Todd Gleason: 00:16

We'll hear from Andy Lee, a native of Urbana, Illinois who now lives and works near Los Angeles. He had written a commentary of sorts on LinkedIn that I saw because of some of the listeners that follow us there. I asked if he would voice that for us. We'll hear from Andy in just a bit. And then as we close out our time together, we'll talk more about Friday's USDA reports.

Todd Gleason: 00:40

We'll do that with Frayne Olson from North Dakota State University Extension, and we'll hear about the agricultural weather forecast too with Mark Russo from Everstream Analytics on this Monday edition of the Closing Market Report celebrating 40 years on the air, some 10,000 episodes, and more than 30,000 interviews.

Underwrite: 01:02

Todd Gleason services are made available to WILL by University of Illinois Extension.

Todd Gleason: 01:07

March corn for the day at $4.76 and a half, up 6¢. The May futures at 4.86 3 quarters, 7 and a quarter higher in December. New crop, up 7 at $4.57 and a quarter on this Monday. The March futures at 10.53, And the soybeans, 27 and 3 quarters higher. May at $10.66 and a half a bushel, up 28 and a half.

Todd Gleason: 01:29

And the November contract, up 20¢ at $10.51. Bean meal at $307.80, up $9.50. The bean oil, 41¢ higher at 45.99. Wheat futures, soft red for the day. A gain of 13 rather 14 and a quarter cents in the March at $5.45, and the hard red at 5.61, up 9 and a quarter cents.

Todd Gleason: 01:52

Live cattle futures, a dollar 37 and a half lower at 19740. Feeders at 26790, up a buck or rather down a dollar 50. And lean hogs were up 62 and a half cents. There's that green number at $83.17 and a half cents. We're now joined by Curt Kimmel.

Todd Gleason: 02:11

He's at agmarket.net to discuss the marketplace. Hi, Kurt. Thanks much for being with us. I think some might have been surprised that there was as much follow through today after Friday's USDA report showing some fairly friendly, maybe even some people calling them bullish numbers. What were your thoughts?

Curt Kimmel: 02:30

Yes. Nice to have some positive reaction, for for a change in here and actually, see some follow through. The magnitude of this price rally caught the ag market team kinda off guard. We were kinda looking at, not such a bullish report, and the market kinda following the trend like we did a year ago and 10 years ago where we established a high here the 1st part of, January. Of course, we're still in the 1st part of January.

Curt Kimmel: 02:59

If you it depends what day you're counting in through here, but this is a welcomed rally. Basically, when you look at the big picture here, a 1,500,000,000 bushel corn carryout is, quite friendly, especially if you go back to where we were when the supply demand balance sheet started coming out. The trade was looking for 2, 2, 2, 3,000,000,000 bushel carryout. And if you go back and pick any month you wanna choose for prices, March corn was trading $5 back then. And here we are at 1.5, and,

Curt Kimmel: 03:37

you know, we're quite a

Curt Kimmel: 03:37

bit below, the $5 benchmark still. So, still a little bit undervalued, if you if you wanna use that, for for a comparison. But, also, too, fundamentally, when you look at the US numbers coupled with the world supply demand balance sheet, world supplies are quite tight too or tighter than what they've been accustomed to. And that kinda also fill filtered into the fleet side of the equation here. So there's been some urgency to get some ownership on.

Curt Kimmel: 04:07

Of course, the commodity funds were the ones today that kinda add a little salt to the wound here if you're wanting the market to go down. Funds bought 12,200 contracts of beans, 94 100 contracts of corn, 42 100 contracts of wheat, 29 100 contracts of bean oil, 59 100 contracts of soybean meal, going into midday there. So, they got the green light on. Today is day 2. We will get day 3 tomorrow, or we'll see a turnaround Tuesday?

Todd Gleason: 04:44

Yeah. So day 3 is the day when the funds are buying. That's usually the day that we either continue and make a much larger move. Am I right? Or or we peter out at that point?

Curt Kimmel: 04:53

Yeah. If you go back and, you know, history is not always the same, but, 3 days is about as much as you get. Lately, it's been about 2, 2 and a half, days in it, and then they're usually to where they wanna, be on it. Now when you look at the momentum indicators, RSI were were incredibly over, bought in through here. Actually, today, if you look at the, particularly on corn, it's it's a little bit more evident is, March was up 6, the May up 7, the July up 8.

Curt Kimmel: 05:26

What I'm getting at, this is, first time we've really seen seen the bearish spread, kick in. And the significance of that is we've seen just a huge, huge amount of, country movement. Producers have taken advantage of this price move here, to get caught up, moving some cash grain tide, particularly with the nice weather we're seeing here.

Todd Gleason: 05:46

On the soybean side, was there a surprise in the exports this morning?

Curt Kimmel: 05:51

We did. China bought a 198,000 tons, US soybeans. The trade kinda assume they were fairly well done, so that is a welcomed business here. We'll see if that, continues here. So, shipments are good.

Curt Kimmel: 06:09

Exports are good. We're we're we're hanging in there, and that sale, coupled with a little bit of dry weather in Argentina, helped add a little fuel to the fire here. The forecasters are kinda flip the flopping around on that South American forecast. That forecast is gonna change every 6 hours, but, that that'll be the next thing here we kinda watch as we move forward here is that South American forecast. One of the observation, for those keeping track, last time we did visit, we were looking at the soybean chart.

Curt Kimmel: 06:43

And at that particular time, we're looking at maybe some market would dip down here and try to carve out a right shoulder on a head and shoulders bottom. And, luckily, it held with the help of the crop report on Friday here. It broke some, neckline, some trend lines in through here. So, that was the other thing technical wise to help add a little bit momentum to the buying interest here the last 2 days' time.

Todd Gleason: 07:10

I know it doesn't mean a lot because it's in expiration, but there was a 3¢ gap higher too on the technicals in the January contract this morning.

Curt Kimmel: 07:17

I think that's gonna continue to add some volatility to the marketplace here. Is volatility increasing through here, you gotta take advantage of some ups. This is an excellent opportunity if you wanna hang on to some cash frame or have not been aggressive or getting started on new crop 25 to come in with some price floors in here, kind of protect your bottom line. Particularly next month, we'll be looking at the crop insurance, prices. We'll be taking the average price of February, and that's very critical because a lot of just about everybody uses crop insurance programs, so it's gonna be important to make sure we keep corn above 4a half and try to get these November beans about 10a half, this new crop year.

Todd Gleason: 07:59

Thank you much. You bet. Take care. You too. That's Kurt Kimmel.

Todd Gleason: 08:02

He is with agmarket.net. You know, the tragedy unfolding in Los Angeles is awful, and it touches many lives. Here on the closing market report, we've already talked with the folks at the Los Angeles Regional Food Bank. We did that Friday. You can hear it in the closing market report podcast.

Todd Gleason: 08:23

Check out the podcast links at willag.org. And we've connected those Santa Ana winds with the changing climate, as well as what could become a potential drought in the corn belt this season. And today, we'll hear from somebody who's been impacted directly, an Urbana native now living in the Los Angeles area with family that was in the path of the Flyers. Andy Lee also happens to be an alumnus of the University of Illinois. He wrote a quick commentary on LinkedIn that some of our followers commented on and that I saw.

Todd Gleason: 09:05

So I asked Andy if he would voice that commentary.

Andy Lee: 09:09

Hey. My name is Andy Lee, and I'm originally from Urbana, Illinois. This week, the Los Angeles wildfires hit close to home, literally and emotionally. My wife grew up in Los Angeles, so this tragedy hit hard. As the fires raged dangerously close to her childhood home, we feared for the safety of family and friends.

Andy Lee: 09:31

Her parents immigrated from Shanghai in the 19 nineties and were hesitant to leave the house that symbolized decades of hard work and memories. Despite evacuation orders, my mother-in-law couldn't bear the thought of losing it all. They experienced paralysis in the moment despite our pleas to leave. When we heard that the fires were just miles away, my wife and I raced up to 4 0 5, determined to track them. Ash fell across our windshield as we dragged them to safety.

Andy Lee: 10:04

Seeing my mother-in-law trembling, clutching her hot tea with shaking hands brought the reality of the tragedy into sharp focus. Here's what inspired me most. Even amidst the chaos, my wife turned her energy towards helping others. She rallied the family to gather food, water, and supplies for those who lost everything. Together, we delivered essentials to the local YMCA where we witnessed an outpouring of generosity from the LA community.

Andy Lee: 10:34

It was a powerful reminder even in moments of crisis, people come together. To those impacted by the fires, our hearts are with you. This chapter will pass, and together, we'll rebuild this incredible city. To everyone watching from afar, thank you for your thoughts, prayers, and support. Tragedy tests us, but it also unites us.

Andy Lee: 10:57

We will overcome. Watching my wife rise to the occasion reminded me of one thing. I definitely married up.

Todd Gleason: 11:04

Andy Lee is originally from here in Urbana, Illinois and now lives in California near Los Angeles. He and his wife extracted his mother-in-law from the path of the wildfires that had been raging across that county. North Dakota State University Extension Agricultural Economist, Frane Olson, located on campus in Fargo, now joins us to discuss last Friday's USDA reports. Hi, Prehn. Thanks for being with us.

Todd Gleason: 11:45

I'd ask you if there were any real changes, but, obviously, that's the case. Can you start with what you think were the most important numbers, please?

Frayne Olson: 11:53

Well, okay. So the one that that everybody is is really focusing on is a reduction of production for corn as well as for soybeans. You know, we had a trimming of acreage planted and harvested acreage for corn. We took some yield off of the corn. Tweaks and minor adjustments on the soybean side, but a a pretty significant reduction in the soybean ache soybean yields as well.

Frayne Olson: 12:16

So the market responded positively from a price standpoint to the lower production. I think, I guess the the comments and questions I'm beginning most of is so, you know, usually, we this January report, we don't get those shocks. We don't get those big adjustments. Periodically, we do, admittedly. Periodically, we do.

Frayne Olson: 12:37

So where did USDA miss it? How did how did this happen, given that most of the traders and analysts and forecasters are looking at relatively minor adjustments? And I guess from from my perspective as I I take a look backwards, words, and and, again, I haven't had a chance to study every number in those reports because there was, you know, several 100 pages of material that came out. But it seems as though most of the reductions in corn and soybean yields as well as a little bit of the acreage came in those those, what I call the transition states. You know, the the core states, the core corn belt states, you know, Iowa, Illinois, we spend a lot of time focusing on those because they are such large numbers.

Frayne Olson: 13:17

But as you radiate out of that, as you get into the Dakotas, as you get into further than the East Coast, you get into the Ohio's, and even Kentucky's in the world, you know, they're still important states individually. They don't add up to as big acreage and and production as obviously as the Illinois and and and Iowas do. So it it it seems as though most of the adjustments, most of those changes that we saw were from those transition areas. The other thing I just wanna remind everybody, we haven't had a production update since the November report. So the November 8th report was the last time we had no formal production updates from USDA.

Frayne Olson: 13:58

Most of that data and most of the analysis came in the late part of October. And and, yes, we were making good harvest progress, but we were only partway through the harvest season. And so, you know, there was a little bit of a blind spot, and I think some of those last harvested acres, some of the tail end crop and some of those areas that were, as I said, in this transition, turned out to be a bit lower in yields than we were expecting. And that's where, you know, by the time everything added up, that's where the the reductions came. So now the question is moving forward, what does that look like?

Frayne Olson: 14:29

You know, the market abs absorbs this information pretty quickly. We did see a nice rally price wise in in on Friday. It looks today like we're we're have some follow through, price improvement. The big question, okay, at what point do we stabilize? And then moving forward, you know, again, markets chew up information very, very quickly.

Frayne Olson: 14:51

You know, in our crystal ball, what are the next things we need to be looking at? So, my my perspective is, we were from a pricing standpoint, given some opportunities here, I hope that farmers are taking advantage of that to try and get some old crop sales cleaned up. I do think these are gonna be some opportunities. I am a bit concerned as we move forward, you know, when when we think about the new administration coming in and and potential for additional tariffs and retaliations and what all this just this political instability that we're looking at in the agricultural world right now is, I think, gonna add a lot of anxiety and some concern into the marketplace.

Todd Gleason: 15:30

I have a question related to the corn rally prior to the USDA report Friday. If you listen to the analyst on Iowa Public TV's market to market over the weekend, you will have heard them say that the market was telling us something was going to change in the Friday reports and that it had already built it in or part of it and in the process that they likely had purchased enough to cover their needs in the near term. And their expectation is that basis might break.

Frayne Olson: 16:04

You know, I I guess in general, I agree with that analysis because what was leading especially for corn, the strength in the corn was some pretty strong export demand. And and even as prices were rising, we we continue to have those export sales. Well, with this pop or this reset kind of in expectations, I guess my underlying, question everybody would be well is is that export demand gonna continue? At what price do US prices get high enough in the global market that people start looking someplace else? And and so then what does that mean for product flows, which is really the basis level is the flow of grain.

Frayne Olson: 16:41

You know, it's your local market trying to regulate the flow of grain is one one simple way of thinking about it. So, as usually, as prices go up, we start getting some additional sales. As those additional sales hit the local marketplace, we sit tend to see a softening of the basis unless it's driven by a big increase in the demand side. And so, again, I I I sit back and start thinking about this and saying, well, what is the response from the buyers going to be? As as farmers and farm managers, we see this opportunity start selling more aggressively.

Frayne Olson: 17:12

And typically what happens then is, you know, buyers start questioning, well, at what at what point is this a value proposition again? And I tend to look to the international markets as that as that reference point because they tend to be the most price sensitive.

Todd Gleason: 17:26

So what are the international markets saying about corn and soybean?

Frayne Olson: 17:30

On the soybean side, you know, we're we're now getting into that that transition zone between the global marketplace coming to the United States versus starting their slow shift into the Brazilian market. The Brazilians have started their harvest, especially in Mato Grosso, but it's very, very early in the stages. We're just there's only a few acres being taken off. We really haven't gotten into that heat of the harvest season yet. That will be coming in the next couple of weeks.

Frayne Olson: 17:56

And so I guess the other part to this will be is is is that transition from the US markets into the Brazilian market, is that gonna be accelerated, or will that be just a a normal transition that we've seen kind of over the last several years? In in my opinion, because some of the rains and some of the the weather forecasts, I think that transition will probably go a little bit slower than what some are some are forecasting or some are projecting just because of the availability of product.

Todd Gleason: 18:24

Thank you much, Frane. Frane Olson as with North Dakota State University Extension serves as an agricultural economist. Now let's turn our attention to the weather forecast. Mark Russo is here. He's with Everstream Analytics there at the end of our conversation with FRAME.

Todd Gleason: 18:41

We were discussing, of course, the international marketplace, particularly Argentina and Brazil. What do crops look like in Argentina today and, weather and really what we wanna know is, will they get rainfall?

Mark Russo: 18:55

Yeah. Well, where they stand today, at least based on the latest, data from the Buenos Aires Grain Exchange, you have currently have, for corn, over 90% and, you know, good to excellent and fair conditions. That has started to drop though. It's a similar situation for soybeans too, but the item of note is that those conditions have started to drop over the past couple of weeks due to the drier pattern that began to become established in around the Christmas holiday, and then heat that has build into the region. So while conditions have deteriorated, they're still above the 5 year average.

Mark Russo: 19:37

But the question becomes, will this trend continue, or do things start to be, you know, do they halt here, with with better better weather coming up? So so kinda turning right to the forecast here. Is there any sign of significant relief to to help turn things around or even stabilize things? It doesn't look like that situation here coming up. It's not a totally dry pattern, but from now through the end of the month, it is a drier bias pattern.

Mark Russo: 20:07

There's 2 rain events coming up, but they look minor in nature. One coming up here later on this week looks to produce about 35% coverage. So, you know, a few scattered areas get some stabilization, but still a majority of a cropper acreage here, you know, will will miss out here. And along this along with this will be a continued warmer temperature bias, And so things we feel in the net will trend downhill further the next week or 2.

Todd Gleason: 20:38

And are things different in Brazil?

Mark Russo: 20:40

Yeah. Things are different in Brazil in the fact that most areas have adequate soil moisture. Granted, southern Brazil has also trended drier here of late. However, that area looks to get significant rainfall even starting by the end of this week. Places such as Rio Grande do Sul and Parana will get back into a normal, even slightly wetter than normal pattern.

Mark Russo: 21:02

So improving soil moisture there. And up north and center west, the continuation of generally normal to above normal rainfall.

Todd Gleason: 21:10

Here in the United States, sometimes and I don't know whether this is the case when California is really hot and dry. And you can talk about the Santa Anda winds, maybe for tomorrow Wednesday in this process as well. That spills to the north and then kind of opens the floodgate, pushing cold air down across the Rockies and into particularly the Dakotas. Can we expect more of that? And is that what's really taking place?

Mark Russo: 21:38

Yeah. We're seeing a ridging of high pressure across the western portion of North America, extending from California all the way northward into Alaska. And, actually, coming up, late this week and over the weekend, Alaska this Alaska Ridge will be significant. And as a result down stream, that is gonna force a very strong Arctic air mass into the middle of the country. It's not record setting in that for, January, but it is gonna produce basically the coldest temperatures of the winter here in the Central US for a couple of days.

Mark Russo: 22:12

Basically, you know, the first half of next week.

Todd Gleason: 22:14

And the Santa Ana winds over the next 2 days?

Mark Russo: 22:17

Yeah. What we're seeing here is an increase in winds and then lowering of humidity is basically from today through midday on Wednesday. So a high risk of more wildfire initiation here overall as well as the spreading as well. So not quite as extreme as a week ago, but nonetheless, more conditions here with the the setup the next, few days before conditions come later in the week.

Todd Gleason: 22:42

Thank you much. I appreciate it.

Mark Russo: 22:44

You're welcome, Todd.

Todd Gleason: 22:45

That's Mark Russo. He is with AverStream Analytics, joined us on this Tuesday edition of the closing market report that came to you from Illinois Public Media. It's public radio online on demand anytime you'd like to listen to us at willag.orgwillag.org, or search us out in your favorite podcast applications. Just look for the closing market report. I'm extensions, Todd Gleason.