Todd Gleason: 00:00

From the land to Grand University in Urbana Champaign, Illinois, this is the closing market reported as the February 2025. I'm extension's Tom Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzolo. He's at GlobalCommResearch.com out of Atchison, Kansas. We'll revisit a conversation we had with Jerry Gulke last week for our Commodity Week program.

Todd Gleason: 00:22

He'll join us with an update on his thinking as it's related to the price of corn. And then as we close out our time together, we'll discuss the weather forecast too. That with Eric Snodgrass on this Friday edition of the closing market report that comes to you from Illinois Public Media. But right now today, you can still get preregistration pricing for the all day ag outlook. That's just $40 for next Tuesday's event at the Beef House in Covington, Indiana.

Todd Gleason: 00:50

Should be a great day. We hope you will join us then. Todd Gleason services are made available to WIL by University of Illinois extension. March corn for the day settled at $4.53 and a half, 11 and a quarter cents lower. The main contract down 11 and a half.

Todd Gleason: 01:06

It settled at $4.69 and a half cents. December at $4.55, down six and three quarters. March soybeans 11 and a quarter lower, $10.11 and a half. The May at 10.253 quarters, 11 and a half lower. And November soybeans down 12 and a quarter.

Todd Gleason: 01:22

They finished at $10.29 and a half. Bean meal, 80¢ higher. The bean oil, a dollar 22 lower. Wheat futures soft red at $5.37 in the March, down nine and three quarters. The hard red at $5.58 and a quarter, 13 cents lower.

Todd Gleason: 01:38

Live cattle futures in Chicago at a hundred $92.65, 3 dollars 40 7 and a half lower. Feeders down $2.55 at $2.73, and lean hogs at $83.67 and a half cents, 70 cents lower on the day. The crude oil at $69.84 a barrel, 51¢ lower. Diesel fuel or heating oil at $2.31 and 9 tenths of a cent a gallon, just about two and eight tenths lower. The gasoline wholesale price a penny and four tenths lower, $2.22 and 7 tenths of a cent per gallon, and the Nasdaq down 20 points at $20,005.83.

Todd Gleason: 02:18

Mike Zuzilo now joins us from globalcomresearch.com. He's in Atchison, Kansas. The marketplace finished lower for the day and the week. Mike, last week we talked, you said it wasn't a good week. Probably worse this week, would you make of the marketplace?

Mike Zuzolo: 02:34

Worse than I thought it would be.

Todd Gleason: 02:36

Yeah. Yeah.

Mike Zuzolo: 02:36

Yeah. That way. You know, I do think, though, bringing that up, Todd, I I do appreciate you starting to show off that way because we really did have, a very tenuous technical picture. And we've been driven so much by momentum and sentiment this past, really, two and a half years in the trade that it really is as important as the supply demand fundamentals, unfortunately. And so this week when we saw the big currency shift, and and this was would have been midweek, right, up against that first day of the agricultural outlook for them.

Mike Zuzolo: 03:08

When we saw that, it was a pretty big signal, especially as the day developed that the the whole financial market became more risk off. And I believe Bitcoin is now down 25% from its highs at this point. But just to give you a flavor of what risk off means, it's like everything is pretty much taking a hit for the most part. And when when I saw that and the technicals and the fact that it was month end, it only made sense that we'd see a liquidation, heading into month end here on Friday. Was it bigger than I thought it would be?

Mike Zuzolo: 03:40

Absolutely in the wheat market. I I think it it's hard to say this, but here we are in February. We had new twenty twenty five highs in wheat, soft red wheat, soybeans, corn in the month of February. We're within 20¢ from the twenty twenty five low, and soft red wheat were within less than a nickel in the corn. And the meal came within 70¢ a ton of its twenty twenty five low, all within twenty eight days.

Mike Zuzolo: 04:07

And and this, I think, really has to be put at the feet of the uncertainty about the tariffs and the idea that the the market just did not appreciate the idea that president Trump is serious about the tariffs. I I will go one more step further, and we can talk about this next week more hopefully at the, AG outlook meeting at the Beef House. I think it's really crucial to think about this as we start March that the drought monitor exploded in corn drought and it increased substantially in in wheat drought as well. The trade clearly walked past that. They are not worried about weather and supply fears right now.

Mike Zuzolo: 04:42

They're much we we're more worried about weaker demand fears.

Todd Gleason: 04:45

Well, I wonder, because the president, really did come out and say, hey. Look. We're we're doing tariffs, and we're we're starting next week. And then I suppose if the trade was paying very much attention today watching what happened in the Oval Office with the, with Zelensky in Ukraine, had to tell them that this president means business, just that's what he means is what he says.

Mike Zuzolo: 05:17

Exactly right. And you you and I have talked about this a lot. We went from making a fresh four month low in the US dollar against the Brazilian real to fresh monthly highs in that currency pair as we closed out Friday. And so if someone would come up to me and say, well, look how strong beans were compared to corn and wheat on Thursday, I would say be careful about trusting that because you're probably underneath some pretty big shifting sands. And again, that's something where we can talk about it more next week.

Mike Zuzolo: 05:45

By the way, I wanted to tell you, I looked at the corn panel meeting and I thought, here we go again. Todd put together the best, the brightest and the boldest once again this year.

Todd Gleason: 05:58

You're Brian, right? That's right.

Mike Zuzolo: 06:04

So, no, I think I think once again, this week showed me that wheat is our price leader. And I think in March, we're gonna probably see that wheat is also our weather leader too.

Todd Gleason: 06:13

Right. Right. So how should producers think about this week as it's related to their new crop marketing? Do they say to themselves, oh, I'm maybe I'm I should have done something earlier in the week, or is this a as some have looked at it and said, well, this this is Where do you put it?

Mike Zuzolo: 06:37

No hedges in wheat. I believe we're within 20¢ of undervalue in the wheat market. And I can change my mind if we do have a warm and wet March because I do think the trade is banking on that because forecasts, earlier in this week and last week suggests that very heavily, especially trade affiliated forecasts. I'm not in that camp. And in fact, the USDA Ag Outlook Forum today, the chief meteorologist that did the weather outlook that I caught, also is leaning now towards a drier Southern Plains and Western Corn Belt this summer, which I was very glad to hear because I'm I'm hearing a lot from Western Corn Belt Producers about what's happening right now that we're turning the calendar to March.

Mike Zuzolo: 07:18

So no hedges in wheat right now. I've got time to do that in thirty days. Not gonna recommend a lot of hedges in corn. I will go after bought puts if I can't see some kind of stability by early next week in corn. But I don't feel like that the fundamentals right now justify jumping and and kind of going off the deep end at this point.

Mike Zuzolo: 07:41

Soybeans is another situation. I mean, we have to remember that while wheat and corn stocks are very tight, ten year type stocks worldwide, beans are record. Bean stocks to use are second record highest, and we're harvesting right now in Brazil. And so I think beans are, again, the place, I think, to start because they didn't get hit as hard this past week.

Todd Gleason: 08:03

We look forward to having you at the Beef House on Tuesday.

Mike Zuzolo: 08:06

Very excited. Nice to see you, Todd.

Todd Gleason: 08:08

Indeed. That's Mike Zuzalo. He's at GlobalCommerceSearch.com out of Atchison, Kansas. You know, if you listen to our programming content very often, you know that Jerry Golke was on Commodity Week last week and made a really compelling story as it's related to being friendly to the corn market, particularly. This week hasn't been so friendly.

Todd Gleason: 08:36

So I thought I'd check with Jerry again to see just exactly what's happened and whether things have changed his mind or not. Jerry, thank you for being with us. Sometimes you come in at the top. I don't know whether that's what happened here, and how you feel about this downturn in the marketplace for the week.

Jerry Gulke: 08:56

Well, yeah. And I'm thanks for giving me a chance to redeem myself because there isn't enough time in a day to explain it all perhaps, but what I was looking at was, been been very friendly since last August, September, and for a reason we discussed in the commodity week, I think. But we reached the point where and I watched what Korn did the previous October, November pricing. And for three years, we never went above that level. And when we went above that level, we had $5.20 in this in in, these corn or in in July corn, which was about the same level that we reached back in May of last year.

Jerry Gulke: 09:33

And I thought, well, we gotta either plan enough acres or discover a price that makes me plan enough acres such that we get a 1.9 carryover for next year close to 2,000,000,000 so such that the end user doesn't have to worry about running out of corn. And, and but could we do that this early in February? And, and so we went there, and, of course, when you when you if you preach the sermon long enough, eventually, it's gonna be wrong or what or right, but but but, usually, been bullied that long. Eventually, you start looking for reasons not to be that way any longer. Well, two things happen.

Jerry Gulke: 10:11

We did not hold that five twenty, and we started to turn lower, and then we, failed at that level. And then we had the crop the forum report coming out, and I did a DTN column that investigated the other policy that came out, an agency that predicts that works for the office of management budget that predicts, what they think is going to happen for budgetary purposes only and for guidance for the president. The president gets it at the end of, I think, December or Jan or January, and then we get we get a copy of it in the February. And that had, you know, an increase in corn acres based upon what they saw in the in the October WASI and based upon the economic conditions as of the previous August, which I thought so much has changed that's all gotta be worthless. But I thought if they saw a 2,000,000 acre increase in corn acres that far back and and and and we and what we did in price since then, we might very well see a 4,000,000 acre increase in corn acres this early in the year, and and things aren't getting any better for soybeans because the insurance was about all but fixed about the middle of the month.

Jerry Gulke: 11:25

So I looked at it and said, you know, I think we got an awful downside risk here. Long term, on a monthly basis, it's still predicated on being positive, but things start with the daily and then weekly and, and, of course, in monthly eventually, but you can't use a monthly signal to position yourselves, but it does help you keep on track. So what we did is before the report came out, we were also starting our crop survey, which we, do every year. And we started a little bit early, and, it was a result of what we were getting in initially that, concerned me a little bit and, and as well as that form that could be more bearish than what we thought. And so we turned out, and I sent you a copy of it.

Jerry Gulke: 12:08

We we bought a lot of a lot of puts. In fact, I I probably covered more grain in one day than I have I don't maybe in my lifetime. I don't know. I don't wanna ever get that, that much covered in one day, but we covered 45 an additional 45% of new crop corn by buying the July or the the May puts, which are only good for a few days, but they were cheap, 7¢. In the same token, I said, if we're gonna take corn, out of soybeans, then soybeans, certainly aren't gonna be increased in acres.

Jerry Gulke: 12:41

So we bought calls against all our short positions in November for 12¢ at the money calls that are good for about two or three weeks. So that put us in a position, and, of course, the rest is history. I just looked up in one one client who farms quite a bit of land, bought, 60 contracts, and he's $35,000 ahead today after two days. Now the day isn't over and neither is the season, but at least it put us in a position that I wanted to be under where I don't wanna have to second guess and say, well, we could get a pullback and we should get a rally, and we got weather coming and all that. I don't wanna be in that position.

Jerry Gulke: 13:15

I've been in that position, and it's a gut wrenching feeling when you look back at it and say, boy, I missed $5 corn, and, now it's 30¢ less. I've got to, and I'm now I've got a hope and wish for a draw somewhere in Iowa or Nebraska, not in Illinois, to get a second chance to get a price at that level again. So it's better to have it, some, you know, you know, some protection. I'm not a never been a fan of buying, options, but this is one case where it works. And I kinda liken it to when I used to fly a lot back in the day, you could go to Keysock, and you could buy life insurance for that day.

Jerry Gulke: 13:55

All I wanted was life insurance from the time I got on that plane until the time I got off. So for about $5, I could buy, you know, thousands of dollars worth of insurance. All I wanted that day was insurance that if I was I'll take a chance and risk seven or twelve cents. And if that report isn't big enough to move the market more than that, then it's then I'll I'll sacrifice that. All things being equal, then I keep my focus and say we're gonna go higher because USDA came out and said only 2,000,000 acres.

Jerry Gulke: 14:23

From what we saw, it's gonna be way more than that. So that's the story and why we did that. That's why I look at it every day and, you know, and and we make those decisions. And I think from a marketing standpoint, you have to do that, and then you look at for some reasons, like I mentioned, I think last week, you gotta constantly look at what is it I'm missing that makes me wrong. And we saw that coming, and, we had probably the biggest response for clients in a long time.

Jerry Gulke: 14:48

Farmers seem like they wanna they like to sell more than they wanna buy. So it was pretty easy to get them to react.

Todd Gleason: 14:53

Alright. Hey. Thank you for the update on that. I know I heard it from a farmer that follows you when I was at an elevator meeting on Wednesday night, so you did this earlier in the week. Thank you for the update, Jerry, and we'll talk with you again soon.

Jerry Gulke: 15:06

Yep. Thanks for calling.

Todd Gleason: 15:07

That's Jerry Golke. He is with The Golke Group. Eric Snodgrass now joins us to take a look at the global growing regions and what the weather is like in them. Hi, Eric. Thank you so much.

Todd Gleason: 15:33

Let's start here in The United States. Can you begin with river levels, in the Midwest in the Mississippi River Valley, because they do differ from one place to the other pretty dramatically, I think.

Eric Snodgrass: 15:47

Yeah. They do. And I think, especially this time of year, the river levels are gonna give you a clue as to how well water's moving through the soil. Now there's frost line, of course, in that soil, but you still get water going through it. And then the rivers are gonna be the the kind of test as to how things are going.

Eric Snodgrass: 16:01

So here it is. You know, in the last two weeks, we saw near historic flooding in parts of, well, even Missouri going into parts of Kentucky, Tennessee, all the way over to Virginia. So the Ohio River has been flooding. So all that water gets into the Mississippi there at the very southern tip of Illinois. And then if you check it at Memphis, in the last three weeks, the level of the Mississippi River at Memphis has come up over 35 feet.

Eric Snodgrass: 16:26

Now what's interesting is you just take a short drive north of there, come back to Saint Louis, and the water levels this morning in Saint Louis were 1.5 feet below low stage. So there's essentially, if you wanna think of it this way, there's about a 30 foot difference in the water levels in Memphis versus Saint Louis. So here's the problem. The Missouri River feeds into Saint Louis. The Upper Mississippi feeds into Saint Louis.

Eric Snodgrass: 16:48

And if you've seen, you know, most of that area, the Missouri and Upper Mississippi Basin, has falls droughts still lingering. Yeah. We are a little muddy in the top two inches right now because of the warm up we've recently experienced, but there is a problem, of falls drought still sitting there, meaning we've gotta have a really active early spring. I'm talking March rains and storms, early April rain and storms so that we can recover this before we have to do most of our field work and planting, which puts us in a bit of a precarious situation going into spring with drought risk.

Todd Gleason: 17:20

You mentioned something, with the frost coming out of of the soils. Now I bet that you also have been getting asked because we're so warm and people are just superstitious about the weather. About late frost, during the beginning of this growing season. So something in April, maybe May.

Eric Snodgrass: 17:42

Yeah. So this is this is what's interesting about this pattern up until this point, Todd. It's been on this four week to five week cadence. We're gonna drop the temperatures off, drop, drop, drop, drop, drop, and then big warm up the last two weeks. So so it's four two four two.

Eric Snodgrass: 17:57

And here we are back into a mild time period for the next couple of weeks. Now listen. It's super windy today. Right? And we're gonna have temperatures tomorrow that might be 30 degrees colder than today.

Eric Snodgrass: 18:06

So I'm sorry to ruin everybody, but that that's how it's gonna be going into Saturday. Cold front's gonna be coming through, but it's only dropping us back off into the thirties. Overall, for the next two weeks, we continue on the mild side of things. But there are some indicators that again in late March and then about a month later in late April, we could be dealing with another, you know, five, six, seven, eight day shot at some colder temperatures. And the late April '1 is the one we care about because our typical last spring frost date here in Central Illinois is somewhere around, you know, the April, which means if we have long extended warm time periods in between these shots at colder air, I mean, folks are gonna get going after it, and they're gonna get going after it for lots of reasons.

Eric Snodgrass: 18:50

But one of the big ones is the fact that we just talked a minute ago about, you know, there's there's dryness that's lingering and drought pressure could be something to think about. So the sooner you get in, the better. Now if you wanna forecast a frost event, it's very hard to do more than four or five days in advance. So even though I just told you that I expect two more time periods of cool conditions dipping in, one of them could be very poorly timed at the beginning of of May. You know, you get down to 36 versus getting down to 32, that's entirely different on the seed that's just in the ground.

Eric Snodgrass: 19:21

So that is something we cannot predict until we're right up next to that time frame.

Todd Gleason: 19:24

Are you still thinking about drought in the summertime months?

Eric Snodgrass: 19:27

I am, Todd. I have no new evidence to tell me to tell you that there's not still gonna be drought risk coming at us from the West. But, unfortunately, I think that our spring is gonna be quite stormy and quite tight on planting windows. And I got several reasons for that. One, it has been already in the Eastern Corn Belt.

Eric Snodgrass: 19:45

It's just gonna start working its way back toward us. You need proof of that? Just wait until midweek next week. Got a big storm system ripping through the country midweek next week. And the other evidence is kinda fun, Todd.

Eric Snodgrass: 19:56

So in addition to the models and the analysis, you just gotta talk with other folks. And there's a lot of my friends and colleagues. I mean, you know Andrew Pritchard. Right?

Todd Gleason: 20:03

Mhmm.

Eric Snodgrass: 20:03

They're all those storm chasers right now, you know what they're talking about? They're talking about their their taking their chase cations. That's what they call them. They're talking about taking time to go chase storms in spring in the Ohio Valley, in the Mid South, in what we call Dixie Alley. And none of that is Texas, Oklahoma, Kansas, Nebraska.

Eric Snodgrass: 20:24

And what that means is if we don't get big early storms in Kansas and Oklahoma and surrounding states, then the pressure that's been there that's been, you know, on the on the drier side of average, that that pressure is going to continue to increase and it's going to spread. And as a result, we're going to be looking at just, I think, lists for there being drought creeping toward the Mississippi River throughout the summer months. And I just haven't been able to find evidence to convince me otherwise. If that changes, Todd, you'll be the first to know. But, I think it's just one of these things where if it's sitting there, we have to pay attention because, I mean, we do have 70% of the lower 48 in some stage of drought, including the abnormally dry category.

Eric Snodgrass: 21:05

And that low soil moisture we started off talking about just sits there as a reminder of what fall can do to the next spring weather conditions.

Todd Gleason: 21:13

Now on the subject of drought in the Eastern part of Brazil, are they developing a flash drought or drought long term? What's happening there?

Eric Snodgrass: 21:21

Yeah. They are. This is the first bullish story I've had out of Brazil in a long time. We have seen the subtropical high that sits off the Brazilian coast on on the in Atlantic move over to, like, Bahia, Goyas, Tocantins, Minas Gerais. These these these locations in the eastern side of their main growing area that have about 20 to 25% of the safrinha corn over them.

Eric Snodgrass: 21:46

So what we're thinking about here is that if this recent dry and hot time period they're in right now through mid March, if it revisits again in about the same time at the March or April, well, that timing is terrible because the monsoon starts to round anyway, which means we could be hitting that crop on its eastern side with drought pressure, right about the time that, it's going through pollination and then getting into grain fill. So the risk here is actually on a positive side for those of us in The US, but I think they're gonna be watching that pattern carefully. Now it's not the Center West. It's not Mato Grosso where 50% of the safrinha crop is grown. It's it's to the east of there that needs to be discussed.

Eric Snodgrass: 22:27

And I'll be honest, it could be perfectly timed with when we're planting a crop in The US and be a bit of bullish news at that point. So we gotta watch that carefully, and it needs to come back a month from now.

Todd Gleason: 22:38

Alright. Thank you much. We appreciate it.

Eric Snodgrass: 22:40

Yeah. You bet.

Todd Gleason: 22:41

That's meteorologist Eric Snodgrass joining us on this Friday edition of the closing market report that came to you from Illinois Public Media. I hope you will join us at the Beef House Tuesday of next week for the All Day Ag Outlook. Details of that meeting are online pre register today at willag.0rg. Preregistration pricing closes at midnight tonight. I'm Illinois Extension's Todd Gleeson.