACA reforms.
• 9:58
  Dick Durbin: This Democrat, and I'm sure others as well on my side of the aisle, will sit down with senator Thune to try to address the problems that he has raised this morning. There are legitimate concerns. We may see them a little differently, but let's discuss it. Let's do something we hardly ever do in the United States Senate anymore. Let's legislate.
• 10:18
  Todd Gleason: And Durbin said, restore tax credits for those who cannot otherwise afford health insurance, many of whom Klobuchar said were farmers at her town meetings.
• 10:27
  Amy Klobuchar: Who brought up to me, what am I gonna do? I can't afford the premiums. I'm a farmer. I barely have enough. The tariffs are hitting me anyway, and I'm gonna have to buy this junk plan.
• 10:36
  I don't know if it's even gonna work.
• 10:38
  Todd Gleason: But with divisions in both parties and midterm campaigns taking root, a deal seems hard to foresee with so few days left before new premium rates kick in. And that's a look at today's agricultural news. The Illinois Corn Growers Association has presented Laura Lanthani, an agronomist at Midwest Grass and Forage in Macomb, Illinois with the Mike Plummer Environmental Excellence Award. I asked Laura about her relationship with Mike, who was an Extension educator and a pioneer in conservation and cover crops.
• 11:26
  Laura Lant-Haney: Mike Plummer had a huge influence in conservation and soil health in the state of Illinois. So to be chosen to receive anything named after him is truly an honor. One of the things that I focus on a lot in my career is making sure that the guys I work with on cover crops were not just out to get that one year sale, but we're truly building a plan so that cover crops can be part of the operation long term to improve some soil health and sustainability and to make that farm profitable and everything still flow smooth. So it's not a not a simple process to set things up so that we're successful long term, but we really try to model a lot of what we do to follow some of the same principles that Mike promoted throughout his career.
• 12:04
  Todd Gleason: My recollection of working with Mike, on conservation and cover crops is that he oftentimes was including it in rotational grazing and operations, beef cattle particularly. But I suspect that you have made that transition to row crops without a livestock enterprise in it. Can you tell me about how that happened and how different it is?
• 12:28
  Laura Lant-Haney: Absolutely. We all know that right now the beef herd is at one of the lowest inventory levels it's ever been. So even guys who maybe five, ten years ago had livestock may not run as many head right now in the current market. A big part of Central Illinois, there's a lot of producers that don't have livestock. So obviously, we're having to figure out how to make cover crops a fit without livestock in the equation.
• 12:49
  And one of the first questions I usually ask guys when they tell me they wanna plant a cover crop is why? Why do you wanna put that cover crop out there? If the answer is, well, my neighbor's doing it. Well, we talk about what benefits is your neighbor looking for? What are those are applicable for you?
• 13:03
  Not everybody has the same concerns on their farm. It may be one of those that you know you're getting some either wind erosion or water erosion, so we want to plant something with a good root system to help glue that soil together on the surface so that we're not seeing that. The other part of it, maybe you wanna leave that ground better for the next generation. Well, then we look at things that will help to improve the organic matter over time and build programs around that. Or maybe you're fighting a lot of weeds.
• 13:29
  So depending on each operation's goals and needs is how we tailor a plan to fit their operation.
• 13:35
  Todd Gleason: Thank you much. I appreciate it.
• 13:36
  Laura Lant-Haney: No problem. Thank you very much.
• 13:38
  Todd Gleason: Laura Lantaney is an agronomist at Midwest Grass and Forage and the winner of this year's Mike Plummer Environmental Excellence Award. The award is named after the late Mike Plummer, a pioneer in agricultural conservation whose work with cover crops and reduced tillage shaped the landscape of sustainable farming in Illinois. You're listening to the closing market report from Illinois public media. Is public radio for the farming world. Visit our website.
• 14:04
  You can sign up for our December conferences in concert with the farm dog team and the crop scientist here on the Urbana Champaign campus, the farm assets conference, and the Illinois farm economic summits. Those are coming up next week. In the following week, you can also find information from them. They're each and every business day of the year along with all our podcasts including the Illinois nutrient loss reduction podcast. It's all at willag.org.
• 14:40
  Let's take a moment to review an interview I did a couple of weeks ago with Gerald Michonge. He's an agricultural economist at the University of Illinois. In it, noted that agricultural conditions across the Midwest have been softening and repayment rates are beginning to deteriorate. That's of course the conclusion of some new analysis of the Federal Reserve data that he looked at. The agricultural economy is shifting after several years of strong income says Mashangi.
• 15:07
  High grain prices and robust working capital. The tide is turning. Recently analyzed data from both the Chicago and Saint Louis Federal Reserve districts, and Mashangi says the trend lines for credit conditions are moving in the wrong direction.
• 15:20
  Gerald Mashange: I think what we're really seeing across the board is that they are deteriorating credit conditions. And I think it's quite important for lenders and producers to get an understanding of what their state looks like, but generally overall, what across the Midwest credit conditions are being reported as. I think what the data is showing is that when it comes to loan demand, you're seeing a little bit of softening there, but I think you're also seeing an uptick in a deterioration in repayment rates as well.
• 15:50
  Todd Gleason: That deterioration in repayment rates, essentially the ability of farmers to pay back loans on time, has been visible since the 2021. And while there was a brief uptick in early twenty twenty five, the overall trend remains lower, and Michagi notes that as farm income falls, lenders are responding with tighter credit conditions and stricter collateral requirements. In a separate study, he looked specifically at the financial health of Illinois grain farms by measuring liquidity. He focused on working capital, defined as current assets minus current liabilities. For years, this metric was climbing, driven by high grain prices boosting inventory values.
• 16:30
  But in 2024, the median ratio dropped by about 10%.
• 16:36
  Gerald Mashange: Starting in 2023, you see current assets falling. So as current assets falling, you're also seeing current liabilities slightly move up, and that's gonna constrain working capital. So it makes working capital less and you're seeing that in the data. If you look at gross farm returns, you're seeing that from 2022 up until 2024, that's also been trending lower. So when you put all that together, it partly explains why in 2024, we saw median working capital to gross farm returns, go down a little bit lower.
• 17:11
  In in summary, what that really says is that liquidity at the median is deteriorating.
• 17:16
  Todd Gleason: This leaves farmers and lenders watching the Federal Reserve closely. The hope is for lower interest rates to reduce borrowing cost. Mashangi warns the Fed is still performing a balancing act between supporting labor and fighting inflation.
• 17:31
  Gerald Mashange: Ideally, we want cost of borrowing to come down. But just looking overall at state of the economy right now, I think the tricky thing that the Fed is trying to navigate is fighting inflation, but at the same time supporting labor. So when it comes to interest rates, again, we all want lower borrowing costs. But the thing is, the most important thing we have to combat is inflation. So I think the big question is going into December and at least the first few months of 2026, trying to get and hoping that the Fed's gonna be able to finally arrest inflation and slowly bring down, interest rates for everybody.
• 18:10
  Todd Gleason: Gerald Nishangi is an agricultural economist with the University of Illinois. You can read his full analysis on credit conditions and farm liquidity online at farmdocdaily.illinois.edu. Gerald Mishangi, by the way, will be traveling with us for the Illinois Farm Economic Summits. Those will take place in DeKalb on December 15, Peoria on the sixteenth, and in Mount Vernon on the seventeenth. You can sign up right now.
• 18:36
  Do that at the PharmDoc Daily website. Again, PharmDoc Daily dot Illinois dot e d u, or visit willag.orgwillag.org Let's check-in on the global growing regions across the planet with the president and CEO at t storm weather. That's tstorm.net online. In Naperville is Mike Tenora. Hi, Mike.
• 19:10
  Thanks for being with us. I wanna concentrate just on South America and the growing regions there today. Can you give me a recap of conditions on the ground in the primary soybean growing areas of Brazil, please?
• 19:25
  Mike Tannura: Well, it's been unusually dry within the northern half. Goias and Mato Grosso had their driest October, November period in more than twenty five years of record, and they beat that record by a pretty notable amount by about an inch. So this is telling you that they need some big rains there. As you move just north of Goias and Mato Grosso into the region that we call Matopiba, they had the fourth driest October, November period on record. So this is just signifying that basically half of this crop needs some pretty big rains.
• 19:59
  Now we are looking at a pattern reversal as we move forward because this dry area across the North is going to get some pretty decent thunderstorms over the next one to two weeks. So we think that the dryness story is going to ease up a bit as we move into the middle of the month. At the same time, these southern areas, have been a little bit dry, but nowhere near as dry as these areas to the north, they're going to start to turn a little drier because surface level high pressure is going to start to dominate. Now we would have more concern in the southern region if not for a pretty good chance for thunderstorms starting on Monday and Tuesday and then lingering into the second half of next week. So as long as that verifies, that will allow us some more time for rains to come up later on in December.
• 20:44
  But as we sit today, there's basically this unusual setup in Brazil where it's been way too dry in the North, a little bit dry in the South, but just enough rain out there over the next couple of weeks to limit concerns.
• 20:58
  Todd Gleason: The collective memory of agriculture tells us that La Nina can have a large impact on detrimental that is on grain production oil seeds in Argentina. Is there a different story there than in Southern Brazil?
• 21:12
  Mike Tannura: Well, it's a similar story to Southern Brazil because they had some pretty good rains over the first part of the growing season, but now it's starting to dry out. Most of these areas that grow corn, soybeans, and sunflowers were drier than normal over the last two to three weeks, but not really over the last thirty to sixty days. And that's because there were some pretty nice rains about a month ago. As we move forward, there are some thunderstorms out out there, but it doesn't look like we're going to see very many. And because of that, we think the dryness will become a bigger story in Argentina with time.
• 21:46
  Now that being said, you need to keep a couple of things in mind. Number one is that we're only planting late corn and soybeans as of today, and that'll continue into the end of the month. So it's a little bit too early for true dryness story to develop in Argentina. If that were to happen, it would be in January or February. On the other hand, about a third of their crop is planted early in October and that crop is going to need some rain.
• 22:12
  And also their sunflowers are planted a lot earlier too and they'll need some rain also. So in the end, it's kind of a mixed bag with Argentina looking okay, but they certainly would benefit from some big rains. And it does not appear that real big rains are on the horizon, so this will probably be a story later on in December.
• 22:29
  Todd Gleason: Hey. Thanks much, and we'll talk with you again next week.
• 22:32
  Mike Tannura: Sounds great, Todd. Thanks a lot.
• 22:33
  Todd Gleason: That's Mike Tenure. He is with t storm weather. That's tstorm.net online. You can find more from him each and every Thursday on the closing market report. You can look it up as podcast or find it at willag.org and its entire team.
• 22:48
  Your choice. While you're there, you can also sign up for the farm assets conference or the Illinois farm economic summits. Both if you'd like. All the details are at willag.org willag.org. You for joining us on this Thursday afternoon.
• 23:05
  I'm University of Illinois Extension's Todd Gleason.