Dec 17 | 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 December 2025. I'm extension's Todd Gleason on the road in Mount Vernon at the Illinois Farm Economic Summits. Coming up, we'll talk about commodity markets, explore the CRP program, and take a look at the weather forecast. Todd Gleason's services are made available to WILL by University of Illinois Extension.

Todd Gleason: 00:26

Greg Johnson from TGM, totalgrainmarketing.com now joins us from the elevator right here in Champaign County. Hi, Greg. Thanks for being with us. How's your week been so far?

Greg Johnson: 00:37

It's been extremely quiet. I think, the traders, the farmers, the merchandisers, I think we've officially entered the holiday doldrums, up one day, down the next. Just not a lot of new news to trade off of. Everybody's waiting for the January 12 USDA supply and demand report. And so until then, I think a lot of farmers have sold what they need to have sold and they're going to wait until January to make any future sales.

Greg Johnson: 01:05

And the supply is still plentiful on the corn side, even though export demand is still strong. And on the bean side, South America is starting to get some rain and the technicals turned negative with that Head and Shoulders formation a couple of weeks ago. So we're just kinda stuck on in a in the middle of the range on corn, and we're back down to the bottom of the range on soybean.

Todd Gleason: 01:30

It would have been nice if the technicals hadn't turned with that head and shoulders kind of formation in the soybeans, and at least the doldrums would have been in the $11 cash range, not below that. I know many farmers are thinking that both for old and new crop. And then on corn, producers, I am pretty still convinced, and some of the trade too really thinks USDA will drop the January number. And they may, and they probably will, I suppose. But as you said, it's adequately supplied, not a burdensome supply, but it was a big crop and remains that way still, I guess.

Greg Johnson: 02:11

It is, and I think Illinois, Central Illinois, really surprised people with the kind of yields we had. I'm not sure that we had those same kind of surprising yields in the West. I think they were good, but not great. And based on where the USDA has those yields estimated, we could see those yields come down anywhere from three to five bushels and overall maybe see a two to three bushel drop. So you might get a 200,000,000 bushel drop on the supply side.

Greg Johnson: 02:41

That's the good news. The bad news is that feed demand number is probably 200,000,000 bushels too high. So if the USDA lowers production, they'll probably lower the demand a little bit. You know, the question is, can we get it enough below 2,000,000,000 to get the market excited? A number right around 2,000,000,000 is plentiful.

Greg Johnson: 03:01

It's not burdensome, but it's not exciting either. And so it's gonna take some other kind of news that we don't know about. It might be how many acres do we plant next year here in The US for corn. That might get us excited, but that's more of a February March thing. That's not a January thing.

Greg Johnson: 03:17

So the January 12 report is probably the next thing that moves the market. But as I always encourage farmers to have offers in because it may not, know, we may get a bump, a spike up the day of the report or a day or two after, but it may not stay there. So have your offers in.

Todd Gleason: 03:32

What's enough below 2,000,000,000 bushels to make the market sit up and take notice? Is that a 100,000,000? Is it 500,000,000? What number do you think takes to really make the market become motivated?

Greg Johnson: 03:45

You know, I think it's it's where the where the reduction comes from. If if they keep raising, export demand, for example, and if they keep, you know, if if they raise the ethanol demand and if they keep the feed demand where it is, even though I don't see how they can do that, but if it's a demand driven rally, then I think this market might have some legs under it. If it's just the supply adjustment, we take the yield down three bushels an acre, that's probably more of a one or two day adjustment. And then we go back to saying, you know, that really that 1.9, 2,000,000,000 bushel carryout is still plentiful because it's not gonna get any lower because the USDA probably has, you know, lowered the yield all they're gonna lower on that January crop report. Whereas if it's a demand driven rally, if exports are 3,000,000,000 this month and 3.1 next month, maybe they're 3.2 in the fall, you get that kind of anticipation in the market, and then you could see the market go up a little bit.

Greg Johnson: 04:41

So I guess I would answer your question by saying, you know, is this gonna are they gonna make adjustments on the demand side, or are they gonna make a onetime adjustment on the supply side?

Todd Gleason: 04:50

Much of this will be driven, of course, by the grain stocks number along with the survey of farmers. But the grain stocks number, which will tell us what usage really looked like in that first quarter. And I think the on farm number, from what the trade has been telling me, will be the real issue that you and the rest of the trade will look at as to how much of the corn crop really is in the hands of farmers. Do you have, some thoughts on how much of that crop remains in the hands of producers and particularly on farm?

Greg Johnson: 05:23

It's, excuse me, it feels like it's very similar to last year. Farmers remain undersold, and so there's a lot more on farm storage than we've seen in previous years. It's gonna be similar to last year's numbers. So I think that we should see numbers similar to last year when those stocks numbers come out. So once again, nothing to get the market real excited because the corn is out there, but you may see basis levels firm up.

Greg Johnson: 05:53

You may see spreads tighten a little bit because the farmers may not, wanna sell anything. So it keeps it off the market temporarily, especially if we get some Trump money, that, could pay some bills in January. They may not have to sell as much grain to pay those January bills. So, the stocks number, yes, definitely will be, closely looked at, but it feels like the farmers are still sitting on a on a ton of old crop corn.

Todd Gleason: 06:17

You know, it's probably percolating through the industry just a little bit at this point. During the Farm Assets Conference on Friday of last week, Scott Irwin made some a presentation which included a basis moving figure for ethanol starting January 1 because of the 45Z. Z. And as he put it, and this aired on Monday during the closing market report if you wanna go find it again, he was about 99.9% sure that there would be a $0.32 per bushel tax incentive that ethanol producers would begin receiving at that point. Will that make much of a difference?

Todd Gleason: 07:03

Have you heard that? Has the ethanol industry taken that into account? And or is that why ethanol demand has been so good in part of the early season?

Greg Johnson: 07:15

I think that's exactly it. I think that's right. I think they're talking about an incentive like that, and that's keeping the ethanol demand very strong. But as far as, you know, raising that ethanol demand from where it is, it's probably gonna take, either, some kind of an e 15, you know, year round e 15 type thing to really jump up the ethanol usage because the bottom line is ethanol usage is based on gasoline usage, and that's based on miles driven. And with the more electric cars that had been built over the past several years, our gasoline driven miles have been have gone down, and so that, kinda limits how much ethanol needs to be blended in with that gasoline.

Todd Gleason: 07:58

And then just on the idea that basis might change or be pushed, do you think that could happen?

Greg Johnson: 08:05

I I think it could. You know, it it could, but, you know, the the govern this is a political issue, and you've got big oil biz versus big farm, and, nobody in the administration wants to pick a winner because both of those industries are big supporters of the Trump administration. So once again, I think things keep getting kicked down the road until they absolutely, positively must make a decision. And by the time they do make a decision, time is worn away, and so then it won't be quite as friendly as if they would decide something sooner rather than later.

Todd Gleason: 08:40

And finally, demand for soybeans to crush remains good?

Greg Johnson: 08:43

Oh yes, more soybean crush plants have been built here. That's the good news, but we need that to offset the poor export demand. The Chinese government is gonna honor their commitment to buy the 12,000,000 metric tons, but our beans are overpriced or higher priced than the South American crop. And so you wouldn't expect the private Chinese companies to come in and buy a whole lot of US soybeans unless our price gets low enough to where it's cheaper to buy our beans than Brazilian beans. So I think that 12,000,000 metric ton number is probably the the top side for a while unless something changes weather wise down in South America.

Todd Gleason: 09:18

Hey. Thank you much, Greg. We, by the way, won't be talking with you next week or the following week. Those are Christmas Eve and New Year's Eve. But you will join us for our final commodity week of the year to record on Thursday afternoon.

Todd Gleason: 09:30

I look forward to that, and I thank you for being here today.

Greg Johnson: 09:33

Thanks, Todd.

Todd Gleason: 09:34

Greg Johnson is with TTM. That's totalgrainmarketing.com. He's right here in Champaign County, Illinois. Well, as you know, I've been traveling this week with the PharmDoc team, the agricultural economist on the Urbana Champaign campus of the University of Illinois for the annual Illinois Farm Economic Summits we wrapped up today in Mount Vernon. Natalie Loduca, a new ag economist on the team, is here now.

Todd Gleason: 10:04

Thanks, Natalie, for taking some time with me and for traveling this week. Also, can you tell me about your specialty in the ag econ department?

Natalie Loduca: 10:12

So my specialty is looking at regenerative agricultural practices or ways in which we can help farmers become more resilient to weather variability and production risk.

Todd Gleason: 10:22

During the Illinois Farm Economic Summit, you talked some about that, but you were focusing on CRP and some policies related to the conservation reserve program that have changed under the Trump administration. Can you outline them for me, please?

Natalie Loduca: 10:36

Yes. So a lot of us on the policy panel were talking about the reconciliation act or the one big beautiful bill and what that means in terms of things that were previously within the traditional farm bill. So what I was speaking on specifically was, as you mentioned, CRP. So EQIP, RSPP, CSP, those have all been reauthorized until 2031. So those for right now stand in place.

Natalie Loduca: 11:02

CRP was extended until September 2026. So currently, it's in an uncertain state. After, September 2026, it's uncertain whether that will move forward given that the farm bill is now kind of split up. I'm not sure if renegotiations will be able to occur regarding that. So what that means long term is that farmers that are currently enrolled or have contracts, those contracts should be honored.

Natalie Loduca: 11:27

You have a contract with the government. So my understanding is they need to honor those payments for the remainder of your contract. But if your contract expires, I don't know if you'll be able to renew as a farmer, or enroll new acres. And so the recent numbers that I had looked at was that as of September, about 800,000 acres were enrolled in CRP. And so those potentially will come out of those contracts on a rolling basis.

Natalie Loduca: 11:54

They're generally ten to fifteen year contracts, so it could take a while for all of those to expire. And over the past five years, there's been an average of about a $170,000,000 paid out annually to CRP payments. So in terms of long run, if CRP is not extended or reauthorized again, we're gonna see, obviously, those payments disappear, and slowly, those acres are going to come out of those programs. And what the farmers do with those acres moving forward, we'll have to see. A lot of times, CRP acreage is on marginal land, land prone to flooding.

Natalie Loduca: 12:29

So if farmers wanna put those back into production, that will obviously have additional impacts potentially on prices moving forward. And so we're gonna have to wait and see ultimately if it's extended and and what the final outcomes will be.

Todd Gleason: 12:44

So that's kind of a quick look of what the financial impact is. There could be really a price impact because there might be more acres that are in production, but there are other impacts I think that you have been considering, particularly as it's related to nutrient loss? These acres probably are acres that are more at risk, to be flood prone, as you mentioned, for water to move through them. What kinds of things have you been thinking about and analyzing?

Natalie Loduca: 13:14

Yeah. So I look at different programs, and moving forward, it it will be interesting to see with the Illinois nutrient loss reduction, strategy how that might change moving forward to try to address these goals because CRP is an important way to help support, nutrient loss, goals. And so there are some other programs that have come into place. So the Illinois cover crop premium discount through the Illinois Department of Ag. I believe this is their fifth year within that program.

Natalie Loduca: 13:44

So that has become available. So there is still, some state support, and there are still programs like EQIP, but those are working lands programs. So as you mentioned, are these gonna be brought back into production, and what does that mean long term? So I'm still fairly new to the University of Illinois, but I am hoping on working with, soil scientists and other people to kind of think about this interdisciplinary and really complex issue of what is ultimately the impact on the environment, thinking about the Mississippi River Basin and those goals across states. And so it will be interesting to see the long term repercussions of this.

Todd Gleason: 14:20

In the main space, because there will be a loss of income if CRP is not reenrolled or acres that might be new may not be enrolled at all. Farmers will be looking for different financial alternatives. You talked about one. Can you explore those a bit more with me, please?

Natalie Loduca: 14:37

Yes. So a lot of the programs that I'm aware of besides CRP are working lands programs. So CRP was unique in that it allows you to retire that land. EQIP, r c RCPP, and the Illinois cover crop premium discount program, those are all on acres that are in production. And so that's gonna be an interesting trade off that farmers will have to look at of are these payments going to help cover crops can help with flood prone and and different issues, but is it worth it to implement these practices, meaning that you have to bring this land back into production?

Natalie Loduca: 15:13

So working with people like FBFM, you can kind of look at what is your financial risk and what is your return. So if you're putting a lot of inputs and your yield is fairly low, are these supplemental payments going to help kind of recoup some of those costs? And so I think CRP was pretty unique in that it was you retiring that land and not needing to have it enrolled or put into production.

Todd Gleason: 15:37

What do you hope to be able to accomplish within your position as a clinical professor? What kinds of things do you expect to look at related to this or other issues?

Natalie Loduca: 15:46

Yes, that's interesting. So I'm starting to work with FBFM and I'm hoping so that's the farm business, farm management, and then there's also PCM, Precision Conservation Management. So my hope long term is to kind of merge these different types of databases to think about which practices do help the farmers financially. So we have different practices that have been prone to be environmentally beneficial but what I'm really interested in is what are ways in which we can support the farmers financially and still have these regenerative ag or conservation goals met. So trying to make sure we have mutually beneficial programs.

Natalie Loduca: 16:22

So I have looked at things like equip in the past historical payments, but also thinking about these other voluntary programs and when can cover crops or other practices be profitable for the farmers as well as produce environmental benefits. Because a lot of times the farmers are still incurring these input costs. You're seeding, you're terminating, and so is there a financial gain? We know environmentally there's a gain, but in terms of the profitability and financial measurement, considering that you could have yield loss, these long term studies are still ongoing, and so there have been some that have come out. But really trying to capture that at a local level and understand ways that we can support them through these practices and ways in which these practices can be beneficial to them on both a financial and regenerative ag basis.

Todd Gleason: 17:14

We look forward to seeing articles on the PharmDoc Daily website from you and following along with the kinds of things that you are researching. Thank you for taking some time with me today, and I hope that you have enjoyed your time on the Illinois Farm Economic Summits this week.

Natalie Loduca: 17:28

Yeah, it's been a great experience. As I said, I'm new to Illinois, so it's been fun kind of going around and seeing the state and meeting with different people. So, yeah, I look forward to continuing with the FarmDoc team.

Todd Gleason: 17:39

Natalie Loduca is with the FarmDoc team, an agricultural economist based on the Urbana Champaign campus of the University of Illinois. Joined us on the Illinois Farm Economic Summit. Helped us to wrap it up here in Mount Vernon on this Wednesday. Let's turn our attention now to the weather forecast. We're joined by Drew Lerner.

Todd Gleason: 18:11

He's at World Weather Incorporated in Kansas City. Happy holidays to you, Drew. Let's start in South America where they will celebrate in warmer weather than we have. I am, though, wondering how well the crops are doing in your opinion. There's been some on and off during this season as to what things will look like.

Todd Gleason: 18:29

I think it's more on than off at this time.

Drew Lerner: 18:31

Yes. It certainly is. We had a pretty, I don't know how to put it. The start of this growing season was pretty herky jerky, I guess, for Brazil. But we're seeing that put to bed here.

Drew Lerner: 18:45

We had a lot of moisture shortages as we came into this month and a lot of concern about where we were going because it didn't look like it was gonna rain too good for a while. But starting mid month, we started seeing the shower and thunderstorm activity getting a little bit better. I know mid month, we're still in it. But, anyway, in the past week, we are going to continue to have a regular occurrence of rain and thunderstorm activity in most of Brazil. And for that matter, really a large part of Argentina too.

Drew Lerner: 19:12

It's all going to be well timed and sufficiently distributed that I don't think there's going to be any large scale dryness issues. Now there will be a problem with some dryness in parts of La Pampa and Southwestern Buenos Aires in Argentina, and also in parts of Bahia in Northeastern Brazil, along with some of the neighboring areas and some minor production areas and Brinambuco and parts of Piaui. But we're not going to see the heart of Brazil have any kind of dryness. And even in those areas, the impact should be low because they're not a part of the main production region and we're not expecting absolute dryness. There is no excessive heat advertised for any part of South America either.

Drew Lerner: 19:57

The temperatures will be mostly normal to just a little bit cooler than normal, which means that the evaporation, you know, between rain events will not be all that great and we'll be able to conserve most of that moisture. So it looks to me like we're on a road here now where conditions are just gonna continue to be very good. And those crops that limped along earlier in the season in Brazil are probably going to see some improvement. We did lose some yield in the early planted crop. It just got too far advanced to be able to fully benefit from the rain that's occurring now, But it's a relatively small portion of the overall crop.

Drew Lerner: 20:35

So it still looks pretty good for Brazil, I think.

Todd Gleason: 20:38

One thing I've heard from a couple of other places that you have not mentioned nor anybody else that we have on the air with us is that the planting season was late enough that it could cause an issue really with second crop corn. Is that true or not true?

Drew Lerner: 20:55

It is true to a certain degree. We have mentioned it to our customers earlier on in particular. The amount of crop that's going to be late is going to be about a third of what it was last year. And so it's a pretty small percentage. Last year we had about 25% of the crop running really late and the crop ended up doing extremely well because of, you know, above normal rainfall in April and May.

Drew Lerner: 21:25

And so it ended up being a moot point, but this year it's a bit different. I don't think we've got more than maybe five or 6% of the crop that's going to be running pretty late, but there will be some that is like that. And the biggest difference between this year coming up and that of this past season is that the monsoon is not going to continue into April and May. So, I mean, we may get that to go into May and end normally, but it's not going to extend longer. So some of that crop is going to yield a little lighter, but it's not a big enough percentage to put us, you know, in a in a big running bull market, I don't think.

Todd Gleason: 22:04

And then because we are ahead of Christmas week, just a short quick forecast for a week out. What does it look like to you?

Drew Lerner: 22:11

Yeah. Get rid of the sweaters. You know, we've got a ridge of high pressure that's going to be building up this weekend and next week, and we are gonna see temperatures way above normal across the heart of the Midwest. Now we'll still have our shots of cooler weather, and it's not gonna be just completely hot, but it will be well well above normal. And so we do not expect any serious snow events to occur outside of the Great Lakes region.

Drew Lerner: 22:37

I think Christmas holiday, very specifically, we're probably going to have a chance for a few rain showers in Iowa, Missouri, Illinois, Indiana. But there shouldn't be any snow. And the precipitation will work its way out of the region in that following weekend, and we'll be done with it. So it's not gonna be perfect, but it's certainly gonna be warm.

Todd Gleason: 22:56

Hey. Thank you much. I appreciate it. You bet. Have a good week.

Todd Gleason: 22:59

You too. That's Drew Lerner. He is with World Weather Incorporated in Kansas City and helped us to wrap up this Wednesday edition of the closing market report that came to you from Illinois Public Media.