Apr 14 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report. It is the April 2025. I'm Extinction's Todd Gleason. Coming up, we'll talk about the commodity markets with Kurt Kimmel from AgMarket.net. Freyne Olsen will be here with some interesting information on tariffs and the port fees and then we'll take up the weather forecast too with Mark Russo of Everstream Analytics on this Monday edition of closing market report that comes to you from Illinois Public Media.

announcer: 00:30

Todd Gleason services are made available to WILL by University of Illinois Extension.

Todd Gleason: 00:35

In Chicago, Maycorn for the day at $4.84 and a quarter, down five and a quarter, December at $5.62, a penny and a half lower, May beans at $10.41 and three quarters down one, November at ten twenty eight and a half up, three in soft red winter wheat for the day, and the July harvest month at $5.61 and 3 quarters down 8 and a half cents. Here to discuss the marketplace is Kurt Kimmel from AgMarket.net. Hello, Kurt. Thanks for being with us.

Curt Kimmel: 01:00

Well, good afternoon, Todd. Glad to be here for this short trading week.

Todd Gleason: 01:04

It is a shortened trading week. No markets on Friday of this week. You'll join us for commodity week, and you'll be here on that day in place of the closing market report. Thanks for doing that. Speaking of the weekends, relatively speaking, I made a trip to Junction City, Kansas, a Friday into Sunday.

Todd Gleason: 01:24

I saw three people actually running on Friday. They were all to Saint Joseph or the West Of Missouri. And then on the way back, I did run into one spot that was right there at the ninety degree longitude mark, on I seventy two between Springfield and Jacksonville. That's marked because it's a quarter of the way around the world, and there was a, I guess, maybe just one dry area that lots of folks were running in, and there was some dust rolling there. I suppose planting might get started this week.

Todd Gleason: 01:59

What are farmers going to be doing as they watch the marketplace?

Curt Kimmel: 02:03

Yeah. Yeah. There's gonna be more activity take place as we go through the week. Actually, the Western Belt, particularly in Iowa, was going there late last week. We're seeing, here in Illinois, activity starting to pick up, and if this wind keeps up the way it is, there'd be a good chunk going.

Curt Kimmel: 02:21

But there was some isolated heavier amounts of moisture around, and it'd be a couple days for them to dry out. This afternoon's planning progress report is expected to show 6% of the nation complete, as of, here on, Sunday. We're off to a good start. The Deep South's gonna be hit and miss as we move forward. They got off to a fairly good jump, but that has slowed, so we'll we'll monitor that.

Curt Kimmel: 02:48

The forecast is gonna be front and center here as we move forward.

Todd Gleason: 02:53

When you think about tariffs and trade at this point, the marketplace seems to be satisfied with them. Is it just marking time waiting for the next shoe to fall, whether that is tariffs increasing or a trade agreement announced.

Curt Kimmel: 03:09

Yeah. I think market's getting for participants to get get a little bit numb to it, not ignoring it, but man, what what happens next, who knows? I guess over the weekend there's talk that, cell phones, computers, some of the technology would be exempt, so they're starting to pick and choose in here, so maybe we're getting to a holding point in through here but, what we don't know will, you know, happen 02:30, three o'clock in the morning and that still remains a risk, to the broader sector. As far as agriculture goes, think the corn's probably the most comfortable right now. I hate to say comfortable because no more you get comfortable, watch out, but, Mexico continues to be in a big drought situation.

Curt Kimmel: 03:58

They continue to buy US corn or need US corn, just they don't have another reliable source to obtain that from. Then plus two, last, report we showed a much tighter supply demand balance sheet, so therefore, we're in a situation where we could get, carry out maybe 1.3 something. So, the corn seems to be, in the driver's seat as far as, avoiding, the negative news from that. When we go forward in through here, we'll see if some of these countries actually sit down and, work out something. It's gonna be up and down.

Curt Kimmel: 04:38

It's like a poker game. I raise you five, you raise me 10, and it's gonna be back and forth here for a while.

Todd Gleason: 04:43

Anything else you've been hearing from producers about, their wanting or needing to do any marketing? Are they satisfied with their old crop sales, relatively speaking, and waiting to, maybe the market at end of them sometime on that next rally or going into the summer and waiting for a weather rally of some sort?

Curt Kimmel: 05:05

Yeah, producers are fairly well sold up. Most estimates on cash sales are 80 to 85% sold on corn, 85% sold on beans as a nation in through here. New crop sales are lagging. Just the idea that, the big free fall in there put, sales on hold. Everybody waited to see what the spring price, insurance program, has to hold.

Curt Kimmel: 05:29

Japan stepped up about a 20,000 tons of US corn this morning, so with this demand still around, I think producer might be inclined to replace some cash sale, old sales on some breaks in through here. Then on some further strengths, probably, raise their price floors to have that price floor under in case we have some ideal weather and this tariff situation doesn't improve here as we go into mid summer.

Todd Gleason: 05:55

And before I let you go, Stonex acquired RJO or announced that they would be soon enough, RJO Brian. Does that change the mix very much as it relates to the commodity markets?

Curt Kimmel: 06:08

Oh, boy. It's an ever changing just like the tariffs. I walked in this morning here and saw our clearing firm, which is R. J. O'Brien, it was acquired by Stonex.

Curt Kimmel: 06:19

Consolidation continues to take place. It's been fairly, common in the IB sector for quite some time in here, but to see the majors start to join forces or group together as one, boy, we're we're getting down to fewer and fewer players, and that's been the trend.

Todd Gleason: 06:37

Hey. Thank you much. I appreciate it. Very good. Take care.

Todd Gleason: 06:40

And Kurt Kimmel is with AgMarket.net. We're now joined by Freyne Olsen, agricultural economist at North Dakota State University in Fargo. Hello, Freyne. Thank you for being with us today. We have a a lot to cover.

Todd Gleason: 07:08

Let's start with tariffs and what producers and those in the industry should be thinking about as it's related to them. What's top of mind for you?

Frayne Olson: 07:20

Yeah. I've been doing several meetings now and conferences of not only farmers but getting a lot of questions from ag lenders as well as some agribusiness managers. I was at a meeting last week and spoke to that group. Obviously tremendous number of questions, a lot of uncertainty. One of the things I'm trying to get them to think about is as we move into kind of this next phase where we're starting to get some of our trading partners coming in and saying, all right, let's sit down, let's start negotiating, let's start talking about how do we resolve the issues, what kind of adjustments, if any, that we need to make within trade agreements.

Frayne Olson: 08:03

And that's been, you know, listed in the press a lot. There's kind of this perception that, oh, this should be, you know, happened pretty quickly, that this, you know, will within a few weeks or maybe a month or so, we'll get this stuff resolved. The reality is that these negotiations are usually very long and drawn out because they get to be very technical, they get to be very, can be very contentious depending upon the parties in the room. So what I do anticipate is we're going to get resolution for trading partners that we already have bilateral agreements. So an example would be Japan and another example would be South Korea.

Frayne Olson: 08:48

And I was anticipating, I still anticipate that I think those will go relatively smoothly depending upon what changes The US is requesting. However, there was a report this morning that started talking about the president of Japan saying, look, we're in no big hurry to come to rewrite our trade agreements, that we're going to try and do very methodical. We're trying to be very detailed about this, make sure that the interests of the Japanese economy and the Japanese businessmen are also represented. So, you know, that kind of leads me to believe that some of these negotiations may go on longer than we expect. And we've got to realize that's important.

Frayne Olson: 09:33

The timeline for this is important, not only because we're entering our production season now, but also that the longer it takes to renegotiate or the longer these tariffs are in place and people start looking at alternative supply chains saying, you know, the one we have historically been using isn't working as well. Let's look at an alternative supply chain buying from other customer, buying from other countries, etcetera. At first, those get to be kind of clunky because it takes a while to figure them out, but once they become more efficient over time and they become more reliable over time, it becomes a lot harder to try and switch back to these, the original supply chains. So one of my concerns is how long does it take to renegotiate these agreements? I do think we'll get something with, again, trading partners where we already have bilateral agreements in place because typically that just means refining what we already have.

Frayne Olson: 10:33

But for other countries and for other regions, this could be years, not necessarily months. I think it's going to be very difficult and challenging to get some kind of agreement with China. Just my personal opinion, just because of the tensions and basically the large changes that are going to have to be made. I also think personally that European Union is going to be very difficult, and not only because of, you know, there's 27 countries within the union that have to agree to this, but as we talked a little bit offline before coming in that the European Union has a very strong set of agricultural policies in place and it takes considerable amount of time for them to adjust their farm policies, which are heavily dependent upon or influence trade and trade flows. So some of these, I think, again, the agreements may take considerable amount of time.

Frayne Olson: 11:33

Others will, I think will come sooner and faster, but I do think farmers need to be thinking about the fact this will likely take months and possibly years, not necessarily weeks. Just just again, because of the complexity of trade and the many, many, many different products that are involved.

Todd Gleason: 11:51

Yeah. So it'd be interesting to see how the European conversations go. So second part of this, is that I want to know whether you think it will be the futures price, and I ask this because Brazil is such a large player in the oilseeds and an upcoming player in corn exports, or basis price that will see most of, the decline for producers?

Frayne Olson: 12:20

So in my opinion, it's going to be obviously some blend of both. Usually what happens in the world of especially grains and agriculture, we see most of the volatility in the futures market side, especially when we look at traditional supply demand conditions and obviously export pace is one of those core supply demand conditions. But when, as I said before, when we talk about shifting supply chains, when we think about the actual movement of grain from where it's being produced to where it needs to be delivered or processed, that shows up primarily in the basis levels. And so, yes, I think there'll be some potential shock value or a lot of volatility within the futures market thinking about, okay, trade flows and how much volume of product can we sell into country A, country B, country C. But I think there's going to be more basis volatility as well, simply because those supply chains are going to have to shift.

Frayne Olson: 13:17

They're going to be changing and adjusting over time. So the customers that we typically have for our export season or our export flows may be changing. We may have different rules, we may have some difference in seasonality that are going to make some adjustments and that will all be reflected in the basis levels. So I know that's just one more thing to have to look at, one more thing to have to be worried about, I understand that. But in my view, the reality is because of these adjustments in supply chains, how we're actually delivering this product and where it's ending up and the time delays that can be involved in going through, for example, additional testing, additional certifications, additional paperwork, that will likely show up in the form of basis levels and basis adjustments.

Frayne Olson: 14:10

So, again, one more layer of complexity we're gonna have to try and struggle with here.

Todd Gleason: 14:14

The Trump administration on a similar topic is concerned about the shipbuilding capacity within The US, and more importantly, about the overwhelming shipbuilding in China. They have been trying to address that with some port fees. What do you think about those?

Frayne Olson: 14:31

Yeah. That's something obviously up here, because we're so dependent upon the export markets, in this region for products that we produce. That's something that we've been watching really, really closely. At this stage, it's a proposal. So I want to be very clear, this is not something that has been fully enacted.

Frayne Olson: 14:47

So there was a proposal made for additional port fees. So there's, this is just like an additional cost to be able to use the ports for both loading and unloading of product, whether it be agricultural products or container vessels, it really doesn't make any difference. Now that proposal was put out and then there was some public comment and there was a lot of public comment. There was a lot of information that was gathered, a lot of people very, very concerned about this because of the cost, the additional costs that would be put into the supply chains, into the whole system. And so now it sounds like the US Trade Representative's Office based on that comment is going to make some revisions.

Frayne Olson: 15:29

They will likely the current thought process is those port fees would be reduced. They would be smaller, but they're not going to be eliminated. And there was a colleague of mine here at North Dakota State that had done a quick analysis on that, on the original proposals. Go through details because it's too long to explain, but the moral of the story was based on his estimates, it would add an additional 40 to 60¢ a bushel in cost just because of these additional port fees based off of, you know, was the vessel flagged as a Chinese vessel or more importantly, was the vessel built by a Chinese company and then being operated by some other operator. So, I mean, these are substantial and the point is that most of that cost, you know, large portion of that additional fee for using US ports, whether it be the Gulf Of Mexico or whether it be the Pacific Northwest, would get passed back through the system and end up in lower basis levels at the country elevator.

Frayne Olson: 16:35

So this is something I know that some of the commodity organizations in this region have been very, very concerned about. It's also something we're watching really closely. It has not been passed. It's still open for debate and discussion, but it is something that if it were to be put into place, would have a very dramatic impact on local basis

Todd Gleason: 16:55

The May WASDE will take that, I assume, its account for the season's average cash price, should it be in place as well as whatever they might have in place for tariffs as well, is that correct?

Frayne Olson: 17:12

Correct. So the of the policy that USDA and the WASDE specifically has is if a policy is in place at the time that they run their models and do their analysis, that they do factor those in. So proposals or, you know, ideas that are floating around, don't include. But if it's a policy that isn't currently in place that would impact trade or trade flows, they are a foreign policy shift. They do include those in their forecast, but it has to be in place at the time of when they run their analysis, number one.

Frayne Olson: 17:49

And then when they run the analysis, they assume that this policy will stay in place, that it's not going to be on temporarily and then removed. So it will be really interesting to see, you know, as we get closer to when USDA runs that May WASDE, what policies have been announced, what policies, trade policies in particular are in place and how that might adjust, you know, expectations for not only old crop, but the May contract is also the one that is in charge or is released for the new crop. So May is the first new crop projections that are also put out. So my guess it'll have a bigger impact on the new crop numbers than necessarily the old crop numbers simply because we're partway through the marketing year in old crop and some of those numbers that we have are actual numbers, not forecasted numbers.

Todd Gleason: 18:45

And then at that time, it will be important if there is a very, very low season's average cash price that doesn't seem to hook up, with the December and November futures prices that that is because the basis level might be reflecting Yes,

Frayne Olson: 19:03

absolutely. Again, what USDA, what the WASDE is trying to forecast is the season average farm gate price. They're not doing anything on the futures, they're assuming this would be a farm gate prices. So if there is an adjustment in basis, again, because of port fees or some other reason, there could be an adjustment in the in the basis levels, which then would enact that that national average farm farm gate price.

Todd Gleason: 19:30

Hey. Thanks much, Frane. Frane Olson is with North Dakota State University Extension, an agricultural economist there on campus. He joins us once a month here on the closing market report from Illinois Public Media. Find us online at willag.org to listen to anytime you'd like.

Todd Gleason: 19:47

That's willag.0rg. Now let's turn our attention to the agricultural weather. We're joined by Mark Russo. He's at Everstream Analytics. Hello, Mark.

Todd Gleason: 19:58

Thanks for being with us.

Mark Russo: 19:59

Hi, Todd. Thanks for having me.

Todd Gleason: 20:00

Tell me about, the Midwest. The Eastern Corn Belt, some are really beginning to say might be pretty wet and delay planting. That's kind of early, so we'll see how that goes. And then, of course, the Western Corn Belt is drier. I was out, all the way to Kansas, middle of through the weekend, and I saw, well, only four, but I did see people going over the weekend.

Todd Gleason: 20:24

So I suspect they'll start to really plant this week if they can. What's the weather look like?

Mark Russo: 20:29

Well, a bit of a variable situation looking out here over the next couple of weeks. Mostly open conditions, you know, generally drier conditions will be in place much of this week across the Corn Belt as well as into the Northern Delta. The next widespread rain event will be then over the upcoming holiday weekend. For some areas, it starts on Friday. Others, it's on the Saturday.

Mark Russo: 20:54

But that does look to be the start of a bit more active pattern, especially in the central and eastern sections of the Corn Belt, like Eastern Iowa, eastward through Illinois, and then on into Indiana and Ohio. The Far Western Belt, though, looks to at least remain generally open. There might be a little bit of light rain around here next week, but, again, that more active zone looks more central and eastern areas. Now as the pattern turns more active, temperatures are going to return to a more kind of slightly warmer bias pattern. So even with the turn to more active conditions, it's not like it's looking exceptionally cool or unseasonably cool, but rather at least we'll have a bit more slightly warmer than normal temperatures to at least help a little bit here in between rain events.

Todd Gleason: 21:45

And then for the hard red winter wheat growing regions in the plains, are things looking okay?

Mark Russo: 21:50

They're okay right now, but the macro situation still is in a downward trend as we go through the April. Reason being is that we've seen hotter and drier weather return to the plains hard red belt. It's going to stay that way here this week. There's gonna be some opportunities for rain next week, but it looks like the heavier rains or the more meaningful rains look east of the main areas. And especially, like, Central And Western Kansas, which has been one of the driest areas of late, we do not feel that there's going to be any real meaningful precipitation there.

Todd Gleason: 22:28

And finally, how is the safrinha crop coming along in Brazil from your perspective?

Mark Russo: 22:33

Yeah. They continue to improve. And this more active pattern at this final month of the rainy season continues to be in place over the next couple of weeks before then kind of winding down the rainy season in early May. So this late rainy season boosts in soil moisture, gonna keep, much of the Safrinha Belt in good shape and even improve the areas, that had been more on the drier side a few weeks ago.

Todd Gleason: 22:58

Thanks much, Mark. You're welcome, Todd. Mark Russo is with Everstream Analytics, joined us here on the closing market report for this Monday afternoon. I'm University of Illinois Extension's Todd Gleason.