- One Big Beautiful Bill Act includes a Farm Bill
- Drew Lerner, WorldWeather.cc
From the land to Grant University in Urbana Champaign, Illinois, this is the Closing Market Report. It is the July 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Greg Johnson. We'll hear from Gary Schnicki, agricultural economist, about the one big beautiful bill.
Todd Gleason: 00:18It also includes a farm bill and is being voted on now in Washington DC. And then we'll turn our attention to the weather forecast with Drew Lerner on this Wednesday edition of the closing market report from Illinois Public Media.
announcer: 00:35Todd Gleason services are made available to WILL by University of Illinois Extension.
Todd Gleason: 00:40September corn for the day settled $4.18, up 12. December at $4.33 and a half, 11 and a half cents higher, and the March at four forty eight and three quarters, up ten and three quarters. September beans up 21 and a quarter at ten thirty nine and three quarters. November at $10.48 up 23 quarters. Bean meal three ten higher.
Todd Gleason: 01:01The bean oil up a dollar 36 and soft red winter wheat gained 15¢ to settle at five sixty four for the September. The July hard red winter wheat at five twenty two and three quarters up 12¢ for the day, and the live cattle futures in Chicago finished a dollar 70 higher on the afternoon. Greg Johnson from TGM, that's totalgrainmarketing.com now joins us to take a look at what's been happening in the marketplace. Hello, Greg. Thank you for being with us.
Todd Gleason: 01:31Where would you like to start with the markets today?
Greg Johnson: 01:33Well, I think we've got a little bit of a bounce today, finally, off of contract lows in the corn, but, we saw the, weekly crop ratings, improve in most states except for Illinois. Illinois had a big drop in the soybean ratings. Last week, Illinois was 61% good to excellent, which is rather low. Usually, we're in the seventies this time of year, but 61, we went down to 54% good to excellent. All the other states basically were unchanged.
Greg Johnson: 02:04The US average was unchanged at 66, percent good to excellent. Last year, we were 67 on the beans. But Illinois, according to the weekly crop progress report, we are one of the worst states, in in the Midwest when it comes to soybean, conditions. I'm not exactly sure. Here in Central Illinois, I think our beans look pretty darn good.
Greg Johnson: 02:28But obviously, the wet weather in Southern Illinois and maybe the dry weather in in Northern Illinois be is, make you know, looking making their beans look a little bit worse than than what ours do around here. On the corn side, we dropped three points from 74 to 71%. Anything in the seventies is still good, though, so I don't think that's going to affect the market. And, you know, the actual national crop went from 70 to 73% last year, 67. So according to the numbers, the corn crop is in good shape, and I think that probably accounts for the contract lows that we saw, and but the soybean number is a little surprising, especially in Illinois.
Todd Gleason: 03:06Usually at this point we look forward not into the July WASDE very much unless we think there's going to be some acreage changes, and there really won't be based on what we saw in the acreage report from USDA. And we look forward to the August crop production report. However, we have the ninety day we're done with the trade thing coming up very shortly.
Greg Johnson: 03:33Well or are we?
Todd Gleason: 03:35Yeah. That too.
Greg Johnson: 03:35Depending on who you listen to, I've I've Trump says that it will not be extended, but, one of his underlings said that it very well could be that there's almost no way that we'll have an agreement done to say these things just take that long. So I know Trump is trying to put pressure on the other countries to come to a resolution, but it would not surprise me a bit if the July 9 deadline gets extended.
Todd Gleason: 04:02We'll we'll set that aside. Maybe it will not have that big of an impact and will be status quo going into that crop production report by the time we get to the August. Now farmers, I know, have been asked you, Greg, I'm I'm at contract lows. Is there gonna be a time before I have to run this across the scale? Rather, whether it's corn or soybeans that that I might have an opportunity to make a sale.
Greg Johnson: 04:27Yeah. And and it's it's gonna have to be weather related. We've had very good exports. The demand continues to result in a lower carryout month to month. We're down to 1.35, but the trade just doesn't seem to care.
Greg Johnson: 04:41With a big Brazilian crop coming on, we think that will buffer, be enough to, serve as a buffer between the tight US old crop stocks and then the plentiful potential new crop crop coming online. So it it's probably not going to be continued good export demand, even though that's probably what we'll see. We'll probably see the export number increase one more time in the July report. But, the the market just doesn't seem to worry whether that number is 1.35 or 1.25 even. It just, you know, it yes, it's tight, but in another three months, three and a half months, it won't be tight if we have normal weather in July and August.
Greg Johnson: 05:20So it's probably gonna have to take some weather problems. We haven't got to pollination yet. But if we don't have pollination problems, if we get normal rainfall in July and August, the 185 or the 181 corn yield that the USDA is using, if you use the good to excellent ratings as a proxy for a yield, you could make an argument that we might have a 185 national yield out there, in which case, you know, the carryout would go from 1.75 to maybe over 2,000,000,000 to 2,100,000,000. So that's the potential downside. If we have another 2,000,000,000 bushel carryover, we could see December corn drop below $4 not tremendously below $4 but $3.9 I think 3.9 to $4.9 was the range we talked about prior to planting.
Greg Johnson: 06:09You know, if we had problems we could be up close to $5 but if we didn't we could be a little bit below $4 and without problems we're at $4.25 today. December corn, and by proxy, the old crop corn could drop another 25¢ going into harvest if everything goes well in July and August. Now, you know, that's that's a big if, but I just want to remind farmers that this crop yield at one eighty one could go up. It could go down, but it it could, be increased as early as the August. I don't think the USDA will raise the yield in the July report, but, they certainly could in the August report.
Todd Gleason: 06:44Well, three fifty cash corn. Aren't you just fun today? One last thing. Hedge pressure coming out of that safrinha corn crop, how when when does it come into the marketplace? Because there there is a delay, a a bit of a delay.
Todd Gleason: 07:01Unlike here where the corn crumbs across the scale and it gets hedged and and it feels like it happens really fast, there it takes some time, I think, for it to actually make its way to the port, and that's where the hedge pressure comes in.
Greg Johnson: 07:13Yeah. No. You're you're exactly right. Right now, they're in the process of exporting beans. Most of the ports are on getting beans exported.
Greg Johnson: 07:21So that corn, probably won't get exported for another month or two, and that could, you know, by with the base as bigger crop as what they're talking, that could obviously spill over into our traditional harvest, export season. So, it could have an impact on our September, October exports, very easily, just because, of the big soybean crop and the big corn crop down there. You just can't get it all moved at once, and it's gonna take time.
Todd Gleason: 07:48Hey. Thank you much. We'll talk with you again next week.
Greg Johnson: 07:51Alright. Thanks, Todd.
Todd Gleason: 07:52That is Greg Johnson. He is with TGM, total grain marketing dot com. I'm University of Illinois Extension's Todd Gleason. We're now joined by Gary Schnicki, agricultural economist here on the Urbana Champaign campus of the U of I'm to discuss the reconciliation bill or the big beautiful bill that contains Gary, as you related to me, a farm bill inside of it that's not getting a lot of attention. You, Nick Paulson, Jonathan Kopas, and Carl Zuloff have written an article about a particular portion of this.
Todd Gleason: 08:34It's related to base acres for the Farm Doc Daily website. Can you tell me a little bit about the inclusion of a farm bill in the reconciliation bill? How unusual is this?
Gary Schnitkey: 08:47The inclusion of the farm bill is a relatively unusual thing. It's been a while. I it might have happened in the last time in the Bush administration, and I'm not even sure that that was a reconciliation bill. What makes this unusual is that bill includes changes to the commodity title program, PLC, and ARC. It includes changes to crop insurance.
Gary Schnitkey: 09:13It increases basic and optional units of premium subsidies, and it also strengthens SCO, makes it such that every Illinois farmer will have to consider SCO. And it also includes a provision for adding base acres. So and that's what our article was about this time. But if this is part of that reconciliation bill, it's in both the House and the Senate version. So both of which have passed, and now they're moving to reconciliation between the two, and we'll see where that process goes.
Gary Schnitkey: 09:53But, if these bills do pass, we will likely have a, farm bill as part of that.
Todd Gleason: 09:59The SCO subsidy would benefit farmers in Illinois, but also across the Corn Belt. Correct?
Gary Schnitkey: 10:05Currently, SCO go it stops at 86% down to the coverage level of RP. The bill will increase that coverage level from 86% to 90%, and it will also increase the premium subsidy or premium support on it from 65% to 80%. So, essentially, the farmers will be paying 20% of the expected payments if it's rated properly, and we would argue that in the Midwest, it probably is not. It's still 80% subsidy makes it a a gainer in most years.
Todd Gleason: 10:44Yeah. And by rated properly in the Midwest, you mean it's underrated in the Midwest. And right
Gary Schnitkey: 10:48You pay too much in premium for the payouts that you get from it, and there's a couple reasons for that. That's that's a long standing problem with the Midwest crops, as well as the mechanism that RMA uses to calculate expected yields have slagged yields in the Midwest. We've had exceptional yields, and their expected yields have been below our actual yields in eight out of ten years in most cases, and there's some counties where it's been below it ten out of ten years. So
Todd Gleason: 11:20Alright. Now let's turn your attention to the article that you and your coauthors have penned. This one is about base acres. There are some things in the reconciliation bill that you find interesting and want to talk about as it's related to these base acres and how they could be updated if this bill passes.
Gary Schnitkey: 11:42The bill includes a provision that would allow, for each FSA farm, or landowners could add base acres to that farm. And the existing base acres on that farm would stay the same. But if three types of acres are above the base acres in the sum of those, you can would add base acres. For Midwest and Illinois situations, the most likely one would be plantings from 2019 through 2023. The average of those plantings of corn, soybeans, and other program crops exceeds base acres.
Gary Schnitkey: 12:28If if they do, then that farm could add those base acres to that farm. That would benefit many producers in the Midwest, but the bigger benefits come from the two other types that are added to it. The other two types are number one, up to 15% of tillable acres of nonprogram crops could be added, and that there would be an eligibility requirement that would be specified by Farm Service Agency. But if you have crops in anything but pasture and grasses, it would likely be added to that. Most farms in the Midwest plant program crops, corn and soybeans, so they wouldn't benefit from that.
Gary Schnitkey: 13:16And there's also a category called unassigned acres, which are old upland cotton acres that have never gotten back into the program, and those could be added through this process as well. And that will skew those acres outside the Midwest and other areas.
Todd Gleason: 13:38What does it mean across the board going forward for the farm economy in your opinion?
Gary Schnitkey: 13:46This bill adds up to 30,000,000 base acres, and that's an 11% increase. That 11% increase will, again, increase the cost commodity titles by about the same amount, maybe a little bit more depending on what what, where those base acres get added, but it'll increase the commodity title by 11%. For Midwest farmers, it will help those that have been planting more corn and soybeans than their base acres. They will get to add acres. It doesn't do anything to rectify the situation where you're underplanting.
Gary Schnitkey: 14:26So anybody that's been underplanting again, that happens mainly outside the Midwest, will be able to maintain those acres. It doesn't cause a fundamental matching of base acres to planted acres, but it does help those that are overplanting their base.
Todd Gleason: 14:45Why would you want to match base acres to planted acres in this situation?
Gary Schnitkey: 14:51The primary reason is that ARC and PLC or the commodity title programs should be countercyclical payments and offering countercyclical help. Therefore, the closer they match actual plantings, the better off that matching will occur.
Todd Gleason: 15:08And so this then would push producers to do what because of the policies?
Gary Schnitkey: 15:18So it's not going to produce produce producers in the Midwest to do anything, really. I mean, you you will choose to add base acres and keep going. Where the issues actually come in is where is rice, peanuts, and cotton, which have many more acres above their planted acres, so they're getting more program payments than they're planting.
Todd Gleason: 15:43Wait. Why why is that the case? Why do they have more acres in the programs than they actually plant? What what's happening? Are they double counting in some way?
Gary Schnitkey: 15:53No. So over time, rice, peanuts, and cotton have decreased in acres, and the base acres are were set historically. So we have this historic basis, and plantings now are below that. The other thing that happened was that most of the time when we've added acres in the past, landowners were given shots, and they could often keep their current base acres or update them to new base acres. And they would choose the alternative that would maximize their payments, which was generally to keep as much cotton, rice, and peanut acres as you as you could.
Gary Schnitkey: 16:35That also happened in the Midwest. When we were given choice between corn acres and bean acres, we always chose the corn acres because corn acres tended to pay more. So if you're looking at base acres relative to planted acres, there's several crops that have many more base acres than planted acres, and that would include wheat, cotton, rice, and peanuts. And there's some crops with more planted acres than base acres, and the big one there is soybeans.
Todd Gleason: 17:05And what does that cause? I mean, let's just stay in the South because I think it I I think this is easier to understand, but I'm not certain that's the case. So if you're a farmer in the South and you have either had, historical cotton or or peanut base acres that's going to the Southeast, and now you don't plant as many of those, but you have replaced them with soybean, for instance, What does that mean?
Gary Schnitkey: 17:30It means that you're getting the cotton, rice, and peanut payment rather than the soybean payment. Here is the difference in projected payments on a national basis if if this these bills pass. Corn would have a $31 average payment per base acre. Soybeans, 21, so less than corn. But seed cotton would have 91.
Gary Schnitkey: 17:55Peanuts would have $256 per base acre, and rice, $268 per base acre. So those three crops have more than at least triple to the sometimes five to six times more payments per base acre than corn and soybeans.
Todd Gleason: 18:15Does the that kind of disparity happen across much of the acreage outside of the Corn Belt? Meaning, is that acreage, and it would shift how much that acreage is worth by a long shot. Right? And so I'm assuming the South is is really overpriced per acre, based on this.
Gary Schnitkey: 18:38The South would have more seed, cotton, peanut, and rice payments, and that would be the big area. Western states probably have more wheat acres than than than are being planted right now, but that's a relatively small payment compared to what's happening in that cotton, peanut, and rice area.
Todd Gleason: 18:57Yeah. And so it wouldn't have nearly as dramatic an impact.
Gary Schnitkey: 19:01The point of this is is if you look at the projected payments, they're three times as much for seed cotton, eight times as much for peanuts and rice than corn or soybeans. And those are the sorts of subsidy differences that are going on those base acres when they're not being planted.
Todd Gleason: 19:23Unwinding that is always very tricky, especially in rural areas because so much of the tax base is agriculture or farmland, and it has an impact on hospitals and rural fire protection and, more importantly, school districts.
Gary Schnitkey: 19:41Unwinding those is really hard, but we're making that unwinding harder by making those disparities wider. And I would argue that there's no reason why Southern rural communities are worse off than Midwest rural communities. And so why are we providing more subsidies there than here? I mean, we've all seen what's happened to many Midwestern communities, particularly those that are away from some of the population centers.
Todd Gleason: 20:14Thank you very much.
Gary Schnitkey: 20:15You're welcome, Todd.
Todd Gleason: 20:17Gary Schnicki is a member of the PharmDoc team, an agricultural economist here at the Urbana Champaign campus at the University of Illinois. You may read more from him on our website. Look for reconciliation bill proposals to add base acres at willag.org. Drew Lerner from World Weather Incorporated in Kansas City now joins to take a look at what's been happening in the growing regions across the planet. Let's start in North America.
Todd Gleason: 20:51The Corn Belt just all good, Drew. Just all good. Right?
Drew Lerner: 20:55It's just all good. You know? It's it's absolutely amazing. You know, like, rains just keep coming off and on or getting perfect temperatures and you couldn't ask for a better deal. I only my biggest fear is, you know, how big is this crop gonna end up getting?
Drew Lerner: 21:11Right? We did have some trouble earlier in the year, so it's not gonna be perfect. But but, yeah, the weather looks really good, and it's gonna stay that way at least ten days and probably for a couple weeks yet.
Todd Gleason: 21:21The Canadian Prairie still having a little trouble?
Drew Lerner: 21:23Yeah. You know, they did have that one decent rain about ten days ago. And since then, it's been they're kinda limping along still. They still have a lot of dryness in the subsoil, especially in Saskatchewan and Manitoba. And, it doesn't look like they're going to get good solid rains.
Drew Lerner: 21:40They give it a little bit of this off and on shower type pattern that we're seeing here in The States. But up there, they really need a more solid significant widespread rain event. And I don't have that on the charts right now. So we do need to kind of keep an eye on it. And if for some weird reason we do get a stronger ridge of high pressure to build up at some point in the July or early August, that could be a real issue for Canada if they don't fix this moisture deficit between now and then.
Drew Lerner: 22:09My gut feeling is they'll probably get along okay. It's not gonna be at the best year they've had. That's for sure. But, they may still be able to eke out their crops as long as they keep these, showers once in a while occurring.
Todd Gleason: 22:22The growing regions of Western Europe, particularly wheat in France, still hot and dry?
Drew Lerner: 22:27Yeah. What a mess. You know, the some of the latest production numbers coming out of Europe haven't been as dramatically bad as for the winter crops as what was feared for some spots. But, you know, France is definitely high on the list that they are taking it on the chin. They've been driest below normal precipitation for much of the country since January.
Drew Lerner: 22:51And the heat that has come on here in the last few weeks has really pushed them over the edge. For some of that winter crop, most of the winter crops are done, but some of the spring cereals and some of the sun seed and corn and soybeans and whatever else that you can think of that's produced in France and parts of The UK, even Germany to some degree is really being stressed at the moment. Now there's a breakdown in the ridge occurring right now. Temperatures have been in the nineties to lower one hundreds every day this week so far in parts of France and Germany, the low countries such as Belgium and and Netherlands and even parts of England. But it is coming to an end.
Drew Lerner: 23:34We're pushing the ridge out of the way and we're going to go through about a week, maybe a little bit more than that of opportunity for scattered showers. Now, I don't see a lot of good rain in France during much of this period. They will have some showers absolutely. And their temperatures will come down maybe 20 degrees. So there's going to be some relief there.
Drew Lerner: 23:53When that ridge comes back the second time, which is going to be in that second weekend, we are probably going to see some pretty serious impact if there's no more rain than what I see in the pipeline right now. So a pretty serious situation for them. And it's also really dry in Southeastern Europe in the Lower Danube River Basin, which is runs through Romania and Bulgaria and some neighboring areas of Serbia. So all of that region down there is really getting dry and hot too.
Todd Gleason: 24:22Yeah. Corn production there. And then if you go north and to the east, you do Poland, Ukraine, and Russia. What do we see across the Black Sea area there?
Drew Lerner: 24:33Yeah. Most of those areas are still doing relatively well. There hasn't been nearly as much heat there. If you can think back to the early part of the spring, there was a lot of trouble with cold though. They got off to a really poor slow start and a lot of freeze damage.
Drew Lerner: 24:50I can't remember exactly how many fruits and vegetables were wiped out in the spring because of all cold air in Eastern Europe and parts of the Western Former Soviet Union. Those areas had a tough start, but since then it's been fairly good. Now we are seeing an opportunity for abundant rain to occur across central and northern parts of Russia. And that's probably going to be the next issue for that part of the world. This would be North Of Ukraine, North Of Russia's Southern region and from Northern Kazakhstan northward.
Drew Lerner: 25:24So that whole crop region from one end of Russia's production area to the other, there will be probably one to three and local four inch rains that will occur over the next ten days. And that may not seem like all that much, but it rains a little bit every day and the ground is already adequate to surplus on moisture. So they don't have much room for that moisture and there is the potential we're gonna end up with some wet weather disease for the spring crops and perhaps some delay in the week harvest for the winter wheat harvest that is and maybe a few other winter crops as well.
Todd Gleason: 26:00And finally, has enough rain fallen in the driest parts of China that they have recovered from drought?
Drew Lerner: 26:07Yeah. You know, we just took a look at China's drought monitor earlier this morning. And earlier this season, we had widespread drought in that Yellow River Basin area in parts of the North China Plain. Well, that's been whittled down to just a couple of really minor little pockets of dryness here and there. And for all practical purposes, they're back to a relatively normal moisture profile and there is more rain in the pipeline.
Drew Lerner: 26:38Now there is another area of dryness developing in China now in the Southeast. This is be more of a rice and sugarcane production area. We're not gonna make a big issue out of it for right now, but we'll keep an eye on it as we go forward in time. And somebody may come up and tell you that Xinjiang, I'm probably not pronouncing that right. But Xinjiang is the Northwestern most province in China.
Drew Lerner: 27:01It is in the middle of a drought apparently. And what I want to tell you is that don't pay it any attention because they irrigate all the crops in that particular province and the water supply should be sufficient, but it has been really dry. I don't think there's been a drop of rain in some of that cotton and corn production area in months. So there is a really dry issue there, but they're not excessively hot, and there is sufficient irrigation water available.
Todd Gleason: 27:27Hey. Thanks much, Drew. Drew Lerner 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. It is public radio for the farming world.
Todd Gleason: 27:40Find us online. Listen to us on demand at willag.org. I'm extensions, Todd Gleason. Doctor.