- Eric Snodgrass, Conduit.Ag
From the Land Grant University in Urbana Champaign, Illinois, this is the Closing Market Report for the 7th day of February 2025. I'm Extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzolo. He's at GlobalCommResearch.com out of Atchison, Kansas, and Eric Snodgrass from Conduit Ag will join us to take a look at the weather forecast. I'll remind you to visit our website at willag.org where you can purchase your tickets for the All Day Ag Outlook at the Beef House in Covington, Indiana.
Todd Gleason: 00:29That's just a bit less than a month away, and we'll want to keep you on hand for the whole hour if we can today for all of our Commodity Week program. If not, it's online right now at willag.0rg too.
Announcer: 00:43Todd Gleason services are made available to WIL by University of Illinois extension.
Todd Gleason: 00:49Corn for the day settled at $4.87 and a half, 7 and 3 quarters lower than May at $5 a half cent, down seven, and December '4 '60 '6, the new crop down three and three quarters of a cent. Soybeans in the March at $10.49 and a half 11 lower. May futures at $10.65 and a half down 10 and a quarter, and November soybeans ten fifty seven and a half down 8 and a half cents. March bean meal at 03:01 forty, down $5. The bean oil at $45.98, 50 8 cents higher.
Todd Gleason: 01:19Soft red winter wheat down in nickel at $5.82 and three quarters. The hard red at $6.00 4 and a quarter down three and a quarter. Both of those are in the March contract. Live cattle, unchanged. Feeder cattle, down 40¢, and lean hogs, up 40¢ for the day.
Todd Gleason: 01:34Crude oil, 34¢ a barrel higher. Diesel fuel, up 3 and 3 tenths of a cent. And wholesale price of gasoline at $2.10 and 3 tenths of a cent, up two and eight tenths of a cent at this hour. The Dow Jones Industrial Average, four hundred and thirty nine points lower for the day. Mike Suslow now joins us from globalcommresearch.com out of Atchison, Kansas.
Todd Gleason: 01:56Hi, Mike. Thanks for being with us. Us.
Mike Zuzolo: 01:58Great to be with you. Thanks for having me, Todd.
Todd Gleason: 02:00It's another interesting Friday. I did not leave the news up, but apparently, the president is talking about tariffs again.
Mike Zuzolo: 02:09Yeah. And, you know, it's kinda weird because because even without that new news hitting mid late session on Friday, it just didn't feel like a very good week even though we saw fresh twenty twenty five highs in soft red wheat, Friday morning in the overnight Globex trade. We saw the twenty twenty five highs, brand new ones, Thursday and soybeans lead month. And then that followed the mid week highs of in corn that took us what I think up to the highest levels in another fifteen, sixteen month time period. But we closed the week kind of on a sour note, and the spreads were much weaker this week, the July corn spread, the July spread, especially.
Mike Zuzolo: 02:49Those spreads kind of gave up this week, and I noticed that in the middle part of the week. And so I'm gonna put two and two together and suggest to you, Todd, that this week was about, did we get anything made in terms of headway with China on the tariffs? And because the phone call between the two presidents did not go through on Tuesday, that took kind of the bullishness out of the demand side of the equation. And I heard a lot more talk in the trade and colleagues sending me emails about how the South American weather was not nearly as dire at the end of the week and that I think helps explain why those spreads gave up and why the corn and the beans specifically had a more difficult second half of the week. But thankfully the wheat held in there very nicely, and we are going to close-up about $0.3 on the soft red wheat.
Mike Zuzolo: 03:40We're going to take out the fifty two week moving average on the weekly chart for the first time since mid October of last year. And we've got quite a bit of weather in The United States and quite a bit of weather in the Black Sea region to have to deal with when we come back from the weekend and in the Super Bowl.
Todd Gleason: 03:56No. So I I happen to open up, the soft red winter wheat. Didn't happen to. I purposely opened up the soft red winter wheat chart so that I could take a look at it, on the weekly nearby. So I was looking at the lead option wondering where we were.
Todd Gleason: 04:12Interesting chart, especially over time. So we have the the 2021 highs at the beginning of the war in Ukraine, and then you have another high back in o eight, a really big high, about the same ant level. And right now we're down on the lower end of this. I I would say we're at the top end of the bottom part of the of the longer range between those that o eight and 2020, one, two time frame. Where where do you think we are, and and what does this mean when you look forward?
Todd Gleason: 04:49Is there there's a lot of headroom over the top of it, not so much to the bottom, but when you're on the bottom end of the trade, that that's that's a different function. Can you can you tell me where you you think we are?
Mike Zuzolo: 04:59Yeah. I I think that we're gonna have a tough time getting much more than 40 or 50¢ higher. I've I've kinda put $6.50, in my sights. $6.40, 6 50 in my sights for for new crop wheat on the software basis. And that's mainly because of the copper in the outside markets, and we still have kind of a sick deflationary Chinese market.
Mike Zuzolo: 05:19And I just can't get too excited about a a commodity demand led market, with what's happening with China and then the uncertainty in tariffs. I can tell you, though, copper and soft red wheat on a six week correlation study, their prices in leave them with few futures have moved in a positive 80% price action on a six week basis, and and copper helped weed out a lot. The Russian ruble helped weed out a lot this past week. Copper is actually the highest level since July of last year, mid July of last year. So I'll look at copper.
Mike Zuzolo: 05:53I'll look at crude. I'll look at the the ruble like we've talked about in the past and just keep watching those for the main reasons why we would keep going higher other than supply demand. And, obviously, weather plays a role. Nebraska clients are already telling me that twenty, thirty days from now, if temperatures warm up, they'll probably look hard at ripping wheat up, and that may even happen as you go farther south into Kansas, Oklahoma, depending on what the weather pattern is this next twenty, thirty days because we may have had some winter kill that's pretty substantial that the trade is kinda glossing over, but maybe respects a little bit more than it did two weeks ago. So I'd still say wheats are a leader to the upside based upon the outside markets.
Todd Gleason: 06:36Do those become corn acres?
Mike Zuzolo: 06:38I think they'll become corn unless the fertilizer prices spike because of tariffs. And then I think they'll become bean acres.
Todd Gleason: 06:45Okay. So we'll have to keep an eye on that. Wheat not the leader in the marketplace?
Mike Zuzolo: 06:51No. I think wheat is the leader of the marketplace.
Todd Gleason: 06:53It is.
Mike Zuzolo: 06:53I think it is the upside potential leader based on those outside markets. Beans, I think they reaffirmed the downside potential in the close of the week, and Safaris came out in the middle part, early part of the session Friday, went from $1.73.7 on soybeans for, for Brazil up to $1.74.9. That was a big increase. That would take you above most of the trade guesses right before the WASDE report on Tuesday. So beans open up along with the meal.
Mike Zuzolo: 07:21Very weak meal price action barely even on the week this week. So beans are back to the leader to the downside, unfortunately.
Todd Gleason: 07:29Speaking of WASDE, that's next week for the month of February. Pretty much a stepping stone normally. Any big things that you expect to see come out of it?
Mike Zuzolo: 07:38I think we still have enough South American weather to make one more play to the upside, but we're gonna need USDA's help on that. So I I need lower numbers from USDA on those WASDE numbers. Otherwise, if I don't get a wheat corn led rally after that those reports, I'll really be eager to move fast on some more bean hedges.
Todd Gleason: 07:57Are we deep enough into the Argentine soybean season to do that?
Mike Zuzolo: 08:01Yeah. I think so. I mean, I think this is where, what you've lost, you've lost. And it looks like about 60% of the ground that was really suffering got some big time relief and saved the crop. But I I'd say 40%, it's kinda like twenty twelve down there right now.
Mike Zuzolo: 08:16But remember, Argentina is 50. Brazil maybe is one seventy five if Safaris is right. So a whole different situation in South America between beans and corn in those two countries.
Todd Gleason: 08:26What are you watching in corn at this time?
Mike Zuzolo: 08:28Big things to drought monitor. I mean, we've got Iowa seventy one percent, Nebraska eighty seven percent, South Dakota one hundred percent drought, Minnesota sixty eight. Nobody's talking about it in the trade right now. Maybe it's too early, but that's the big thing to watch in the corn other than the wheat market.
Todd Gleason: 08:43Okay. So what are you telling producers? Because I know they have both old and new crop to market. Start with the old crop.
Mike Zuzolo: 08:50Yeah. I I'll do puts, on the on the both old crop corn and beans if I need to, not cash, because I need to know a little bit more about where we're headed in the tariffs. More nervous about the future side of the equation in the short term, not the cash because of the tight stocks that we have here domestically. New crop start with beans. Maybe wait, for another $25.40 cents in the new crop corn.
Mike Zuzolo: 09:14Again, that's predicated on what the wheat does.
Todd Gleason: 09:17A week ago, USDA put the cattle inventory numbers out before you and I talked. You had a week to see them. What'd you think of them?
Mike Zuzolo: 09:24They did not feed the bull. The the trade sees that. The funds are letting go of their positions right now. The only good thing to say about it at the end of this week is the feeder cattle index at the Mercantile Exchange is 2 70 7. The March feeders closed at 2 60 5.
Mike Zuzolo: 09:39There's a huge discount in the futures for both fats and feeders right now. I'm hoping that maybe this winter storm coming across The Plains wakes the market back up to that cash discount. Otherwise, those funds could keep liquidating.
Todd Gleason: 09:52Speaking of coming across The Plains, I'm looking forward to having you come through The Plains and Missouri, parts of Illinois, and ending up in Indiana on Tuesday, March for the All Day Ag Outlook. Thank you for doing that for us too.
Mike Zuzolo: 10:04It was a real loss to miss last year. I cannot wait to get over and see you and all the great people over there, Todd. I'm really looking forward to it.
Todd Gleason: 10:11Looking forward to having you. That, of course, is Mike Zuzilo. He's with globalcomresearch.com out of Atchison, Kansas, and will join us at The Beef House on Tuesday, March. We hope you will too. Tickets are available now.
Todd Gleason: 10:24Register at willag.0rg. Eric Snodgrass now joins us as usual on a Friday. He's with Conduit Ag and traveling through the great state of Indiana today. What were you up to this morning?
Eric Snodgrass: 10:43Yeah. I was at a place up in Northern Indiana called Auburn. I have a incredible car museum here, but, they actually got hit the last couple days with some ice in this area. So it was kind of an interesting, morning just to hang out here, and I'm I'm blazing my way back to Mohammed.
Todd Gleason: 10:58Excellent. We'll see you here in a few hours. In the meantime, I'd like to talk about the weather conditions you're driving under. It's gotten cool again. What does this pattern entail, and has it changed anything?
Eric Snodgrass: 11:12Yes. It has changed a few things, and this is gonna be really important to look out for the next, certainly for the next ten days, but beyond that. But here's the big idea. We've reoriented the jet stream by changing the temperature pattern. So the Cotton Belt, of course, down south is averaging 20 plus degrees of thunder for the next ten days.
Eric Snodgrass: 11:30They have a couple of shots of cold air, but most of it's gonna be very, very mild. Whereas in the Canadian Prairie, we're gonna be seeing temperatures 20 degrees colder than normal for much of the next ten days. So we're right in the middle. And as a result of that, we're caught up in this kind of corridor of extremely active weather. I've already counted five weather systems that should go across The United States from west to east over the next ten days at east.
Eric Snodgrass: 11:52They're gonna culminate in the Northeast where they should get some pretty big snow. And, unfortunately, Todd, with all that mild air to our south and access to colder to our north, I think we could be under the gun for more risk of ice going into the, you know, between now and and Valentine's Day. But here's the thing. It's active. It's moving.
Eric Snodgrass: 12:09It's changed the world we saw in January. And I need it to stay this way for a while so that I can undo some of these longer term fears of of drought developing at some point later on this growing season. I like to see very active finishes to winter, and certainly we're in
Todd Gleason: 12:25So by for a while, you mean for the rest of the month, for two weeks, all the way through the March? How long?
Eric Snodgrass: 12:33Well, I think the atmosphere is gonna prefer to keep coming back to this. And what I mean is we're gonna get into a stretch ten to twelve days very active, then it's gonna back off. Okay? Just maybe normally does. But there are still good indications that it's gonna fire back up again.
Eric Snodgrass: 12:46And one of those indications is that for the first time, I mean, in a while, our polar vortex in the stratosphere is gonna go into a full split. And when it gets disrupted like this, it tends to shake up the weather patterns for a while. So we will access some pretty significant shots of cold air. I don't think they're gonna last, you know, for weeks, but a few days at least. And that is just gonna help reinforce the same thing they got started, which is this whole idea of being the jet stream would come out of north from the West than what it did for most of January, which is come out of support from the North.
Eric Snodgrass: 13:17Now bigger picture is, can it last until we get towards spring? I think February is gonna be pretty wild ride, but can this last as we get into March and April and start to turn our hopes around for this risk of drought getting pushed in the other direction as we get into those spring months?
Todd Gleason: 13:35Moe, give me your prognosis, spring and summer.
Eric Snodgrass: 13:38So the first thing is this. The newest weather forecast runs from the European model of the new summit fifth, and they confirmed what we were concerned about. La Nina is at its peak. It's gonna fade, but what we're really gonna have to pay attention to is the full momentum of the atmosphere and where there is drought now. So it's still drought under this frozen soil across the Midwest, Upper Midwest where falls drought lingers.
Eric Snodgrass: 14:00We still have dry conditions in the Southwest. And the biggest problem with all of this is that the model is suggesting a tight spring for us in terms of precipitation, likely being wet, and then watching drought come through the plains toward the Mississippi River by the time they get into summer. And the question is, does it hop that river and get to pass by those critical months in July and August, which means, Todd, we still have risk on the table for this upcoming summer on adverse weather conditions preventing us from getting those high yields. And I think, honestly, the world's watching carefully to see if that's gonna be the case.
Todd Gleason: 14:34Is the river or the valley there really a barrier?
Eric Snodgrass: 14:38Well, it's just funny that you ask that because when you look at the geography that made the Mississippi River, yeah, there's a large topographical effect that puts it in this particular place. And on top of that, the further west you go from that location, you get yourself farther and farther from the direct access of the Gulf Of Mexico. And then lastly, if you go from West East Crust to Corn Belt, you also measure an entirely different spectrum of soil types in terms of their ability to hold water. So, yes, there's a million things that change across that river basin, and it all has to do with the shape of the Rocky Mountains, the depth of that river basin, and then the Appalachian Mountains on the eastern side. So, yep, topography plays a role.
Todd Gleason: 15:17Yeah. So we're at the lower levels, and then altitude goes up in both directions.
Eric Snodgrass: 15:22That's right. Alright.
Todd Gleason: 15:23Thank you much. Anything else before I let you go?
Eric Snodgrass: 15:26Just understand that we are gonna go a little drier in Brazil, which means we're gonna be able to harvest more quickly. Better rains are forecast at parts of Argentina, which will put a Band Aid on some of the drought issues down there. I still don't have a bullish story coming out of Brazil.
Todd Gleason: 15:39Eric Snodgrass is with Conduit Ag, joined us here on this Friday edition of the closing market report that comes to you from Illinois Public Media. It is public radio for the farming world online on demand anytime you'd like to listen at willag.org. That's willag.0rg. There, you'll find our daily agricultural programming, including the opening market report, the midday report with Sue Martin, Martin, along with the closing market report to listen to on demand our broadcast schedule throughout the day for our home station, and you'll find information from the economist, the crop scientist, and the animal scientist from the University of Illinois. Oh, as well as as a way to register, and please do this now, don't take more time, don't wait, it's just $40 to register for the all day I got look that'll take place at the Beef House in Covington, Indiana on Tuesday, March.
Todd Gleason: 16:33That's just a bit less than a month away now. You'll want to join us for the whole of the day. The farmdoc team will be there. The brokers and analysts from willag.org will be along, and we'll have a fantastic day. It is an interactive day like none that you've spent at other conferences if you've not been there before.
Todd Gleason: 16:54We really do want to have you on hand, so get yourself registered today. It costs just $40 and that includes your beef house cinnamon roll and coffee in the morning. By the way, they're not open for breakfast, so those cinnamon rolls aren't a normal thing, and man, are they good. You'll wanna be there for that. And then, of course, a beef house lunch can't beat it either.
Todd Gleason: 17:15And all of the other activities through the day. The cost is just $40 Sign up right now. Get yourself registered at willag.0rg.