- Ben Brown, University of Missouri
- U.S. Secretary of Commerce Lutnick
- Mark Russo, EverStream.ai
From the land to Grant University in Urbana Champaign, Illinois. This is the closing market report. It is the July. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Kurt Kimmel.
Speaker 1: 00:14He's at agmarket dot net. We'll look at international trade and exports, particularly for corn, with Ben Brown at the University of Missouri, agricultural economist there and a member of the Food and Agricultural Policy Research Institute. And then we'll turn our attention to what, the Commerce Secretary had to say during the Sunday morning shows. We'll have a couple sound bites from Howard Lutnick and those will relate to what Ben Brown has to say about trade. And as we close out our time together, we'll discuss the weather forecast too.
Speaker 1: 00:46We'll do that with Mark Russo of Averstream Analytics on this Monday edition of the closing market report from Illinois Public Media. It is public radio for the farming world. Just a quick note that Wednesday of this week, I'll be out of the office. We'll hear an excerpt that day of the one big beautiful bill act and its impact on commodity programs and crop insurance webinar hosted by the PharmDoc team last week. You won't want to miss it.
Speaker 1: 01:18It'll be just about twenty minutes, the last portion of that webinar that summarizes the changes and the impact it is likely to have on agriculture. That's Wednesday afternoon during the closing market report here on Illinois Public Media. Todd Gleason services are made available to WILL by University of Illinois Extension. September corn today at four zero three and three quarters, down four and three quarters. December at four twenty two and a quarter, five and a half lower, and the March down a nickel at $4.39 and three quarters.
Speaker 1: 01:50August soybeans, $10.15, twelve and three quarters lower. September, ten ten and a half, down 10 and a half cents. November, down nine and three quarters at $10.26. Bean meal futures, $3.50 lower. The bean oil, up 25¢.
Speaker 1: 02:04Soft red winter wheat, down 4¢, and the nearby September, also three and three quarters lower in the December. It settled at $5.63 and a quarter, and the hard red December at $5.48 and a quarter, down three and a quarter cents. Live cattle futures, a buck 80 higher. Feeder cattle, up $3.60, and lean hogs, 35¢ higher on their settlement price for the day. Crude oil about $65.89 a barrel, 17¢ lower, diesel fuel 4¢ higher at $2.47 and 3 tenths, and the wholesale price of gasoline about 2 and a quarter cents higher at $2.09 and 2 tenths of a cent.
Speaker 1: 02:41We're now joined by Kurt Kimmel. He's at agmarket.net to discuss what's happening in the marketplace. Thank you, Kurt, for being with us. Give me your quick overview of the trade since it started last night.
Speaker 2: 02:54Oh, boy. We kinda just started a little lower, tried to trade a little unchanged. It just kinda eroded from there. Most of the old trade or or producer side, to get the market to go up to make some sales higher. You know, we're talking tar spot, aphids, some pollination issues in some of these, varieties or hybrids, and, you know, tight tassel wrap and too much flooding in some areas and other areas missing out in the rain, but the tree just kinda is putting that in the back burner here saying, you know, some of these items are kinda isolated or or not widespread.
Speaker 2: 03:40And we're just looking at the crop conditions report in general. This afternoon, they're looking at corn conditions as a nation being unchanged, 74% good to excellent. Soybeans are expected to be 71% good to excellent versus 70% last week. I don't know if I quite agree with that. Beans don't like wet feet.
Speaker 2: 04:04There's some areas where it's starting to show, with, too much rain, particularly on the southern third of, Illinois and through here, were some areas, spots that recorded up to seven inches of rain here over the weekend. So that's kind of the, last thing they needed to see there. So we'll see what the, crop conditions report shows here, this afternoon and and kind of what areas are still hanging in there, what areas are struggling Todd.
Speaker 1: 04:35You missed one new item that may impact the marketplace, that's southern rust of corn. You can read more about that on our website at willag.org. Do you think today was simply some profit taking after last week's moves higher?
Speaker 2: 04:52Well, you know, lot of that strength was, due to the heat coming in this week, but, ideas are we've received some moisture here to work with, the heat dome flattening or moving back to the Southwest in general. From a technical point of view, looking at the charts, the market moved up into the gap areas we left right after the July 4. There were some downtrend lines, particularly in beans, the market touched and was unable to move up through. Corn moved up close to its gap area, there's some retracement levels there. So that coupled with the fundamental news, the market, backed and filled in through here I believe, the commodity funds sold 3,700 corn contracts, 4,300 beans, and some meal and oil.
Speaker 2: 05:46Not a huge amount, but the buying interest was just not there. Going up there and failing suggests we could maybe cool down here for a day or two. Last week's technical action was pretty good, so fairly good support at last week's low, but we don't want to go back down to those lower levels. What to look for now on a pullback on the December corn futures is 4.183 quarters is halfway back down to last week's low. Today's low here on Monday was 4.2 and on the soybeans we had a low of ten, twenty and a half, ten, twenty and three quarters is 50% back down to last week's low.
Speaker 2: 06:29So it's gonna be kind of important to hold today's lows in through here and see if we can achieve or see a turnaround Tuesday tomorrow time.
Speaker 1: 06:39We'll be watching for that turnaround Tuesday. If we are unable to maintain those retracement levels and futures just simply decide to push lower, where does the tripwire come into place? It is, I assume the contract lows certainly for to crop corn.
Speaker 2: 06:58Correct. The main area everybody's going to watch is last week's lows. Failure to hold that would open the door to drift another 15 to 20¢ lower, from there. So we're kind of in a downward momentum in here. So last week's lows is gonna be the kind of the key support.
Speaker 2: 07:19When you go back in history and not saying we're going to turn around and go sharply higher from here, oftentimes we see some seasonal lows occur here in late August, September 1. Now that's a ways away yet, so the market could still, you know, be kind of in a struggle mode here for a while. But, once we get larger crop priced into the market and once we get, particularly August 1 to see how this tariff news unfolds, the market could be maybe in a position here to have a different look than it has now.
Speaker 1: 07:53How much old crop corn and or soybeans, particularly corn, do you think is still left to go to market and how much of an impact and or weight could it have on the marketplace as we move through the July, into August, and September?
Speaker 2: 08:07Well, that's a good question because, basically, we do receive those calls every now and then. I, you know, dropped the ball. Was drinking the drought Kool Aid like I did myself here, thought we'd have a little bit more up. But there are some isolated cases, guys need to move some old corn and particularly the thing to do is to kind of monitor where you're at and what offers are out there. On our commercial side of the equation, most end users are down to just needing to secure about ten to fifteen days to get them into the harvest in here.
Speaker 2: 08:44So it's kind of cat and mouse, it's a type of situation where a big up from a smaller supply is not going to really help here here right now. It's just a matter of somebody needs some grain here to give them to harvest.
Speaker 1: 08:59Hey, thanks much. I appreciate it.
Speaker 2: 09:01You bet. Take care, Todd.
Speaker 1: 09:02You too. Kurt Kimmel is with agmarket.net. I'm University of Illinois Extension's Todd Gleason. Ben Brown is now here, agricultural economist with Extension and the Food and Agricultural Policy Research Institute at the University of Missouri in Columbia. Thank you for taking some time with us.
Speaker 1: 09:37What, have you been keeping an eye on in the way of numbers that we should know about this week?
Speaker 3: 09:41We're still in the growing season, so a lot of people are focused on, you know, pollination and production. And and, you know, the the heat that's expected this week is is kind of been driving some expectations here the last couple days. A lot of our commodity markets finished higher on the week last, last Friday. Starting off on a little bit of a bearish tint here this week just because there's been some rains pop up, to kinda help alleviate some of the heat. But, you know, domestic production continues to remain in the forefront.
Speaker 3: 10:11I will say that I've been working and following the export market quite a bit because corn exports have really been, I'm going use the word stellar here this summer, very strong. In fact, 2024 and 2025 is is about as strong of an export year as we could have asked for. In a lot of ways, was expected last fall, especially in, October and September when Mexico was buying a lot of corn from The United States. I was asked, is this, you know, just them trying to jump the market to get ahead of any potential tariffs? And my response then and remains the same now is they need corn.
Speaker 3: 10:46They it was very dry in Mexico. They needed corn. And The US is just such a dominant market into the Mexican or, you know, we're a dominant supplier into the Mexican market, because of our our geographical proximity and and the way we built our infrastructure in rail. And so corn exports have just remained relatively strong, driven largely by Mexico and and a lot of our other prime buyers, Japan, Colombia, Korea, all of those have been extremely strong. So I found interesting that for the month of June we had a stellar export program both in terms of sales inspections and the market just kept drifting lower, as as the prospects of a domestic crop continued to increase.
Speaker 3: 11:29However, you know, the demand was really strong. Now we're kind of entering into a period of July where our export inspections are starting to really slow down on corn and yet the market is trying to move a little higher. So it just emphasizes those those domestic expectations really move the market even though we have, you know, or at least to this point, we've had relatively strong underlying demand. So that's on the corn market. I will say on the soybean market, I continue to look for signs that China comes in and buy soybeans.
Speaker 3: 11:55That's been the, you know, the the, I guess, focus here the last couple weeks because it was about this time last year that they started buying, of course, then they ended up having, you know, a pretty robust export window for for US soybeans, but certainly we'd like to see them come in and make some some purchases of US soybeans here in the next couple weeks. And on the wheat side, soft red winter wheat export inspections this week were were very strong. We don't talk a lot about soft red winter wheat, because there's just not as many growers anymore, but for our soft red winter wheat market, at least according to my estimates, this was our second largest weekly volume of any week of the calendar year over the last five years. Largest volume coming last year in late July, early August. So you know a very strong week of soft red winter wheat exports.
Speaker 3: 12:46We have the soft red winter wheat and it looks like it's going to be a really nice sized US winter wheat crop again. So I, that's gonna continue to lead to to strong strong exports just because we have the volume and product to to ship.
Speaker 1: 13:00In August 1, the tariff regime that the president, expects to put in place should go into place. The commerce secretary yesterday on the Sunday morning shows, Howard Lutnick, said, yes. It will go into place. He also made sure that we understood that 10% was a rate that will simply be in place across everything that comes into The United States regardless of the deals that are struck. It's just that nations which are have higher gaps may have higher rates.
Speaker 1: 13:35The Chinese are the only place, that have imposed tariffs on retaliatory tariffs on, agricultural products. Do you think that will make any difference going into the fall that those are already in place and will stay there?
Speaker 3: 13:53Trade is a really hard topic, to kind of, you know, at least grasp going forward. And and I'll tell you the reason why I think it's hard is because of the likelihood or at least the trajectory of purchase agreements. This is something that's becoming a common theme in in trade negotiations here. The last couple weeks, we saw it with Indonesia. We saw it with the agreement with Bangladesh.
Speaker 3: 14:17There is, you know, an emphasis, it seems, by US trade negotiators to work in some type of purchase agreement commitments. Very similar to what we saw in the phase phase one trade deal with China, you know, what was that, five years ago. You know, the commitment to say, you know, they'll come into the market and they'll buy, you know, a set amount of product above what the market would justify given prices. And so, you know, if those continue to happen, you know, when they're announced, it could move the markets pretty pretty quickly. And and so that's why I sit here and say, you know, economics is based on the principle of of all else equal or said it said it's Paris.
Speaker 3: 14:56You'll hear that a lot. All else equal and marginal change. And and I don't think anything that we're dealing with in the trade space right now meets those two assumptions. There's a lot of things changing all at once, so it's not marginal change, and then everything else is not being held constant. And so I it's it's this era to where if prices increase to a buyer, we would assume that they would buy less.
Speaker 3: 15:20However, in the face or, you know, in the inclusion of purchase agreements, you could end up in a scenario to where, you know, commodities might be higher priced and people actually consume more. Right? It would be the same as me going to to the grocery store. I love Oreos and Oreos going to $8 and I'm being like, yeah, I was gonna buy one package at $4, now I'm gonna buy two packages at $8. Right?
Speaker 3: 15:38That's what's making the current trade discussion rather difficult is this notion and this theme that we're seeing kind of play out of purchase agreements. Not saying that that's not the trajectory to go forward, it's not my decision to make in that case. It just it makes figuring out what to do, just kinda difficult.
Speaker 1: 15:58So Hey. Thanks much, Ben. I appreciate it.
Speaker 3: 16:00Yep. Appreciate it.
Speaker 1: 16:01Ben Brown is an agricultural economist. He's located at the University Missouri in Columbia where he is with the Food and Agricultural Policy Research Institute and U of M Extension. Now we mentioned Howard Lutnick who is the secretary of commerce for the Trump administration. He was on the Sunday shows with Face the Nation. I picked up a couple of sound bites for that.
Speaker 1: 16:26Illustrate just exactly what he and the administration are thinking about as it's related to tariffs that will be put into place on August 1.
Speaker 4: 16:37Oh, they're gonna love the deals that president Trump and I are doing. I mean, they're just gonna love them. You know, the president figured out the right answer and sent letters to these countries, said this is gonna fix the trade deficit. This will go a long way to fixing the trade deficit, and that's gotten these countries to the table. And they're gonna open their markets or they're going to pay the tariff.
Speaker 4: 17:00And if they open their markets, the opportunity for Americans export, to grow their business, farmers, ranchers, fishermen. This is going to be the next two weeks are going to be weeks for the record books. President Trump is gonna deliver for the American people.
Speaker 1: 17:16Let's put those comments from secretary Lutnick into context with what Ben Brown, ag economist from the University of Missouri, just told us about purchase agreements. These are part of the trade agreements or at least part of the framework of the trade agreements that were put in place for Indonesia and Bangladesh. The trade agreements outlined a wheat purchase by those countries, but they're not really obligated to do so, especially once the administration's changed. That's what happened in the first Trump administration once it was transitioned to the Biden administration and the purchase agreements that China had with The United States. It frankly only honored about 75% of the total purchase agreement of agricultural products.
Speaker 1: 18:07What we do know however for sure as it relates to all the trade agreements from the secretary's comments on Sunday is that the 10% base is in place and will start and stay in place indefinitely.
Speaker 4: 18:2510% is definitely gonna stay. Many countries will pay higher, higher, like Vietnam and Indonesia. Right? They're 1920%. Most countries will pay higher.
Speaker 4: 18:35The small countries are likely to be 10%, but the bigger countries are likely to pay higher. That's just the way it's gonna be because we can't have these $1,000,000,000,000 trade deficit. It's just wrong for America, and Donald Trump is gonna fix it.
Speaker 1: 18:50If the fix includes a higher tariff rate, it is very likely there will be a higher reciprocal tariff on products imported into those nations from The United States. Let's check the weather forecast now with Mark Russo. He's at Everestream Analytics. Hello, Mark. Thank you for being with us for the day.
Speaker 5: 19:25Hey, Todd. Thanks for having me.
Speaker 1: 19:27Let's start with the heat that is moving into the Midwest, a relatively cool and gray day here. A little humid out, but not terrible, though. Things are supposed to get a lot warmer. Can you give me some instructions on what that might look like?
Speaker 5: 19:43Well, Todd, yeah, as we go through this week, we are going to see some heat briefly build into the Midwest, especially the middle portion of this week with high temperatures climbing into the low to mid nineties. The Far Southwest part of the Midwest will have even hotter temperatures. But for the bulk of the Midwest, especially the key states of Illinois, Iowa, Indiana, we do not see any long duration heat. So for the remainder of corn pollination taking place here the next week or two, no significant heat stress is expected. For those areas of the Far Southwest, centered in like it's again, it's more so of the plains, but, you know, Kansas into portions of Southern Nebraska and even into Missouri, there will be some heat there.
Speaker 5: 20:38So for any late pollinating corn, those crop areas will be stressed here the next couple of weeks.
Speaker 1: 20:46Largely, will there be rainfall attached to this heat, or will it remain out of the picture?
Speaker 5: 20:51Yes. It does look like there will be continued opportunities for rain, again, especially across the heart of the belt. This recent active or wet pattern looks to continue during the next couple of weeks with rainfall registering normal to even above normal. So right now, we do not see any extended stretches of dry weather, especially in the core of the Midwest.
Speaker 1: 21:15Sounds not bad for The United States, particularly for the Corn Belt. They put a little on the warm side. In Europe, it's been hot. They have had dry conditions. Are things changing at all there?
Speaker 5: 21:26Yeah. They are getting some relief in Europe. We're seeing temperatures here, less of Europe, seeing temperature less spatial extent of their ag belts seeing significant heat. There is still some heat the next four to five days in Southeastern Europe. So countries like Romania, Bulgaria, and Hungary will see some heat.
Speaker 5: 21:45But for the remainder of Europe, no significant heat is expected the next couple of weeks. And along with that too, there will continue to be opportunities for rain. We've seen an uptick in rain activity recently that looks to continue for the next two weeks. So overall, the pattern looks to basically stabilize crops here and even create some improvement following the heat and dryness to begin July.
Speaker 1: 22:08Thank you very much, Mark.
Speaker 5: 22:09You're welcome, Todd.
Speaker 1: 22:10That's Mark Russo. He's with Everstream Analytics, joined us on this Monday edition of the closing market report from Illinois Public Media. It is public radio for the farming world. Just a quick reminder that I will be out of the office on Wednesday of this week, and we'll bring you a special program, an excerpt from last Tuesday's One Big Beautiful Bill Act and its impact on commodity programs and crop insurance webinar. This will be the condensed version, the last portion of the program surmising some of the changes, and you'll want to listen up if you've not already watched that on YouTube.
Speaker 1: 22:47You can watch that whole webinar if you'd like. It's easy enough to get to. You can do that on YouTube, youtube.com/pharmdoc and you'll find the webinar there. But again, we'll have a portion of it on Wednesday of this week during the closing market report, which you've been listening to today on this Monday afternoon. I'm extension's Todd Gleason.