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Dec 16 | 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 December 2025. I'm extension's Todd Gleason on the road in Peoria with the Illinois Pharm Economic Summit today. We'll talk, of course, with Naomi Blohm about the commodity markets, and then Joe Jansen will join us. He's traveling with HIFIS.
• 0:20
  We'll discuss with him, an ag economist, member of the PharmDoc team, how producers might consider using the bridge payment and whether it should influence their marketings or not for corn and soybeans. And then as we wrap up our time together, we'll take a look at the weather forecast too. We'll do that with Don Day at Day Weather in Cheyenne, Wyoming on this Tuesday edition of the closing market report from Illinois Public Media. It is public radio for the farming world online on demand at willag.org.
• 0:55
  announce: Todd Gleason services are made available to WILL by University of Illinois Extension.
• 1:00
  Todd Gleason: Naomi Blum now joins us from totalfarmmarketing.com. She is in West Bend, Wisconsin. Hi, Naomi. Thank you for being with us.
• 1:08
  Naomi Blohm: Yes. Thanks for having me.
• 1:10
  Todd Gleason: So Naomi and I are talking earlier in the day because, of course, I'm traveling on the Illinois Farm Economic Summit. By the way, if you wanna join us tomorrow in Mount Vernon, you can do that. The cost, if you wanna walk in, is a $100, but it's easiest just to pay that beforehand because we're going to make you go online to do it anyway. Go to willag.org, willag.org. Come see The Ag Economist, the PharmDoc team.
• 1:32
  It's a really great program. Include your meal. We'll be at the Doubletree in Mount Vernon, and the door is open at 07:30AM. Program starts at eight, goes through the noon hour, and includes your lunch. Now, Naomi, we've been talking a lot about what farmers can and maybe should do as it's related to marketing their crop.
• 1:54
  And I want an idea from you where you think they ought to be at this point and how they should manage their expectations related to how much they can hold off given the Trump administration's coming bridge payment. And that, of course, won't arrive until February.
• 2:15
  Naomi Blohm: Yeah. Plenty of things and moving parts here for these markets right now. So with corn and soybeans, we're having this price pullback. Now the one thing with soybeans today is that we fulfilled the downside objective on the head and shoulders formation. The gap is now filled on the March, May, July, August, and September daily charts.
• 2:33
  We filled that gap. The January chart is just a half cent away from filling the gap. So we've got some good technical downsides here that are fulfilled, that are now holding as support. So going forward, we're gonna be, looking to see if there's any kind of a seasonal year end rally into the new year. But just keep in mind, unless there is a substantial weather issue in South America in January or unless we get some exceedingly unexpected friendly news on the January WASDE, any kind of rally back that we can see into late December, early January is likely a cash sale opportunity, both for old crop in your bin and also to be thinking about pricing for new crop as well and starting to forward contract.
• 3:23
  I would say if we can get that rally into the new year, that would be an opportunity to get probably up to three quarters of anything in your bin sold. Because like I said, it is gonna take a severe weather issue in South America and really unexpected friendly news on the January WASDE to get the market to have a significant unforeseen rally from here. When you look at charts, $5 futures for corn, $12 futures for beans, $6 futures for wheat, those are big resistance areas, and we cannot get above those levels, again, unless there is significant bullish fundamental news, which right now we don't have at the moment. So, again, any kind of rally we see, make your cash sales, old crop, new crop, get to three quarters sold, I think, with old crop. And then for new crop, I would get probably up to 25% sold on any kind of a winter rally we can see.
• 4:19
  Todd Gleason: I would think that on soybeans, news from China that it is going to reduce tariffs on the import of imports of pork from the European Union would be supportive of this idea that you probably ought to make some sales simply because if they're importing pork, that means that there won't be hogs that they have to feed or soybeans that they need to buy, I guess.
• 4:44
  Naomi Blohm: Yeah, that's a great point. That news came out this morning. So another reason, potentially, why China doesn't need to buy above and beyond what we're still hoping them to buy. Right now, it's estimated that they purchased about 7,000,000 metric tons of the 12,000,000 metric tons that they said they were gonna be buying, but I kinda think with this price pullback that we've had here now today, when over the past couple weeks of now, we've got beans on sale. They're back in the value zone.
• 5:15
  The value of the dollar has been inching lower. So I think China will come in and do a little bit more buying here, and that'll be supportive for the market into the end of the year. But to your point, we've got the notion of sufficient global supplies and demand that's maybe holding steady but potentially not growing. So, again, point of my story, make those cash sales on any rally we see into year end and in the new year.
• 5:42
  Todd Gleason: For the corn market, talk to me about the demand side, both as it relates to feed, exports to Mexico and feed there, and the ethanol, and all those things that have been driving the market and look to be really pretty strong. And I think the grain stocks number could have some influence related to how the WASDE is reconfigured, if it is, in the month of January.
• 6:09
  Naomi Blohm: Yeah. So recent export sales data that came out, today or I guess it was yesterday. We got export sales from the week that ended November 20. And for corn, the number was 73,000,000 bushels, and so that brought our commitments up to 1,670,000,000 bushels, so about half of what the USDA thinks we're gonna be doing for export sales. So we are, at this point, on target to meet those projections, and our export inspections, which were not affected by the government shutdown, came in for the most recent near 62,000,000 bushels, in line with expectations, and we are ahead of projections for USDA export demand.
• 6:53
  So, looking to the January WASDE, I think that we might even see another bump up on the demand number for exports for corn. Ethanol probably stays unchanged, but that's a really great number. But of course, the question would be, the market remaining skeptical of the USDA feed usage forecast of 6,100,000,000 bushels. I mean, that number is up 11% from a year ago, but yet we have cattle on feed numbers that are continually running about one to 2% lower than last year. So that's where the question is gonna be coming in.
• 7:27
  We'll see some of that massaging and tweaking of those demand numbers probably on that January WASDE, but ultimately what we're gonna be watching for is the perception that ending stocks come in below 2,000,000,000 bushels or not. And then is there gonna be any competition for acres between corn and beans into the spring or not. So a lot of unanswered questions still. That January report is the cornerstone for first quarter. So we will see what all comes to fruition as time progresses here in the next couple weeks.
• 7:58
  Todd Gleason: Anything else that we ought to talk about before I let you go for the day?
• 8:02
  Naomi Blohm: I would say keep an eye on energy prices. Right now, the crude oil market is trading a little lower on perception that there might be a resolution between the Ukraine Russian war. So, if that does not come to fruition where they can get a deal done, crude oil and energies might be of a good value for those who've been needing to book some of their needs in place. And, with holiday trade coming up, expect volatility, expect year end position squaring as well from fund traders, and anything can happen. So just be mindful of any rallies that we could potentially see as, again, cash sale opportunities.
• 8:38
  Todd Gleason: Hey. Thank you much.
• 8:39
  Naomi Blohm: Thank you.
• 8:40
  Todd Gleason: That's Naomi Bloem. She is with totalfarmmarketing.com. Now here's Donde with an update of today's weather forecast.
• 8:49
  Don Day: Temperatures are going to be bouncing around as we head into the next week. We're gonna see temperatures fluctuate a bit due to two cold fronts. One cold front in the short term, another cold front coming into the region as we get into Thursday late into Friday and Saturday. So this will cause temperatures to be up and down a bit. Not a lot of snow at these fronts, but the Northern Plains, the Great Lakes, part of the Eastern Corn Belt can expect a little bit of snow out of these systems.
• 9:15
  With these systems coming through about every two days or so, in between, there'll be a brief warm up, a brief cool down, then as we get into Christmas week, it does look a bit warmer. There's gonna be a realignment of the Northern Hemisphere jet stream pattern as we get into Christmas week and into New Year's week, and this is likely going to allow some warmer air from the West to come into the nation's midsection, giving us a bit more of a consistent warming trend as we wrap up 2025. Down in South America, it's gotten wet and a little bit more stormy in Brazil and parts of Northern Argentina. And the ten day outlook is for above average precipitation over most of the northern and central parts of South America and Northern Argentina.
• 9:57
  Todd Gleason: The Trump administration is deploying about $11,000,000,000 to crop producers by the end of the month of February through what they're calling a bridge payment. In the past, sometimes when this has happened, that there has been an ad hoc payment, producers have used those payments to not market a crop because they have something on hand in their cash supplies. That may very well not be the best option. We're going to discuss this just a bit with Joe Jensen. He's an agricultural economist from the University of Illinois and has been speaking on the Illinois Farm Economic Summit this week, a tour across the state for winter meetings.
• 10:41
  Thank you, Joe, for taking some time with us. I know you've been talking with farmers and talking to farmers about payments that come in from the United States government. In the past, what do we know, particularly from the Trump administration's MFP or market facilitation program payments that took place very similar to what this bridge payment might be?
• 11:01
  Joe Janzen: Yeah. So going back in history is a helpful guide, I think, this case. We you know, what do what would farmers do with this money? Well, I think we we know that they probably won't adjust production levels. Right?
• 11:15
  They that doesn't really change our incentive to plant a crop or not. But I think it can have an influence on marketing decisions, particularly the decision to hold grain for longer into the to the end of the marketing year. That's what we saw during MFP, the MFP era, the trade aid payments that were made in 2018 and '19. We saw, you know, the farmer being a much bigger holder of the the crop in 2018 and '19, particularly for soybeans. Some of that was, yes, market conditions, but some of it and what you know, we've done some research to show that, you know, some portion of that additional inventories that were held after harvest those years really were on farm inventories held directly because of the money that was paid out by the administration for those payments.
• 12:02
  The the question is, will we see that again? And I think, you know, anecdotal evidence suggests that, yes, indeed, that that may be the case. That that's kind of the farmer's already a pretty large holder from, you know, what we can what we've heard anecdotally. We'll get some confirmatory evidence of that when USDA releases its grain stocks report in January. And the big concern is, you know, what does that do?
• 12:26
  It kind of narrows the marketing window for the farmer, and the the potential is that, you know, you're stuck holding a crop, you know, in, you know, let's say, June and July with a very, you know, short time window in which to to get that crop sold before we have a a 26 harvest.
• 12:42
  Todd Gleason: So the fear, I suppose, is that because the USDA report in January is comprised of the grain stocks figures, world agricultural supply and demand estimates, and the final crop production numbers along with a wheat plantings and acreage figure, that those combined set a tone for the marketplace probably for the first quarter, the three first three months, really, of the year. And if they don't change anything, that producers will have missed opportunities to market a crop because they have decided to hold at this point. And the changes could come, but the tone may very well not change very much.
• 13:30
  Joe Janzen: Yeah. I think, you know, I I don't have a a crystal ball into what that report will contain. I just suspect that we will see, you know, higher than normal levels of on farm inventories of corn and soybeans after this this 2025 harvest, which was was pretty we know it was, you know, maybe not as big as we once thought it could be, but it was still a big crop by any by any measure. And so if we do in fact see that, then, you know and the farmer is a big holder of corn and beans after harvest. They have a a bigger marketing challenge than they than they would in in any other year, and that, you know, presents not a not a problem, but it presents, you know, like I said, a challenge in terms of how do we get that crop priced and not get pushed into narrow marketing window where, you know, prices may not be what we would would have hoped they would get to, you know, where we would get sort of in terms of that, you know, typical seasonal improvement in price may not be there given, you know, the big crop and and the big farmer inventories.
• 14:41
  And then know, whatever news we get about the size of the the crop elsewhere in the world, principally South America.
• 14:47
  Todd Gleason: Even if USDA were to drop yield on corn by a couple of bushels to the acre, which could happen, many believe it might, It would still be a large crop, and farmers, if they really do have as much inventory on the farm as as expected, potentially, would be considered weak hands mostly because they'll have a big they'll have crop that in the bin, and they'll have bills that are coming due all along. And so there will be this challenge at that point as to timing and how much time they really have before they need to have more cash in their pocket beyond what's coming from USDA.
• 15:29
  Joe Janzen: Yeah. I think that's that that's again sort of you know, you've hit the nail on the head. This marketing challenge is is about sort of, like, combining cash flow needs with, you know, the market pricing. And, you know, the market the corn market doesn't care about the farmer's cash flow needs too much. If it feels price needs to go lower or and similarly in soybeans, if it if those markets feel the price needs to go lower to balance supply and demand, they the the farmer's cash flow needs don't matter, and so that's where we could get, you know, into a, you know, an unfortunate or, like, you know, less than comfortable situation.
• 16:06
  Todd Gleason: Before I let you go, anything on looking forward into the twenty twenty six, twenty seven crop year related to corn and soybeans and marketing?
• 16:16
  Joe Janzen: Yeah. I think, you know, obviously, the one thing we think about is two things we think about is sort of what's the acreage mix, and how does that kind of define the supply situation going into that that new twenty twenty six crop year. And we think we'll we'll see, you know, a shift to, you know, away from corn towards beans nationally. That tends not to be a huge shift in the state of Illinois because our our rotations are relatively fixed. But at the margins, we're gonna we're gonna play with that.
• 16:43
  And then the the other thing I I really think about going into to '26 is understanding seasonality with, you know, with a new crop year comes sort of a a much longer and bigger marketing window with the you know, we have, you know, the opportunity to price grain, you know, already if if someone wants to. But certainly, thinking about making sales in that sort of, say, March to June time frame, which tends to be the time of the year when new crop pricing pricing for delivery at harvest tends to be the best, it should be part of any farmer's marketing strategy.
• 17:20
  Todd Gleason: Thank you very much.
• 17:21
  Joe Janzen: Thank you, Todd.
• 17:22
  Todd Gleason: That's Joe Jansen. He's traveling with the PharmDoc team on the Illinois Pharm Economic Summit. One more to go. If you'd like to come to Mount Vernon tomorrow, we'll be at the Doubletree. You can walk in.
• 17:31
  Cost is a $100, but go ahead and go to willag.org, willag.org. Fill that out tonight or tomorrow morning, because we're gonna make you fill it out when you're there online anyway, and that way we'll know you're registered and coming. We'll see you. Doors open at 07:30AM, and we begin the program at 8AM. Also traveling this week with the PharmDoc team on the Illinois Farm Economic Summits is Gerald Meschongian.
• 18:00
  He is an ag economist and taking a look at farm financial trends. Thank you for being with us. As you're talking to producers across the state this week, what is your primary message to them?
• 18:12
  Gerald Mashange: Overall, we're seeing that for a majority of grain farms in Illinois, they're actually in quite good shape. But we are seeing that there are some that are showing signs of stress. So what we try to do with our FBFM data is to look at quartile distributions of grain farms, particularly focusing on leverage, liquidity, and just trying to understand how everybody is fearing. And what we saw is that for the most part, the majority of grain farms are in good shape. But for those, for example, above the seventy fifth percentile, you're starting to see quite a few signs of stress.
• 18:47
  An example would be the current ratio, where we saw that the quartile, while the lower quartile came in at 1.2, which is considered a vulnerable ratio. And because we're at the lower quartile level, we're seeing that 25% of those grain farms are not necessarily in good shape when it comes to evaluating the current ratio. Other measures are also showing similar signs as well, where again the majority of those grain farms are doing quite well. But again, you're seeing a small subset of those not due as well as others. Define current ratio for me.
• 19:22
  So this will be current assets divided by current liabilities and it just shows the claim form's ability to meet financial obligations as they come due. So the higher that ratio, the better. Is it that they have fewer assets to put against the debt or that they just simply have much larger debt? So a bit of both. So when it comes to thinking about current assets, part of the reason why current assets are actually a lot lower is as grain prices fall, ending inventory value is also going to fall.
• 19:51
  So that's going to mean current assets get smaller as well. And because working capital has also come down, you're seeing operating loans increase as well. So that's shrinking working capital, but it's also going to shrink your current ratio, which is current assets divided by current liabilities. So that's really the mechanics of what's going on over here. There's some grain farms that have ample working capital and they're doing quite fine.
• 20:13
  But for those that have tighter working capital, you're seeing a lot of stress in that, particularly with lower grain prices impacting those ending inventory values. Do we have historical data sets that tell
• 20:24
  Todd Gleason: us what happens to these farms generally speaking or how they can turn their current rate current ratios around so that they are a viable operation?
• 20:36
  Gerald Mashange: I think really cost management is really what they need to be focusing on. I think really being cost efficient and managing working capital well is what matters here. We can control the gray markets, the price is the price, But for those that are thinking about taking on operating lines of credit, also thinking about taking on DIT, really focusing on making sure that you only do that when you need to. Another example would be when it comes to debt, would be thinking about what has happened in the farm machinery and equipment market as well. We saw that quite a few borrowers took on new equipment and machinery when they didn't need to do so, And obviously they are experiencing higher interest costs as well.
• 21:23
  Now those interest costs matter because higher interest costs are going to impact your cash flow. And we're seeing that for quite a few firms as well. Again, those that are most levered, we've seen the interest expense rise by quite a bit. So really the message is managing working capital well, but also being mindful of borrowing costs too. When it comes to borrowing costs, I think what's going to be interesting as we go into 2026 is just watching where interest rates go.
• 21:49
  The expectation right now is for one rate cut, but the jobs numbers just came out today and are painting a rosy picture. And the question might be, will we see interest rates stay the same in 2026 or will they go higher? The reason why I think about higher interest rates as well as thinking about inflation, right? Inflation can really be arrested if we see high interest rates or at least interest rates that can slow down spending. But then at the same time, the Fed has a dual mandate that is they also have to support the labor market in addition to price stability, right?
• 22:23
  And we've seen that the main onus of what we've seen in 2025 is really to accommodate the labor market. So what I'm gonna be paying attention in 2026 is just where borrowing costs are gonna go and how that's impacting our grain farms here in Illinois. Thank you very much. Thank you, Todd. Appreciate it.
• 22:41
  Todd Gleason: That's Gerald Michonghi. He is an agricultural economist and traveling with the Illinois Farm Economic Summits. You can see him in person tomorrow if you'd like in Mount Vernon. Our doors open at 07:30 a. M.
• 22:52
  At the Doubletree. We get started at 08:00 in the morning. You've been, of course, listening to the Closing Market Report from Illinois and Public Media. It is public radio for the farming world. Online on demand at willag.org.
• 23:06
  I'm Illinois Extension's Todd Gleason.