- Use Bridge Payment to Service Debt
- Mike Tannura, Tstorm.net
From the Land Grant University in Urbana Champaign, Illinois. This is the closing market report. It is the January 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Matt Bennett.
Todd Gleason: 00:12He's at agmarket.net. We'll get an update on pork production in The United States as it looks for calendar year 2026, and then we'll turn our attention to the bridge payments USDA and the Trump administration will be sending to row crop producers across the nation by the February and how the Ag Econ team right here on campus thinks producers should use them in the coming weeks and months and what they might mean to their bankers as well. And as we close out our time together, we'll take a look at the weather forecast with Mike Tenora today. He's at T Storm Weather in Naperville, Illinois. Tstorm.net online all on this Thursday edition of the closing market report from Illinois Public Medium.
Todd Gleason: 00:57It is public radio for the farming world online on demand at willag.org, or search us out in your favorite podcast applications, including Apple, Spotify, and, of course, on YouTube. Todd Gleason services are made available to WILL by University of Illinois Extension. Corn futures in Chicago finished the nearby March contract at $4.46 a bushel. That was three quarters of a cent lower for the day. That's in the March.
Todd Gleason: 01:28The May at $4.54 unchanged. December at $4.64 and a half, 3 quarters of a cent higher. March soybeans down five and three quarters of a cent. The settlement price there at $10.61 and a quarter. May at $10.73 and a quarter, down 5 and a half cents.
Todd Gleason: 01:42And November beans, $10.73, down two and a quarter. Bean meal futures, a dollar 80 lower at $303.60. And bean oil futures at $49.45, 14¢ higher. Wheat futures, soft red, $5.18 unchanged for the day in the March contract. The hard red, March at $5.30 and a quarter, down a penny and a quarter.
Todd Gleason: 02:05Live cattle futures in Chicago at $235.27 and a half cents per 100 pounds, 75¢ higher. Feeder cattle were up $2.22 and a half cents for the afternoon. Their finish at $3.57, 72 and a half, and lean hogs at the $85.87 and a half cents, a dollar and 7 and a half cents higher. Crude oil at $57.78 a barrel, up a dollar 79 at this hour. Diesel fuel or heating oil, 6 and 2 tenths of a cent per gallon higher at $2.11 and 8 tenths of a cent in gasoline on the RBOB today at a dollar 76.
Todd Gleason: 02:38That's 6 and 6 tenths of a cent higher. Ethanol and Chicago unchanged at a dollar 59 and a half per gallon. The S and P 500 around 8 and a half points lower, the Nasdaq down around 215 points, and the Dow Jones Industrial Average now stands at 49,485. That's up 246 points for the day. You're listening, of course, to the closing market report from Illinois Public Media on this Thursday afternoon.
Todd Gleason: 03:08Do visit our website at willag.org, willag.org, whereby about 06:00 this evening, you'll find our latest edition of commodity week posted, including our panelists this week, Naomi Bloom. She's with totalfarmmarketing.com along with Ellen Dearden of Ag Review and Chuck Shelby of Risk Management Commodities. That'll air tomorrow on our home station at willag.org, will, and on many of these radio stations tomorrow and over the weekend. Commodity week, it's our weekly look at what's happening in the world of agriculture. Matt Bennett from agmarket.net now joins us to take a look at the marketplace.
Todd Gleason: 03:48Hi, Matt. Thanks for being with us in the midst of the winter meeting season. I bet you're on the road. Where are you today?
Matt Bennett: 03:55Yeah. I'm in Kearny, Nebraska here today, so I've got one shortly and then another one this evening before I get to come home. So, you know, it's that time of year. Everybody's wanting to talk markets. So I don't know.
Todd Gleason: 04:07It's certainly a
Matt Bennett: 04:08a concerned crowd, I think, for the most part that I've been in front of so far. But as always, I believe everyone's got a little bit of hope and optimism that maybe things will get a little better than what we've seen here these last couple of years.
Todd Gleason: 04:18Did you plumb them to see what their yields were like when they finished up for the year and what their, thoughts are or yours maybe as we look forward to the Monday world ag supply and demand estimates and, of course, those final numbers in the crop production report.
Matt Bennett: 04:33You know, it just depends on where you're at, Todd. You know, I was in Northwestern, Iowa yesterday, and I'll tell you what, there was a lot a lot of guys that didn't have the yields they were wanting to see. And, you asked those guys, hey, and gals, you know, what what do you think USDA is gonna do? And they say they think yields are gonna go down. And then you get in this part of the world, and some of these guys will tell you that, actually, their dry land corn's better than what they've ever had.
Matt Bennett: 04:57So, you know, I think it's a mixed bag. But by all means, there's certainly some locations. You know, the crop was significantly lower. I mean, I did talk to some folks, oh, in Iowa yesterday that told me whereas their normal yields in the last couple three years have been in that two thirty to two sixty range. They had a fair amount of sub 200 corn, but, of course, it was some of the areas that were super wet, had a lot of disease pressure.
Matt Bennett: 05:22So, you know, it wasn't all sunshine and rainbows last year by any means. So it'd be very interesting what USDA has to say there on Monday.
Todd Gleason: 05:28What are they telling you, if anything, about that Tyson beef plant closing and what impact it might have on their local economies. Have you discussed that with them at all?
Matt Bennett: 05:37You know, I've talked to a couple of guys before the meeting here today, and they're certainly frustrated with the whole situation. Know, just accessibility is one thing that they're bothered by. And so, you know, they feel like it is just one more hurdle that they've got to overcome here. I mean, clearly, the beef prices have been awfully strong here the last couple of years. There's no doubt.
Matt Bennett: 05:58I mean, a lot of these guys have made a ton of money, but they still have to have an outlet to be able to go and and process. And so, that's a big issue. You know? Yeah. You've got some local processors.
Matt Bennett: 06:08Of course, whenever you take someone that large out of the mix, it it definitely hurts your accessibility in a major way.
Todd Gleason: 06:14Okay. For the corn producers there, and I'm just wondering what they're thinking. If this plant, closes down, does that mean that beef cattle production moves further to the West, into parts of Far Western Nebraska and Colorado and maybe Greeley and some of those places, and corn has to move that way too?
Matt Bennett: 06:33Yeah. I certainly think that's a possibility. I think there's still hope, for some of these guys that, you know, if this plant shut down, maybe it'll get sold, and, you'll you'll figure out some sort of a cooperative type situation come in there because, certainly, there's a ton of cattle in this part of the world. But if that doesn't happen, there's no doubt. You know, you're you're looking at significant cattle production farther west that you're getting.
Matt Bennett: 06:55As you suggested, you know, especially like in that Northeastern quadrant of Colorado, there's a ton of cattle in that part of the world. So I certainly think that's a possibility, but these guys are sure holding out hope. That's not what it comes down to.
Todd Gleason: 07:07I'm plumbing this a little bit because I wanna know what they think and you might think basis levels in their their areas will do and how that could back up into parts of Iowa and all the way to the Mississippi River.
Matt Bennett: 07:17Yeah. I mean, you know, it's certainly a problem. And so they've been asking me why space is acting like it is throughout the Corn Belt. And, you know, there's no doubt that we're shipping some corn south into Mexico. You know, they've been our number one destination for corn.
Matt Bennett: 07:31You got a lot of rail going that way, but by all means, the river system certainly can't float a full barge right now, first of all. You know, and second of all, you know, it's just one of those deals where the interior is not having to bid much against the river because the business going through the river isn't near what it usually is. So, you know, I think that, certainly a lot of concerns never comes to basis, especially this time of year, which basis is typically gonna be fairly weak.
Todd Gleason: 07:56What are you watching most closely coming into next week, as related to those reports or anything else?
Matt Bennett: 08:03Yeah. I mean, there's no doubt that with really strong weather in South America, there's just not much to talk about there. This report needs to be friendly.
Todd Gleason: 08:11Doesn't mean it's gonna
Matt Bennett: 08:12be friendly. We certainly have to look at what US and world carryouts look like. No doubt on corn. We're using more corn than what we're growing, but at the same time, world feed grain situation concerns me a little bit. We've really built wheat stocks this last year, so hopefully, we'll get some good news here Monday.
Matt Bennett: 08:29Maybe they drop the yield. But if they do, I'm afraid that they're gonna take some demand with it. So I'm not looking for a wildly bullish report, but I'd sure settle on something a little bit supportive.
Todd Gleason: 08:38Anything else before I let you go for the day? Nope. I think we're good
Matt Bennett: 08:41to go. I sure hope that we get that, kind of bullish enthusiasm, next week. But if we don't, you know, I think we've gotta buckle down and, understand that this may be gonna take a little time if we're able to work these, prices a little bit higher.
Todd Gleason: 08:54Matt Bennett is with agmarket.net, joined us on this Thursday edition of the closing market report. One other item related to the marketplace is from Jason Frank, an agricultural economist at the University of Missouri, and an article that he's written this week for the Farm Doc Daily website. The latest numbers from USDA, he says, suggest pork producers will see lower prices this year than last. Still, Franken's quarterly hog price projections based on the hog inventories and farrowing intentions for 2026 reflect a standard seasonal pattern, he says, with prices peaking in the second and third quarters. Franken, of course, an agricultural economist at the University of Missouri and writing on the FarmDoc website, He expects hogs will average about eighty five dollars and forty three cents a pound in the 2026, jump by $10 to that 95 to $97 range in the second and third quarters, and close out the year just at $83 a 100 pounds.
Todd Gleason: 09:56Record levels of pigs per litter, he says, reaching nearly 12 at 11.93 in late twenty twenty five, and increased farrowing intentions for the 2026 are expected to keep slaughter levels above year ago figures for July to December, and that results in that $83 number that we just went through. The overall result is a projected slight increase in total pork production, he says, for 2026 when compared to 2025. I'm University of Illinois Extensions, Todd Gleason. We're now joined by Nick Paulson, agricultural economist at the U of Ime. He, Gary Schnitke, Jonathan Koppas, and Carl Zuloff have penned an article for the FarmDoc Daily website entitled Farmer Bridge Assistance Program Payment Rates.
Todd Gleason: 10:51Those numbers were released by USDA just before the end of the year. Corn payments per acre at $44.36, soybeans at $30.88 per acre. What's important about these numbers from your perspective, Nick?
Nick Paulson: 11:11I I know if the specific numbers themselves are are as important as I guess, just now we we we sort of have the certainty in terms of, the level of support that producers can expect, and maybe even more importantly, that producers, lenders can expect to receive from this bridge program here in what, the next six to seven weeks. FarmDoc had put out some was estimates out there beyond FarmDoc as well, mid December, FarmDoc put some estimates out for what we thought these bridge payments would look like. And by and large, I don't think there were really any surprises in the final numbers that USDA put out on December 31. In terms of the crops that we tend to focus on most here in the Midwest, I think, you know, maybe the one positive surprise was that the soybean payment rate did end up being $5 or $6 per acre higher than what we had estimated. But, you know, both the corn and the wheat payment rates were pretty much in line with where we were at in mid December.
Nick Paulson: 12:22And so no big surprises there, but again, it does provide the certainty in terms of total dollars that any individual farm operation can maybe be counting on here by the February.
Todd Gleason: 12:36Do these payments make producers whole? By that, I mean, do they get back to breakeven or a slight profit because of the payments for the twenty twenty five, twenty twenty six crop year?
Nick Paulson: 12:48So that's a question I've tried to be a little more careful in answering the last few months. So, we track averages, we do regional averages. And I think those are very, very good solid indicators that we have for the state because it's based off of information from actual Illinois farms that are cooperating members of the Illinois Farm Business Farm Management Association. And so what those regional averages suggest based on those payment rates for the bridge program that were released is that for our Northern And Central Illinois regions, those bridge payments, in addition to what we're expecting will come from the ARC and PLC programs for 2025, but not until October, we would be looking at close to or even slightly above breakeven average returns now for those Northern And Central regions. Southern Illinois, we're still looking at an average return that would be negative even with the bridge assistance and ARC and PLC and crop insurance.
Nick Paulson: 13:59But again, I'm trying to be more careful when we talk about those things because those are averages. So, half the farms are below that average, roughly half the farms are above that average. So there are definitely still farms that bridge payment will not make them whole. And there are also farmers that are gonna be doing even better than breakeven because of these bridge payments.
Todd Gleason: 14:26You have cautioned farmers over the last several months that when these payments come in, they might not want to use them as the MFP payments in the first Trump administration. Mostly were used, which was to provide the opportunity to wait for higher prices, and rather maybe instead to service debt loads. Why is that the case?
Nick Paulson: 14:54Well, I think and this is is not going to be avoidable, even if farmers held onto these payments or used them to pay down debt. I mean, they're providing liquidity that wasn't there prior to the bridge program being announced or existing. And I guess our thinking on this, and I think a lot of farmers realize this, I've even heard more farmers than even during the MFP years say this straight out is that they recognize that this is a short term band aid. There's no doubt that a lot of farm businesses are going to benefit in the short term and arguably need this support to get through the 2026 crop year, make sure that crop gets in the ground. But in terms of, you know, using these things to, you know, bid up cash rents, make further investments in the farm, you know, if I was giving advice to a typical operation, particularly one that might be in more of a financially stressed situation right now, I'd be looking at probably paying down debt.
Nick Paulson: 16:00Or if that's not necessary, putting this into savings, holding it as working capital. Because as we look ahead to 2026 numbers, it looks to be kind of a repeat of 2025, 2024, and 2023 with some negative numbers projected in those averages. Fact
Nick Paulson: 16:25the matter is, is we're still in a situation where we've got prices that are low, not by historical standards, or even low relative to where we think the global market fundamentals suggest they should be, but prices that are below breakevens based on what's implied by our current cost of production. So we still have work to do to either try to bring prices up, ideally with some some demand increases, or more realistically, we gotta keep chipping away at at some of these production costs and and get those down so we can get back into a a longer term situation of of viability and profitability. Otherwise, we're gonna be, you know, rinsing and repeating and and looking for for another bridge payment a year from now or even sooner than that.
Todd Gleason: 17:16Nick, thank you much.
Nick Paulson: 17:18Thank you.
Todd Gleason: 17:18That's Nick Paulson, agricultural economist here on the Urbana Champaign campus of the University of Illinois, a member of the PharmDoc team. You can find his article on the PharmDoc Daily website right now at pharmdocdaily.illinois.edu. Let's turn our attentions now to the global growing regions. Mike Tanura is here. He's the president and CEO at t storm weather.
Todd Gleason: 17:53That's tstorm.net online out of Naperville, Illinois. Hi, Mike. Thanks for being with us. Hope you had a great Christmas and New Year's, but we do need to turn your attention to South America again, our first chance to get a look at, what you've been thinking as it's related to both Argentina and Brazil. Let's start with Argentina.
Todd Gleason: 18:15I take it there's some complicating factors there, that we need to keep an eye on, and they're both on the wet and the dry side. Why don't you start with the wet piece first?
Mike Tannura: 18:25Well, yeah, thanks a lot, Todd, and happy New Year to you as well. There is a complicated story developing in Argentina. If you look at rainfall over the last thirty to sixty days, it's been pretty dry. Now is this a historical drought? No.
Mike Tannura: 18:41But it is pretty dry and it is notable. The thing that's going to happen over the next five to ten days is that we're going to see the northern third of corn and soybeans in Argentina turn a lot wetter. An eruption of thunderstorms is going to develop over the next six to twelve hours, and that'll be phase one of more than one thunderstorm event for that area. We think that about a third of that crop is going to be looking pretty ideal once we get a week or so out from now. As you move to the south though, there's going to be a very sharp line between heavy rain and no rain.
Mike Tannura: 19:15And because of that, it looks like the southern crops are going to end up turning pretty dry as we move forward over the next week or so. Now we do need to keep in mind that there is a chance for some storms next week, but those don't look all that great. And we need to get about two to two and a half inches of rain every two weeks to keep up with normal. And it doesn't look like we'll see anywhere near that, maybe half of that. And if that's the case, then we're going to see this story develop in Argentina where the northern third of crops are looking good and the southern half to two thirds maybe not so much.
Mike Tannura: 19:50So that's kind of the thing to monitor as we move through next week and into the following week.
Todd Gleason: 19:54The Brazilian growing season began dry, It turned wet. I'm wondering what conditions are on the ground. That's a big country, so it's a little bit different from the South to the North and maybe from west to east as well. But if you could give me your assessment, please.
Mike Tannura: 20:11Well, yeah, we can divide Brazil into two pieces for this discussion. And pretty much to start out, just like you said, we had pretty ideal rainfall over December and that set up a situation where we were arguing that soil moisture was pretty much ideal for soybean development at least as of a week or two ago. It has been changing a little bit and it's the forecast though that has us a little more concern than anything. So what's been going on over the last week or two is that some of the northern gray regions have been drying out. And even though it's not a big concern, the problem is that it looks pretty dry as we move forward over the next ten days.
Mike Tannura: 20:50An upper level high is going to develop near Bahia, and this region includes about 20% of Brazil's soybean production. So they've been drying out over the last two weeks, and it looks like it's going to stay pretty dry for the next ten days and maybe a little bit beyond that. If that's the case, then you're going to need to start thinking a little bit about how that might affect yields there because they plant the latest in this region basically from October through November, and they need to start seeing some pretty good rains now or that'll become a bit of a story. So it's kind of a mixed bag right there with things changing a little bit to the dry side for about 20% of Brazil's soybeans. As you look to the south, they've had great rains over the course of the growing season and a lot more is on the way.
Mike Tannura: 21:37That same setup that's bringing thunderstorms to Northern Argentina is going to expand into Southern Brazil this weekend and then continue next week. So it'll be kind of a mixed bag in Brazil with the southern 40% of soybeans having pretty ideal soil moisture, 20% not looking so good, maybe a little too dry, and the other 20% or 40% in between. So it's just a tricky story as you can see in in South America with basically some dry pockets in Argentina and Brazil, but also some wet pockets in each of those countries. Overall, it's just going to take a little bit more time to see how all this plays out.
Todd Gleason: 22:16We'll check back with you again next week to see how this story continues to develop. Thank you much for taking time with us today.
Mike Tannura: 22:22Thanks for having me, Todd. You have a great day.
Todd Gleason: 22:23You too. Mike Tenoras with t storm weather. That's tstorm.net online. He's in Naperville, Illinois. You've been listening to the closing market report on this Thursday afternoon.
Todd Gleason: 22:34It came to you from Illinois public media. It is public radio for the farming world. Don't forget we'll record our commodity week program this afternoon for use tomorrow on our home station and in part on many of these radio stations. Too will air over the weekend on all of these stations. Be sure to visit willag.org this afternoon after 06:00.
Todd Gleason: 22:54If you wanna get an early listen to it, it'll be posted there, or you can search out commodity week on the closing market report for that matter in your favorite podcast applications. You have a great afternoon. I'm Illinois Extension's Todd Gleason.