- Brad Zwilling, ILLINOIS FBFM
- Don Day, DayWeather.com
From the land to Grant University in Urbana Champaign, Illinois. This is the closing market report for the July. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Naomi Bloem. We'll hear from Brad Zwilling about an article he's written for the Farm Doc Daily website as it pertains to the cross structures on different sized farms across the state, and then we'll turn our attention to the weather as we wrap things up.
Todd Gleason: 00:29We'll do that with Dundee at Day Weather on this Tuesday edition of the closing market report from Illinois Public Media. Two things of note as we get started for the day. First, president Trump has successfully lobbied Coca Cola to provide more cane sugar based Coke in The United States as opposed to Coke that used sweetener from corn. And the second is that coming up tomorrow, I'll be out of the office and will provide a special excerpt from the one big beautiful bill act farm bill webinar that the PharmDoc team hosted last week. You definitely will want to pay attention to it.
Todd Gleason: 01:09Todd Gleason services are made available to WILL by University of Illinois Extension. December corn for the day settled at $4.18, down four and a quarter. The March at four thirty five and three quarters, four lower for the day. August beans at ten ten and a quarter, four and three quarters lower. November down a half at $10.25 and a half, and bean meal futures were up $3.30 in the lead.
Todd Gleason: 01:33Bean oil down 44¢. Soft red winter wheat, six and a quarter higher, settled in the December at $5.69 and a half, and the hard red December at $5.55, up six and three quarters of a cent. Live cattle futures down 50¢. Feeders up 67 and a half cents, and lean hogs 47 and a half cents higher, 400 pounds on this Tuesday afternoon. Naomi Blohm from total farm marketing dot com out of West Bend, Wisconsin now joins us to take a look at the marketplace.
Todd Gleason: 02:04Hi, Naomi. Thank you for being with us. Why don't you give me your assessment of the day's trade in Chicago first, and what you're thinking about the rest of the week?
Naomi Blohm: 02:13Yeah. So markets today for corn and soybeans finishing a little bit lower after almost filling the gap last week, Friday, and the market had been pushing higher last week on weather concerns. But then as we came into trade Sunday night and Monday, the forecast shifted. I mean, it's still gonna be hot out there, but there is, cooler temperatures on the horizon, so that's what the market chose to focus on today. So, for the rest of this week, probably seeing some sideways range trade as we go forward because we're still waiting to really see and understand where this crop is.
Naomi Blohm: 02:46But when you look at the crop progress reports from yesterday afternoon, corn at 74% good to excellent, same as the prior week, but that still is up from 67% a year ago. And beans at 68% good to excellent, while it was down two points from the prior week, is still matching where we were a year ago at this time. So looking probably, like I said, a holding pattern here for grain prices until we just really get a better handle on yield and yield potential and additional weather for August going forward.
Todd Gleason: 03:20Are the producers you're talking with satisfied they have a good crop in the ground?
Naomi Blohm: 03:25Yeah, primarily there is no complaining happening. Definitely whispers though of some potential production issues in terms of the pollination factor on some of those yield varieties out there. There's also whispers of, tar spots on some corn fields as well. So those are things to be watching for. But overall, with the weather being mostly cooperative this entire growing season with timely rains, we're still under the impression of a big record crop.
Naomi Blohm: 03:56And so I feel though like the marketplace, for the moment, has put a pause on suggesting that yield is gonna be bigger than one eighty four or one eighty five until proven otherwise. And that's why corn prices for the December contract did not go below $4. But at the same time, fundamentally right now, we don't really have a reason to get above $4.30 either on the board price. So, I'm feeling like we're going into that sideways fashion. If yield ends up being closer to 184 or 185, I do feel that that is a reason why December futures could go below $4 and probably closer to $3.75.
Naomi Blohm: 04:36But if there is starting to be more of a concrete agreement that yield is actually closer to the current USDA number of one eighty one, well, that's a reason for corn prices to stay near the $4.30 area, maybe go up towards $4.50, just because the demand still is so fantastic for corn, and that would put the USDA carryout that we have right now of the 1.66 as more of a friendly factor. But again, that's correlating with one eighty one yield, so that's what we're keeping an eye on.
Todd Gleason: 05:06When do you suppose if trade agreements are not announced, the trade will take notice of Canada, Mexico, and the EU, our largest trading partners, and potential increased tariffs?
Naomi Blohm: 05:18Well, I would say that if if we don't see any positive traction on trade and trade agreements as it returns to US agriculture exports, that is a reason why grain prices could then just continue to slide lower and continue with a seasonal sell off where corn and soybean prices oftentimes just grind lower into mid to late August. So that's what I wonder might come to fruition if we don't get some positive trade deal news. But when you keep an eye on the US dollar, that continues ultimately to trend lower. We're trading near 97 right now, and as that dollar does trend lower, of course, that'll be supportive for exports as it pertains to currency exchange rates. So a couple different facets going on there to be monitoring between exports and export demand, but you're right.
Naomi Blohm: 06:10I mean, those trade deals are so critical, and especially for soybeans and soybean export demand, that's the last missing piece of the puzzle as we also, of course, continue to balance that with August weather and yield potential.
Todd Gleason: 06:23And then finally, turn your attention to the upcoming cattle, reports that are due out Friday this week. What do we know about them and trade expectations?
Naomi Blohm: 06:32Yeah. Heading into that pre report expectations for the cattle on feed report, on feed number expected average number of 99.1%, placement number at 98%, and the marketed number, the average estimate, 96.2%. And the range of estimates heading into this report is actually tight. Previously, there had been a little bit wider and a wider range of estimates, but now we're starting to hone in on some more specific numbers. So in addition to the cattle on feed report, it is also a very important cattle inventory report where we're gonna really see a breakdown of different levels of upcoming production, different numbers of cattle and size of different points of the herd, and we're gonna be wanting to see if there's any evidence of heifer retention.
Naomi Blohm: 07:22Are we holding heifers back for breeding? And that report, these two reports that came out on Friday afternoon, really could set the next big cornerstone for the industry. It's either gonna be a reason where if we see friendly news, we see the market be ready to take the next leg higher, or if we start to see signs that the herd is starting to grow, that might be the reason for funds to finally start to exit this massive long position that they have, which could then weigh on market prices. So be ready for Friday afternoon, two reports for the cattle market.
Todd Gleason: 07:57Thank you much, Naomi.
Naomi Blohm: 07:58Thank you.
Todd Gleason: 07:59Naomi Bloom is with totalfarmmarketing.com. You're listening to the closing market report from Illinois Public Media. It's public radio for the farming world. Have you checked out our calendar? There are a whole series of things this week and next week that you may very well want to attend.
Todd Gleason: 08:22They begin tomorrow with the University of Illinois Extension field day in Mouth, Illinois. That's near Galesburg. You'll wanna check that out if you're in that area. All the details online in the calendar. On Thursday, there'll be another field day.
Todd Gleason: 08:39This one in Hewing, Illinois, and that's for those of you South Of Mount Vernon or in that area. And then on Friday of this week, the Hemp Research Open House happens on campus. Check out the details for that one. It runs from eight a. To four p.
Todd Gleason: 08:55M. On Friday right here on the Urbana Champaign campus of the University of Illinois. Now next week, there are a couple of online webinars you will want to attend. The first one is the Empowering Illinois Soybean Producers Harnessing Climate Tools webinar. This is sponsored by the United Soybean Board and done in conjunction with the Midwest Regional Climate Center, Illinois Extension, Illinois State Water Survey, and of course, the Illinois Soybean Association.
Todd Gleason: 09:24They'll be discussing of course some USB funded projects, discovering some ag climate decision support tools that are already available to you, demoing a new ag climate tool dashboard, and they'll tell you how to assess soybean production decision needs. The first 25 registrants get $350 so you'll want to register for this one. It is a Zoom meeting you can do that online. Look for the registration information in the Empowering Illinois Soybean Producers Harnessing Climate Tools webinar on Wednesday, July 30. That's next week.
Todd Gleason: 10:05And on the thirty first, there'll be another PharmDoc webinar, this one, about the tax changes included in the OBBBA. That's the one big beautiful bill act. There's a wide ranging set of tax provisions in that act from permanent bonus depreciation and expanded section 179 deductions and new agricultural payment limits and real estate loan incentives. You can learn about all of those along with Bob Rang and myself. That'll be on Thursday of next week, a farm doc webinar.
Todd Gleason: 10:40Check it out in the calendar at willag.0rg. I'm University of Illinois Extension's Tut Gleason. We're now joined by Brad Zwilling from Illinois FBFM. That's the Farm Business Farm Management Recordkeeping Association in the state. Thanks for being with us.
Todd Gleason: 11:09You've written an article I think producers will find of interest exploring how farm size based off the FBFM records affects crop and equipment cost in the state. There is a long standing background information that says the bigger you are, the cheaper things get as it relates to both equipment and inputs. I assume that's why you decided to explore the data.
Brad Zwilling: 11:38That's right, Todd. Thank you very much. Yeah. The you always hear that as you get bigger, things are cheaper. So I kinda broke it down just using the last four years, and then I'm taking average of an average.
Brad Zwilling: 11:49Right? So we got each grouping. And, looking at those and see how those change from a group of, you know, 1,200 to 2,000 all the way up to a group over 4,000 acres and broke that out by the different regions of the state, North, central, and south, and just to see what what's going on. And I I picked a few things just right now, crop costs and equipment costs, but I think we'll look at some more down the road. I think this is an interesting study, but I wanna with those because those are the things that, the most manageable, you know, on a farm, besides the, you know, some of the cash rent and some of those things.
Brad Zwilling: 12:22But these are some of the big cost, structures on a farming operation.
Todd Gleason: 12:26Were you surprised that the data showed regional differences in the state?
Brad Zwilling: 12:30I was. But, you know, thinking about some of the things we have a little bit different typing of, you know, how the leasing costs are and kind of the crop rotations are different and, you know, more wheat in Southern Illinois. So I think that was some of that, but it it just didn't some of it didn't make sense why they were different for different things. But I think that had something to do with it, all those different factors, impacting those.
Todd Gleason: 12:55Now I'm gonna take you through all three regions, northern, central, and southern. We'll explore, the same sets in all three, and then as we wrap up, maybe we should talk about the differences again. So what were the things that you looked at and start in Northern Illinois and how that broke out?
Brad Zwilling: 13:13Yeah. So we're looking at Northern Illinois and and just to back up, we are looking at these are accrual costs. So this is the true cost for the crop year. And when we're looking at this, when we looked at crop costs and just looking at those numbers, you know, fertilizer, we didn't see much variance across those first three groups, but then we did see it drop off for the less than 4,000 acres. And then pesticides, kind of was going down the entire time as each group, As the acres went up, our pesticide costs went down.
Brad Zwilling: 13:44And then seed costs, when we looked at that, lot of not a lot of variance in those first three groupings, but did drop off than that less than, or over than 4,000 acres. When we look at the power and equipment costs, we're looking at repairs, machine hire, fuel and oil, and machinery depreciation. And, you know, the one that, threw me for a loop, the first thing is just looking at machinery depreciation. It increased a little bit from the small smaller two groups and then started decreasing off once we got over 3,000 acres, and that's gonna depend on your power units and where those justifications are. I think where that's coming from.
Brad Zwilling: 14:20And then looking at fuel and oil, not much variance there. Machine hire, not much variance there either. And then, machine repairs, we did see that, increase slightly up to that 4,000 acre group and then decrease off over that group. So lots of differences going on in there. They're not you can't just pick one cost and say, yeah.
Brad Zwilling: 14:42This follows the same trend for all those different costs that we are looking at.
Todd Gleason: 14:45In Northern Illinois, and I don't know whether this holds true, it appears that if you're under 2,000 acres, those costs are lower, generally speaking, than those that are between two and three thousand acres. Did that surprise you?
Brad Zwilling: 15:00It did. And that and it just, you know, I can't and like I said, I can't fathom what the difference is. I mean, these are primarily grain farms in Illinois, in Northern Group. So, it did surprise me, and that's why I try to do a four year moving average or a four year moving average or four year average just to kinda get rid of the year over year things. And it did surprise me.
Todd Gleason: 15:20Yeah. So that that held for Northern Illinois. However Mhmm. Central And Southern Illinois, those two costs were declining as you got a little bigger, but again, the spread between all of them isn't really that big. What's what's the area that has the widest spread between the lowest number and the highest number for the total, and maybe we should use the inputs at this point.
Todd Gleason: 15:48It looks like maybe in Northern Illinois, it's what, $40 or $42 something along those lines for the input cost. But only, what, $3 in Central Illinois? I mean, So just just some big differences. And I guess you're telling me that part of that is because they their crop rotations are different in Northern Illinois. They have a lot more corn on corn.
Brad Zwilling: 16:13Yeah. They grow a lot more corn on corn. They have a you know, it's more like a 60%, instead of a fifty fifty more in Central Illinois, sixty forty versus that. So, and there's a little bit more livestock up there too. So, you know, they've got the place to input that feed into.
Brad Zwilling: 16:27Right? There's some livestock operations they can, sell that corn off directly to.
Todd Gleason: 16:31Were there much difference in the machinery cost from one part of the region to the other in the state?
Brad Zwilling: 16:36Yeah. It was, you know, the cost structures. You know, Central Illinois, you know, we look at those things, and I'm gonna look at just power and equipment strictly. You know, that increased. You know, we went from a 180 to $1.95 in Central Illinois.
Brad Zwilling: 16:53And then in South, we that one did increase a little bit, about $5 an acre. That was surprising to me that it kinda just stayed about the same, but it increased. And then when we look at the Northern Illinois group, that one, like I said, it dropped off a lot when we went from that 3,000 to 4,000 acre to the 4,000 acre group. We're talking, you know, not a little over $10 an acre. So that that surprised me only looking just at machinery depreciation there, but even in the whole piece, we went off about, 10 to $15 there.
Brad Zwilling: 17:24So that was a big jump or a big decrease on that group on the power and equipment.
Todd Gleason: 17:28Again, the power and equipment, Central Illinois is interesting because the range, at the bottom for acres was about a $180, but under 2,000, up to a $195 an acre if you're over 4,000. But it was the sweet spot appeared to be between 2 and 3,000 acres, at a $168. So if you said a $180 for the smallest part, a $170 for those 2 to 3,000. And I was surprised that it costs so darn much if you were over 4,000 acres. Do you do you know why?
Todd Gleason: 18:03And that was $1.95. That's a $35 increase over the over the sweet spot area.
Brad Zwilling: 18:08Yeah. And I think there's something that's going on there a little bit that you don't see is that when we say over 4,000, that's a huge range. Right? That's 4,000 up to whatever the the max would be. And and I will tell you the Central Illinois farms are a their average acres are lower than the North and the central or north and the south group.
Brad Zwilling: 18:28Central Illinois farms have typically had our smaller groups, and, it's just interesting to see that group. And so it could be just the fact where that where that average was. And like I said, is it the third combine? Is it the fourth combine? Where is that in the range?
Brad Zwilling: 18:44When is that next power unit there not be able to directly spread it over the acres too? I think that has something to do with it. I don't have any statistical information on it, but just me looking at that and kinda understanding that there's a machinery economics fast tool that kinda looks at that. You know? You can see how many acres there is for one those power units, and that's an interesting piece.
Brad Zwilling: 19:03I've seen that when running those, numbers through those little tools on the fast, fast tools through the PharmDoc website.
Todd Gleason: 19:10Yeah. That's on the fast tools portion of the PharmDoc website. I take it that even if you're not in the FBFM record keeping system, you think this is worthwhile for producers to come take a quick look at and try to understand where they fit within their region, and then, decide whether they need to adjust things for their own farms.
Brad Zwilling: 19:31Yeah. I think good to look at, get some information on, you know, where they would fit, look at their bench you know, kind of benchmark it in essence as you would say, but then look at your own farming, your own operations, what you've got going on because, you know, this is an average of a group of farms. And so you don't know what's going on to each one of those groups. We know that they're in that area. We know that they're grain farms.
Brad Zwilling: 19:52We know what the acre size is, but there's a lot of other pieces going around. So understand that the differences are here, and then take a look at yours and so you can better understand what's going on in your operation. This was kind of a gee whiz. Take a look, and let's make sure we're analyzing that as we look at different things.
Todd Gleason: 20:08Thanks much. I appreciate it, Brad.
Brad Zwilling: 20:10Thank you very much, Todd.
Todd Gleason: 20:11Brad Zwilling is with Illinois FBFM. You may read the article he's written for the Farm Doc Daily website. Look for it at willag.org. The title is How farm size affects crop and equipment costs in Illinois. Our theme is written, performed, produced in courtesy of Logan County, Illinois farmer, Tim Gleason.
Todd Gleason: 20:43You're listening to the closing market report from Illinois Public Media online at willag.org willag.0rg. Now let's turn our attention to the weather forecast. Dundee from Day Weather in Cheyenne, Wyoming has this update.
Don Day: 20:59A dominating and large area of high pressure at the lower and upper levels across the South Central United States will dominate the weather across The United States over the next seven days. This high pressure ridge will bring hot, dry conditions to the South Central US, parts of Texas, Oklahoma, Kansas, maybe Missouri, and Arkansas. But around the periphery of the high pressure ridge, as moisture rotates around the high in a clockwise fashion, we're gonna get a ring of thunderstorms that will form pretty much daily across the Dakotas, Nebraska, Iowa, Southern Minnesota, Wisconsin, and into portions of Central Northern Illinois and Indiana into Ohio. This ring of fire, we call it, will keep those areas wet with frequent episodes of showers and thunderstorms, while just about all of the Central And Eastern United States will have above average temperatures. But the hottest temperatures relative to the thirty year average will be underneath the high in Texas, parts of Southern Missouri, Arkansas, and Eastern areas of Kansas and Oklahoma.
Don Day: 22:03The heat will be centered in the Central And Eastern United States, while temperatures will actually remain below average and will continue that way as it's been for most of the summer in the Far West along the coast of California into the Pacific Northwest.
Todd Gleason: 22:18That's Don Day. He's with Day Weather out of Cheyenne, Wyoming, gave us a forecast for this Tuesday afternoon edition of the closing market report that came to you from Illinois Public Media. This is public radio for the farming world online on demand anytime you'd like to listen at willag.org. Tomorrow, I'll be out of the office. We'll run a portion, an excerpt from the one big beautiful bill act farm bill update from the PharmDoc team webinar that took place last Tuesday.
Todd Gleason: 22:48It's really interesting. You'll want to tune in for that and to hear how the One Big Beautiful Bill Act has changed the crop insurance and the AARCAN PLC decisions that will take place going forward and the payment structure more importantly. That's tomorrow during the closing market report right here on Illinois Public Media. I'm Todd Gleason.