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Aug 28 | 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 August 2025. I'm extension's Todd Gleason at the Farm Progress Show in Decatur, Illinois. Today, we'll hear from Luke Worrell.
• 0:15
  He is with Worrell Land Services and worked with Gary Schnidke to collect information about the latest land value survey for the state of Illinois. We'll talk with Scott Irwin, agricultural economist about the biofuels landscape. He has a lot to say about soybeans, particularly about soybean oil and some of the Trump administration policies. And we'll turn our attention to agronom, John Jones, talk about corn crop here in the state. He's an agronomist at the University of Illinois and with extension all on this Thursday edition of closing market report from Illinois Public Media.
• 1:06
  Todd Gleason services are made available to WILL by University of Illinois Extension. It's been a fantastic week here on the Farm Progress Show site in Illinois, Tim. Thank you to all of those who dropped by to see us. We're going to start today with an interview that I did with Luke Worrell. He's with Worrell Land Services out of Jacksonville, Illinois.
• 1:27
  But more importantly, he's with the Illinois Society of Professional Farm Managers and Rural Appraisers and worked with Gary Stinky at the University of Illinois on their latest land value survey. Here's Luke.
• 1:41
  Luke Worrle: But long story short, we sent out a survey to try to get a glimpse of what we think is happening here in the state, January through June. We sent that out. We had over 70 respondents from across the state. Our results probably wouldn't be earth shattering to many, but we did see continued declines in the land market. We saw Class A land down around 2.2% and other classifications down around three and a half.
• 2:07
  If you put that on top of what we saw last year, you know, we're off around seven to 10% from from our highs from a couple years ago. What I said on the podium a little bit ago, what I'll say right now is obviously if you zoom out, we're still really historically very high. Right? So even though we're down 10%, you take that off, we're still at levels that would have been a record breaker five years ago, six years ago. So yeah, continued softening.
• 2:38
  Not only that, but also in the rental markets. But that was the quick synopsis on values.
• 2:45
  Todd Gleason: And then on the rental side, are there expectations for cash rents to go down this fall?
• 2:52
  Luke Worrle: Yeah. So our survey showed, and again, in March we're able to dive into each region specifically. Now we're talking the state as a whole. Survey showed approximately four to 7% decline. If you take that across the numbers, you're going to look at somewhere between 10 and $20 an acre and a decline.
• 3:10
  Todd Gleason: What else from these surveys do you look at and might we be interested in?
• 3:15
  Luke Worrle: Yeah, absolutely. So I think one of the things that's interesting is we always look at demographics. Still the highest number of farms are selling because of estates, the settling of estates. Vast majority, 67%. So two thirds of every sale we've seen is pretty much because of an estate sale.
• 3:34
  Similarly on the buyer side, farmers, owner operators are still predominantly the largest demographic of buyers. 61% of farms sold in the first half of the year were bought by farmers. I think 17 local investors and then 11% nonlocal investors. So the demographics honestly have not changed a ton. Even in this kind of ebb and flow we've been doing over the last couple of years.
• 3:59
  Todd Gleason: Over the decades, and I think nationally turnover in farmland is about 1%. Is there a difference in Illinois? Do you measure that?
• 4:07
  Luke Worrle: So we don't measure it to that point, but I do know that we expect there to be more volume of sales this fall as opposed to last fall. Why? Great question. I think last year we were coming off this historic run up, and I think so people were maybe cautious on are we really going down? They they they still weren't quite ready to pull the trigger on their So
• 4:31
  Todd Gleason: you're saying they didn't pull the trigger fast enough. That's what you're saying.
• 4:33
  Luke Worrle: That's exactly what I'm saying. So I think that played a role. Think everybody was kind of catching their breath. And now I think we kind of understand that, okay, we're in a decline. We're not in a trap door kind of decline, but a softening.
• 4:47
  And so you're going see some of those people who sat out on the sidelines last year or so. And then like we just said, there's going be those estate sales regardless.
• 4:54
  Todd Gleason: When you and Gary sit down and go through these numbers as you were talking about them, what do you project out or what do you hear him telling you you're projecting out for the next, I don't know, five to ten years?
• 5:06
  Luke Worrle: It's funny you asked that because I just we asked a question just two years out. And it's pretty clear that all of us are very conflicted even on two years. So I mean, we asked the survey, where do you see the land market in two years? And I think 33% said up, 44% said the same, and the remainder said down. So it's like we're all kind of conflicted.
• 5:32
  I think as far as like short term, I think we're all expecting another like marginal softening. I think that's the projection. And that's what the survey showed is people expect land to, I'll put it this way. We asked a question, what do you expect the land values to do in the 2025? And I'm pretty sure not a single person said go up of any variety.
• 5:58
  I think 89% said to either stay the same or to go down less than 3%. And then 11% said a decline higher than 3%. Not a soul predicted it to go up. So I think we're expecting to either kind of settle in or gradually continue to decline marginally.
• 6:19
  Todd Gleason: I'll ask a classic Bruce Sherick question at the end of most of his presentations. And I don't think I have this quite right because I'm flipping it around. But because you are Luke Warrell of Warrell Land Services, I want to know if you had land, would you sell it? Raise your hand. He's not raising his hand.
• 6:42
  Luke Worrle: So it's hard to ask a a a, you know, a guy an ag about don't get me wrong. Love selling land. But if I own it, it's hard to let that go. Right? I'm gonna hedge my bets here.
• 6:52
  This is gonna sound like a total cop out. I admit it. I think a lot of it is gonna be completely dependent on I I say a lot. Each farm is so uniquely different, and with it, the ownership structure surrounding it. So, you know, we see this all the time.
• 7:08
  There are people who are very much let's let's sell why we're strong and then there are other people who like it's just in bread in them that we own land. That's what we do. I'm never selling it. So when you ask that question, I think of like the world home farm and I would never sell that. But if I owned if I lived in Texas and I owned land in Illinois and I'm never here and I don't have an emotional connection to it, perhaps I would.
• 7:33
  There you go. Does that make sense?
• 7:34
  Todd Gleason: It does. Thank you. Yep. Give a nice round of applause to Luke Worrell. He is with Worrell Land Services out of Jacksonville, Illinois.
• 7:42
  John Jones is with us too. John is, an agronomist, a soil scientist on campus. I'm not gonna take too much time with you, John, but I do want you to say a few words very quickly about the crop this year, the condition of the corn crop and soybeans and what you think farmers might be able to harvest for the season.
• 8:03
  John Jones: Sure. Thanks, Todd. One of the things that's important to note is when we look at just the accumulation of growing degree units, those biomass numbers per area, and that's, again, overall corn leaf biomass is what's going to drive eventual yield and hopefully a long duration of grain filling period that we caught up in many cases. Now the plants unfortunately may have hit that switch to reproductive stage at a time when we had very high nighttime temperatures and we had a very rapid accumulation of growing degree days, on an area basis or acre basis, we might be okay in terms of the amount of carbon accumulation that we had. But our yield potential certainly might be a little different just depending on when those corn plants switch into the reproductive phase.
• 8:47
  Todd Gleason: So it might be important if you're a producer to understand what your crop looks like based on planting date to look at growing degree days accumulated in your area to see whether it when it hit pollination to kind of figure out what really happened in your field.
• 9:02
  John Jones: I think it's worth doing some diagnostics on ears. If you have a water heat stressed ear compared to a true pollination issue, you'll have some different deformities in how that ear developed from the butt up to the tip of the ear in terms of kernel development. If you're able to identify that it was water stress, you'll probably see more consistent lack of kernels or kernel depth. If we're dealing with a pollination issue early, you're actually going to look at the butts of those ears and those kernels will be a little more deformed. Or seeing some ears that look really good in the middle because those early silks may not have had the best scenario and the late silks might not.
• 9:40
  So there's some differences in the ear development that might be able to do a post mortem on what happened to that corn crop. But certainly look at not just, let's say, your relative maturity of your hybrids, but the growing degree days to get to those certain points. Those are very important to go back, collect some data, and maybe log for next year.
• 9:57
  Todd Gleason: Alright. Thank you much. I appreciate it, That's John Jones. He is an agronomist, soil scientist here on Urbana Champaign campus of the University of Illinois. Let's turn our attention now to biofuels.
• 10:09
  Scott Irwin is here. He is one of the best specialists on biofuels, the RVOs, the RFS in the nation. People turn to him consistently. He's always looking at the policy and the data and what it means, and it is always confusing. Right?
• 10:32
  And and the RIN policy in particular is always confusing.
• 10:36
  Scott Irwin: There are days, Todd, I go, why did I decide to get into biofuels?
• 10:41
  Todd Gleason: This was yes. Why what was this decision about?
• 10:44
  Scott Irwin: I thinking.
• 10:45
  Todd Gleason: Okay. So there have been policy issues related to EPA Yep. Recently. Mhmm. Background me on them very quickly and then detail what these new policies might mean for biofuels in The United States.
• 11:02
  Scott Irwin: Okay. Big picture first
• 11:04
  Todd Gleason: Yes.
• 11:05
  Scott Irwin: Was second Trump administration. What was going to be their policy bias, pro ag or pro big oil in the second administration. That was the big question that hung over everything. In the first Trump administration, decidedly pro big oil. So that was the first question everyone's wonder was wondering about.
• 11:35
  And the answer to that is, basically a complete reversal in Trump two point o compared to Trump one point zero. You know, big oil was in the driver's seat firmly in the first Trump administration. All the signs now are that it's been a one eighty, and now ag is in the driver's seat or ag and biofuels, however you wanna say it.
• 12:05
  Todd Gleason: If agriculture gets an MFP payment, I suppose that will tell that will be a real telltale sign. Well AG's gonna stay in the I know there's a differentiation. Yeah. But I feel like that tells us that AG, given the amount of tariffs that are going on across all kinds of different industries.
• 12:22
  Scott Irwin: Although, would still say it's still a change in kind because in the first Trump administration, there were large trade payments. Right. But biofuels policy clearly went in in the direction of the interest of the oil industry. This time Yeah. Probably we're gonna get both.
• 12:40
  Todd Gleason: Maybe. And and if we don't get both and we only get the RVO, I I'm I'm trying to suggest that there may it may have swapped positions. But we'll see. It's that's a policy issue yet to come.
• 12:52
  Scott Irwin: That's gonna we do have well defined data points now on biofuels that we can talk about.
• 12:58
  Todd Gleason: Tell me about them.
• 12:59
  Scott Irwin: So the first one was last June, the new Trump administration, EPA, which is responsible for setting the RFS mandates, came out with their first major rule making, and it was for setting what are called the RVOs or the mandates for 2026 and 02/1927. So that was point number one. And, wow. They surprised everyone with, how aggressive they set the mandate levels and some of the trade restricting rules that were, new in that rule making.
• 13:44
  Todd Gleason: Used cooking oil not being able to come in and be used in, renewable diesel, for instance.
• 13:51
  Scott Irwin: Well, that's a different policy. What they did in the RFS rule making specifically was ruled to comply with the mandates, obligated parties, which are the refiners and importers, have to turn in something called RIN credits. And they proposed in June that if you are complying through an imported biofuel or a domestically produced biofuel from imported feedstock, like used cooking oil from China, you only get half a RIN. I mean, percent of if you use domestic feedstocks and compared, you get twice as much RIN revenue if you use domestic biofuels made from domestic feedstocks. Is a if that survives to the final rule making, which I think it will, that's a very bullish development in terms of biofuels and feedstock markets right there.
• 15:09
  Todd Gleason: Can you convert that to bushels in bullish development? Or?
• 15:13
  Scott Irwin: Oh, I haven't really spent much time doing that. It it's very hard to do that on
• 15:22
  Todd Gleason: the wall. I'll
• 15:23
  Scott Irwin: say that. But it certainly increases particularly the demand for soybean oil, and a lot of discussion about where that's headed. So that that's data point number one. Data point number two was in the big beautiful bill, a revised tax credit for biofuels. So the brief history there is we had a biodiesel $1 gallon biodiesel tax credit for a long time.
• 15:49
  02/2022, in the IRA bill under the Biden administration, that was converted to something called 45 z with the level of the credit keyed to carbon intensity scores. So that's what happened there. In the BBB, there were a number of features of the new 45 z that was passed under the Biden administration that ag was very upset about. And they successfully dramatically changed the rules for the 45 z tax credit in the BBB that was passed in July. For example, now almost every corn ethanol plant in The United States is gonna probably be eligible for a 10 to 15¢ tax credit at least under under that bill.
• 16:44
  And they have not been getting anything since 02/2011. And you know there's a variety of changes there, but the big one was that told you AG was in control was that they eliminated in the carbon scoring something called ILUC, ILUC or indirect land use charges. Those went away and really puts plant based vegetable oils in the biofuels tax credit world on an even footing with the things like used cooking oil, tallow, and animal based fats and grease. And so that's data point number two. That was a bullish development.
• 17:28
  Data point number three is something that was released last Friday called an SRE ruling, small refinery exemptions. And without getting into all the gory details, there's a way that small refineries, can petition to be exempted from the obligations. In the first Trump administration, these were used as a backdoor means of cutting the mandates. That's all you need to know. And so everybody's wondering, huge uncertainty for legal and political reasons.
• 18:05
  There was this incredible backlog of these SRE petitions going all the way back to 02/2016. You know, billions and billions and billions of gallons of biofuels in essence demand was essence at stake. And so they released the rule making, and on net, it's got a lot of dimensions to it, very bullish. And there's really only one more domino to fall, in my opinion, before we have, at least in the biofuels in in especially renewable diesel and fame, a pretty explosive situation, and that's a technical issue called reallocation. So so the idea is if you award an exemption from the RFS mandates to these small refiners, what happens?
• 19:00
  Under the first Trump administration, they, in essence, just subtracted from the mandates. Reallocation is just transferring the obligation, you know, the gallons from the small to the larger refiners. That decision is still outstanding. And but the press release last Friday, everything I'm picking up from talking to people in DC is that, it's going to be something in the ballpark near full reallocation.
• 19:42
  Todd Gleason: And Which means all the SREs that are forgiven, all those billions and billions of gallons get transferred and must be absorbed by the large refineries. In the future. In the future.
• 19:55
  Scott Irwin: Yes. And and now they did a very cute trick that's gonna clearly end up in court for the 2000 the old 2016 through 2022 SRE petitions, which there were, by my estimation, at least 10,000,000,000 gallons of those things were potentially in play. They awarded them all, but gave them back in return their old RINs which are worthless. Oh, the small refiners' heads were exploding, and they're gonna take that to court immediately. And so this whole story is not over, but that'll play out in the courts years and years into the future.
• 20:38
  So, you know, what the basically, the EPA did under Trump is they didn't give out as many. Most of what they gave out were worthless, And so there's maybe around 3,000,000,000 gallons of worth of RINs that are at play in reallocation. And I think I don't know what the number will be, but it'll be at least two, two and a half billion likely to be reallocated.
• 21:05
  Todd Gleason: A clarification point for me because sometimes when we talk about RINs and them being reallocated, they've been these are already produced gallons, already used gallons. But if they're reallocated and pushed forward, are these gallons that the large refiners are now obligated to produce going forward, and that's why we're bullish?
• 21:32
  Scott Irwin: Yes. Well, it's a combination, Todd. Number one, I'm assuming that the final, mandate levels will be about what was released in June. I I think that's not hopefully very controversial because they're high. And there's this half Rin part of that.
• 21:51
  So they're high, and you're gonna add on top of that some SRE reallocation. And, and and then you've got restrictions on, imported, feedstocks that were a part of 45 z as well, and I will use the e word. This is setting up to be explosive price action in the 2026 in RINs, biofuels, and some feedstock markets.
• 22:31
  Todd Gleason: Now usually when we're talking about this, we're think thinking about corn and ethanol. But in this case, you're talking about fame Yes. Or soybeans and bio diesel. Yes. Not renewable diesel, but bio Both.
• 22:46
  Scott Irwin: Both. Both. Both will highly benefit from this.
• 22:51
  Todd Gleason: Thank you very much. I really appreciate the explanations and all the work you do on biofuels. Well, there are days. I know. I know.
• 23:00
  Scott Irwin is an agricultural economist on the Urbana Champaign campus of the University of Illinois. I'm Extension's Todd Gleason.