May 02 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois. This is the closing market report. It is the May 2025. I'm extension's Todd Gleason. Coming up, we will not talk about the commodity markets with Mike Zuzlow.

Todd Gleason: 00:14

He's out of the office this afternoon. Mike, of course, is with globalcommercesearch.com out of Atchison, Kansas. Instead, we'll discuss the fertilizer marketplace in detail with Josh Linville from Stonex, where he's the vice president of fertilizer and then we'll turn our attention to the weather forecast. We'll do that with Eric Snodgrass from Nutrien Ag Solutions in the second half hour of the program today. If you can stay with us for the whole of the hour, you'll hear our commodity week program where we will take up the marketplace.

Todd Gleason: 00:48

Our panelists for that program recorded Thursday afternoon included Ellen Dearden from AgReview, Logan Kimmel from Roach Ag, and Brian Stark of the Andersons. It too is up online right now at willag.org. That's willag.0rg. We're at the top of the page. If you'd like, you can hit the donate button.

Todd Gleason: 01:10

We are in the midst of the final day of our spring fun drive and sure would like to have you make a contribution at (217) 244-9455 or will give.0rg. And thank you. Elite option, crop corn finished the month of April that happened earlier in the week 18 and a quarter cents higher. For this week, it was off 16 and a half cents total on the weekly trade. And today, the July contract settled at $4.69 a bushel.

Todd Gleason: 01:43

That was three and a quarter cents lower. New crop December futures closed April 4 and a quarter cents higher, the week down 5 and a half cents, but the daily trade today was up 3¢. The settlement price for the December contract at $4 and 50 and a quarter cents. Lead option old crop soybeans settled the month of April 29 and three quarters of a cent higher. The week down a penny and a half, and that lead option July contract for Friday afternoon settled at $10.58.

Todd Gleason: 02:13

It was 7 and 3 quarters of a cent higher for the day. New crop November soybeans were down a penny for the month of April and for the week, four and a half cents. The daily trade, up 6 and a half cents. November settled at $10.30 and a half cents for the day. The bean meal for the day at $2.60 higher.

Todd Gleason: 02:33

The bean oil finished 27¢ lower. Soft red winter wheat was up 12 for the day at $5.43 in the July. The hard red at $5.28 and a half in the July up 12. Live cattle futures in Chicago were a buck 45 higher. Feeders were $2.45 higher, and lean hog settled at $99.35, a dollar and 17 and a half cents higher for the day.

Todd Gleason: 02:59

Just a quick reminder that Mike Zuzlow is out of the office this afternoon. Josh Linville is here. We'll talk not about the commodity markets, but about the fertilizer marketplace. Thanks, Josh. Hey.

Todd Gleason: 03:10

Can you tell me what is your title?

Josh Linville: 03:12

Vice president of fertilizer.

Todd Gleason: 03:14

In that position, you watch fertilizers closely. And today, I'd like to talk to you a bit about the potential impact tariffs might have on fertilizers, particularly, what would be imported from China. This is because the tariffs are so high on the imports from China, and and it just seems that that may have an impact. Of course, there's 10% tariff across the board on many things. Can you tell me what you're watching most closely?

Josh Linville: 03:44

Well, when it comes to China, actually, from a US perspective, we have not brought in Chinese product for several years. There were tariffs put into place on Chinese fertilizers during the first Trump administration, and we saw those import flows effectively go to zero. So from that aspect, there's not really a direct correlation. We've not really seen much of a change. The whole Trump administration's war strategy, whatever you wanna call it, a direct Chinese situation hasn't had much to play.

Josh Linville: 04:18

But what we've been seeing is that Chinese exports have been slowing. And even though we don't do anything directly with them, the indirect effect is still in place.

Todd Gleason: 04:27

When you look back to that first set of tariffs that were imposed and the impact it has had across the globe on fertilizer and restructuring the industry. I suppose the flows as opposed to anything else. Who has picked up a portion of what we don't import from China? Where have Chinese exports gone? And has it really and I don't know whether you can calculate this or not.

Todd Gleason: 04:57

Has it had an impact on world price as compared to the impact it's had on US prices and which fertilizers?

Josh Linville: 05:08

Yeah. So when you look back and the problem is for the last couple years, haven't seen much of anything getting exported, least from a urea perspective. So it's been a little hard to figure out like who's the big buyer if there's nothing really being exported. But when you start to look at someone like those BRIC Alliance members, those are the folks who have been stepping up and taking a lot of it. India has been a buyer of them.

Josh Linville: 05:27

Brazil has been a buyer of them. So yeah, when The US cuts them off, as long as China had been still exporting the product, the global S and D doesn't really change. It just shifts these trade patterns which had been established and the most efficient way possible. So when you put these tariff restrictions in place, it's not the overall S and D changes. It's just these supply chains start to change a little bit.

Josh Linville: 05:53

What one country may lose, the other country gets the gain. So that's what we've really been dealing with. But over the last well, when you look at Korea ever since late twenty two and actually phosphate as well. Early twenty two saw global prices spike and the government started to intervene on these export programs taking the stance of we're gonna keep tons at home, keep our price lower versus the rest of the world. We're gonna take care of our farmers before anybody else gets to, add product.

Todd Gleason: 06:17

And has that worked?

Josh Linville: 06:18

It unfortunately has, especially when we look at it from the urea standpoint. Since '22, China, when you look at them, they would normally export about five to five and a half million tons urea per year. That started to fall off as we got into that early twenty two cycle when China started to step in, but it's really picked up the pace since 2024. Last year, their exports just barely made over quarter million ton total, not a single month, total for the entire calendar year. Q one twenty five, those exports have fallen to, shy of 4,000 ton.

Josh Linville: 06:52

We're no longer measuring Chinese exports in vessels. We're measuring them in containers. It is such a small amount. And what that has done is obviously paid a big part in why gold prices are higher. But when you go and you look at the price charts and you compare Chinese values against our own, say, The Middle East and places like this around the world, China is a significant, significant discount.

Josh Linville: 07:15

So fortunately for Chinese buyers, this strategy has worked out amazingly well. Unfortunately for the rest of the world, this strategy has worked amazingly well.

Todd Gleason: 07:24

Now you started off by saying by keeping that at home, and you meant that China was keeping it at home for its own farmers. Do we know if China is simply keeping it off the world market and or if it's actually being used domestically?

Josh Linville: 07:41

Well, and that's a great question. Every time we see updated operating rates in China, they remain extremely high, which means that product is getting produced in country. And that really brings the question of what are they doing with all that? Where's all this product going? They can't hold five plus million tons and just create the storage.

Josh Linville: 08:02

I personally believe in that, listen, this is China. We don't ever know. It's always educated guesses if we can even call them that. But when I look at China, we have seen where the government has kind of started to telephone people, listen, we need to be less reliant on the world. We need to produce our own food.

Josh Linville: 08:18

But how do you ramp up yields? Well, fertilize them or fertilize them more. So I think just an increase of domestic man could soak up a lot of that product that they would normally export. We have been hearing where storage is near record highs or at or above record highs. And that has led to some speculation that we will see some exports be allowed here fairly shortly.

Josh Linville: 08:41

How much, how often, how quickly we don't quite know yet. Again, it's a lock and key type information. We're hopeful they're going to start releasing some tons, but unfortunately, I don't think it's returned to normal. I think they are probably a bigger domestic demand buyer than what they were in the past.

Todd Gleason: 08:57

Because this urea has come off the world market and is being used in some form within China itself, has that moved the supply curve in a way that it has increased prices other than what the tariff has done?

Josh Linville: 09:16

Absolutely. So Ecom one zero one. Everything goes back to a balanced S and D, a balanced supply demand model. So we have not seen global demand fall. In fact, you can kind of count on a steady demand growth of nitrogen around the world.

Josh Linville: 09:32

But we've removed a significant amount of supply. So ECON one hundred one says the prices, they move higher in order to rebalance that S and D. And unfortunately, it's not just been China. European production has also been suffering because of high natural gas prices. So this does not mean urea prices cannot go lower.

Josh Linville: 09:51

It does not mean they're not going to continue to be volatile. They absolutely will be. But what that means is the overall price war gets raised in that scenario.

Todd Gleason: 09:58

Again, we're talking with Josh Linville. He is the vice president of fertilizer at Stonax. We'll continue our conversation in a moment here on the closing market report. Quick reminder that you can also, while you're listening to this, dial in at (217) 244-9455 with your pledge of financial support. Thank you.

Todd Gleason: 10:18

Or you can go to willgive.org or willag.org, either one. At the top of the page at willag, you will find a donate button. I kinda like the hundred and $20 level. We're in the last day of our spring fun drive, and we need the farm population, the agricultural listeners to step up and make their donations right now. Thank you for doing that.

Todd Gleason: 10:39

Now let's continue that conversation with Josh. Thank you, Josh, for staying with us. I want to switch topics, at least fertilizer topics that is to dap and map. Can you explain what kind of phosphate that is and then tell me your view of it on the world marketplace?

Josh Linville: 10:58

Yeah, so obviously your farmers going to know phosphate, a major input for a lot of the crops out there that we grow. It's a significant one of the big three as we look at it. And when we look at urea from a Chinese perspective, five to five and a half million tons of exports is what they would normally do. And that's about 10% of the global marketplace. They're one of the bigger ones, but they're not the biggest.

Josh Linville: 11:19

Russia holds that title. For phosphate, they would normally export between nine and ten million tons of DAP, MAP. They were the world's largest, the second largest, I think it's Morocco. If you look at them, they were, oh, dang it. I want to say it was like 7,000,000 tons.

Josh Linville: 11:39

Well, all of a sudden now the phosphate exports have significantly slowed down as well. We've now got a situation where in the first quarter of twenty twenty five, those exports, only a 11,000 tons. Now, Q1 is typically a slow quarter anyway. I don't want to act like, oh, their typical export rate for that quarter is two and a 3,000,000 ton. That is not the case.

Josh Linville: 12:03

But if you go back to their last normal year, it was nearly a million tons. So dropping to 111,000 tons is a significantly lower number. And we don't feel real good. We don't feel real confident anything returns in a big way in Q2 either. The month of April, we've not seen any sort of signs of the return.

Josh Linville: 12:22

And the rumor in the marketplace that even if the government stepped in and said, hey, we're gonna allow you guys to start exporting FOSTAG and start exporting DAP, start exporting MAP, the producers are gonna say, thank you. We appreciate it, but we don't have anything. We have been focused on some different types of phosphate for domestic users. We're focused on our own demand. We may not have product to start shipping out to the rest of the world until June or July at the earliest.

Josh Linville: 12:47

And all of sudden there, we have to start having a conversation that the world's largest manufacturer and the world's largest exporter has just gone missing for half of the year. And what can we really make up in the second half of twenty twenty five?

Todd Gleason: 12:59

What impact does that have from your perspective on how farmers should think about next year's and this fall's applications?

Josh Linville: 13:09

Well, we need to have a very good eye this is coming from me. I'm not an agronomist. But I would say if I'm in that seat, I am going to have a very, very, very good idea of what the minimum needs are to grow my crop next year. Let's presume nothing changes. And right now when you look at the future market of phosphate, the prices are flat.

Josh Linville: 13:31

The prices do not dip down. If this continues to hold, I updated these graphs yesterday at close of business. If we continue with corn prices and DAP prices where they are, we will continue at the second worst, second highest ratio value that we've gotten in history of this data. This chart goes back to 02/2005, but I've seen this stuff going back into the nineties. We've never seen anything quite this bad.

Josh Linville: 13:55

So from a farmer's perspective, you are spending far more of your bushels corn to pay for that dApp. This is the market's way of trying to kill demand. And so not to say this improves in the years to come. I hope that it does. I'm staying hopeful this all corrects itself and we'll get back to some decent values.

Josh Linville: 14:15

But there needs to be some hard decisions. And I think one of those things that you need to have an idea of, what do I truly need to raise next year's crop?

Todd Gleason: 14:23

From your point of view, why is China holding all of this off of the marketplace? Are they trying to increase yields? Are they trying to employ more people? Are is it a combination of the two? Are there other things that they're working on?

Todd Gleason: 14:40

And and I guess I'm really asking is the issue with fertilizers, related to China One of tariffs, or is it a domestic policy?

Josh Linville: 14:54

I think it's more domestic policy. A lot of folks have been trying to tie this back to the Trump administration's kind of economic war on China, the parties like that. But again, the phosphate flows when you look at it, those export flows started to slow significantly into the early twenty twenty two when global prices cycle last time. And so this is a situation that in place. This is a domestic Chinese political strategy again to keep tons at home prices low.

Josh Linville: 15:20

Now to your point, I believe part of it is an effort to ramp up production of foods in their own areas. They're % reliant on Western countries like The U. S. Part of it could be that production rates are down to phosphate. If you look into the sulfur market, there's been a lot of supply and price issues there which may be making it kind of uneconomical.

Josh Linville: 15:39

And the third and a lot, something that a lot of people kind of swing at you when you talk about battery manufacturing. The current adopted manufacturing for batteries is phosphate based. And so, you know, that China is obviously a major player in that field. We could be seeing a lot of phosphate being pulled away from agronomical uses or pulled away from export and being placed into that industry.

Todd Gleason: 16:04

It's always fascinating to talk with you. I thank you, Josh, for taking some time with me today.

Josh Linville: 16:10

Absolutely. Anytime, bud.

Todd Gleason: 16:11

Josh Linville is vice president of fertilizer for Stonax. Now let's turn our attention to some news for the day. The Trump administration has released its fiscal year twenty twenty six skinny budget for the federal government. Here are some of the details related to agriculture. The president is proposing a $4,500,000,000 cut to USDA's funding, down 17% from fiscal twenty twenty five.

Todd Gleason: 16:36

Programs facing the steepest cuts include farm conservation programs and rural development. The budget includes a $15,000,000 increase for food inspection but interestingly does not include cuts to SNAP or the Supplemental Nutrition Assistance Program. NOAA. The proposal aims to cut the budget for the National Oceanic and Atmospheric Administration. That's by some 25% or $1,500,000,000.

Todd Gleason: 17:05

On that note, let's turn our attention to the weather forecast. Eric Snodgrass is here. He's with Nutrien Ag Solutions and Daggerable. Good Friday afternoon to you, Eric. Thanks for being with us.

Eric Snodgrass: 17:16

Yeah. I don't know if it's a good Friday anymore after that news. So

Todd Gleason: 17:19

Yeah. Well, you know, weather is really important to the agricultural community, and I know you have been a defender of NOAA and the initial ideas that the budget would be cut. And some of those who have already taken leave and employees who have been put on leave and or let go, one of the two. The but you argue that this is really important across the board to producers and farmers and those who just like to watch the weather.

Eric Snodgrass: 17:56

Well, it's not just that. It's about protection of life and property. Right? And so this is this is something that is is if this ends up, if this ends up costing in the area of prediction such that we now have less accurate or less timely prediction of any type of severe weather from hurricanes to floods to drought to tornadoes, whatever it is. What we've just done is, you know, we we've cut something that was already an incredibly efficient part of the government that was doing a massive service that we had all gotten accustomed to.

Eric Snodgrass: 18:30

I mean, to be honest with you, the the weather forecasting, the weather stuff is not typically something that most people just complain about all the time. Like, it's a terrible thing going on. So it's very frustrating. And I'll be honest, Todd, if if if they make massive data cuts, in other words, if we start losing data products, I don't think people quite understand how much less access they're gonna have to weather forecast and weather information. And just remember, it is the number one app checked on your phone.

Eric Snodgrass: 18:59

If we lose more of NOAA, we we don't have that. My website, which I got 60,000 people on it right now. You know, they my website will go down, so will many others. AccuWeather will be changed, of course. That's a big one.

Eric Snodgrass: 19:10

So will the Weather Channel. And so I'm I'm a little upset because I I don't understand it, why it's such a massive cut is being made to such an efficient organization in my opinion, but that's for another discussion. I hate to just say, but we'll have to wait and see.

Todd Gleason: 19:25

Ag-weather,wxthatis,.com if you wanna see his website. I do wanna stay with this for one moment because the data is important, and some will say, well, you know, you've got the new AI models, but they're being fed by the data. Correct?

Eric Snodgrass: 19:40

That's right. Yeah. Yeah. The AI model has to be trained on something. So it was trained on seventy years of high resolution both in time and space.

Eric Snodgrass: 19:50

It's trained on that historical data. So what happens when you stop collecting it? Well, your model doesn't it's got nothing new to go off of. This is Yeah, there's a lot in this that, I'll be honest with you, Todd, there's probably a lot in this I don't even understand, right? That I don't know what these budget cuts mean.

Eric Snodgrass: 20:06

But I would also say at the same time that if we make a change in that direction where we start to lose that data, it hurts so many different areas and prediction and the ability to keep people safe is gonna go down with it. I mean, so this also means that the channels that everybody likes to watch, be it television, be it YouTube, be it the Ryan Hall y'alls of the world, you know, the folks that do all the live streaming, that severely impacted by this. So, yeah, it's a bit concerning.

Todd Gleason: 20:37

Hey. So we left two minutes for weather forecast. What's

Eric Snodgrass: 20:41

Alright. Here it you want it real quick, Todd?

Todd Gleason: 20:42

Yes, please.

Eric Snodgrass: 20:43

Massive flooding in the Southern Plains, and we've got more coming into that area. We then have a cutoff load that's gonna linger in our neighborhood for a while. I thought we're gonna blow these planting windows wide open, but there's this cutoff load that's nearby this weekend. It's gonna keep a little cooler, little wetter. I think after that, we see more wide planting windows.

Eric Snodgrass: 20:59

I think it gets warm quite warm after this as well. Still have the summer narrative on drought. That's not gone anywhere. It's mostly a Western Corn Belt, Western Plains, and you gotta watch the Gulf Of Alaska Ocean temperatures to see when that's gonna take shape. And, Todd, that's the next forty five days when we gotta watch it carefully.

Eric Snodgrass: 21:16

So planting windows are opening, but in between now and then, we still have a pesky upper level low keeping some rain

Todd Gleason: 21:22

in

Eric Snodgrass: 21:22

the area.

Todd Gleason: 21:23

Quickly on the May?

Eric Snodgrass: 21:25

Well, I have no idea, Todd. To be honest, I don't. I I think it's gonna be something where the May will look entirely different from the May. And I'm just gonna say this. If we start getting drier and drier in the May, that is another symptom that the atmosphere has lost its its its movement, its its motion, its momentum, and that's problematic come midsummer, and it's still gonna be on my list of things to worry about until it's not.

Eric Snodgrass: 21:49

So there you go.

Todd Gleason: 21:49

Hey. One last question. Do you still have June 10 as your target date for what might happen in the summer months?

Eric Snodgrass: 21:56

Yeah. I think it's mainly June 10 to maybe June 17, June twentieth. That during that week, if we see between now and then that the ocean temperatures along the West Coast Of North America drop considerably, then we start to bring in my analog years in a big way. So that again, just to reiterate those years, 9699, o '6 zero '8, '11 '12 '17. And this morning, Todd, I even took a close look back at 2021 as another possible analog.

Eric Snodgrass: 22:23

So all of those years at about the time we got to, you know, mid to late June, we were seeing the behavior of the atmosphere affect the ocean temperatures in a way that kinda gave us a bit more of a signal as to the risk of heat and drought in summer. And, again, is it us or is it west of us? If you ask me today, I think it's west of us.

Todd Gleason: 22:40

Alright. Hey. Thank you much.

Eric Snodgrass: 22:41

You bet. Thank you.

Todd Gleason: 22:42

That's Eric Stongrass. He is with Nutrien Ag Solutions. Indagorable 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. If you can stay with us for the second half hour this afternoon, you'll hear our commodity week program.

Todd Gleason: 22:58

Otherwise, it'll be up online. Actually, it is right now at w I l l a g dot o r g, and you can make your pledge of financial support there as well. I'm Todd Gleason.