Jun 05 | Closing Market Report

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This episode of the Closing Market Report features analytical discussions on agricultural markets and regional weather conditions. Market analyst Mike Zuzolo evaluates the New World screwworm outbreak in Mexico, observing that the Mexican beef industry has successfully retooled its supply chain to export boxed beef rather than live feeder cattle. While this structural adjustment addresses immediate border transport constraints, Zuzolo cautions that sustained market stability relies heavily on consistent consumer demand. Additionally, he advises producers to secure fall diesel needs due to ongoing supply chain closures in the Strait of Hormuz.

Meteorologist Eric Snodgrass then provides an agricultural weather outlook for the broader Corn Belt. He details a drought pattern that may be developing north of Interstate 72 in Illinois and across surrounding states, emphasizing that immediate rainfall (scheduled for today and over the next several days) is critical for current vegetative crop stages. Snodgrass further outlines predictive variables for mid-summer heat risks—specifically Delta soil moisture and Gulf of Alaska ocean temperatures—while explicitly dismissing a newly released European long-range model predicting a dry late summer due to its severe historical inaccuracies.

- Ag Markets with Mike Zuzolo, GlobalCommResearch.com
- Ag Weather with Eric Snodgrass, NutrienAgSolutions.com

Todd Gleason: From the Land Grant University in Urbana-Champaign, Illinois, this is the Closing Market Report. It is the fifth day of June 2026. I'm Illinois Extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Mike Zuzolo. He's at GlobalCommResearch.com out of Atchison, Kansas. And we'll talk about the weather across the Corn Belt today with Eric Snodgrass. He's in Nutrien Ag Solutions in Champaign. If you can stay with us for the whole of the hour, you'll hear all of our Commodity Week program with guests Shane Houltorp, Logan Kimmel, and Sherman Newlin. If not, it's up online in its entirety right now at willag.org. That's w-i-l-l-a-g dot o-r-g.

announce: Commodity Week is a production of Illinois Public Media and University of Illinois Extension. Our theme music is written, performed, produced, and courtesy of Logan County, Illinois farmer Tim Gleason.

00:58 Ag Markets with Mike Zuzolo, GlobalCommResearch.com

Todd Gleason: I'm traveling this afternoon, so Mike Zuzolo is joining me a bit early in the day to talk about the marketplace. Thank you, Mike, we appreciate that.

Mike Zuzolo: Absolutely, Todd. Thanks for having me back on this lovely Friday afternoon.

Todd Gleason: Mike, of course, is at GlobalCommResearch.com out of Atchison, Kansas, and a whole lot closer to an event taking place along the southern border in Texas with the New World screwworm. You're also a lot closer to a whole bunch of cattle producers. How are Kansas and Nebraska cattle producers thinking about the New World screwworm and its impact on their operations?

Mike Zuzolo: This is an interesting question. I have talked to several producers since the news broke and the screwworm was confirmed. There's actually relief in the rancher mindset right now because it's been a sword of Damocles hanging over us. It wasn't a matter of if, but when. In both grains and livestock, we've seen a very strong fund-led and investment-led market this year. In feeder cattle, the thought by the funds was that as long as the screwworm stays in Mexico, we won't open the border to allow more feeder cattle into the United States. We previously did 1.2 to 1.3 million head a year back two years ago.

Since this has gone on so many months, thanks to a great attache report from USDA in February, we know Mexico has retooled and changed their supply chain. They are finishing feeder cattle out, and their idea is to export the beef to us. I was wondering if we could have gotten some Mexican feeder cattle across the border, but it would have been tough given the sanitary constraints we would put in place. Do we really have that many cattle left in the feeder category in Mexico? I think the market is adjusting and the funds understand this situation is not what it was six or seven months ago. That explains why we opened sharply lower for just a couple of minutes, closed limit up on Thursday's trade, and continued to go higher on Friday. I am almost sure the weaker corn and grain markets also helped the feeders along. Can we get back to that 381 high from late last year in lead month feeders? I'm wondering if we can't do that.

Todd Gleason: So the supply chain of feeder cattle that we thought was stuck at the border actually changed in Mexico? Rather than moving feeder cattle across the border, they put slaughter plants in place and fed those cattle out. Now the whole operation, from cow-calf to boxed beef, is inside Mexico?

Mike Zuzolo: Yes. In the last Livestock, Dairy, and Poultry report in May, USDA keeps track of beef imports coming into the United States. From Mexico, their beef exports year-over-year are up over 30%. This is concrete evidence they have changed their supply chain, sending it over as beef instead of live animals.

Opening the border to Mexico right now would be dangerous because cases of screwworm down in Mexico have ballooned this spring. We are not ready scientifically or from a veterinary standpoint to take on that situation. Can we really manage it if it breaks out in more than one state? The question now is how the consumer handles it, and the USDA has to be really on it to not allow this to spread out of Texas. The consumer might not care much if they see a story this past week and it dies down, but if we're talking about this weeks from now in the heart of summer grilling season, that's going to impact analysis.

Todd Gleason: That would mean consumers decide something different about how much beef they want on hand. The consequences of feeder cattle not coming across and a higher price for feeder cattle turns on the beef industry, right? You're not keeping heifers back for expansion, and we're already at a lower herd size. If consumers don't change their attitudes, and the screwworm is kept in place, but we still have high demand for beef, does it keep the expansion from coming?

Mike Zuzolo: No, I don't think it keeps the expansion from coming. Ranchers have confirmed that USDA's Cattle on Feed report was probably very accurate with the increase in placements in Colorado, Texas, and Kansas. That is where the drought came in and hurt us. But if it starts to rain again in key dry areas, we will go back to a retention phase.

The situation is similar to what we dealt with in 2014 and 2015, where the ultimate high in the market was caused by a drop in consumption. It is up to the import-export numbers. Can we get enough beef to saturate the supply from other countries? I don't think we can do that in the next six months. If we don't change consumer habits, does Wall Street have a big drop? That is the most likely scenario that could hurt us regarding price.
Todd Gleason: I only left you a minute and a half to cover corn, soybeans, and wheat. Big drop yesterday, not so much today.
Mike Zuzolo: Because of wheat and crude oil still being leaders, this is still a correction, not a top. The trade and the funds are playing this very much like last year for a variety of reasons, but the fundamentals are just not like last year.

Todd Gleason: What are you telling producers after the drop this week then?

Mike Zuzolo: I'm looking at buying feed needs for corn for the rest of the calendar year. I'm doing a webinar this afternoon for clients to talk specifically about locking in diesel needs for fall. I think the situation in the Strait of Hormuz, as we get deeper into June, will draw down on inventories. I'm very nervous about the rest of this year in diesel.

Todd Gleason: If the Strait of Hormuz doesn't open up, does it have an impact on global demand? Is there demand destruction simply because of the price of energy to ship commodities across the planet?

Mike Zuzolo: I don't think so. The head of Vitol was at an energy conference this week and said at $90 WTI, we're not rationing demand. Several major energy experts have stated we need to ration demand because we're losing about 14% of global output with that strait closed. Nothing is going to be able to substitute that except demand destruction.

Todd Gleason: Thank you much, Mike. We appreciate it.

Mike Zuzolo: Thanks, Todd.

Todd Gleason: That's Mike Zuzolo. He's at GlobalCommResearch.com out of Atchison, Kansas.

10:02 Ag Weather with Eric Snodgrass, NutrienAgSolutions.com

Todd Gleason: Let's turn our attention on this Friday to Eric Snodgrass and the forecast for the growing regions across the planet. Hello Eric, thank you for being with us. What a beautiful week it has been in our part of the world. As a meteorologist, you often get the bad end of it, but I have to give you kudos for this week.

Eric Snodgrass: Thank you, Todd. It was a nice week. We got some needed heat on the crop. Driving around a little bit, the crop is jumping out of the ground, which is what we want to see. We needed some heat units back into this because we were technically in a deficit since the start of May. The heat's going to continue through this weekend into early next week. It's just a question about precipitation.

Todd Gleason: I went west to the middle of Kansas earlier in the week, and it hurt just a little to see such a good crop out west of the Mississippi and the big rain they had there. Which brings me to Illinois—there are places here that are really dry and getting drier.

Eric Snodgrass: Yes, my colleague Trent Ford put in some recommendations for drought degradation across the northern half of the state. If you look back over the last 20 to 30 days, the dividing line is Interstate 72. South of it has seen decent moisture, but to the north, it's bone dry. That's why we're so excited to see storms come out of Iowa into northern Illinois this morning.
Our chances of rainfall are improving over the next several days, and next week we have even better chances of picking up maybe another inch of precipitation. That moisture is critical. Looking toward July and the risk of heat, we have two big predictors. First is our soil moisture from the Midwest down the western side of the Mississippi Valley. If soil moisture values are low at the end of June, the risk of July heat goes up. Half of the sun's energy goes into evaporating water—a cooling process. If you have no soil moisture, the ground absorbs all of the solar energy and gets hot. The rains coming up over the next seven to ten days will be critical in predicting the upcoming summer.

Todd Gleason: So the important factors are soil moisture and where that soil moisture is in the Delta region?

Eric Snodgrass: Exactly. Soil moisture in the Delta is part one. Part two involves ocean temperatures, which offer a clue as to what the overall jet stream wants to do. Watch the Gulf of Alaska and the West Coast of North America. If it gets colder there over the next three weeks, we increase our risk of heat in the Midwest. Right now, there is some cooler water there, but it's not expansive enough to be a problem. Most models show a sizable Western US ridge setting up around June 16th or 17th, which is where the heat will be located. Rain in the Mississippi Valley, a big ridge out west, and non-threatening ocean temperatures all point toward a more favorable temperature and moisture pattern going into pollination.

Todd Gleason: Before we return to the near-term forecast, I want to address the drought in the northern half of Illinois. What's happening in that part of our Corn Belt?

Eric Snodgrass: There are places that have gone 20 to 21 days without a drop of rain. They're behind about three to four inches of rainfall over the last 30 days, so anything coming through that area is key. The saving grace is that it didn't get extremely hot during that timeframe. The crop is in its vegetative stages, and this is an okay time of year to give it mild drought and heat stress, as long as it rains soon.

Todd Gleason: Does this area cover roughly Wisconsin, northern Illinois, Minnesota, and Iowa? How big is it?

Eric Snodgrass: It's pretty big. It extended across more of Iowa until recent rains and covers a lot of Wisconsin. It even extends into northern Indiana and southern Michigan. The farmers in those regions desperately want some rain.

Todd Gleason: What does our near-term forecast look like?

Eric Snodgrass: We have chances of storms today and through parts of the weekend, with additional chances coming next week. We will see temperatures climbing ahead of this, and the rest of the Midwest could be quite warm going forward. However, looking out toward the middle of the month—from the 13th through the 18th—I see less extreme heat.

Todd Gleason: Anything new on the long-term outlook?

Eric Snodgrass: There is, and it's a bit of a head-scratcher. We received the new European seasonal forecast this morning. I agree with its prediction for El Nino, which has strengthened; over 50% of ensemble members are predicting a historic, super El Nino. The head-scratcher is that it predicted a really dry Corn Belt for July, August, and September.

History does not support that. Last year on June 1st, the long-range model predicted a huge western Corn Belt drought with the epicenter in Iowa. Instead, it was one of the wettest Julys on record, causing massive fungal problems like southern rust. I would not take this new model's forecast any further than I can throw it. As I've told you before, it takes up an entire office floor with computers, so I can't throw it very far.

Todd Gleason: We'll check and see if it changes next month. In the meantime, we'll check with you again next week. Thanks much.

Eric Snodgrass: You bet, Todd, thank you.

Todd Gleason: That of course is Eric Snodgrass, he is with Nutrien Ag Solutions in Champaign. He joined us on this Friday edition of the Closing Market Report that came to you from Illinois Public Media. It is public radio for the farming world, online on demand at willag.org. That's w-i-l-l-a-g dot o-r-g.