Apr 17 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report for the April. It's the last trading day for the week. The markets are closed tomorrow in observance of Good Friday. Coming up, we'll talk about the commodity markets with Matt Bennett. We'll hear from Joanna Colucci about Brazil and how ethanol has been driving a corn planting boom there.

Todd Gleason: 00:23

And then we'll turn our attention to the weather forecast here in the Corn Belt across The United States with Mike Tenora on this Thursday edition of the closing market report from Illinois public media. May corn for the day settled at $4.82 and a quarter, two lower. July at $4.19 a quarter, down a penny and a half. December down three quarters at $4.06 6. May beans, two at a quarter lower at $10.36 and a half.

Todd Gleason: 00:49

And November, '10 '30 '2 and a half, a penny and '3 quarters of a cent lower. Matt Bennett from AgMarket.net now joins us to take a look at what's been happening in Chicago on this last trading day of the week. Hi, Matt. Thanks for being with us today.

Matt Bennett: 01:02

Oh, absolutely. Thanks for having me.

Todd Gleason: 01:04

So the trade is over now for the week. How did it go?

Matt Bennett: 01:06

Yeah. Overall, this trade was nothing like it was a week ago. You know, a week ago, of course, corn rallied 30¢. Beans rallied 70¢. You had, bull spreading going on.

Matt Bennett: 01:17

This week, a little different story. If you look at last week's close for, May corn to this week, you're around 8¢ lower. You know, if you look over at soybeans, soybeans, they didn't have a bad week by any means, but last week, you you know, you settled at $10.42. This week, $10.35. So, you know, overall, Todd, I think a couple of different things are going on.

Matt Bennett: 01:40

Of course, there there have been a lot of planters roll, especially farther west and north of us. We've actually been able to get in the field ourselves, just planting soybeans. But, you know, with some of the forecasts, we've been a little hesitant to get too hog wild at least, you know, with the four with the temperatures as well. So I think a lot of that's going on first of all and then second of all, you know, we just kind of cooled off a little bit. Last week, we were on fire with these commodity markets.

Matt Bennett: 02:07

This week, you still see the dollar isn't doing anything great. We've fallen so much even from just six, seven sessions ago. You know? But here towards the close of the week, up just a little bit. We're still 99.3, so well under a hundred on the index.

Matt Bennett: 02:24

So I think that weak dollar is keeping things from, oh, maybe falling apart a little bit more than what we saw this week. We gave back a little bit, but we didn't give near back what we gained last week.

Todd Gleason: 02:33

I'd like to turn to the supply and demand tables. We have enough numbers from USDA now to put some figures together ahead of the May New Crop S and D figures. What do you see in that table, and what does it show you?

Matt Bennett: 02:48

Well, I mean, you know, whenever I look at our table, for instance, you know, one four six five is where we're currently at. Now if if you look at the pace of export sales, we're actually still running vastly ahead of what the USDA has projected, but let's just start at one four six five. If we look at one four six five, you know, you could you could factor in a one eighty one yield if a person really wants to. I think that's a stretch for a variety of reasons just simply due to the fact that we've gained acreage. So anytime you really balloon acreage, it puts you in a tough situation.

Matt Bennett: 03:24

But, you know, if I just go to, you know, your your trend line yield of a one eighty one, you know, and and I look at that, I mean, that's gonna put me in a in a pretty big carryout situation. I mean, I'm probably looking at something more along the lines, you know, of a 2,000,000,000 type carryout if you're able to plant the ninety five three, and that's keeping demand fairly consistent. Now if I go ahead and look at, like, a one seventy seven type yield, you know, to me, that that's probably a little more believable. You're still probably looking at, you know, in that one five, one six range. Of course, it all depends on what you wanna do with demand.

Matt Bennett: 04:04

You know? But I'd be very cautious as to assume that this is super bearish due to the fact that I think there's more meat on the bone with increasing exports. We just continue to see solid exports, and I really don't expect Brazil to be shipping corn at a very fast pace until you get out into that June, July timeframe. And we're liable to ship a fair amount of corn between now and then. Right now, I still think that the market is kind of hesitant to come in here and say, Hey, we really want to sell this thing off.

Matt Bennett: 04:39

I feel like, especially the funds, they're going to want to take a look and see, can we get big yield along with big acres? Because if we don't, given the fact that all of our major competitors out here on the world market are just they don't have a whole lot of corn to put on the market. You know, US needs to have a big crop.

Todd Gleason: 04:56

So USDA in March was at a $4.20 season average cash price looking forward. But the numbers you're using for your s and d table, do you kinda end up in that same space still with nearly a 2,000,000,000 bushel carryout?

Matt Bennett: 05:14

Yeah. No. If you get a 2,000,000,000 carry I mean, here's the thing, Todd. You're gonna have some massive, massive volatility depending on where this thing's ends up. So if you had a 2,000,000,000 type carryout, you know, a $4.20 cash price would look awfully good, I think, you know, whenever you're delivering this fall.

Matt Bennett: 05:31

Now to get to that 2,000,000,000, I think a lot of things are really gonna have to fall into place. First of all, you're gonna have to come in here and just slam exports at some point, slam the door shut. I don't necessarily see that happening. But if it did, you know, and then you were able to go ahead and get all these acres planted, you know, and then mother nature would cooperate. You know, a lot of these long range forecasts are still keeping a pretty significant amount of drought West Of The Mississippi.

Matt Bennett: 05:58

Know talking to Eric Snongrass this morning, one of the updated maps he looked at, he's still very concerned that in most of the Corn Belt you could have some late season dryness. I'm talking July, August, and September, especially more concentrated to the West. So, you know, I don't know that I wanna buy into a 2,000,000,000 carryout right now. In fact, I'd probably bet good money that we end up below that by a fair amount. But to answer your question, you don't wanna be sitting here watching these markets and not doing anything on the risk management side.

Matt Bennett: 06:32

Anytime you see these price levels above that average cash price, you know, you don't wanna do that if we end up with a 2,000,000,000 carry because it could be pretty volatile. On the flip side, I think you could see really strong market this summer, you know, on any sort of weather abnormality. So, clearly, planting's gonna slow down significantly. Is that gonna get into the market? I think it's anybody's guess.

Matt Bennett: 06:55

But, you know, if we're talking about this two, three weeks from now, there's no doubt that the market's going to have reacted to some degree.

Todd Gleason: 07:01

Anything on soybeans before I let you go?

Matt Bennett: 07:04

Oh, I don't know. I think on soybeans, I'm kind of in a wait and see approach. I know that they're not, bullish fundamentally, whether you're looking at the world or US, but you know, I do think that if you get some sort of weather related type rally with corn, you'd have a shot at some beans as well. Problem with selling beans today is they're not profitable for most anybody at ten thirty one basis the board. And so I wanna at least be a little bit more hesitant and patient here if we do get back up to that spring insurance price of $10.54 and above.

Matt Bennett: 07:34

If that works for someone, they could go ahead and manage some risk there. But personally, I I won't be doing it until we get closer to an $11 type figure, which I think is attainable still.

Todd Gleason: 07:44

Thanks, Matt. Matt Bennett is with AgMarket.net. The closing market report is a production of Illinois Public Media. It's public radio for the farming world online on demand at willag.0rg. There you'll find our daily ag programming along with information from the crop scientists, the animal scientists, and the ag economist from the U of I.

Todd Gleason: 08:10

It's all at willag.org. Now up next, just a quick preview of the weather for the Midwest or at least the past weather and what might be coming. We've seen floodwaters, of course, throughout the Ohio River Basin over the last two weeks, but how much rainfall did they really get? Well, Trent Ford from the Illinois State Water Survey did the math.

Trent Ford: 08:34

A back of the envelope calculation suggests that just the entire Ohio River Basin picked up roughly 56,000,000 acre feet of water in just four days last week. To put that in perspective, that's about twice the amount of water stored in the entire Colorado River Basin right now. Lake Powell, Lake Mead, all of it.

Todd Gleason: 08:50

Last week is actually two weeks ago. The Ohio River crested at Cincinnati this past Sunday at 61 feet. The highest recorded river level there was in 1937 when water reached heights of nearly 80 feet. We'll have more on the weather and what's coming to the Midwest in just a few minutes here on the closing market report. We're now joined by Joanna Colucci.

Todd Gleason: 09:26

She's part of the PharmDoc team at the University of Illinois in the College of Agricultural and Consumer and Environmental Sciences. Hi, Joanna. Thanks for being with us. You've written an article for the PharmDoc website titled Ethanol Boom Drives Sharp Rise in Brazil's Corn Consumption. Can you give me a bit of history about corn production in Brazil and the development of ethanol both in corn production and from sugarcane.

Joana Colussi: 10:00

So in fact, Brazil is using more of its corn to meet the growing demand from the animal protein and also corn based ethanol industries. So, if you look just the ethanol production, Brazil has seen a significant expansion of corn based ethanol processing plants across the Central West States, where the second crop, the safrinha production has grown very fast over the past decade. So, as a result, the corn crush for ethanol production has grown, for example, from 16,000,000 bushels in twenty fifteen-sixteen to over 700,000,000 bushels in the current crop season, accounting for about 15% of the country's total corn production. The total corn output for the current crop season is projected at 4,800,000,000 bushels, an increase of 6% over the previous harvest. So, the planting season in Brazil is over, the second crop production for twenty twenty four-twenty five season actually is underway in Brazil, with planting being completed in March and harvesting beginning in July.

Todd Gleason: 11:29

What do you think the implications might be for the global marketplace of more domestic consumption of corn within Brazil?

Joana Colussi: 11:37

If you look at that Brazil is keeping more corn in the domestic markets, whether for ethanol production or to feed the animal protein industry, we can say that it is shifting the expectations for Brazil's role in the international market, which has expanded actually over the past five years. But in the last two years, especially in 2024, Brazil reduced its shipments of corn, especially because the recovery of the corn production in main supplier countries such as The United States, Argentina and Ukraine, and also because of a slow demand from China. But basically, with a strong domestic demand in Brazil, a natural consequence is likely to be a decline in Brazil's corn exports in the coming years, reducing the competition with U. S. Corn exports in the global markets and also maybe putting up our pressure on the international prices.

Todd Gleason: 12:50

In Brazil, unlike The United States, where just 10% of the gasoline supply can be made up of ethanol, so for every gallon of gas pumped into a car, normally about 10% is ethanol made from corn, that number is much higher, I believe, in Brazil.

Joana Colussi: 13:09

Yes, currently gasoline sold in Brazil contains 27% ethanol, that's the maximum. Actually, it's from 18 to 27. This policy has helped to widespread adoption of the flexible cars, that are cars that are capable of running on any blend of gasoline and ethanol, being from 100% gasoline to 100% ethanol. The consumers, when they go to the gas station in Brazil, they can choose if they would prefer to put gasoline or ethanol according to price. And following a recent technical review, Brazilian regulators are recommending one increase in the ethanol blend to 30%.

Joana Colussi: 14:08

So, from 27% nowadays to 30%. And that could happen this year. If that happens, this change could add one extra 1,300,000,000.0 liters equivalent to around 300,000,000 gallons to the annual ethanol demand in Brazil.

Todd Gleason: 14:29

Do you suppose that this domestic usage, increasing domestic usage within Brazil will reflect in higher exports of corn from The United States?

Joana Colussi: 14:42

Yeah, that's a possibility because the competition, we know that nowadays The United States is the number one in corn exports, Brazil is the number two. In 2023, for one year, just only Brazil became the number one in corn exports. But given the situation that the corn has good prices in domestic market in Brazil, because they have more use either to ethanol production and also to the meat production, we can expect that the amount of the corn, at least from Brazil in the international market, will reduce. And if that happens, The United States will have even more room to put its corn outside of the country. And the same will happen with the corn from maybe Ukraine, from Europe as a whole, or Argentina, other big producers of corn.

Todd Gleason: 15:42

Joanna, thank you much. I appreciate it.

Joana Colussi: 15:44

Thank you so much for having me. See you next time.

Todd Gleason: 15:47

Indeed. Joanna Calusi is a member of the PharmDoc team. You can read more from her online at farmdocdaily.illinois.edu. You're listening to the closing market report on this Thursday afternoon. It's the last trading day of the week.

Todd Gleason: 16:02

The markets are closed in observance of Good Friday tomorrow. Our theme music is written, performed, and produced as well as courtesy of Logan County, Illinois Farmer, Tim Gleeson. The weather is next. Let's turn our attention to the global growing regions. We'll stick with The United States this week.

Todd Gleason: 16:24

We're now joined by Mike Tenora. He is at tstormweather. That's tstorm.net online where he's the CEO and president. Hank, thank you so much for being with us, Mike. Let's talk about, planting conditions today across the Corn Belt.

Todd Gleason: 16:41

What are they like?

Mike Tannura: 16:42

Well, today, they're not too bad. About 95% of expected US corn and soybean production were drier than normal over the last week. And so that tells you that a planting window is open. Now there are some areas that are too wet, then we estimate that that includes about five to 10% of US production, and that's mainly from the Mid South into Southern Illinois and parts of Indiana and Ohio. So that's the area that we'd like to have be dry.

Mike Tannura: 17:08

But everybody else right now, Todd, is doing okay, at least if you look at rainfall over that period of time.

Todd Gleason: 17:14

And what do you see for the next couple of weeks?

Mike Tannura: 17:17

Well, things are going to go downhill, unfortunately. And there's a pretty stormy setup that's developing, and that's going to last into the end of the month. We'll see a few thunderstorms around the Corn Belt today and tomorrow, but that's not really the main event. The main event follows Saturday, Sunday, and Monday, and that's because a cold front that dries through the Corn Belt essentially stalls out tomorrow and into Friday, and then that will allow a pretty large system to ride along it this weekend. We're looking for one to three inches across most of the Corn Belt and Mid South through Monday.

Mike Tannura: 17:49

So that's quite a bit of rain. But the bigger concern is not so much that initial rain event, it's that there's a number of them behind it. We can see that southerly winds are gonna flow northward from the Gulf for a while, and that's going to interact interact with pretty mild weather. And you put those two things together, and that's a good recipe for showers and thunderstorms at this time of the year. It looks like we're going to see some pretty heavy totals.

Mike Tannura: 18:13

Two to five inches should be fairly widespread into early May. And, Todd, while this might not be the biggest rain event ever, this certainly is a significant one. And our concern is that these southern growing areas that are too wet today are going to be really wet by the time we get into the end of the month.

Todd Gleason: 18:30

Sometimes we worry about persistence within the weather tracks and the weather in general, meaning every three to five days. Is that what you're thinking as the systems will come through?

Mike Tannura: 18:43

It'll be a little more frequent than that, probably every two to three days. So there's quite a stormy setup here that's going to be rolling on by. One thing that we've been talking with our clients about is that we have neutral conditions in the Pacific Ocean, and that basically means that water temperatures are close to normal. If it were an El Nino, we'd say the water temperatures were warmer than normal, Well, if those temperatures were colder than normal, then it's a La Nina. But we're in the middle, we're in this neutral setup.

Mike Tannura: 19:13

And if you look at the last five similar setups to this one, all five of those were at least moderately wetter than normal in the seven state Corn Belt in the period of April and May. So this is very much within the historical normal of this setup and that's part of the reason that we think it's going to continue. Not only have we seen some pretty big rains earlier this month, we can see the near term forecast is wet and we know historically that this is what happens.

Todd Gleason: 19:39

So are we talking about wet areas being the Delta and the Ohio River Basin? Does that include Missouri and parts of Illinois and Indiana? And what happens to the Northwestern Part Of The Corn Belt?

Mike Tannura: 19:53

Well, you're right. The wet areas are exactly where you're talking about, stretching from Southern Missouri through Southern Illinois and parts of Indiana and Ohio, and then points on to the South. That area to the Northwest around Iowa, I'm sure people listening out there are saying, man, I I could use some rain. It's been a little dry here for a few weeks, and all this wetness storage isn't really adding up where I live. And that's a pretty formidable area being Iowa, and it extends into parts of Nebraska and Kansas, even into Minnesota and Wisconsin.

Mike Tannura: 20:23

So it's not an entirely wet story. That's for sure. You could argue that more areas are dry today than are wet. But this pattern is conducive to rainfall for everybody. So these dry areas are going to turn wetter, and these wet areas are going to turn wetter as well.

Mike Tannura: 20:40

And then trying to add all that up and figure out what it means is kind of the difficult piece of the equation. But one thing we do know is that you can't plant rapidly when you have this much rain coming up. So it's going to slow down a little bit from wherever it would have been in a normal situation, and that's just going to bring home the importance of May weather. If the first two weeks of May are mild and dry, then this is going to be a fantastic thing because we'll have nice soil moisture in place, and everything will start growing real well. But if you have normal rainfall or wetter than normal rainfall over the first half of May, well, then all of a sudden, you'll be looking at one of the later planted crops.

Todd Gleason: 21:17

Producers then will be moving as fast as they can in each section. Early on, they will be worried about colder temperatures. You suggested moderate. Is that across the whole of the Corn Belt and no frost issues in mornings through that time frame?

Mike Tannura: 21:33

Well, once they get beyond the next three to four days where temperatures are going to wobble around quite a bit, then it looks a lot warmer. So part of this storminess is happening because of mild air coming north from the tropics, and that's just going to leave temperatures close to normal or above normal. So we don't think cold weather is going to be much of a factor once we get into next week. But as far as a major frost or freeze event, those are almost impossible to forecast this far out because if you look more than two weeks into the future once we're in May, a frost or freeze is basically a one off event. It's always possible that you could have that happen, but is it likely?

Mike Tannura: 22:14

No. On the other hand, when you look back at historical record, it's difficult to see exactly when we had a major frost or freeze because if you look at the monthly records, it could be warm in the entire month of May if you look back, say, twenty years ago. But if you had a frost on May 10, it wouldn't show up in the data because one day in the entire month of May is not going to affect your monthly record all that much. So it's a little challenging to see from that perspective, but I think the bigger story is that it's going to be pretty wet for a while. It doesn't look like it's going to be cold, and that's just gonna, again, increase the importance of that weather in May.

Todd Gleason: 22:51

Thank you much. I appreciate it. We'll talk with you again next week.

Mike Tannura: 22:54

Yeah. Sounds great, Todd.

Todd Gleason: 22:55

That's Mike Tanura. He is with T Storm Weather, the CEO and president there. You've been listening to the closing market report from Illinois Public Media. It is public radio for the farming world. I'm Extensions, Todd Gleason.

Todd Gleason: 23:49

Doctor. JACKSON: