Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the Closing Market Report. It is the February 2025. I'm Extension's Todd Gleeson. Coming up, we'll talk about the commodity markets with Matt Bennett. He's at agmarket dot net.

Todd Gleason: 00:14

We'll hear from Gary Schnitkey. Some comments he made during this morning's webinar, which you can find on the FarmDoc Daily website right now or later this afternoon related to farm income and some strategies for dealing with it in this coming year. And then we'll turn our attention to the weather forecast with Mike Tenure at t storm weather. Speaking of Gary, he and the rest of the farm doc team will join us at the All DAG Outlook Tuesday, March the fourth. I hope you can do that too. The cost is just just $40 a person.

Todd Gleason: 00:46

That includes your beef house roll and coffee in the morning, the lunch at the noon hour, the whole of the day including most of the farm doc team. Gary will be there, Nick Paulson will be there, Joe Janssen, Jonathan Koppas, Bruce Sharick, all on stage with us, along with many of the analysts and brokers that you hear on our programming that you find at willag.org. And a couple of other items. Sue Martin will be coming in from Iowa to join us for our Korn panel, And we'll hear from John Reed from the Center for Digital Agriculture here on campus about autonomous operation of the tractors on your farm. This is a labor thing.

Todd Gleason: 01:27

You'll want to be there to hear it too all at the All Day I Got Look at the Beef House in Covington, Indiana, but you need to register today. The cost is $40. Do it online at willag.0rg. Todd Gleason services are made available to WILL by University of Illinois Extension. March corn for the day at $4.93 and a half, up 3 and a quarter.

Todd Gleason: 01:51

May at $5.00 6, 2 higher. December, '3 quarters lower at $4.72 and 3 quarters of a cent per bushel. March soybeans at $10.30, up two and a quarter. The May at $10.47, up one and a quarter. New crop November, '10 '40 '5 and a quarter.

Todd Gleason: 02:06

That finished the day a penny and a quarter higher. Bean meal, a dollar 40 lower. The bean oil, up 59¢. Soft red winter wheat in the March, up three and a half at $5.77 and three quarters. The hard red, up six and three quarters of a cent at $5.98 and a quarter.

Todd Gleason: 02:22

Live cattle futures, around 25. Live cattle futures at, 80¢ higher, that is, at $1.96 52 and a half. Feeders at $2.67 97 and a half, up $3. And the lean hogs at $93.10 a dollar and 22 and a half lower for the day. Crude oil, 11¢ lower, $71.26 a barrel.

Todd Gleason: 02:42

And the wholesale price of gasoline today, up a penny and a tenth at $2.32 and 4 tenths of a cent. Now here to talk about these numbers is Matt Bennett. He's with agmarket.net. Hi, Matt. Thanks for being with us.

Todd Gleason: 02:56

I hear you're traveling again on your way back to the state of Illinois. Hope that goes well for you. However, I'm interested to hear what those farmers you were talking to out west had to say about the marketplace and their plans for this season. What did you hear from them, and what area were you in today?

Matt Bennett: 03:14

So I was in Sioux Falls, South Dakota. The big co op put a meeting on, and, you know, there was probably 300 growers there, pretty good sized group. I asked them, you know, what are you guys gonna do planning wise this year? Because every time I've gone north, I've found most people feel like their corn acres are gonna be pretty stout, and that's exactly what I heard again today. Most hands in the room went up, so they just didn't think they could make, $10 type fall beans work.

Matt Bennett: 03:41

And so, you know, I thought that was probably one of the more interesting things I took away from it.

Todd Gleason: 03:46

And what does that tell you about the marketplace and when you should sell new crop?

Matt Bennett: 03:50

Well, we've had such a nice little rally already. So to me, it's pretty tough to, sit here and, just watch it all go past. I think, having a measure of flexibility certainly is advisable, given, what we're situation we're in this year with, you know, a lot of uncertainties about weather. Eric Snodgrass spoke after me. I didn't get to hear him, but I've heard him a few times already this year.

Matt Bennett: 04:12

And I know there's a lot of uncertainties there, so I'm perfectly fine with a a guy having flex, but I I I just wouldn't wanna let all this get away from me.

Todd Gleason: 04:21

This morning, CONAB took a look at its crops, four corn in total across all three crops. It expects that safrinha to come in larger in number of acres or hectares, and in total, all three crops around 97,000,000 bushels bigger than they expected last month. That number is not small. That's gotta work into your calculations as well. Yeah.

Matt Bennett: 04:47

Absolutely. I mean, you saw them think about the Brazilian growers. They've seen this corn price go up as well. So, you gotta think they're gonna throw everything they can at that crop. If mother nature's gonna be conducive, they're gonna plant all the acres they can possibly get their hands on.

Matt Bennett: 05:01

So, you know, we've heard in, some areas that it could be up as far as planted acreage, up to five to 10% just in certain areas. And if that's the case, clearly, they won't need near as good of a yield as if, they didn't plant so many acres. So at this stage of the game, you gotta see how that works into things. Now the thing is funds have built their long for a reason, and I think a lot of that has to do with, hey. What's Brazil gonna look like first of all?

Matt Bennett: 05:26

And second of all, are we gonna have a spring conducive? You know, they're going in here and planting all these corn acres. Because if we do, by all means, I think, you know, if there's no issues, probably wanna sell everything today. But if there is issues, you know, and the funds are right, there's probably a chance for a little more upside.

Todd Gleason: 05:44

I know this morning, I hosted a webinar for the FarmDoc team. And, during that webinar, there were a couple of questions. Probably out of the five we got, two were on, the Trump administration and its willingness to pay producers under a tariff situation or other situation. Is that what you're hearing in general from producers? Are they asking what they you believe the odds are that more payments, whether they're ad hoc for low income or ad hoc because of a tariff situation, might be coming?

Matt Bennett: 06:17

Yeah. I mean, I think people are certainly concerned about it. You know, most people feel pretty confident that he'll handle it similar to the last time around. Whereas, I think there's some people a little bit, you know, maybe wondering if there wouldn't be near the incentive to do that, being that he wouldn't be in a reelection type situation. So, it's certainly on their minds.

Matt Bennett: 06:38

I mean, as they see, oh, you know, the doji type stuff going on, I've tried to encourage them not to, assume that there wouldn't be anything on our side of the thing because, that maybe would be on the chopping block. You don't wanna think about that, but at the same time, it's probably due now that we need to at least consider.

Todd Gleason: 06:56

Yeah. So you're, looking at, Elon Musk and, the Department of Government Efficiency and and how it would view, some of the things happening within USDA as it's related to payments. Already looking at SNAP, I know, and other places, and of course, we're in the midst of a farm bill year. Let's turn your attention to soybeans. Not as many acres.

Todd Gleason: 07:21

When you think about this in total, do you think soybean acreage could be down in The United States this year over last year?

Matt Bennett: 07:28

Yeah. So I think that that's probably something to expect. I mean, if you're, you know, if you're looking at, for instance, corn acres in this, 95 and above range, which I kinda feel like you've gotta start there. Two years ago, you're at ninety four six, so I've gotta think that we'll at least be there. If that's the case, then I think you could take at least a couple million out of this.

Matt Bennett: 07:48

You know, probably somewhere 84 or below was just my guess, because I don't think we'll plant in totality over one seventy eight, maybe absolute max one seventy nine with a perfect spring. And so with that being the case, you know, I'm probably 84 below at this stage, and that might be a little supportive as far as The US balance sheet goes. Clearly, the world balance sheets fired in some, but you might see a US balance sheet that actually gives a a person reason to maybe, have a little

Todd Gleason: 08:18

You know, the first look at that we'll get that will be during the Ag Forum, and then we'll get the USDA acreage figures at the end of the month of March. I suppose you've also been asked many times about crop insurance and what the possibilities for this season should be. I know Gary Schnicki has been looking at it. You have talked in the past about using ECO. I'm wondering whether that's where you're thinking for your own farm this year that you'll be, increasing your insurance or not.

Matt Bennett: 08:51

Well, clearly, your ECO is getting a pretty good subsidy, and so it's something a guy needs to look at. But, at the same time, I think every farm is different depending on where you're at and what your situation is. So I would definitely sit down with one of these insurance tools and calculators and try to make sure that it's gonna be a good use of your money. You don't really wanna outlay, you know, $50.60 bucks an acre for some of these programs, whatever margins are where they're at. And so, it's something you need to, you know, weigh it as far as your own operation goes.

Todd Gleason: 09:22

Hey. Thanks much. I appreciate it.

Matt Bennett: 09:23

Absolutely. Thank you.

Todd Gleason: 09:24

That's Matt Bennett. He is agmarket.net. This morning, I hosted another in the FarmDoc IFAS webinars. That's the Illinois Farm Economics Summit this time around with Nick Paulson and Gary Schnickin. You can see the whole of that webinar anytime you'd like on the FarmDoc website under the archive section.

Todd Gleason: 09:59

It's probably just easier to go to youtube.com/the at signfarmdoc. That's youtube.com/@farmdoc, and it should pop up right away on that page later this afternoon. May not be there just yet, but it will be later today. Anyway, I thought I'd pull some cuts from it as they had been going through what the 2025 season will look like. They have breakevens there for owned and cash rented land for corn and soybeans across the state of Illinois.

Todd Gleason: 10:32

You can see all of those. I did want to go through some of the things that Gary Schnicki has been talking about all winter long as it's related to strategies for dealing with very low prices. There are four things that he says you should do. You need to be a low cost producer. You have to reassess some of your land rental strategies, the machinery strategies, and take advantage, of course, of all the available government programs.

Todd Gleason: 11:01

Being a low cost producer is paramount. And the precision conservation management program that he's been working with the Illinois corn growers on over the past many years has given him some real insight into the workings of farms, and a lot of it has to do with number of tillage passes and how many inputs you're using.

Gary Schnitkey: 11:23

Just to give you a feel for that, this is, data from f from PCM, And we divide that into buckets of less than 150 pounds, 150 to 175 pounds of actual m per acre, 176 to 200, all the way up to over 225 pounds of actual m. You do notice that yields do increase, as you increase the pounds of n applied, but you also notice that operator and line returns decrease as you increase the number of pounds of N applied. And sort of the sweet spot there is in that middle range right about around that, that,

Matt Bennett: 12:11

university

Gary Schnitkey: 12:12

recommendation. So and you also notice that those don't go down more than you might expect. But, again, that is because the same people that have above nitrogen n also tend to have higher tillage and also tend to have higher fungicide rates. So the same thing you observe with, with, more tillage passes and again, sort of the sweet spots are, no till, till, one pass light, two pass light. Those, I have less tillage passes, obviously, than the two plus moderate and two plus tillage passes.

Gary Schnitkey: 12:51

Again, looking at that, more moderate to no till have had the higher returns over time than those more intensive tillage systems.

Todd Gleason: 13:03

So the number one item on Gary Schnittke's how to become a low cost producer is to lower the nitrogen rate to the university recommendation. That's total nitrogen from all sources to the university recommendation. So if it's a 80

Matt Bennett: 13:20

pounds, that's a 80

Todd Gleason: 13:20

pounds from all the in sources that are that's a 80 pounds from all the in sources that are applied, including anhydrous, fall fertilizers, and anything else that might be put on during the season. The second part of that is not to chase higher yields by using extra inputs, maybe the fungicides or all the rest of the biologicals that you have tried over time. That you have tried over time. In fact So that you have tried over time, university research probably says on the biologicals that they don't work. Anyway, I saw that yesterday during the Crop Management Conference on the Urbana Champaign campus of the U of I.

Todd Gleason: 14:01

And then to get rid of the excess tillage passes, the sweet spot, Sechnicki, is no till or one light pass, possibly two. Anything more than that, and it's a waste of fuel and time.

Gary Schnitkey: 14:15

So again, we're again and that that difference is becomes, if anything, more important in lower price environments. So, you know, if you're looking at a three bushel increase, three times six is higher than three times four. So and we're in in this lower, environment right now. So that would be our our our our our reassessment number one, and that is to, again, really emphasize that be a low cost producer.

Todd Gleason: 14:49

The number two item on this list is far more difficult. That's reassessing the land strategy and shedding the highest cash rent properties that are dragging down total income.

Gary Schnitkey: 15:00

This is a tough one to talk about because we do know that in ten years, the farms that want to continue in existence will most likely be larger than they are today. And some of that growth will happen, maybe most of that growth in farm size will happen with the rented farmland. So we do have to increase the farm size using rented farmland. And so we have do have to think about a marketing approach. How is this farm going to attract new land owners?

Gary Schnitkey: 15:34

We have to have a farm resume and a sales pitch, and, basically, that would focus on what makes this farm different and unique and such that a landowner would would want to, rent to you rent to that individual. And then finally, how much will can a farmer pay for cash rent farmland?

Todd Gleason: 15:55

Here's the long term bottom line on net farm income from a corn and soybean crop rotation farm in Illinois. The numbers say the net income, not the gross income, over the long run for decades has been about $100 an acre. That means with the cost of inflation that the net return has continued to go down and not trend upward. It is a number that Gary Schnittke thinks farmers need to consider along with their cash rent and ownership strategies. If you'd like to talk to Gary Schnittke and Nick Paulson, who were on the webinar this morning, you can do that on Tuesday, March at the Beef House.

Todd Gleason: 16:40

They'll both be there in the afternoon for a wide ranging discussion with the panel of farmdoc ag economists, including the two of them, along with Scott Irwin and Jonathan Koppas. I hope that you will come and join us and ask them questions. I left it to the end so that we can stay as long as it takes to get through a series of questions that farmers and landowners want to know about as we move through the decade of the twenty twenty's. I think that this year's all day outlook is more important than any other we've ever had. You can join us.

Todd Gleason: 17:15

The cost is just $40 Get yourself registered today at willegg.0rg. Let's turn our attention to the global growing regions and how the climate is impacting crops in them. Hi to Mike Tenura. He's here on this Thursday, president and CEO of TStorm Weather. Hi, Mike.

Todd Gleason: 17:47

Thanks much for being with us. I, am thinking about South America. You and I have been having some conversations, and your suggestion here is that it's it is a complicated story still and that there are really three things we have to explore. What are they?

Mike Tannura: 18:03

Well, those three things are heat in Argentina, dryness in Brazil, and then also some decent rainfall in Argentina and Far Southern Brazil. So all three of these things are kind of creating a mixed scenario for South America. The easiest one to talk about would be the heat in Argentina. If you look at temperatures relative to corn and soybean production over the last thirty days, They've been the warmest for them seven years, in that period of time. And that just tells you that the heat that we've seen in January and over the first third of the month has been significant.

Mike Tannura: 18:38

We are cooling off a little bit today and will stay that way for another day or two, but our concern is that another heat wave is on the way. This will start on Wednesday, Thursday, and Friday coming up, and it will most likely last into March. If that's the case, then this is going to go down as one of the hottest February's on record, and that's never a good thing for crop development. So that's number one, Todd.

Todd Gleason: 19:01

And then the next two are dryness and rainfall?

Mike Tannura: 19:05

Well, you're absolutely right, and I know this creates a complex story. But if you look at Brazil, most of the area is going to be drier than normal over the next ten to fourteen days. We have a large area of upper level high pressure, and that's going to keep rainfall totals low for most people. Now the concern with this is that some soybeans are still sensitive, So you still would like to see some pretty good rains because, you know, around a third of the crop would benefit from that, but they're not going to see that. So that's kind of the first piece of that story.

Mike Tannura: 19:34

But the other piece is that the lack of rain aids soybean harvesting, which is also taking place because, remember, soybeans are planted over a pretty wide window. So some of them were planted way back in September and October, and now they're being harvested while others were planted in November, and those are the ones that want the rain. So we will see some improved conditions for harvesting, and that will also improve conditions for second corn planting. So between all of that, it's kinda hard to make a real clean story, but then there's a third story, and that's the one with the rains that are coming up for parts of Argentina and Brazil. There's going to be some decent rainfall for the northern two thirds of corn and soybeans in Argentina and the southern 20% of soybeans in Brazil.

Mike Tannura: 20:18

These areas do need rain, and they will see benefit from that over the next week with anywhere from one and three quarters to three and a half inches coming up, which is considerably wetter than normal. They might usually see around one and a half inches over this period of time. So basically, you're going to have some areas seeing improving conditions, some areas seeing deteriorating conditions, some producers happy that they can harvest soybeans and plant corn, and then other areas that just don't like all this heat. So, you know, it's gonna be tricky to see how all this plays out. But maybe in a week from now, we'll have some idea of a cleaner story that might lie ahead for March.

Todd Gleason: 20:54

Conab, that's Brazil's USDA counterpart, pointed out in its fifth grain survey released earlier today that first crop corn production this year was more than last year despite there being fewer acres and expects that there'll be about 2.4% more planted area in the Sabrina crop this year, and that total production there will be up 6.4% from last year. How do you see the April weather playing out for that crop?

Mike Tannura: 21:26

Well, the only real tool that we might have to start thinking about that would be the development or continuation of La Nina. We're in a La Nina phase right now, which means that water temperatures in the Pacific Ocean are colder than normal. Now they're expected to stay at least a little bit colder than normal all the way in May, and it might even last beyond then. There's some hints that we're going to stay in a neutral or weak La Nina phase for the upcoming summer, which is something to keep in mind for The US later on because typically our best crafts happen when we end up with an El Nino that's coming up later this year. But at this point, that does not look to be in the cards.

Mike Tannura: 22:04

But back to what you're talking about with corn in Brazil, there's just not a real strong correlation between this setup and the type of range that they might see in April and May in the Center West Region, which is where most of these crops are produced. So at this point in time, we don't really have anything to say about that. You know, we would just say maybe to expect normal weather because if we look back in the past, we can't latch onto any one particular scenario based on this type of La Nina that we're in today. So, you know, it's just gonna be a wait and see, and we'll have to be much further into the future, say, the March before we can really think hard about it.

Todd Gleason: 22:43

It will remain normal until it is not. Thank you much, Mike.

Mike Tannura: 22:47

There you go.

Todd Gleason: 22:48

That's Mike Tenura. He is with t storm weather, where he serves as the president and CEO. You've been listening to the closing market report on this Thursday afternoon. Do visit our website at wilag dot org, where you can sign up right now for the all day Ag Outlook. Have a great afternoon.

Todd Gleason: 23:05

I'm University of Illinois Extensions, Todd Gleeson.