Jul 28 | Closing Market Report

Todd Gleason: 00:00

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.

Todd Gleason: 00:13

He's at agmarket.net. We'll discuss tariffs, trade, and negotiations, and how those are impacting the marketplace and why supply really does seem to be the important thing at the moment. We'll do that with Chad Hart at Iowa State University Extension in Ames, and then we'll turn our attention to the weather forecast. We'll do that with Mark Russo of Everestreem Analytics on this Monday. Addition of the closing market report from Illinois Public Media.

Todd Gleason: 00:43

It is public radio for the farming world online on demand anytime you'd like to listen to us. Look us up as a podcast. Search out the closing market report from Illinois Public Media. Todd Gleason services are made available to WILL by University of Illinois Extension. September corn for the day at $3.93 and three quarters, down five and three quarters.

Todd Gleason: 01:06

December at $4.14 on this Monday, a nickel lower, and the March settled at $4.31 and a quarter. It was down 5 and a quarter cents for the afternoon. The soybeans in the August at $9.88 and 3 quarters, a dime lower. The September at $9.92 and a half down 9 and a half cents, and new crop November, $10.11 and a half, 9 and a half lower. Bean milled futures down $2.90.

Todd Gleason: 01:30

The bean oil, 6¢ higher, and wheat futures for the soft red in the December contract, just a half cent higher at $5.58 and 3 quarters of a cent a bushel. The hard red at $5.46 and 3 quarters down a penny for the day. Live cattle futures after the Friday USDA report finished the October $2.24 77 and a half for the live cattle, a dollar 62 and a half higher. Feeder cattle up $2.35 per 100 pounds at $334.55, and lean hogs, 27 and a half cents higher at $90.87 and a half cents. Crude oil, around a dollar 46 higher at $66.63 a barrel.

Todd Gleason: 02:11

The wholesale price of diesel fuel at $2.40 and 3 tenths, two and 4 tenths of a cent higher in gasoline on the RBOP, up three and seven tenths at $2.10 and a tenth of a cent. We're now joined by Kurt Kimmel. He's at agmarket.net to discuss these numbers. Thanks so much for being with us, Kurt. I hope you had a great weekend if maybe a little rainfall, a lot of rainfall possibly.

Curt Kimmel: 02:36

Boy, it was humid. We had a family wedding event, and I had to wear a jacket there for a while. But I went through two shirts, but we made it. Unbelievable. Wow.

Todd Gleason: 02:47

Well, it remains humid on hot, hot, hot. However, the marketplace is kinda cold, cold, cold. Can you tell me why that is the case today?

Curt Kimmel: 02:57

Oh, boy. Yeah. It is no giddy up to it at all. Basically, you know, the the forecast itself, even though it's warm, it does have moisture around, in fact, maybe too much moisture, some areas. But the temperature is expected to cool as we move into the weekend and, next week, warm up, somewhat, but the trade is really not real concerned about weather right at the moment.

Curt Kimmel: 03:24

There is concern though about fungus and disease and so forth, so we'll see how that affects the crop. This afternoon's crop conditions report is just about unchanged from last week, expected to be about 74% good to excellent corn, soybeans are expected to be about 68% good to excellent, wheat harvest about 82% complete. Seasonally, actually good to excellent category starts to turn down here as the crop matures, so seasonally, here in the next week or two we should see the good to excellent conditions kind of, pull back some somewhat. As far as today's, last night's price action, there was talk, of course, of the trade deals, the EU. They're supposed to purchase about 750,000 $750,000,000,000 in US goods from The US and invest about 600,000,000,000 into The US.

Curt Kimmel: 04:27

As these other countries negotiate, eventually, you know, we'll probably see, hopefully see some numbers here before, Friday, August 1 is kind of what the deadline's, been, advertised. But the big the big trade talk, of course, will be US and China. They're in Stockholm here this week and, odds are they'll make some headway here and try to extend some deadlines. As everyone knows, China's big one is, we're in the key time window in here for them to make some purchases because these purchases need to be made so these ag products, particularly beans, can be moved to a logistic location here so we can ship it out here later this wintertime.

Todd Gleason: 05:14

Speaking of the export market, corn exports continue to look fairly good. What can you tell me about that place?

Curt Kimmel: 05:21

Yeah. Sales are there. We sold 225,000 tons of corn Mexico, sold another 229,000 tons of unknown. The unknown sale was a chunk of that was new crop. We wrap up the marketing here at the August, so any old crop business needs to take place, needs to be shipped.

Curt Kimmel: 05:40

And shipments were fantastic today. We shipped out 59,900,000, bushels of corn, 15 millions of bushels of beans. The corn number was above trade expectations, and the soybean shipments were at the upper end of expectations. So overall, demand's been good for the most part, but it's the future demand that the trade is, being concerned about, particularly with the corn in the Southern Hemisphere coming on the market. Then two, Argentina, they lowered their export tax, bean exports tax was 33%, it's bumped down to 26%, meal tax is, 31%, it was moved down to 24.5%, so it's going to keep grain from Brazil and Argentina on the world market, and, they're they're our main competition here as we go into this fall.

Todd Gleason: 06:34

Well, so the the competition will be offset probably by sales to other places unless, of course, there continues to be an issue, with the world's largest buyer, China, and that is in the Trump administration's court at this point. We've taken that up already a couple of times. I do want you to turn your attention to last Friday and the USDA cattle inventories and on feed numbers. Can you tell me about those and the impact they had in Chicago today?

Curt Kimmel: 07:04

Yeah, if you wanted some giddy up in the cattle market here earlier this morning, especially right out of the chute, on feed 98.4%, pretty close to the average guest, but, placement's 92%, the average guest was 98, marketing is 95.6, the average guest was 96.4. Inventory wise, the cattle on all cattle and calves 98.7%, beef cows 98.8%, dairy cattle 100.5% and then calf crop 98.6%. You know, we're just not seeing expansion when you visit with beef guys, you know, it's awful lucrative to move, move instead of retaining it through here. So at some point in time in here until we actually see some heifer retention take place, We're going to continue to see tight situation. The other thing on the world market, whether or not we see these feeders come north out of Mexico due to screwworm and also to Brazil.

Curt Kimmel: 08:10

And we need to see what happens to the terror as far as meat coming into The US from Brazil.

Todd Gleason: 08:16

Hey. Thanks much, Kurt.

Curt Kimmel: 08:18

You bet. Take care.

Todd Gleason: 08:19

You too. Kurt Kimmel is with agmarket.net. We're now joined by Chad Hart, agricultural economist at Iowa State University in Ames, an extension ag econ specialist there. Thank you very much, Chad, for taking some time with us. There have been a series of announcements of trade agreements, trade frameworks that the president has, put forth over the last week.

Todd Gleason: 08:51

They include Japan, Indonesia, a couple of others, and just this week, the EU or the European Union, and he is working with The UK this week as well. I'm wondering how you see these agreements and what the trade reaction in your opinion has been.

Chad Hart: 09:11

Well, that's the deal. The trade reaction has sort of just been there. If you will, the ag markets have sort of just sort of treaded water for a while as we go through this trade and tariff uncertainty. But when we look at the frameworks that have been put forward, you know, the idea is that The US is putting on at least a minimum of a 10% to 15% tariff on almost everybody, but same time too, we're exempting certain products. And that's one of the things I'm watching to see is how those other countries are responding with their tariff rates.

Chad Hart: 09:44

For the most part, what we're finding is that we're not seeing any reciprocal tariffs on the part of those other countries onto The US, which is good news for US agriculture. But it also brings up the question of what are we really gaining from this here as we're looking? Because I know in the case of the EU framework, it sounds like several agricultural products were exempted where it's a zero for zero tariffs, where neither The US nor the EU are placing a tariff on those goods.

Todd Gleason: 10:13

It all is almost like watching the weather work its way into the marketplace. Instead of a premium, it's a discount, relatively speaking. And and whatever the trade is or the crop size is is normal until it's not, and we're still kind of watching that. I think there is a discount within the in the marketplace. You can tell me whether you believe that is the case or not too, at least for trade still.

Todd Gleason: 10:40

However, it is supply side that seems to be driving this market. How good is the corn crop in the state of Iowa?

Chad Hart: 10:48

Well, that's still looks really good, but I think it's one of those cases again where we're trying to figure out whether looks are again deceiving. I think for a lot of folks, we've been hearing a lot of discussion about, you know, tar spot and spots. Been hearing a lot about tight tassel wrap. At the same time too, these are not issues you spot from the roadway. And when we're looking from the roadway, what we've got is our crops that have gotten, you know, a good amount of moisture, especially compared to previous years.

Chad Hart: 11:19

You know, a crop that went in the ground in a timely manner, it's looking good. And I think, yeah, you're right. The idea is that, you know, those supplies and especially on the corn side, that projection of record yield and record production is weighing heavily on the market.

Todd Gleason: 11:37

Yeah. It doesn't hurt that there is a second crop or safrinha corn crop in Brazil that is also big and coming into the market more than maybe we expected just because the size was there.

Chad Hart: 11:49

Yep. The size is there, but, but I'll say this as well. The demand globally has been there. One of the things that has fascinated me, especially with these past two, three months is watching the continued strength that Us corn has had in the global market, despite that safrinha crop coming online. It just goes to show that world demand right now was strong enough to eat through not only The US crop, but continue to take on that safrinha crop as well.

Chad Hart: 12:16

And we continue to see really good flows.

Todd Gleason: 12:19

When you think about old and new crop at this point, many producers will look at that old crop ending stocks number. And I talked with Joe Jansen late last week about this. He wrote a Farm Doc Daily article about it, in fact, and the impact it has going forward. But mostly it's about the impact that the size of the coming crop is having on the trade as it's waiting for those supplies to come in. Is that your opinion as well?

Chad Hart: 12:46

Yeah, it is my opinion as well. I mean, anytime we're staring at the potential of not only a record crop, but a record by over three fifty million bushels, That's just a stunning amount of possible production coming in here within the next, you know, couple of months. And so I think that is having, let's call it an overweighted experience in the markets today relative to a normal crop.

Todd Gleason: 13:12

When you talk to hog producers in the state of Iowa, I'd like to discuss the availability of soybean meal and the biofuels push. That would be for oil. It just seems to me that there might be an awful lot of meal available. Will they expand herds?

Chad Hart: 13:32

Right now, I'd say the economics are sort of split on that. The idea is what we continue to see is, you know, we brought the breeding herd down a little bit, but we continue to be able to produce a pig crop that is creating growth when it comes to pork supplies. And so right now I think they could expand a little bit, especially as we continue to see meal supplies continuing to build and those prices continue to soften there. But one of the things I'm also watching again here as well is not only will we use a little more meal here, but we're going to have to export that meal as well. And that's one of the things USDA is definitely projecting as we move forward.

Todd Gleason: 14:11

That will be a drag on the soybean price and futures?

Chad Hart: 14:16

It will be a little bit of a drag, but I think in this case, we're looking at the strength in the oil and just the demand in the soybean crush, hopefully being enough to offset some potential export losses.

Todd Gleason: 14:29

What are farmers telling you about their marketing so far?

Chad Hart: 14:32

They're basically, you know, wondering where the seasonal, you know, typical late spring, early summer rally went, and trying to figure out, do I need to make some moves here or is it going to get, worse for me as I look out there? And I think a lot of folks, you let's face it, we're still cleaning up some old crop and trying to figure out, okay, just how much room do we have to put new crop into storage to try to hold on for next spring and look for that rally again.

Todd Gleason: 15:04

I was contemplating over the weekend the potential size of my own corn crop and then, of course, doing the multiplication. It would be a good year even at a low price if the bushels are there. I suppose that has to be something producers need to think about.

Chad Hart: 15:21

It is something you have to think about here and and the idea is again, what we're hoping for is not only a good crop, but you know, if you get a good crop that comes out of the field, you know, a good moisture that is, you know, maintains that storage capability out there, it just gives you more time to possibly realize some price recovery with that good crop.

Todd Gleason: 15:44

Any final word?

Chad Hart: 15:46

I think one of the big things here that, like I say, continue to watch is I'm fascinated by, let's call it the strange trade that we're in. The idea is we're continuing to see export pace on old crop look really good. Will that translate for us as we're looking for new crop? Because we're gonna need that international boost to work through these larger crops we think we're bringing in this fall.

Todd Gleason: 16:10

Thank you much. I appreciate it, Chad.

Chad Hart: 16:12

Thank you.

Todd Gleason: 16:12

Chad Hart is an agricultural economist at Iowa State University in Ames. Just one agricultural news item for the day. This, follow-up to the Friday announcement by USDA. Critics are crying the USDA agency reorganization plan announced last week by agriculture secretary Brooke Rawlins. In a written statement, Amy Klobuchar of Minnesota who sits on the senate Ag Committee condemned the plan as half baked and called for USDA officials to peer before Congress saying a reorganization of this scale would impact USDA's ability to provide critical services.

Todd Gleason: 17:05

Rebecca Wolf, a senior policy analyst at Food and Water Watch Senior Food, went on to say that the move further guts the government's ability to protect public health, the environment, and food safety. The real world consequences will be severe, she believes. The reorganization is at least partly a cost cutting measure according to Rollins, and staff to be relocated outside of the Washington, D. C. Area could see significant salary reductions led to the lower cost of living rates.

Todd Gleason: 17:44

You're listening to the closing market report from Illinois Public Media on this Monday afternoon. Our theme music is written, performed, produced in courtesy of Logan County, Illinois farmer, Tim Gleason. Do visit our web website the address is willag.orgwillag.0rg. There you'll find the latest information from the crop scientists, the agricultural economist, the animal scientists located right here on the Urbana Champaign campus of the University of Illinois. Now let's turn our attention to the weather forecast for the growing regions across the planet.

Todd Gleason: 18:19

Mark Russo is here from Everstream Analytics. Good afternoon, Mark. Thank you for being with us again on this Monday.

Mark Russo: 18:27

Hello there, Todd.

Todd Gleason: 18:28

Let's start in the Midwest. Quite the rainstorm over the weekend, at least where I am, and we had another one roll through this morning. We certainly weren't the only part in the Midwest that received rain. Tell me about those weekend, precipitation events.

Mark Russo: 18:44

Yeah. Overall across, especially the swath, right, kind of in and around I 80 and about give it 40 or 50 miles north and south of there. That was the zone of the the most significant rainfall, and some areas picked up several inches of rainfall. A lot of that happening in a in a short amount of time as a result of some of the heavier thunderstorm activity. But with this weekend's rains, it's just been a continuation of what we've actually seen throughout much of July with active pattern near to above normal rainfall and some of those most anomalous wetness has been centered here in Illinois and kind of areas, like Iowa and adjacent areas in Missouri too.

Todd Gleason: 19:26

It remains hot, humid. Will we continue to have storms over the next several days?

Mark Russo: 19:31

Well, yes. And that is still part of, like you said, this hot and humid pattern that's going to be in place for the next two to three days. So especially across areas of the Central And Northern Midwest, there'll be there will be additional thunderstorm complexes developing over the next few days. As we get into late this weekend late this week and over the weekend, that's where we see actually cooler temperatures working their way in and drier conditions for a relatively brief period of time. So a bit of a respite here coming up from the heat, humidity, and and thunderstorm activity.

Mark Russo: 20:06

As you go into later on next week, it does look like well, temperatures still stay seasonal. Some rainfall opportunities, but again, a different pattern compared to what we're seeing right now.

Todd Gleason: 20:18

Well, tell me about that pattern and what it might mean for the month of August.

Mark Russo: 20:22

Yeah. What we're watching here is we get into, you know, call it more like week two and week three of August, beginning to see at least temperatures warm back up again, climbing to warmer than normal levels. Right now, it doesn't look as hot and humid as what's occurring right now here starting out the week in the Midwest. And from a rainfall standpoint, it certainly is looking less active and something to keep an eye on and to monitor, especially for soybeans going through pod development next month. But having said all this, the soil moisture base across the Midwest right now is exceptionally good.

Mark Russo: 21:03

In order for things to quickly turn detrimental, well, we don't see any indications of that right now. And even, you know, with a warmer, drier August, that might not even result in any kind of, you know, negative impacts for crop development given the current state of things.

Todd Gleason: 21:20

Are there places around the planet in the Northern Hemisphere that you're still watching closely?

Mark Russo: 21:25

Yeah. We're watching Europe and the Black Sea region. Again, they're in a mode right now of additional rain activity and now cooler temperatures across the region helping to stabilize or improve summer crop development, especially corn that has been going through corn pollination. That looks to continue for much of the next two weeks. After that, it does look like drier and warmer weather will return to more of Europe.

Mark Russo: 21:51

In fact, hotter than normal temperatures look to start building into Western Europe days eleven to 15, and then that would expand eastward as we get into more of the August. So something to watch here longer term, but as of right now, this relief that Europe and the Black Sea region is seeing for summer crops, it's it's it's beneficial.

Todd Gleason: 22:12

Hey. Thanks much. I appreciate it. We'll talk with you again next week.

Mark Russo: 22:15

You're welcome. Sounds great, Todd.

Todd Gleason: 22:17

Mark Russo is with Everstream Analytics, Joined us on this Monday edition of the closing market report that came to you from Illinois public media. It is public radio for the farming world. Don't forget to visit our website. The address there is willag.org. And in the list of articles that can read, you'll find one that's titled Empowering Illinois Soybean Producers.

Todd Gleason: 22:39

Later this week, there is a United Soybean Board webinar that you can sign up for, which will offer you $350 if you're one of the first 25 to do so. Make sure that you read up on that. Get yourself signed up for that Empowering Illinois Soybean Producers event in cooperation with USB, the Illinois Soybean Association, the Midwest Regional Climate Center, and Illinois Extension. You have a great afternoon. I'm Todd Gleeson.

Todd Gleason: 23:49

Doctor. JACKSON: