Jan 24 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report for the 24th day of January 2025. I'm extension's Todd Gleeson. Coming up, we'll talk about the commodity markets with Mike Zuzolo at globalcomresearch.com, and Eric Snodgrass from Conduit. Ag will join us. Along the way, I'll bring you up to speed on crop budgets for 2025, the coming growing season, from the FarmDoc team.

Todd Gleason: 00:26

And we'll hear from secretary of ag nominee Rollins on this Friday edition of the closing market report from Illinois Public Media. It's Public Radio for the Farming World. Todd Gleason services are made available to WIL by University of Illinois Extension. March corn for the day settled at $4 86 and a half down 3 and a quarter cents. The May at 4, 96 and a half, 2 and 3 quarters lower. New crop December at $4.61, down 3 and a quarter.

Todd Gleason: 00:54

March soybeans today, $10.55 and 3 quarters. 9 and 3 quarters lower. The main down 9 and a half at 10.68 and a quarter. And new crop November at 10.48 and 3 quarters, 4 and a half cents lower. Bean meal off $10.40.

Todd Gleason: 01:09

The bean oil up 18¢. Soft red winter wheat down a dime, settled at $5.44. The hard red at 5.59 and a half, down 11 and a quarter cents. Live cattle futures at 203, 2 and a half, up 2 dollars 30. Feeders up $2.50 at 2.70 6.57 and a half.

Todd Gleason: 01:27

And lean hogs were £100, up a dollar at $88.20. The closing market report is celebrating 40 years, some 10000 episodes and 30,000 interviews. Mike Zuzlow now joins us from globalcalmresearch.com. He's in Atchison, Kansas. Hey, Mike.

Todd Gleason: 01:45

Do you still have snow on the ground where you are?

Mike Zuzolo: 01:48

You know, we do, Todd. It's been extremely cold after the 14 to 15 inches we got, you know, a couple 3 weeks ago, and, just haven't seen much snow melt. We're looking at a warming trend next week. The weather models are a little bit in disagreement. They turned a little bit wetter for the hard red wheat belt and actually probably played a bit into Friday's price action with hard red wheat, soft red wheat meal, the, leaders to the downside after starting the week out as the leaders to the upside.

Mike Zuzolo: 02:18

So it's gonna be a pretty important weather week next week, as a lot of meteorologists I talk to and and follow suggest that there may be a pattern change coming. So we need the precept. That's for sure. And and I would include Nebraska and South Dakota, corn belt and wheat belt farmers in that too.

Todd Gleason: 02:36

We're almost to that time of year where the weather does change a little later normally, in March, but we'll see what, brings, from the weather in the next week or so. What do you make of this 4 day trading week for corn and soybeans?

Mike Zuzolo: 02:52

So much to digest that the market is still probably trying to sift through everything, but I've got 3 major points. President Trump's trade policy and his foreign policy are essentially 1 and the same. And we've talked about this, and that just has, I think, been stamped as far as he's doing it now. Whether he's talking to OPEC to cut the price of oil, whether he's talking about cutting interest rates, whether he goes on an interview and says that he doesn't want to have to put tariffs on China. That last one in particular, Todd, I think really rang a bell with the grain trade and the dollar and the currency markets on Friday.

Mike Zuzolo: 03:33

It seemed that really moved those markets and helped underpin the corn and the soybeans, and they found some support, I think, from that and and derived through the US dollar weakening against some of those key currencies like the Chinese currency and the Brazilian currency. I I think point number 2 is, as I said, meal and wheat led the market higher to start the week. They led the market lower to end the week. This is, I think, a cautionary kind of a yellow flag. We see that on the weekly closes.

Mike Zuzolo: 04:02

The market looked tired this week. Corn closed roughly 2¢, penny and a half higher than it did the prior week. Wheat barely closed positive. Soybeans closed, you know, better, versus the other 2, but it just looks more tired. And I think this goes to the Argentine export tax being cut.

Mike Zuzolo: 04:22

I think that really impacted negatively the corn, excuse me, the wheat and the meal prices and, that and also I think some weather improvement in Argentina probably didn't help either.

Todd Gleason: 04:32

And we have talked about that just a bit, but, to go back and go through it, essentially the Argentine farmers in something of the same situation, of course, as US farmers, looking at losses, complained about the export tax that gets put onto their product and hoping to garner more of that for themselves. So the Argentine president, Mele, cut, I think does it start now? Is that? I I don't quite recall when. But down to 26% from, what, 33%, I think, for their export tax?

Mike Zuzolo: 05:11

It was it was it was almost a double digit cut, and it does, I believe, start 1st of next week. And and and, you know, Milay also needs the US dollars. And if you look at Argentina, that's about the only way they can generate dollars on their own is to get agriculture exports out the door. The big question is, do farmers take the bait? Do they sell?

Mike Zuzolo: 05:30

And I'm hearing that they have a pretty ample amount of old crop, corn and beans. And that may get the the trigger pulled for them to sell some of that old crop. So I think next week for me, South America carries as much weight as it did this week. In that, we see what the Argentine farmer does and whether that pulls the Argentine corn and bean prices down, which they've been steadily increasing in prices, upriver export prices. The second thing is I think we're really building a situation, and this probably is why the beans and corn were able to hold up a little bit better than the wheat as well, is a lot more analysts and a lot more people in the trade talking supply demand are much more worried about center west Brazil not getting beans harvested and the 2nd crop corn planted.

Mike Zuzolo: 06:18

I think that was at the top of the list as we closed out the week. And so I have to watch that weather pattern in in center west Brazil. That that's gonna be the biggie, when it comes to the the whether the corn market can keep going or not to the upside on the supply side, if you ask me.

Todd Gleason: 06:34

Yeah. So so things that are happening are, soybeans potentially coming out of Argentina, putting pressure on the marketplace. The weather in Argentina looks better, I believe. So that putting pressure on the marketplace. However, for the corn market, it is about how fast harvest goes in Mato Grosso at this time.

Mike Zuzolo: 06:55

Yeah, it is. And I think the other thing that I would say disappointed me this week, and I'm gonna give it a chance next week, is the phytosanitary issue of Brazilian beans to China. It looked like that was a real contamination issue. So is China gonna be back in for a lot of beans from the United States, especially given the pullback? But, that and and the weakening of the dollar against the Brazilian currency, I would have expected a little bit more upside move in the soy complex as we closed out the week.

Mike Zuzolo: 07:20

But, again, that meal market continues to be the real thorn in the soy complex side.

Todd Gleason: 07:27

Did you confirm what they believe that was? I heard possibly a deca desiccant, which would be a way to kill the beans earlier.

Mike Zuzolo: 07:34

That is what I'm hearing, but no confirmation on that.

Todd Gleason: 07:37

Yeah. None for me either. So just a rumor. We'll see how that goes. 5 cargos, and we'll have to see what China and the Brazilians do over time.

Todd Gleason: 07:48

What's your bottom line for the end of this week?

Mike Zuzolo: 07:51

Bottom line for me is we are vulnerable to a bigger setback if we don't have several boxes get checked that we talked about next week. The charts are suggesting that as well. Corn could be more of the leader to the downside. I still feel as though weak weather both here and in the Baltic areas, is underappreciated and therefore the prices are underpriced at this stage. And I can't go away without saying another new record high in the live cattle to close the week out.

Mike Zuzolo: 08:22

HPAI seems to be expanding. APHIS moved on more curtailing of the border in Canada, and I'm hearing more outbreaks here in this country as well. So protein supplies are going down. Very important to watch cattle on feed and the big annual semiannual numbers, which ain't really annual numbers because we didn't get a July report next week on cattle.

Todd Gleason: 08:45

Thank you much. I appreciate it. Thank you, Todd. That is Mike Zuzlow. He's with Globalcom Research dotcom out of Atchison, Kansas.

Todd Gleason: 08:57

You know, earlier in the week, we went through the updated farmdoc crop budgets for corn and soybeans. For the coming growing season, the University of Illinois budget cash prices changed by 5¢ for both of those crops. Corn went up 5¢ to 4.30 a bushel, and soybeans came down to $10.20. Those are the new crop projections. The same FarmDoc update included new figures and information for the old crop too.

Todd Gleason: 09:23

And what Nick Paulson calls some good news will qualify that in a moment. The 2024 season cash prices were increased 15¢ per corn to $4.25. And again, the soybean price was lowered. It dropped 30¢ to $10.20. Now the old crop budget projections were also updated to include estimates of the economic assistance payments included in the American Relief Act signed by president Biden.

Todd Gleason: 09:50

Those are expected to add around $43 per acre for corn and $30 per acre for soybeans and are intended to help offset some of the losses associated with the 2024 crop year, says Paulson.

Nick Paulson: 10:04

While the economic assistance payments provide welcome financial relief in the short term, keep in mind that these payments will not address the ongoing issue of production costs being misaligned with current market prices. In summary, while projections for both 2024 and 2025 have improved compared with where we stood in September, average returns for producers on cash rented farmland are expected to remain negative. Producers should remain diligent in trying to identify ways to lower production costs and manage their risk during this multiyear period of extremely tight and challenging margins.

Todd Gleason: 10:38

During our annual all day outlook at the beef house coming up in March, the farm doc team, including Nick Paulson, Gary Schnicki, and Joe Jansen, will address these challenges and ways to manage the risk. Watch for registration information next week on our website atwillag.org. Now in related news, president Trump's USDA pick for secretary of agriculture Brooke Rollins during her senate confirmation hearing suggested more farm payments may be the administration's answer to another trade war. Rollins agreed with the senators that farmers want trade, not aid. But if president Trump's tariffs lead to more trade wars, there could be more MFP or market facilitation payments.

Brooke Rollins: 11:21

We are prepared to execute something similar if approved, if confirmed, but also working with the White House to ensure that we can close those holes for our farmers and ranchers.

Todd Gleason: 11:32

Close the short term trade losses, yes, but maybe not completely recover the long term implications. US soybean exports to China have yet to return to the pre 2018 levels when about 60% of that nation's needs came from the United States. It dropped to 18% during the trade war and has been in the mid to low fifties since about 2020. Those are figures Joanna Kalusi from the U of I posted to the FarmDoc Daily website this week. So the check's in the mail is the short term answer, and on that note, the secretary of ag nominee Rollins said distributing the American Relief Act or ARA funds will be a priority.

Todd Gleason: 12:11

Again, that legislation was passed and signed in late December with hopes the funds would be distributed by the end of March. Let's turn our attention now to the weather forecast. Eric Snodgrass is here from Conduit Ag at Conduit dot ag online. Hey. Thanks, Eric, for taking some time with me.

Todd Gleason: 12:42

I think we have a lot of ground to cover today. We always do. This week, however, it includes more because I wanna know what you thought about those historic snowstorms along, the coastal areas, of the United States from Houston to Florida.

Eric Snodgrass: 13:00

Well, you know, Todd, this is what it remind me of, first of all, back in 1984. Alright. So I'm 4 years old. I have a picture in my parents' backyard where I'm I'm next to a drift that's, like, 10 feet. Right?

Eric Snodgrass: 13:12

I mean, this is a monstrous drift in my parents' backyard. And like, so my, my child is forever, like shaped by that. I used to think, you know, man, we used to get feet of snow. And so it's just kind of funny to think back, to that time. Well, you're going to have a whole generation of people who remember the blizzard of 25, right?

Eric Snodgrass: 13:29

First time ever for the National Weather Service out of Louisiana to issue a blizzard along the coast. We had snow on the coast. I mean, in the Gulf of Mexico stretched from southern Texas all the way to North Carolina, never between. You know, shoot, Florida set a record. There's a foot of snow in New Orleans.

Eric Snodgrass: 13:43

And so it's gonna be one of those kind of, life lifetime weather events. Now this is what I'm thinking about though, Todd. What did we talk about the week before that? We talked about the wildfires in, Southern California, which we continue to have this week, plus in the Baja, California. And honestly, it's all symptomatic of the same thing.

Eric Snodgrass: 14:00

So do you know the only way you can get snow that far to the south? You've got to start cold air clear from the Arctic and take it into the Gulf. Did you know that low never even touched, you know, North America? It went through the Gulf of Mexico and just missed missed us. And by the way, it eventually went in to the North Atlantic, the same snowstorm.

Eric Snodgrass: 14:17

Right? Went into the North Atlantic and hit, Ireland yesterday with a 115 mile an hour winds. Oh, wow. Now this is yeah. It's crazy.

Eric Snodgrass: 14:24

The this is all symptomatic of the same thing. And I don't know how many people listen right now remember what I said last Friday, but I I talked about how we have this one dimensional jet stream pattern. Right? We do not have this double component hitting us from both sides, ripping across the United States. So how do you get cold air all the way down to the Gulf Coast?

Eric Snodgrass: 14:43

You can't have the jet living over it. You gotta be able to sink that cold air in place, and this is all symptomatic of the bigger problem, which is what's promoted such dry conditions across so many areas in in the United States. And to be honest, what we should be talking about is not where the snow fell, but where the snow isn't. The snow isn't on the headwaters of the Mississippi or the Missouri River, and that continues to be just something that if we don't flip this thing around, I'll be talking about drought issues for the rest of 2025. So, yeah, history was made, but I'm also looking at the, you know, the areas that have gotten nothing and what it means to understand where, where these drought areas are starting to pick up, pick up some pace.

Eric Snodgrass: 15:22

And that's what I'm concerned about going into, this new month of February.

Todd Gleason: 15:26

Oh, you know, I'm usually asking about snowpack in the mountains, not, what what snow conditions are like in

Eric Snodgrass: 15:32

in Minnesota. That's for sure. Yeah.

Todd Gleason: 15:36

Will there be snow? As in in in the future weeks here, we they're still in the month of, January, just about to hit February. It'll stay cold.

Eric Snodgrass: 15:44

That's right. We've we're not anywhere close to being done with winter. I do have some good news for you. The temperatures are gonna moderate. I mean, it has been bone chillingly cold several mornings in a row around here.

Eric Snodgrass: 15:55

In fact, Todd, something to think about. Parts of, Kansas, which do not have snow cover on. There's a bunch around Kansas City, but not the whole state. Remember earlier this week, they took on temperatures that were in the minus 10 to minus 15 range, and we're curious. In fact, I was talking to Arlen Suderman about it.

Eric Snodgrass: 16:12

We're just curious if maybe there was some kill that we won't know until we get into, you know, into April. Now it takes a lot to kill wheat in the middle of winter, but it can happen if you don't have the snowpack. Alright. So you say, well, what's going on this last week of January, the, you know, the beginning of February? I'm hoping, just hoping, that we can rearrange the jet stream.

Eric Snodgrass: 16:31

There are several things making it happen, but bring a trough back to the West Coast. I mean, do you know that during all of this we've not mentioned at all what's going on the West Coast? Just no good flow. If we could get that to return, we could start to wake things up, pull some gulf moisture here, get a little bit more mild air, and fill in some of these holes that have been missed out with some snow. And I think that could be an interesting thing that February does.

Eric Snodgrass: 16:53

I think February is gonna go down, as one where the northern half of the country sees a pretty active storm track. So we talked in January about snow down south. I think February is gonna be snow back in our area if the flow pattern returns the way we're hoping it will by the beginning of the new month.

Todd Gleason: 17:10

Well, it might stay into the month of March. I know you can't make the all day outlook because you'll be in Denver at the at the, commodity classic. Actually, several of the folks that normally would be with us won't be there, but we have a great lineup still there. And I have to admit, there are years I don't think I don't think we've ever canceled from weather since 1991, if I recall correctly. I'm not quite certain about that, but, man, we have needed 4 wheel drives to get there and back from time to time.

Todd Gleason: 17:41

Does what you've talked about have any impact on your summertime thoughts?

Eric Snodgrass: 17:47

Yeah. Yeah. And that's that's ultimately the question. Right? So so here here's the idea.

Eric Snodgrass: 17:53

Now understand, Todd, I am more than prepared to be wrong on this, and I am not saying this to be any sort of alarmist. Alright? But there is concern that if you're east of the Mississippi, that we're gonna have the cooler weather lasting through bigger chunk of March, and then we think it's gonna be a pretty wet March April and maybe the beginning of May, which means tight windows. That would follow historical data that we've been studying plus the analog years plus every model. Right now, they're all just saying, hey.

Eric Snodgrass: 18:21

Look out for a wet and stormy spring here. But that drought I kept mentioning, the one that's, you know, in Mexico and in the southwest and then, you know, places pockets throughout the Midwest where we still have soil moisture deficits, there's a concern that creeps from the west to the east as the summer goes on. Meaning that'll probably hit the western corn belt first to become a problem along the Mississippi River mid mid year. And so I'm talking about July. And as it get over to us, there's a chance that that could happen.

Eric Snodgrass: 18:47

So you ask, like, what what does all this mean for later unless something big comes along and changes all of this? That's where this typical pattern finds itself just kinda following the good old flow of the atmosphere without that second piece of the jet stream in winter. So there's some concern on the table, but man, there's still what there's still four and a half, 5 months before this matters. And I think until then, we will be watching to see, you know, La Nina Fe or if we'll see the North Pacific jet do something different, there's all sorts of things that can change. But if it doesn't, that's what we're looking at.

Todd Gleason: 19:19

The concern on the table, however, does matter in South America, particularly in Argentina. What are your assessments?

Eric Snodgrass: 19:26

Isolated storms the last few days, modest rains in a few places. There's pockets of drought down there. Most folks I talk to say, alright. But did Brazil pick up some of the, you know, the the the problem areas in Argentina? Possibly.

Eric Snodgrass: 19:40

But it's been so wet in Northern Brazil lately. Here's the forecast. They're gonna flip it around a little bit. Maybe some more modest rain comes back in Argentina, Southern Brazil where there has been pockets of drought, and it gets drier in Northern Brazil. Now you understand drier in Northern Brazil means they still get an inch and a half of rain every week, But the thing will be that they're gonna be able to start harvesting a bit quicker in the next 7 to 10 days.

Eric Snodgrass: 20:02

And they're gonna have to do it quickly because we all project that after we start that new month of February, it's gonna get wet across the northern growing areas again, at least based off current projections. So that could be some tighter planting windows for safrinha crops once they start to go in. But at this stage, I can't I still can't find a major reason to tell you that Brazil's gonna spark some sort of weather premium in the market right now.

Todd Gleason: 20:24

Hey. Thanks much, Eric.

Eric Snodgrass: 20:25

Yeah. You bet.

Todd Gleason: 20:26

Eric Snodgrass is with Conduit Ag. That's at Conduit dot Ag Online. Joined us on this Friday afternoon edition of the closing market report. If you can stay with us for the whole of the hour, you'll hear all of our Commodity Week program. In fact, we'll talk with a grains analyst from Argentina, and they'll give you a preview.

Todd Gleason: 20:46

She says good crop there. Not great crop, but good crop. I think she just means it's okay. You can listen for yourself. That's coming up next on Commodity Week.

Todd Gleason: 21:04

Todd Gleason services are made available to WIL by University of Illinois Extension. Welcome to Commodity Week. I am Todd Gleeson. A special program today pulled in part from the farm doc daily webinar held on Thursday morning with Joanna Colucci from the University of Illinois talking about Brazil and Argentina and crop production there, and Paulina Lescano joined her from Argentina where she lives in La Pampa. She's a grains analyst.

Todd Gleason: 21:32

You can find her online at Paulina Lescano dot com. And then we paired that with a conversation which we had with Joe Jansen at the U of I along with Kurt Kimmel of agmarket.net about the commodity markets in general. It's a great show. Stay with us here at Illinois Public Media. We'll pick up first with that FarmDoc webinar, which you can watch in full at youtube.com/atfarmdoc.

Todd Gleason: 21:58

At the end of the webinar, I asked Paulina Lescano to introduce herself. She's a grains analyst, as you might recall.

Paulina Lescano: 22:05

Well, yes. As you told, I I am a agricultural engineer. I am grain analyst. My main, work is to advise farmers to, follow their commercial position So, they they can decide when to sell the grain and how to cover it from the volatility. I give speeches.

Paulina Lescano: 22:31

Companies hire me to give a talk in different, countries even in I I was in United States. This is my main, focus. I work in the business almost for 25 years, until now. I work in a company, in a exporter, a broker, and finally, I work by my own as adviser.

Todd Gleason: 22:57

That's Paulina Lescano. She is a grains analyst from Argentina and joined our commodity week discussion recorded Thursday afternoon along with panelist Kurt Kimmel from agmarket.net, Joanna Colusi, and Joe Janssen, both from the University of Illinois. Find it online in its entirety right now at willag.orgwill ag.org.commodityweek is our weekly look at the marketplace. You can also hear it on many of these radio stations over the weekend. You've been listening to the closing market report on this Friday afternoon.

Todd Gleason: 23:29

I'm University of Illinois Extensions, Todd Gleeson.