Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market reported as the February 2025. I'm Extension's Todd Gleeson. Coming up, we'll talk about the commodity markets with Matt Bennett at agmarket dot net. Gary Schnitkey will take up the ARC PLC decision that farmers must make by the month of March, and we'll hear from Mike Tenura too from TStorm Weather about the global growing regions weather forecast for The United States and South America all on this Thursday edition of the closing market report from Illinois Public Media. It is public radio for the farming world where today at willag.0rg, you can sign up for the all day Ag Outlook.

Todd Gleason: 00:41

It's to be held Tuesday, March at the Beef House in Covington, Indiana. Todd Gleason services are made available to WILL by University of Illinois extension. Arch corn for the day settled at four ninety five at a quarter, two higher, December at four sixty nine and three quarters, up a penny and a quarter. March beans at $10.60 and a half, up three and a half since. November at ten sixty six, three and a half higher, and soft red winter wheat in the March at five eighty seven and three quarters, up 15 and a half.

Todd Gleason: 01:10

The hard red March at six zero seven and a half, also fifteen and three quarters higher. Matt Bennett from ag market dot net now joins us to take a look at what's been happening in the marketplace. Hi, Matt. Thanks for being with us. Have you recovered from your big Nashville event?

Matt Bennett: 01:25

Yeah. You know, we had a pretty darn good event. It was just, just solid all the way around. A lot of good, presentations and, you know, the it was it was better than what we've ever had. And so now we've gotta try to figure out a way to make a better decision.

Todd Gleason: 01:39

So Those are always really great to do, but they they make the following year tough. They really do. What did you learn that was different than you didn't really understand or know about or think about, prior to the time you were there?

Matt Bennett: 01:53

You know, I think one of the things that jumped out at me as far as something that we really learned, we had a we had a guy from Brazil there talking about irrigation and, you know, just how it might impact total production. And so this guy said, that based on their analysis, I don't know that everyone listening knows this, but, you know, the the, corn yield in Brazil is typically, you know, like, in that 90 bushel range. And so, they feel like with the amount of water they have available, you know, and and with, the extra production they have available, that's you know, they could raise that yield from 90 to one fifty. And I don't know that everyone wanted to hear that, but by all means, we need to hear stuff like that. So, you know, there's certainly the chance that they're gonna gobble up even more production, you know, than what, we have seen here, already.

Matt Bennett: 02:48

I mean, if you look, I I've been presenting on this for a while. And, you know, if you look, since 2015, actually, their production has gone up about 83% for corn, whereas for The US, it's gone up about nine. So, we've got some very stiff competition. But, you know, we had guys like, Dan Bozzi and Eric Snodgrass and, you know, Eric Norland from the CME Group. He's their chief of con.

Matt Bennett: 03:11

It was just pretty fascinating.

Todd Gleason: 03:13

Yeah. Interesting to listen to. I know in The United States, you would not think that year in and year out that the state of Washington would have the highest corn yields in the nation, but they do. It's only on a hundred thousand acres, roughly speaking, but it is all irrigated. Now that's vastly different than what you're talking about in in Brazil, particularly, for this week, for farmers, is on the week's trade.

Todd Gleason: 03:38

Because we are now above the two hundred day average, which has been a benchmark for you, that should open some upside. However, the long term downtrend, now we're bumping up against, I suppose, and we're kind of in this triangle working our way forward. Which way will the thing break, do you suppose?

Matt Bennett: 03:56

You know, I think what's really interesting, Todd, about both corn and beans, last week, you know, we rallied in the face of the, you know, I guess, the talk of tariffs. You know? I mean, you sit here and the funds seem like they really want to buy commodities. It's more of an inflationary type move than what we've seen over the last couple years. And then, you know, of course, Sunday night, everyone was in full on panic mode.

Matt Bennett: 04:21

And I get it. I understand it. But, one thing that we can learn here, of course, is that, you know, the threat of tariffs I think I've told you this more than once. The threat of tariffs and the implementation, of course, are two completely different things. So even in the even in the face of potential tariffs, funds were buying, but you just see that they came right back in and bought this thing there on Monday, both corn and beans.

Matt Bennett: 04:43

And then you come in today, and you have pretty steep losses there for a while. And you turn right back around, and they buy, you know, buy weakness once again. So you're we gonna push up above that long term downtrend. I guess my thought on soybeans is pretty tough, you know, to assume that happens without major weather. And so, from my own personal opinion, I I do think, you know, rewarding this thing as you go incrementally makes some sense.

Matt Bennett: 05:08

But at the same time, you know, Todd, this is more of a supportive field than what we've had in quite some time.

Todd Gleason: 05:13

So is it inflation driven, do you suppose, for those funds only, or are they looking at that 1,500,000,000.0 bushel carryout and saying at 10% stocks to use ratio, it could tip either way easily?

Matt Bennett: 05:26

Yeah. I think, what it boils down to whenever it comes to corn is, you know, you've whittled corn stocks on the world basis down, each year for the last several years. You look at stocks and stocks to use ratio. And then whenever you start talking, The US balance sheet last year, of course, US balance sheet, it left everyone feeling like, hey. This is a ballooning thing that we haven't seen for a while.

Matt Bennett: 05:48

Highest stocks to use, we were gonna see for a while. Highest stocks we've seen. And then you come in here this year, and it kinda stop that trend of higher stocks and stocks use ratios. And so I think, ultimately, the funds have come in for a couple different reasons. I gotta think there was a lot of money on the sidelines coming into the election just because of the uncertainty of what the direction might be.

Matt Bennett: 06:08

Sometimes you see commodity inflation whenever you see, for instance, the, you know, the equities fall apart. Well, you know, really, we haven't seen that. The equities have held right in there. And so, I've gotta think there was a lot of money looking for a home, and they looked at commodities and said, hey. We feel like these things are too cheap.

Matt Bennett: 06:26

So I think it's a variety of influences, but, ultimately, I think the funds wanna be long to see. Hey. Does this the fruit of crop pan out or not? First of all. And then second of all, as far as The US is concerned, yes, we're probably gonna have a lot of acres.

Matt Bennett: 06:38

Hey. But we're gonna have weather issues this year. So they've built this long for a reason. I don't think they're gonna give it up too easily just yet.

Todd Gleason: 06:46

So you made some sales, new crop that is, already, I believe. Are you satisfied there, and and is there anything else to do?

Matt Bennett: 06:56

Yeah. I mean, for right now, I think anybody that hasn't done anything, if they wanted to leg into something on a flexible basis I mean, that's what we've tried to do with all of our sales this year because we knew it's kind of a fluid situation. But if you haven't done anything yet, we've been rewarded. You know? I guess, we're not doing anything in here.

Matt Bennett: 07:14

And I think when you look at input costs, if you've got them all locked in, you know, being here $30.35 cents above where we traded for so long in that April, April, '4 '40 level, you gotta expect that it would be smart to at least step in and do something. So I'm not of the opinion you go hog wild, but at the same time, I think, setting a floor in place as you go up just on the increments of bushels makes a heck of a lot of sense to me.

Todd Gleason: 07:37

Hey. Thanks, Monte. Anything else before I let you go?

Matt Bennett: 07:40

No. No. I think it's a good, it's a more supportive feel. You know? So we gotta be thankful for that.

Matt Bennett: 07:45

And, hopefully, we'll continue to see more buying.

Todd Gleason: 07:47

Thank you. That's, of course, Matt Bennett. He is with agmarket.net.

Matt Bennett: 07:56

Up

Todd Gleason: 07:56

next, there's a tool on the FarmDoc website called the Farm Bill What If tool that could help producers make decisions about ARC and PLC and which of those two programs they should use. However, the article that the FarmDoc team has written and posted to the FarmDoc Daily website includes some interesting numbers as it's related to both ARC and PLC. PLC uses an effective reference price and ARC uses a benchmark price. I won't go into how each of those is figured, but the benchmark prices are much higher than the reference price. However, you have to multiply that benchmark by 86%.

Todd Gleason: 08:39

So here are the numbers and what they mean. For corn, the reference price under PLC is 4.26, the 86% benchmark price is 4.33 under ARC. Soybeans 9.66 for the reference price under PLC, $10.47 at the 86% benchmark price, and for wheat $5.56 for the reference price under PLC, and $5.78 for 86% of the benchmark price. Effectively, what this means, says agricultural economist Gary Schnicki, is that producers at least in Illinois and probably in a large part of the Corn Belt should be choosing ARC County this year for corn, soybeans, and wheat.

Gary Schnitkey: 09:31

So for all three of those commodities, corn, soybeans, and wheat, our county likely has a higher chance of payment and larger payments than PLC. The one caveat to that, although, is if we have very low prices or market year average prices below, much below the effective reference price, PLC will pay more than ARC County because it doesn't have that 10 cap which ARC County does.

Todd Gleason: 10:01

That's Gary Schnicki, agricultural economist at the University of Illinois. He, Nick Paulson, and Ryan Batts have authored an article called Farm Bill What If tool that includes all the numbers that you just heard as it's related to the ARC PLC decision, the reference, and benchmark prices. You can see them on the Farm Doc Daily website at farmdocdaily.illinois.edu. Look for the article titled the 2025 Farm Bill What If tool. The ARC PLC decisions are due in the month of March.

Todd Gleason: 10:36

Gary did make note in the five minute FarmDoc video from which this particular set of audio from him was pulled that there is a very strong preference for ARC County for soybean this year. If you'd like to learn more from Gary, you can watch that FarmDoc video as well on the YouTube channel or you could just come see him in person at the All Day Egg Outlook at the Beef House on Tuesday, March and learn what he has to say about crop insurance decisions too. That'll be just perfect timing for those crop insurance decisions. We hope to see you there. The cost is just $40 Gary will be there, Nick will be there, Scott Erwin will be there, Bruce Sharik will be there, Jonathan Koppas will be there, and so many more, not only from the FarmDoc team, but from the Will Ag gaggle of analysts that you listen to each and every day here on W I L L and Illinois Public Media.

Todd Gleason: 11:35

We hope to have you there as well. That's at the Beef House, Tuesday, March the fourth in Covington, Indiana. It's a great day. Starts with a Beef House rolling coffee. You have your lunch during the noon hour from the Beef House and all day long.

Todd Gleason: 11:50

The FarmDoc team, the Will Ag analyst, and so very much more. I hope you can join us, but you need to register today. You can do that at willag.0rg. The theme music for the closing market report is written, performed, produced, and courtesy of Logan County, Illinois Farmer Tim Gleeson. Now up next, Craig Lemoine, ag economist here on the Urbana Champaign campus of the U of I, breaks down the complex world of tariffs into some easy to understand concepts using real world examples from lumber imports to textile manufacturing.

Todd Gleason: 12:32

We'll learn how tariffs impact international trade and domestic industries.

Craig Lemoine: 12:38

Tariffs are in the news. Tariffs have been in the news since November. And so let's dig in a little bit into what a tariff is. A tariff simply put is a tax on imports. Give you an example.

Craig Lemoine: 12:50

Let's say that a home builder in Wisconsin imports lumber from Canada. If we put a 25% tariff on that lumber, then for every hundred dollars of lumber pre tariff, now that importer buys the hundred dollars of lumber and cuts a check for $25 to the government as a tax. That lumber now costs the importer a hundred and $25 instead of a hundred dollars. So that importer then when they sell that lumber or they build a house, they're going to have to reflect that increased tax they paid the government and the cost of those materials. And that in a nutshell is a tariff.

Craig Lemoine: 13:31

Well, let's dig one layer deeper. When we think about why we use tariffs from an economic standpoint, we can use tariffs for a number of reasons. We can try to raise revenue from a federal government standpoint. We can act participate in what's called protectionism as well. And either way, the idea is, okay.

Craig Lemoine: 13:49

Well, if we raise the cost of goods outside The United States, perhaps we're more likely to use goods generated inside The United States. Growing up, I lived in El Paso, Texas. And during my time growing up, there was an act that passed. It was the North American Free Trade Agreement. And you saw a bunch of textile companies like Levi's and, you know, things that made BlueJeans pop up on the border of Mexico and The United States.

Craig Lemoine: 14:15

The idea being that you would have American and Mexican management, and you would have typically employees from Juarez and they would make the textiles and textiles would then ship to United States. So it was a way that we could make textiles without paying United States labor costs, which typically are more expensive than that labor cost in in Juarez, Mexico would be. So the idea of a tariff then kind of flies in the face of that free trade. K? And what we're looking at with this world of tariffs today is that we're kind of tariffing by country and not necessarily by industry.

Craig Lemoine: 14:53

When there's some industries, The United States does a very good job and maybe we have a domestic interest in that industry continuing such as making cars in The United States. Right? Our ability to produce cars is the same as our ability to produce and weaponize those kind of things if we ever needed to. And so, yeah, you can make the argument that we need a strong, healthy car industry in The United States. So maybe if we put tariffs on automobiles or automobile parts, we would then see perhaps more people buying US cars because they would be priced more affordably or cheaper than international alternatives.

Craig Lemoine: 15:26

You could make an argument that perhaps if you're a big believer in bourbon, right, we put a big tax on tequila. Tequila is generally grown in Mexico and south of there. And so we would grow and make tequila in Mexico. What used to be a hundred dollars a bottle. Now we'd have a hundred dollars a bottle plus that tariff tax put on it.

Craig Lemoine: 15:44

But to summarize a little bit about tariffs, the reason that we use tariffs might be to raise funds. It might be to protect American jobs, to grow American industries. And we can look at that from the slant that, okay, maybe perhaps that'll work. The danger of tariffs is that there are local economies and synergy economies and a real global economy that when we start to introduce tariffs becomes significantly less efficient and has different middlemen and different cost and fees and structures that weren't there in the past. So I wanted to share a little bit about tariffs with you today.

Craig Lemoine: 16:20

I hope you learned a few things.

Todd Gleason: 16:21

That's Craig Lemoine, an agricultural economist in the College of Agricultural Consumer and Environmental Sciences here on the Urbana Champaign campus of the University of Illinois. We're now joined by Mike Tenure. He's the CEO and president of T Storm Weather. That's tstorm.net online. Hi, Mike.

Todd Gleason: 16:52

Thanks for being with us again on a Thursday. Let's turn your attention to South America. What's the weather story developing like as we enter the summer and or harvest season depending on where you are in that continent?

Mike Tannura: 17:10

Well, we're basically watching heat in Argentina. It's going to be hot there for about five more days, and this is a continuation of a pattern that started over a week ago. So this will have been an unfavorable setup for the corn and soybean. Now the heat is going to break once we get into Tuesday and Wednesday, and we will see some storms when that front moves to the north. But the potential problem is that there's not a lot of rain with this front.

Mike Tannura: 17:34

And even though there are some rains even beyond then, those don't look to be too heavy either. So in the end, in Argentina, we're looking for below normal rainfall over the next two weeks, And we really need a lot of rain because it's been kind of dry over the last month or two. And, Todd, if we don't get these rains, we'll still be trying to get out of this situation if we have rain in the February and into March. But overall, we'd like to see those rains come in sooner than later so we can stop talking about this so much.

Todd Gleason: 18:06

And if you move to Brazil, what kind of conditions are they harvesting under today?

Mike Tannura: 18:11

Well, in Maragrosso where they are harvesting soybeans, they're seeing a mix of dry and wet periods. So, not an ideal situation, but not a problematic one either. And they're basically going to continue to see that going forward. If you move on to the south, that's where some concerns also exist. They have a similar setup to what's been taking place in Argentina, and we'll see bouts of heat over the next week, and we'll also see some thunderstorms later next week when heat comes to an end.

Mike Tannura: 18:39

Once we get beyond that, some more storms are going to linger in Southern Brazil and in Paraguay, but it doesn't look like heavy rain is on the way. And some of these areas have been very dry over the last thirty days, and these rains coming up are not going to be enough to alleviate that. This is particularly true in Rio Grande do Sul and in Paraguay. So the story there is kinda similar to Argentina where it's a little too dry, it's a little too hot, and it doesn't look like there'll be a major change in that going forward. The other thing we'd like to mention about Brazil is that the northern area produces about 15% of the soybean crop.

Mike Tannura: 19:13

This region plants a lot later than everybody else, and so they are sensitive now because they were planted later. As we move forward, there's not a lot of rain coming up. Bahia and nearby areas, it's going to stay pretty dry for about the next one to two weeks, and that's because an upper level high is forming. They average about three and a half to four and a half inches of rain over the next two weeks, and it looks like they're going to see about one to three inches. So when we say dry, it's still as wet by US standard, but for them, that's just not a lot of rain.

Mike Tannura: 19:45

In the end, will all of this come to fruition and create yield problems? That's a great question, and we just don't really have the answer to that yet. But all in all, we'd like to see weather improve in all these areas that would make this story a little cleaner, Todd.

Todd Gleason: 19:59

Taken as a whole, do you suppose the continent will have a relatively normal harvest at least for those crops that, are already in the ground and growing?

Mike Tannura: 20:09

Well, at this point, there's no real reason to be concerned about harvesting. If you look at Brazil, you know, this pattern coming up isn't super wet, so people that are ready to harvest are not going to have major problems doing that. If you look into Argentina, they also, you know, are pretty dry. And even though they have some rains coming up, it wouldn't be enough to impede harvesting. But they'll only start to harvest early corn over the next few weeks or even in the next month.

Mike Tannura: 20:35

And their key weather for harvesting really doesn't start for about another six to ten weeks. So it's kinda hard to think too much about Argentina. But in Brazil, at least, they should start to move forward with their soybean harvesting. And that will also aid second corn planting, which is beginning now, but key weather for that crop is not until mid March and especially mid April, Todd.

Todd Gleason: 20:56

And then I suppose I was asking as well about total production across the continent. Do you think it will be off, relatively normal, yet to be determined?

Mike Tannura: 21:07

Well, it's hard to come up with a scenario where they'd have a great crop. So is this going to be one of their better crops on record? Probably not. The weather has not been cooperating in Argentina, hasn't been cooperating very much in Southern Brazil and Paraguay lately. And as they move on to the north, it's probably been okay there, but they're kinda going to make up for everybody else.

Mike Tannura: 21:27

So, you know, at this point in time, it's kinda hard to get too excited about a great crop. It's a little too early to get excited about a poor crop because we still have some weather to get through coming up. And as we do move forward, it doesn't look totally terrible as we already talked about. So all in all, you know, probably a near trend crop, maybe below trend if some of these other stories become a little more prominent. But, you know, at this point in time, it hasn't been ideally wet and cool.

Mike Tannura: 21:54

That's for sure.

Todd Gleason: 21:55

Is there anything that you're watching in The United States we should be aware of?

Mike Tannura: 21:59

Well, there's a much colder period that's developing in the Dakota. And even though that doesn't mean much directly for agriculture, it is going to set up the main storm track across the Southeastern Corn Belt, the Mid South, and especially the Northeastern US. As we move forward, we can see that a number of rains and snow that are coming up. These are going to start affecting different areas this weekend, and especially one to two weeks out, we could see some pretty big storms, from Pennsylvania onto the Northeast. Now how all this pans out is a little bit too early to determine, but the softer winter wheat crop is certainly going to turn wetter.

Mike Tannura: 22:35

And we also think we're going to see some river and field flooding basically from the Ohio River on south. So we'll see how all that plays into logistics later on this month and next month. But that's kinda the main thing that we're keeping an eye on now.

Todd Gleason: 22:46

Thank you very much, Mike.

Mike Tannura: 22:48

Thank you, Todd.

Todd Gleason: 22:49

That's Mike Tenora from t storm weather. He's at tstorm.net online. Joined us on this Thursday edition of the closing market report that came to you from Illinois Public Media. It is public radio for the farming world online on demand anytime you'd like at willag.org. I'm Illinois extensions, Todd Gleeson.