Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market reported for the 02/18/2025. I'm Extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Naomi Blohm. She's at totalfarmmarketing.com out of West Bend, Wisconsin. And then we'll be joined by FAPRI's Ben Brown.

Todd Gleason: 00:19

He's at the University of Missouri in Columbia and with extension, the Food and Agricultural Policy Research Institute there. And as we wrap up our time together, we'll take a look at the weather forecast too with Don Day day weather in Cheyenne, Wyoming on this Tuesday, edition of the closing market report from Illinois Public Media, just two weeks away from the all day. I got look in the beef house in Covington, Indiana. If you've not registered yet, today is the day. Do it now at willag.0rg.

Todd Gleason: 00:48

See the agenda. Register yourself. The cost is just $40. And don't forget to pick up one of those books by Neil Dahlstrom, Scott Erwin, or Jonathan Koppas. March corn today at 05:02, up five and three quarters.

Todd Gleason: 01:02

December half higher at $4.77 and a half. The March beans at $10.38 and a half, up two and a half November at $10.58, up 6¢ for the day. Naomi Blum now joins us from totalfarmmarketing.com. Hi, Naomi. Thanks for being with us today.

Naomi Blohm: 01:16

Yeah. Pleasure to be here. Thanks for having me.

Todd Gleason: 01:18

Let's begin with the export inspections. The markets were closed yesterday because of the president's holiday, so the inspections were released this morning. Can you give me your assessment of them on the weekly and the yearly basis, please?

Naomi Blohm: 01:31

Yeah. So for the week, we had, export inspections at 1.611. So that was, for thousands of tons. That was ahead of the expected range. That was, just above expectations totally and just says that that other countries are just really, really, wanting our product, and then they're we're shipping it out as quick as we can.

Naomi Blohm: 01:55

Our year to date, year over year inspections are up about 35% over a year ago. So things are just are strong there, and the corn market responded to that today. And that, I think, was part of the reason that the corn for the March contract was able to get above that $5 handle. And we saw some new buying come in today. On the soybean side of it, export inspections coming in at $7.20 below the expected range.

Naomi Blohm: 02:21

And so that might have been part of the reason why beans today just lagging a little bit. And, also, behind expectations was the wheat number at two fifty. That was below the expected range of 300 to 500. So, that corn number, though, just definitely spoke volumes, for today's price activity.

Todd Gleason: 02:42

Yeah. And it's a a core number that we thought had been front loaded, but apparently just continuing to buy by the world.

Naomi Blohm: 02:50

Yeah. We are seeing that. We're seeing that in terms of sales. We're seeing it in terms of the ex the inspections and what's leaving the country. So that corn demand is strong, and it does kinda make you wonder if now on the March WASDE report in about three weeks, will we see the demand number for exports for corn on that report be a bigger demand number?

Naomi Blohm: 03:14

And and then potentially, could that bring the ending stocks number down? So that's something that the trade is gonna probably start to talk about and toy with. But before that, of course, we have to get into the USDA outlook for them at the end of next week.

Todd Gleason: 03:27

Yeah. That's the last two days of next week. What are your expectations, I suppose?

Naomi Blohm: 03:31

Well, I think that they'll give us a higher corn acre number. Trade is expecting that. You know, what they throw out there next week will just be, you know, interesting as it's not an official USDA report number. And Trade is already expecting them to show bigger acres, and they always give us a record yield number. So it'll just be a question of just trade trade the number or just kind of ignore it and focus on the reality of still tight ending stocks for the old crop, which continues to keep the March, May, and July contracts supported overall.

Todd Gleason: 04:06

For corn, is there much of a difference in direction for you as it's related to old and new crop?

Naomi Blohm: 04:13

Well, the old crop numbers, we still have a chart that is inching higher, and now that December chart has been, you know, working higher as well. So I feel like both of those markets yeah. I had been hoping we'd see it, like, a little bit of a pullback or correction on corn over the past couple weeks, and we only saw sideways range trade, and maybe, like, a 10¢ pullback at best. And now it's like we built up enough momentum from the past two and a half weeks from that kind of sideways shuffle that we were doing to give us enough of firm footing to be able to have this leap higher today. So, it is important to just be mindful that the funds are, you know, overall, they they're they're have that long position in corn.

Naomi Blohm: 04:57

Are they gonna be defending it or not as we go forward? And we have to keep an eye on geopolitical issues. And, of course, if there's anything that should occur with, poor weather on that second crop corn in Brazil, the market's gonna be ready to respond to it. But it does, again, start to feel like we're we're trading, you know, slightly smaller corn carryout. And, it feels like almost like, well, if we can't see that market finally have some sort of a pullback on corn, might as well jump in and be a buyer and join them.

Naomi Blohm: 05:25

And and that technical momentum still continues to to just slowly gain with prices continuing to inch higher for the corn market.

Todd Gleason: 05:36

Do do you think in the in the new crop that the because you were looking for a pullback, just a pause in the marketplace. Do you think that's not going to happen at this point and it will march higher to whatever the next area might be? I suppose that's up at, I don't know, $4.80 and a five or something along those lines, or at least the way I'm measuring it out. Do you see the market continuing on this steep rally?

Naomi Blohm: 06:06

Well, I would say it's going to be just a slow climb higher. So with that contract, this is the first time we've been able to close above four seventy five. It was a major resistance area. Do we keep that momentum going just straight higher? Probably not.

Naomi Blohm: 06:22

We maybe take a little bit of a pullback here. But now we're talking about a pullback of maybe only being a nickel or 10¢ instead of looking for hoping for maybe, like, a 15 or 20¢ pullback. It's going to take either some kind of a geopolitical thing at this point to get this corn market to pull back, or you gotta give the funds a reason to just want to exit that long position. And now I'm wondering, well, it's February. Are we going to see the funds hang in there with that long contract until we get into our summer high?

Naomi Blohm: 07:00

So that's that's kinda what I'm starting to wonder. If the market, you know, maybe doesn't go straight up from here, to get a little bit more of a sideways shuffle again, but ultimately continuing to trend higher just on the on the fact that US carryout numbers are tight, global carryout is tight, and corn from a historical perspective is still pretty decent buy here.

Todd Gleason: 07:22

It seems like a hard pull with two corn crops, the Brazilian and The US, not being put in the ground yet, but all to be put in the ground within the next four months.

Naomi Blohm: 07:32

Yeah. And and so we know that that Brazilian crop, you know, has has some potential, but at the same time, it's already spoken for in terms of demand. They need that for part of their domestic demand yet, and then all of that, is is expected to be exported also to the world. So the world is expecting and needs that big Brazilian crop. So there actually now is no room for error.

Naomi Blohm: 07:56

The question then becomes, how many acres sanded in The United States? Does that then alleviate the tight global carryout and the tight US carryout? So, it's starting to actually make me think of how few how how the market was trading in 2021. When we came off of the big China buying, we had 2,000,000,000 bushel carryout in August of twenty twenty. And then by the time we got to January of twenty twenty one, we were down to 1,500,000,000 bushel carryout, similar to what we have going on now.

Naomi Blohm: 08:30

And then that year, that, late March, we had a surprise really, really bullish quarterly stocks report from the USDA in March 2021, and that really lifted the market higher. And then from the March into mid May, July, corn futures rallied almost $2 just in that short time frame because the ending stocks number kept getting tighter and tighter. And then, of course, it lifted the December contract as well. It didn't, of course, rally as much as what the July did, but it started to work higher as well. So it's just something to be careful to be careful of, to be mindful of because going back again, that January USDA report is such a game changer.

Naomi Blohm: 09:13

And and now it feels like we're peeling off more layers of the onion of this whole corn story. And and could there just be more supportive prices to come? Because, again, we've got US carryout at 1,500,000,000 bushels now. That's such a difference than where we were back in in the summertime, and we have the potential for it to maybe get tighter because we had strong corn export numbers wherein the ethanol numbers too continue to be strong as well.

Todd Gleason: 09:41

Thank you much, Naomi.

Naomi Blohm: 09:42

Thanks for having me.

Todd Gleason: 09:43

That's Naomi Blum. She is with totalfarmmarketing.com. We're now joined by Ben Brown, agricultural economist with FAPRI, the Food and Agricultural Policy Research Institute at the University of Missouri. He's also with extension there. Thank you, Ben, for being with us.

Todd Gleason: 10:02

Oh, and thanks for coming to the state last week for the Illinois Soybean Summit. It was good to see you.

Ben Brown: 10:07

Yeah. I had a wonderful time. Met a lot of, great Illinois producers and, had a lot of really great feedback and certainly a lot of conversations in the back of the room after I got done about just kind of the the state of the agriculture economy and where we might be heading. A lot of people had questions, and, it was it was a really good time. Good event.

Todd Gleason: 10:23

Let let's start with that, but we'll start a little broader in a macro sense. Where are we in the economy now, and what does that tell you about the state of the ag economy?

Ben Brown: 10:34

Sure. So when I when I present, a lot of times I have three kind of categories that I start and just get broad remarks about. It's always commodity markets and just kinda what, you know, is affecting all the commodities across the board. Then usually we talk a little about The US economy and and just kind of the overall sentiment and state of the ag or of the macro economy, and then we finish up and talk a little bit about what's happening in the policy realm. Those are kind of the three things that I usually try to hit on.

Ben Brown: 10:59

And I would say here as of late, there's been a lot of not only questions about commodity markets as people start thinking about, you know, moving their their final old crop supplies, maybe even thinking about new crop pricing. You know, certainly a lot of questions around policy, but I've been getting more and more questions about the macro economy and just kind of where we see things going as it relates to consumers' expenditures, as it relates to the employment market, and then frankly, interest rates. You know, that's one of the things that really, can impact agriculture, producers a lot is is how much they're paying for operating notes, at the, you know, at the beginning of the year that they repay back at the end of the year. So a lot of questions about where interest rates could go in in the months ahead.

Todd Gleason: 11:41

What do you think? So I've

Ben Brown: 11:42

been out of the opinion that, interest rates are are maybe a little bit lower right now than where we probably need to see them to have a neutral position. That's my opinion. Others, you know, other economists might disagree and and certainly, you know, there's people all over the spectrum. But my opinion is is that, you know, last year in 2024, we saw a a one percentage point decrease in the in the federal funds rate. That's at short term federal funds rate set by the Federal Reserve.

Ben Brown: 12:11

We saw a a full percent, and half maybe was justified. I felt like the other half was just the market moving because that's what the or, excuse me, that's what the Fed did because that's what the market was was expecting them to do. Given the inflation data that we've seen both at the consumer level and at the wholesale level in the last couple of months, I just I have a really hard time seeing how the Fed can can just maintain interest rates where they're at. And and certainly, you know, I I wouldn't remove the the possibility of a interest rate hike here before May or June.

Todd Gleason: 12:44

Well, the Federal Reserve has been trying to keep things in line. So they brought the interest rates up in order to slow things down, and that's what your expectation is again this time around.

Ben Brown: 12:55

Yeah. So I, something that I feel has changed, in the Federal Reserve, let's just say over the last ten years. I I I can probably go back and kinda pinpoint where this started. But the Federal Reserve has really, really, really tried to communicate policy decisions in their press releases or their news conferences and and, and in their language. Right?

Ben Brown: 13:16

So you're hearing more and more about kind of the future direction of of fed federal policy, kind of in the in the news rather than through their official policy statements. It used to be they would go into a room, they would they would hash it out, and they would release a policy statement afterwards. And that was kind of that was what the market had to trade on. And and I think the the change that we've seen is them being a little bit more proactive and kind of priming the market a little bit for some of these decisions. And so that cuts both ways.

Ben Brown: 13:44

And and certainly when we were seeing interest rates hikes two years ago, two and a half years ago, they would communicate that ahead of time, you know, the expectation was, hey. We're gonna keep increasing interest rates to fight this inflation. Then they kinda started to soften that language here over the last six months, and interest rates kinda fell down. I think now what they're trying to do is they're they're trying to proactively say, hey. Inflation is moving in the wrong direction.

Ben Brown: 14:06

It might justify interest rate hikes. And so they're priming the market saying, hey. Don't be surprised if we do have to increase interest rates. Now they that works to the point of, like, if they do enough priming, you know, maybe the market, you know, gets enough concern that they don't have to increase rates. And, of course, then you end up in this boy that cried wolf situation.

Ben Brown: 14:26

But I certainly think they're using language and press releases and press conferences, much more today than what they did ten years ago.

Todd Gleason: 14:34

Yeah. I could say the same for USDA NASS and the World Ag Agricultural Outlook Board, and because they follow all of them, the same goes, for the Federal Reserve. I agree with you, but it's been probably a bit longer than a decade at this point. But in the nineties, certainly, you did not hear anything from them

Ben Brown: 14:55

at all. Yeah. You know, I I certainly think they're trying to to communicate, trying to control, you know, market sentiment basically with language rather than official policy discussions. But, you know, just to look at last week's inflation data, you know, the consumer price index came up, you know, month over month higher than than even what the expectations are. That's the third straight month that we've seen inflation come in hotter than expected, and the producer price in, index was also up signaling that that wholesale inflation will eventually trick trickle down to consumer inflation as well.

Ben Brown: 15:28

So I do think we're we're seeing the price prices, increase, faster than expected. And and I think that's got the the Federal Reserve a little bit concerned.

Todd Gleason: 15:39

Now turn your attention to the marketplace directly. It feels if we are at a tipping point for the marketplace, but it's unclear as to which direction that might be. This is the first time for some time that many of the brokers have begun to feel more positive about the marketplace. I think farmers actually also feel more positive about the marketplace, but the rally, has happened to some extent. The question is which direction now?

Ben Brown: 16:13

Yeah. This is this is, a great conversation to have because we're kind of right here at what I call the the change in the market sentiment season. So, you know, there's there's a period to where we're very focused in in exports of US product and then also really production in South America. And and those two are connected because if you have more production in South America, less demand for our exports here out of The United States. But then that changes and we we start focusing on US production in the summer starting with planted acreage.

Ben Brown: 16:41

And usually that starts right around the time, a little bit, maybe right before, USDA's outlook form in DC. That's an area that has changed over time. We used to not get the new crop, acreage estimates, until the outlook form. Now they publish those couple of months in advance. So some of that some of that built up excitement has has kinda waned here in recent years.

Ben Brown: 17:01

But it's still an important data point, and it it does capture market tension. So I do think we are kind of on this tipping point, and and that's that's where I think we you know, maybe it's creating a little bit of uncertainty is because if you look at South America production and I'm a start in corn here. If you look at South American production and the opportunity for increased corn export sales out of The United States, that is bullish, to the market. Then you turn around and you say, okay. Well, let's think about new crop corn acreage seedings, and how large they potentially could be and a trend line adjusted yield, which we haven't hit trend line for the last couple years.

Ben Brown: 17:36

So there's a lot of people questioning whether trend line forecast for for yield is is an accurate method anymore. But but nonetheless, you can look at potential acreage on the corn side and a trend line yield, which is what the market will trade and and that's bearish. And so you could end up in a scenario where you have a bullish old crop picture and a bearish new crop picture, right here at the same time. Soybeans kind of similar story just in reverse. A bearish old crop picture, given the large supplies that we see in South America and a potentially bullish new crop, picture for US Egg Producers.

Ben Brown: 18:09

So we're at this period where we're targeting two different markets or we're we're talking and thinking about two different markets marketing years. And and we've got opposite fundamentals kind of working for both of those markets. So just an interesting year, and I think that's probably what you're picking up there with, like, this tipping point of, like, when does this market sentiment start to shift? And people are saying, okay. We can get through the old crop because we've got these fundamental changes in the new crop market that we can wait for.

Todd Gleason: 18:35

Yeah. So these are things that producers who have old crop to sell, and it's very, and and certainly have new crop that they must market eventually. It's very difficult to deal with them as separate entities.

Ben Brown: 18:48

Sure. Absolutely. Yep. We just we broadly think of the corn market and the soybean market, but we're at that point where we're gonna start talking about two different crops, two different crop years, two different sets of fundamentals.

Todd Gleason: 18:58

Any advice?

Ben Brown: 19:00

So, you know, I, I'm gonna complicate this one more hurdle. You know, so not only we've been talking about two different crop years and largely talking about the market sentiment from a futures perspective. The same concept applies for your local cash markets and basis. I do think there are some opportunities in the local markets with, you know, with with basis contracts here of of late that are adding to some of the stronger fundamentals on the the old crop corn futures to where, you know, there's there's probably some opportunity to move that that old crop corn, maybe even at profitable levels at this point. So, you know, those are things to be thinking about in the old crop market.

Ben Brown: 19:39

For the new crop market, you know, I'm what I'm hearing is is that the basis market's not overly friendly or at least what I'm looking at. The basis market's not overly friendly for new crop. But we may be seeing, you know, if if we're right and the new crop looks a little bearish, there may be some opportunity to lock in some futures prices, here and and let basis kinda fluctuate to see what happens in the in the cropping season. So, you know, these are these are just things that we, you know, break down price and we manage them as best as we can given the the separate fundamentals we've got. But, you know, lots of information.

Ben Brown: 20:12

You know, you could just in corn and soybeans, you could make the case that there's four different price markets to follow here right now. So

Todd Gleason: 20:17

Indeed. Thank you much. We appreciate it. Yeah. Thanks, Todd.

Todd Gleason: 20:20

That's Ben Brown from University of Missouri with the Food and Agricultural Policy Research Institute in Extension based in Columbia on campus. You're listening to the Closing Market Report, a production of Illinois Public Media. It's public radio for the farming world, where right now, you should sign up today for the All Day Egg Outlook. That's not next week, but the following Tuesday. We'd like to have you there at the Beef House.

Todd Gleason: 20:46

The cost is just $40. All the details are online, willag.0rg. Don't wait. Register right now. The theme music for the closing market report is written, performed, produced in courtesy of Logan County, Illinois Farmer Tim Gleeson.

Todd Gleason: 21:03

Now let's turn our attention to the weather forecast. Don Day is here from Day Weather in Cheyenne, Wyoming. Hey, Don. Thanks much for being with us. What's the story in the weather as it relates to The United States?

Don Day: 21:16

Well, the story this week, weather wise, across the Lower 48 is all the winter weather, the severe cold that has spread from the Rockies and the Northern Plains now into the Midwest and Corn Belt and very cold temperatures even for February, getting deep into the heart of Texas and into the Southern Plains. This cold and the snow associated with it and the ice will dominate the weather pattern across most of the Central US moving to the Great Lakes and Eastern United States here later this week. However, it does look like by the weekend, we're gonna see the Pacific push in some warmer air, and moderating temperatures will move into The US, all of the lower 48 states, as we get into the weekend and into early next week. This will bring relief to the Dakotas, Minnesota, Wisconsin, Southern Canada, Montana, parts of Wyoming, Nebraska, and Kansas that have had severe cold. This will be a break for livestock interest in those areas.

Don Day: 22:12

We do expect, though, the warmer temperatures to overspread the lower 48 next week for a bit of a thaw for the last days of February. Once we get into March, the weather pattern starts to get stormy again, although should not be as cold. Going South Of The Equator, the trend which has been drier for the last several weeks in the key growing areas of Brazil and Argentina continue. Now the prospects for rain look a little bit better over the next fourteen days for parts of Brazil and especially looking a little bit better for Argentina. But overall, the trend is gonna be warmer and drier than average for the next ten to fourteen days in most of Argentina and Brazil.

Todd Gleason: 22:49

Hey. Thank you, Don. That's Don Day. He's with day weather out of Cheyenne, Wyoming. Joined us on this Tuesday edition of the closing market report.

Todd Gleason: 22:57

Came to you from Illinois Public Media. Don't forget to go online right now and register beef house in Covington, Indiana. I'm Todd Gleason.