Jan 13 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois. This is the closing market report. It is the January 2026. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets and yesterday's USDA reports with Rayn Olsen, agricultural economist at North Dakota State University.

Todd Gleason: 00:17

He's with extension there and has a very, very, very simple explanation for why there is now a 17,000,000,000 bushel corn crop. You won't believe what it has to do with, well, let me tell you, silage. That's right. Corn silage. You'll want to listen to that.

Todd Gleason: 00:36

Naomi Bloom is out of the office this afternoon. She's with totalfarmmarketing.com. We normally talk with her on Tuesdays, but not today as she's traveling. We'll also hear today a portion of the interview you did not hear last week with bio urges Jordan Fife. I asked him one last question after the fact about renewable diesel and the impact Venezuelan oil, which is mostly turned into diesel fuel, might have on it and its future.

Todd Gleason: 01:05

And then we'll turn our attention as we finish up our time together to the agriculture weather forecast. Don Day will be here from Day Weather on this Tuesday edition of closing market report from Illinois Public Media. It is public radio for the farming world online on demand at willag.org.

announce: 01:25

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

Todd Gleason: 01:31

March corn for the day settled at $4.19 and 3 quarters. Opinion three quarters lower than May at $4.27 and 3 quarters down two and three quarters and December contract down five and three quarters at $4.45 and 3 quarters of a cent. March soybeans, 10 and a quarter lower. Settlement price at $10.38 and 3 quarters. New crop November down eight and three quarters to finish at $10.58 and a quarter as beans came under pressure from the president's announcement over True Social that he would be imposing a 25% tariff on any country, including China that trades with Iran.

Todd Gleason: 02:06

Bean meal futures down $6.70, wheat futures off about 3 quarters of a cent, and the March contract for the soft red, the hard red down seven and a quarter. We're now joined by Freyne Olsen, agricultural economist with extension at North Dakota State University. He's based on campus in Fargo. Hi, Frane. Thanks for being with us again.

Todd Gleason: 02:26

We have a lot of ground to cover today because yesterday, the United States Department of Agriculture released some, what I think, most of the trade thought were shocking numbers as it's related to corn, particularly in the crop production in the WASDE reports. Can you give me your take on what USDA did?

Frayne Olson: 02:46

Yeah, so a lot of shock, right? Shock and awe is what they say. The trade was basically expecting a slight cut in total production, and we actually got pretty significant increase in production. Everybody's trying to spin their head and say, Well, what happened here? So let's just go through the numbers really quick.

Frayne Olson: 03:06

How do we get to production? Well, we take planted area, we adjust to harvested area, and then that times yield. Well, the yield, yeah, went up about half a bushel. This isn't shock value. For planted area, we went from 98.7 to 98.8 planted area, not shock value.

Frayne Olson: 03:27

What they did was what there was an adjustment in harvested area. So we went from a harvested area of about 90,000,000 acres to a harvested area of 91.3.

Todd Gleason: 03:40

Just so people understand that, the planted area went up a 100,000 for corn, but the harvested area went up 1,300,000 acres.

Frayne Olson: 03:49

The harvested area went up 1,300,000 acres. So why there this difference in corn between planted area and harvested area? Well, in soybeans, think about soybeans, planted versus harvested, they're almost identical, right? I mean, there really isn't, there's some area, if you have a wet spot and you don't harvest it, or if you have a high spot in the field that is drought out, or you have some hailstorm come through, the difference between planted and harvested in soybeans is pretty tiny. But for corn, we always have this big difference between planted and harvested area.

Frayne Olson: 04:26

So in the December report, that difference was 8,700,000 acres. In December, it was 98.7 planted, 90 harvested. Why was there 8,700,000 acres difference between planted and harvested? We always have this big separation between planted and harvested in corn. The short answer is corn silage.

Frayne Olson: 04:50

Not all of the acres are going to be harvested and run through a combine. We always have some corn silage. Okay? So that differential that's spread between planted and harvested went from 8,700,000 acres to 7,500,000 acres. And most of that, not a 100%, but almost all of that's corn silage.

Frayne Olson: 05:12

Well, know what? We had a pretty good corn silage year too. And if Southern Minnesota or if you're in dairy country in Wisconsin, you know, what happens when you have a really good corn silage crop? You know, you start going through, the bunker gets full, and you say, you know what? I think the rest of it, which is actually really good corn, will go into the grain bin instead of going to the silage pile.

Frayne Olson: 05:38

Oh. And so I you know, this makes some sense. So let me let me flip that around. In a droughty year, when we have really, really dry conditions, all of a sudden more of that corn goes into the silage pile. We end up some of the low yielding crop instead of running through the combine, chop it and you put it in the silage pile.

Frayne Olson: 05:59

And so we're used to having on a drought year, the difference between planted and harvested increase. Well, year we had such a fantastic year, it decreased. This actually makes some sense. And on top of that, the USDA is in the January report, cross checks the survey data from farmers with the information they get from FSA, FSA acreage reporting and the information from RMA. And as we were talking before we came on air, yep, because of the bridge payments, a lot of farmers did certify the acres early this year.

Frayne Olson: 06:43

So we have a pretty good idea of what the area harvested is.

Todd Gleason: 06:46

And their yield.

Frayne Olson: 06:47

And again, this is all cross checks. So it's not that USDA is saying, Oh, Joe reported this on their survey, and they reported this on their FSA, and reported this on their crop insurance. That's not what they do. They're looking at averages. They're saying, well, what's the average for this county or this state compared across these different data sources?

Frayne Olson: 07:07

And they're never identical, they're never exactly the same, but there's a relationship. There's this normal kind of relationship and we can really zero in and come pretty close to the right number. And so I know it was a shock to everybody. Everybody's trying to scratch their head and say, what the heck happened? Where do we come up with all these harvested acres?

Frayne Olson: 07:28

But it's actually pretty simple. It's we ended up getting more corn silage and the bunkers got full quicker. And you know what? The stuff that we didn't put in the silage pile was pretty good yielding corn, and the bushels got got added.

Todd Gleason: 07:44

Do the math.

Frayne Olson: 07:45

It just it's yeah. Just do the math. It, you know, it actually does make logical sense when you try and, you know, pull it apart and say, what what actually happened here?

Todd Gleason: 07:54

We've done the math. The math is correct. USDA says so. We believe them. What happens in the next three months by the time we get to the prospective plantings report then?

Frayne Olson: 08:06

Okay. So now that becomes a little more challenging. So the other thing, just before I dive into that, the other thing that happened was that USDA did adjust the consumption numbers for, or usage numbers for soybeans. They did cut the forecast for soybean exports. They trimmed them up.

Frayne Olson: 08:27

And I was expecting that to happen. I wasn't sure it was going to happen in January. But our export pace for soybeans so far this year, primarily to China obviously, is well behind the curve. I think USDA said we're so far behind, we better make some adjustments in what our total export pace will look like. Now obviously politics can change that, but when USDA does their forecast, they assume that the policies in place at the time they run their model will continue.

Frayne Olson: 08:57

So they made an adjustment. So what does that all that mean? We'll watch this through the whole process. It's not like we're going to have an acreage battle for 2026. Right now, I think the going thought process is we'll have to cut some corn acres.

Frayne Olson: 09:17

We'll probably trim the corn planted area a little bit, we'll probably going to look at a slight increase in soybean acres. When I look at the futures market and the futures market relationship right now, kind of the spreads we're looking at, I don't know that there's a big advantage for corn versus soybeans or any other crop. And that's one of the challenges we have up here in North Dakota is we grow a lot of different crops, we're very diversified, but they're pretty small acreage. And so when we start thinking about shifting, it doesn't take much of a shift out of corn and beans and into some of these smaller market crops to suddenly flood these other crops. And so I'm getting a lot of questions from farmers just that exact same question.

Frayne Olson: 10:01

What do we do next year? I think right now the default position is we follow rotations. I mean, there's not a big incentive to start flipping acres around, so we'll probably follow rotations, which means that when you do that and do the math and we kind of come back to a normal relationship, again we're looking at probably a slight cut in wheat plantings. We're probably looking at a slight cut in corn plantings with a slight increase in soybeans. And I don't know that there's a big incentive to increase cotton acres, I don't know that there's an increase, a big incentive to increase sorghum acres, which are some of the other crops we could shift into.

Frayne Olson: 10:45

I I think it's we're just rebalancing. I don't know that there's an incentive to make any big shifts.

Todd Gleason: 10:50

For a very long time, we have planted about a 180,000,000 acres of corn and soybeans combined, including last year. Despite the fact that we had 98,800,000 acres of corn, we only had 81.2 for planted acres. For soybeans, are you thinking those change by, what, 4,000,000 each? So they go beans are up around 84, 85, and corn's at 94, 95?

Frayne Olson: 11:19

No. I don't know that it'll be a one for one shift. I know in in the Corn Belt, that's usually what happens. If you're thinking about Illinois, if you're thinking about Iowa, Southern Minnesota, I mean the hardcore Corn Belt, a lot of people think one to one, but when you think about what's going on here in North Dakota, South Dakota, you get into parts of Central Kansas, you get into Missouri, the flip isn't a one for one flip. So I do think, I guess my personal opinion is relevant, but what I see in the marketplace, what I see traders and analysts talking about is probably about 94, 95,000,000 acres of corn, about 85,000,000 acres of soybeans, about 44,000,000 acres of wheat.

Frayne Olson: 12:11

That would be winter wheat and spring wheat and everything else combined. We might see a little slippage in cotton acres. Again, don't know that sorghum acres will change very much, but after that the acreage pretty thin. I mean, there isn't there's a lot of crops that have small acreage bases, and we see that here in North Dakota.

Todd Gleason: 12:34

Given a normal growing season, what does that do for the ending stocks for both, and how do you see price playing out?

Frayne Olson: 12:43

Okay. Well, that's our challenge. Right? So based on the numbers we got yesterday, we're gonna produce 17,000,000,000 bushels in 2025.

Todd Gleason: 12:53

Mhmm.

Frayne Olson: 12:54

You do the math on on corn. So let's do the math on corn real quick. If you have 95,000,000 acres planted, you subtract out corn silage, you know, you have about 80, or that would be about 88,000,000 acres, 87,000,000 acres harvested. You put on a trend line yield which is about 186 depending on who does the math. We're looking at just under a 16,000,000,000 bushel crop next year if we have normal yields.

Frayne Olson: 13:24

Kind of the same thing with soybeans. You do the math on that, you come up with about 44.4, 4,500,000,000 bushels of soybeans. I mean, the beans are coming into harvest full and I don't know that we're going to have, unless something really changes, we're going to have a big change or reduction in ending stocks in 2026. I mean, again, this is all forecasting, this is all doing the math forward. The simplest way obviously to get a reduction in inventory, be able to make adjustments in price, would be some kind of weather problem, preferably a weather problem in South America because that would make it a lot easier on us.

Frayne Olson: 14:04

But I just don't see that happening real soon in the short term. Weather conditions in Brazil, at least Northern Brazil, have been nearly ideal. Some dryness showing up in Southern Brazil, some parts of Argentina, but again it's not at a point where it's going to move the marketplace. So the question I get from farmers a lot and in particular lenders, when we look at price movements, are we looking at like a V in prices where we have high prices, they drop and they recover fairly quickly? Or do we see more like a hockey stick where you have prices drop and they stay at these levels for several years in a row?

Frayne Olson: 14:46

And unless something really dramatically changes or shifts, we're probably looking at a hockey stick. We're probably looking at prices in in some trading ranges. We we're just gonna need some help. We're gonna need some something to change and shift, either from a weather standpoint or from a political standpoint, because those are the two things that are most difficult to forecast, to put some kind of shock or lift into the market.

Todd Gleason: 15:10

Thank you much. We'll end on that note. Not a happy one, but a practical one. We appreciate you taking the time with us and spending so much time with us today.

Frayne Olson: 15:18

Oh, always a pleasure to visit.

Todd Gleason: 15:20

That's Frey Olson. He's an agricultural economist based on campus at NDSU, North Dakota State University, and he is with Extension. I'd like to take you back now to a conversation we had last week with Jordan Fife, who is the president of Bioergia Trading. He's involved with both the oil and the ethanol industry, and I thought he might have some insights about the Venezuelan crude oil and what impact it might have in The United States. In fact, he told us that that was heavy sour at the time.

Todd Gleason: 15:55

It was called Roots and Rocks crude by those folks that are in the industry and that mostly the industry, even along The Gulf Coast, refines light sweet, and so that this crude oil would probably have to end up in the Midwest at some point where we do refine heavy sour that's mostly coming out of the tar sands in Canada and other places, and it would offset some of that oil if that were the case. I asked him one other question after the interview had finished, but did not run it last week. Thought I you'd might like to hear the answer to this one. I wanted to know if he thought that there would be any impact on the future of renewable diesel.

Jordan Fife: 16:37

If you get stuff cheap enough, right, and and renewable diesel is is not as economically viable right now as just diesel off of the off of the the refiner. If crude were to get silly cheap, and that's when people start asking questions. You know, if if if if diesel was a dollar 50 a gallon and the the subsequent gallon of renewable diesel costs $4, people start asking questions. And refiners start moving things around. And a and a good example of this, you know, it's not exactly the one for one or an apples to apples, but, you know, it's an apples to pears or something analogy, is when you get the big disparities between gasoline prices and ethanol, it doesn't happen that often.

Jordan Fife: 17:20

But if you ever get ethanol that's like a buck, excuse me, gasoline is like a buck and and ethanol is like $33, the inland refineries, and especially those that have smaller RVOs, will stop blending as much as they can. But it kinda goes back to the exact thing we were talking about, Like, in that in that analogy, it is so hard to untie these knots. You have future contracts on. You've already purchased stuff. The curve generally doesn't show you clarity past a couple months.

Jordan Fife: 17:50

So you're not gonna untie these huge logistical knots that these these, you know, massive corporations have have made. Specifically with ethanol blending, they've already bought the ethanol for the quarter. They've already taken out the ethanol space. The pipeline is constrained for gasoline. So when you start moving more gasoline on the pipeline, then you don't have enough space to do it.

Jordan Fife: 18:09

You have to cancel a contract. So you're like it's the same thing with the Venezuelan crude. Right? It's like these things are just so laid out in advance and and planned for. You know, to to take it to an an agricultural analogy, it's like you've already bought the seed.

Jordan Fife: 18:22

You've already bought the fertilizer. You know, the the field's ready to start working. Oh, and beans pop $2 because something you couldn't, you know but you've already bought your corn seed. Are you gonna go return it? And then he's like, no.

Jordan Fife: 18:33

Well, maybe next season. Right? It it it it's not you can't turn these boats on a corner. So I think it's just a wait and see game for a lot of it. But for to answer the renewable diesel question, I don't think it has, like, a direct impact, but it could have a long term if we just get infinitely cheap crude.

Todd Gleason: 18:48

Jordan Fife is the president of Bioergia Trading. It is a subsidiary of Bioergia, which owns a series of grain elevators in the Dakotas and Nebraska along with Colorado called Western Plains, and they own the ethanol plant along the Illinois River in Peoria. You're listening, of course, to the closing market report that comes to you from Illinois Public Media. It is public radio for the farming world online on demand at willag.org. Let's check the weather forecast now.

Todd Gleason: 19:33

Don Day is here. He is with Day Weather in Cheyenne, Wyoming. You're traveling in Nebraska to a rangeland conference today?

Don Day: 19:41

Yeah. I'm headed to Shattering, Nebraska in early January. They have a rangeland conference, and, there to talk about, what we're expecting as we go into the next several months and, of course, the all important spring and summer season.

Todd Gleason: 19:56

What will you be telling them?

Don Day: 19:57

Well, what I'm gonna be telling them, at least in this part of the country, which has been abnormally dry and warm this winter, is that the luck is probably gonna run out, that we're gonna see first in the Central United States, in your neck of the woods, the return of some pretty harsh winter weather conditions with not one but two arctic fronts coming in.

Todd Gleason: 20:19

That sounds cold. How cold?

Don Day: 20:21

We're gonna see the coldest of cold stay up in the Northern Core Belt and into the Northern Great Lakes. But there's gonna be a time early next week where we could see temperatures approaching zero or a little below as far south as Interstate 80 and maybe even creeping a little bit further south of that, certainly single digits and teens. It's part of a a double barreled push. We've got a push coming in Friday and Saturday and then another push coming in Monday and Tuesday. The Monday, Tuesday push is gonna be the coldest.

Don Day: 20:54

In fact, would not be surprised if we have near freezing temperatures along the Gulf Coast and even parts of Florida by next Wednesday. And so the whole eastern side of the country is gonna be getting much, much colder again.

Todd Gleason: 21:07

Is there any concern for winter wheat, whether that be soft red in parts of Illinois, Indiana, or hard red, which may or may not have enough snow cover, I suppose, in the Lower plain States, or, up to the north as well.

Don Day: 21:24

Yeah. No. I think it is a concern. This this warm spell we had in mid to late December up to present time has eliminated a lot of snow cover. And we're expecting some snow with these Arctic fronts that will put down a little bit of snow before the real cold comes in.

Don Day: 21:42

But these type of fronts are not big snowmakers. So I think there is some concern that, there could be some exposure to extreme cold.

Todd Gleason: 21:51

I wanna turn your attention back to this Rangeland conference. They'll be asking you, I know, about the spring season. That's tougher because things can change very, very quickly. What advice do you have for them or explanations looking forward?

Don Day: 22:07

Well, when we go into the, spring and summer season 2026, one thing that we're not gonna have that we had at the same time last year was La Nina. La Nina out in the Pacific Ocean is barely hanging on, and it's on its way out. It's going to weaken extremely rapidly over the course of the next several weeks. So there's gonna be some talk about, well, what is The Pacific doing? What is The Atlantic doing as we get into spring and summer season is as the ocean dynamics play a really big role in how spring and summers go.

Don Day: 22:44

And with the removal of La Nina, that's a bit of a different element going into the growing season of this year.

Todd Gleason: 22:51

K. Thanks much, and we'll talk with you again next week.

Don Day: 22:54

Sounds good.

Todd Gleason: 22:55

That's Dundee. He is with Day Weather in Cheyenne, Wyoming. Helped us to wrap up this Tuesday edition of the closing market report from Illinois Public Media. Find us online at willag.org. I'm Todd Gleeson.

Todd Gleason: 23:49

Doctor. JACKSON: