Jan 22 | 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 22nd day of January 2025. I'm extension's Todd Gleeson. Coming up, we'll talk about the commodity markets with Greg Johnson from TGM and Drew Lerner will be here from World Weather Incorporated in Kansas City. Along the way, I'll invite you to join tomorrow's webinar from the farmdoc team.

Todd Gleason: 00:24

You can do that in our calendar of events. Tomorrow we'll take up crop production in South America, and we'll also hear today from Nick Paulson about 20 25 crop budgets and break even prices for corn and soybeans on this Wednesday. Addition to the closing market report from Illinois Public Media. Celebrating 40 years of the closing market report, some 10,000 episodes and 30,000 interviews. Todd Gleason services are made available to WIL by University of Illinois Extension.

Todd Gleason: 00:56

March corn for the day settled at $4.84 to quarter, down 5 3 quarters. The May at 4.94, 5 3 quarters lower. In December, no crop down a quarter of a cent at 4.59 and a half. March beans at 10.56, down 11 at a quarter. The May at 10.68 and a quarter, down 9 and a half cents.

Todd Gleason: 01:13

The wheat in the soft red at 5.54 for the March, down 4 3 quarters, and the hard red, down 3 quarters of a cent at 5 74 3 quarters. Greg Johnson now joins us from TGM. That's total grain marketing dot com right here in Champaign County, the elevator operated by FS. Thank you so much for being with us. I suspect you were busy for a while last week, maybe earlier this week, if things calm down for you as it relates to old crop sales?

Greg Johnson: 01:43

It's not as busy as it was Friday. Friday was an absolute zoo. Everybody was selling, in in response to the report. But then, Monday, there was no markets. Yesterday, markets were good, and so farmers sold into that as well, not not quite as heavily.

Greg Johnson: 02:05

And today, with the markets a little bit lower, the the trading has, has has really backed off. Although we were higher, early this morning, and so we you know, when the markets were higher, farmers continue to sell into that. So we were busy for a while, but, with the markets selling off a little bit midday, the the volume has has certainly died down.

Todd Gleason: 02:26

Till last week when we talked, you talked about making new crop sales. I wanna discuss the market in general. You can talk about new crop again if if you'd like. And there are many analysts who look at the marketplace or chartist or are charting something, you know, 5 at least and above For corn, old crop that is. And I'm wondering because I I look at that look at it and think well, are we with this much grain around despite what the numbers coming out of USDA show as as it relates to a lower crop size and a much lower ending stocks number.

Todd Gleason: 03:10

But on the world and global stocks domestically, I suppose it doesn't seem as if we're in horrible shape. Do we really have that much rally potential? And I'm wondering how you put that in context for farmers, and if I'm just off base?

Greg Johnson: 03:26

Well, we've already rallied 86¢ in the old crop corn. March corn was 404 on the board right before harvest, and now we're at 4.90. The new crop corn has not rallied as much. We were 4.30, on December futures, and now we're at 4.60. So about a 30¢ rally in, the new crop futures.

Greg Johnson: 03:44

But we have seen a definite increase in old crop, and the and that's directly as a result of the the January USDA supply and demand report, cutting the carryout from 1.7 to 1.5. And now you throw on top of that, the funds have, got a long position. They've started going long corn since the 1st November. That's accounted for some of this. And South America, Brazil specifically, might be a little late on their soybean crop.

Greg Johnson: 04:11

They've got an excellent soybean crop coming online, a 170,000,000 bushels a 1000000 metric tons plus. But if they don't get the beans harvested in a timely fashion, then that, delays the double crop, planting of the serif serafina corn crop. And so, and that's a pretty big crop. That's, the majority of their corn is double crop corn. So, there's some reasons to think that, the corn market will be supported until we get a better idea of what the weather will be like, for the Brazilian corn crop, and, also, we need to get a better idea, as far as what, president Trump is gonna do as far as trade policy is concerned.

Greg Johnson: 04:50

The rally, post election was primarily his announcement that he would not put any tariffs on until February 1st at the earliest, so that gives us 2 weeks, where the market, you know, could, see a little bit more export business. Ideal you know, initially, they thought that day 1, you know, that that everything was gonna happen day 1. Tariffs would happen day 1. Well, now it's not gonna happen till Feb 1 at the earliest, and there's some hope that this is all part of his strategy to try to ring concessions out of some of these other countries, and maybe the tariffs won't be quite as heavy as what, he initially had proposed.

Todd Gleason: 05:28

It could be, on on the flip side, if if this doesn't work and February 1st comes and there are tariffs that are put in place. He's really talking about Europe, maybe Mexico and Canada. Not much said about China yet. I would think that would be a rough spot, particularly for new crop corn, essentially, because Mex if Mexico is in that mix, I can't imagine that that doesn't turn ugly, really quickly for corn.

Greg Johnson: 05:59

You're you're right. I mean, he is talking about 25% tariffs on Mexico, Canada, and maybe even Europe, whereas he's only talking about a 10% initial tariff on China. So, yeah, that, 25% tariff would be extremely big. And I think Mexico has heard you know, it has felt the the the the pressure, and so they've front run it. They bought a lot of corn ahead of time just in case those tariffs do come to fruition.

Greg Johnson: 06:26

So, you know, maybe we will see export demand start to lag a little bit, once we get past February 1st, and, and and we'll see what happens. But, certainly, the just the uncertainty over the trade policy probably will provide us with wider trading ranges, bigger trading ranges. You know, today, for example, corn's had a 6¢ trading range. Beans have had an 18¢ trading range from high to low. Wheats had a 12¢ trading range.

Greg Johnson: 06:53

I think you'll see those kind of swings. You know? We've been both higher and lower today. You know? So the that tells me the trade has not figured out what what is going on.

Greg Johnson: 07:02

There's obviously positive potential things out there, and there's negative potential things out there. And we just don't know the answer yet, and, we may not know the answer on February 1st either, but we'll have probably have a better idea then. And like I said, the South American weather in Brazil will will have a big impact as well.

Todd Gleason: 07:18

Those trading ranges, I suppose, and we would have been familiar with them from the first Trump administration, because you don't know exactly what might happen from one day to the next. But those trading ranges make it important for producers to have orders in place. Did they did they adapt to that during that 4 year period, from 16 to 20? And do you suppose they will do so again if that was the case?

Greg Johnson: 07:49

Yeah. In in, the the year that, the tariffs took place, the bean market basically went straight down, so having offers in really didn't work, in that environment. But prior to that, when we did have the uncertainty and we had both ups and downs, having offers in and and having you know, getting getting those offers picked off overnight or early in the morning when the market was higher certainly did work, and so we continue to advocate farmers having offers in, at prices where they feel like they can make money both old crop and new crop because you just never know and, you know, when the when the shoe is gonna fall and, you know, everything looks pretty good right now, especially in corn, but things can change. And so, you know, if you can lock in a profit, why not lock in a profit on a certain percentage of your bushels?

Todd Gleason: 08:37

Well, thank you for so much for reminding me why I was a bad marketer. Orders, offers in don't work unless they're good. Okay. Well, it it's good to be, an interesting time. It always is in the marketplace.

Todd Gleason: 08:59

I love to talk about it, and I know you guys do too. What's your best thoughts on, both corn and soybeans today, old and new crop?

Greg Johnson: 09:09

Old crop, you know, I I would say if you're 60 to 70% sold, you can probably hold on to that last 30, 35%, and see what happens. Soybeans, I wouldn't, be opposed to being a little bit heavier sold than that on old crop. Now as far as new crop is concerned, 20% on on the corn, 40% on the beans seems to be enough for now. I I still think anything with the beans are gonna be a struggle this year, if any of these trade, tariffs come to fruition. So I know $10 plus, 10.25 now for cash beans doesn't tickle a lot of people's, fancy, but I I think this might be a year where we just try to break even on the soybeans and try to make our money in the corn market.

Todd Gleason: 09:53

As it happens, we'll hear about crop budgets. We're not gonna do either. But we'll try try to not suffer through the losses. How about that? I appreciate that.

Todd Gleason: 10:05

Thank you, Greg, for being with us today.

Greg Johnson: 10:07

You're very welcome, Todd.

Todd Gleason: 10:09

Greg Johnson is with TGM, that's total grain marketing .com. Yesterday, agricultural economist Nick Paulson from the University of Illinois FarmDoc team posted a video updating the U of I's 2025 crop budgets. Initially released in September, the updated budgets reflect higher new crop corn and soybean prices at $4.30 a bushel for corn, up about a nickel, while soybeans were adjusted down 5¢ to $10.20. Paulson says this adjustment improves projected corn returns by 10 to $15 an acre. The soybean returns drop 3 to $4.

Todd Gleason: 10:51

He says in the video, which you may view right now at the willag.org website, that this does not change the situation much for the coming year. It adds a 3rd year of losses on cash rented land starting with the calendar year 2023 through 24 and including now 2025. Paulson says these negative return projections are due to low corn and sweeping prices relative to the high production cost producers are expected to continue to face.

Nick Paulson: 11:23

Let's talk about breakeven prices implied by those high production costs, assuming a typical growing season and trend yields occur in 2025. Corn prices in the range of $3.17 to $3.66 per bushel are needed to cover non land costs, while corn prices need to be 4.60 to 4.66 to cover total costs which include non land costs and average cash rent levels by region.

Todd Gleason: 11:47

Roughly speaking, the break even corn price on cash rented ground is $4.60 a bushel. It's a dollar less than that if the farm is owned free and clear. For soybeans, those numbers are more like 3 and a half dollars apart. We'll call it $8.11.50. The range is wider, and you'll need to watch the video to see them.

Todd Gleason: 12:08

It's online now at willag dotorg. There you'll also find a link to tomorrow's webinar hosted by myself and including Joanna Colusi from the FarmDoc team. Joanna is in Brazil at the moment and will have an update on crop conditions there as well as those in Argentina and what those nations look to harvest in total across not only the 2 of them but all of South America. Be sure to join tomorrow's webinar that starts at 11 AM CST. I called and spoke with Joanna earlier today and asked her just exactly what she'll be covering.

Joana Colussi: 12:50

Sure. We'll see the recent forecast and information about the crop season, like you said, in Brazil, where I am right now and in Argentina. The situation changed a little bit since the Ives meetings in December, especially in Argentina and in the south of Brazil, there are some drought spots, here in the south of Brazil and also in Argentina. In Mato Grosso, so far the situation is good. So, but just to provide a summary, I will start the presentation, by providing one update on soybean prospects in Brazil that should be a record.

Joana Colussi: 13:32

After that, I will discuss corn production, and trait. Remember corn production, we are now in the 1st season of corn, the summer corn, but now in January and also in February farmers will plant the 2nd season, the saffrinha. Then I will give one overview of the potential for future agriculture expansion in Brazil. We always receive these questions from our audience. Next, we'll look at the crop prospects in Argentina, another very important key agricultural player in South America.

Joana Colussi: 14:16

Following that, Paulina Lescano, a grand market analyst from Argentina, We'll share insights into the current crop season there, also including concerns about drought.

Todd Gleason: 14:30

If you'd like to join tomorrow's webinar with Joanna Colucci, it's free. Part of the FarmDoc team service to agriculture across the state of Illinois and around the planet. It's easy enough to get to at willag.org in the calendar of events. Click on tomorrow's webinar and then click on more details. You'll get a hot link at that point so that you can register, but don't wait.

Todd Gleason: 14:53

Register today. It is free, and there are plenty of seats. You'll want to be there at 11 AM CST tomorrow for the FarmDoc Daily Webinar focusing on production in South America. Now Now let's talk with Drew Lerner on this Wednesday. As usual, he is with World Weather Incorporated, and thank you, Drew, for being with us.

Todd Gleason: 15:25

I'd like to start, not in South America, but in the United States. What an historic storm we had on the southern coast. Can you tell me about that and put it in some context for me?

Drew Lerner: 15:38

Oh, you know, absolutely amazing. You know, I've been doing this almost 46 years now, and every year, there's something else that I never thought would ever be seen. And this is one of those events. The the snowstorm that came out of east Texas and moved through southern Louisiana and on over to Georgia and northern Florida, dumped anywhere from 4 to 10 inches of snow, all the way down to the coast. And then, all that, of course, occurred yesterday.

Drew Lerner: 16:07

And then today, we saw the cold air come in behind it. And temperatures this morning plummeted into the single digits within a few miles of the coast in Louisiana. And upper single digits and teens across Georgia and Northwestern Florida was in the teens. We had freezes all the way down into Northeastern Mexico, lost a lot of fruit and vegetables in South Texas and Northeast Mexico. But you know, this it's interesting.

Drew Lerner: 16:34

I hit the I hit the history books as soon as this storm started being advertised. And there was another storm just like this, only more intense, believe it or not, that occurred in 1895 Wow. That moved from eastern Texas through Louisiana to Georgia just like yesterday. And that storm, believe it or not, produced a record setting 19 and a half inches of snow in Houston and a foot in south central Louisiana. So I guess weather is more cyclical than we think.

Todd Gleason: 17:08

Oh, well, I suppose horses probably were more sure sure footed than the people driving vehicles in the snow. Yeah. That's that's No kidding. That's my guess there. Turn your attention further south to South America.

Todd Gleason: 17:22

Start in Argentina. There's been a lot of worries about the dry conditions, maybe drought, those sorts of things. Are those still in place?

Drew Lerner: 17:31

You know, the the latest vegetative health indices are now showing the stress from the 1st January. We have to keep it all in perspective. We've only been in this situation for about two and a half weeks. And, so the loss in production potential has not really kicked in in a major way yet, but we are certainly drying out the soil. We are very short on topsoil.

Drew Lerner: 17:53

A subsoil is marginally adequate to very short depending on location. So, you know, the the metal, the pedal is to the metal or whatever they say. We're at the point where we're going to accelerate the decline in crops if we can't keep some timely rains going. And the outlook for Argentina is that there will be some rain periodically over this next couple of weeks. But most of it's going to be in the 1st week of the outlook and much of it will be erratic and light.

Drew Lerner: 18:19

It looks like east central and south eastern parts of Argentina will go without rain for the most part. What rain they do get won't be enough to counter evaporation with daily highs in the nineties. And that will lead us into February. And we do expect a weak ridge of high pressure to develop in the 1st week of February that will allow for hotter temperatures and continue perpetuating this dry bias. So, Argentina is without much question going to lose some yield.

Drew Lerner: 18:50

The real question is, you know, how long are we gonna go in this mode? And it's interesting to note that the La Nina event, is always been somewhat of a borderline thing, but it is showing some signs of weakening at the moment. And if that trend will continue, we might be able to keep going with some of this instability in Argentina and be able to, keep some of this crop hanging in there. Now that may be good news for some folks and not so good for others. There's a big need for the market to move higher, I guess.

Drew Lerner: 19:21

So, you know, there's probably a lot of folks rooting for a problem down there in Argentina. But as it stands right now, we are going to lose yield. And the question is just how long will that continue? And my guess is February is gonna be a challenge all the way through the month.

Todd Gleason: 19:36

Across the continent, it could be that the Brazilian crop, maybe that in Uruguay, Paraguay as well. I'm not certain about those last two countries. Could make up for any losses that would happen in Argentina. What do you think?

Drew Lerner: 19:52

Oh, yeah. I'm totally on that bandwagon. You know, I look at the vegetative health index for Brazil too, and there's no the crop is nationwide in much better shape than a year ago. And, there's no sign that anybody in Brazil drying down at this point. Now that's, you know, that's good for full season crops and second season crop.

Drew Lerner: 20:14

But we're trying to harvest the early soybeans and that could get in the way a little bit. But, before I go down that road, I do wanna reiterate that, they have a huge soybean crop and there's no question even their 1st season corn is going to yield well although it's a fairly small crop. Now, right now we're seeing a little bit of a break in the wet weather in Brazil. Yesterday was probably the driest day I've seen in weeks across the nation. And they need to stack several of these in a row to get the ground firmed up enough for aggressive crop maturation and harvesting.

Drew Lerner: 20:47

It looks like this more erratic and light precipitation pattern will continue into probably the end of the weekend and then may and possibly early next week. But we will slowly ramp up on the rain after that. And it looks like from mid week next week, through the 1st full week in February, it will rain fairly often again. And so there will be a slowdown in field work at that point in time. But as I mentioned before, the La Nina event is showing some weakening tendencies.

Drew Lerner: 21:18

And if we can get that to continue through the whole month of February, then we may be able to get by with a little less frequent and a little less intensive rain in Brazil so that they can get that early bean crop out and the safrinha crop in. But if I had to place a bet on the table right now, I would say we're going to be a week or 2 late on that safrinha crop. And, there is a slight chance we may be able to keep the rainy season going by an extra week to 10 days maybe, and that could actually help them out in that situation.

Todd Gleason: 21:48

Last week, we talked about the other side of the planet. You were concerned at that point about the southern areas of China, some dry weather conditions in the rapeseed or canola oilseed kind of areas.

Drew Lerner: 22:00

That's right. And that has still continued. It is still cold in China or cold enough. They're actually warmer than usual, but they're cool enough to keep the, demand for moisture very low and crops are still semi dormant. So it's not an issue at the moment.

Drew Lerner: 22:15

So forecast models are advertising rain beginning late this week, maybe, in the weekend in particular and next week in some of that rapeseed country. It may not be a full soaking, but it is going to moisten up the ground a little bit. So that when the crops do start to wake up a little bit in February, mostly in the second half of the month, that there will be moisture to to feed upon. With La Nina conditions still lingering though, there will be a a below normal precipitation bias that prevail. So we will be watching them pretty closely as time moves along.

Todd Gleason: 22:47

Hey. Thank you much.

Drew Lerner: 22:47

You bet. Have a great week.

Todd Gleason: 22:49

You too. That's Drew Lerner. He is with World Weather Incorporated in Kansas City. Joined us on this Wednesday edition of the closing market report that came to you from Illinois Public Media. Our theme music is written performed produced and courtesy of Logan County Illinois farmer Tim Gleason.

Todd Gleason: 23:05

You have a great afternoon. I'm Illinois Extension's Todd Gleason.