Oct 08 | 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 October 2025. I'm extension's Todd Gleason out of the office for the afternoon, so no update of the commodity markets. However, we will hear from agricultural economist Scott Irwin about renewable diesel and the biofuels policies the Trump administration has been putting forward.

Todd Gleason: 00:24

And then we'll turn our attention to weeds with Aaron Hager, weed scientist at the University of Illinois. As you are making your way through harvest, I know you're paying attention to what weeds are in your fields and making a plan for next year. Aaron has some thoughts on what might and might not work going forward. Oh, and I'll remind you that you should visit our website too at willag.0rg. It's now updated with information on the farm assets conference.

Todd Gleason: 00:53

That's coming up on the December. It's a Friday. You don't want to miss it in Bloomington, Illinois. You can find a partial list of the details, more information on our website, and a way to register at w I l l a g dot org.

announce: 01:09

Todd Gleason's services are made available to WILL by University of Illinois Extension.

Todd Gleason: 01:14

You know the second Trump administration's biofuels policy is expected to be more favorable to agriculture and biofuels compared to the first administration. Recent policy changes, including aggressive RFS mandates, a revised 45Z tax credit, and a ruling on small refinery exemptions, are bullish for biofuels and feedstocks. These changes, coupled with a potential reallocation of RIN obligations, could lead to significant price increases in the biofuels and feedstock sectors. As it happens, one of the nation's leading experts in this area is located right here on campus, Scott Irwin, agricultural economist from the University of Illinois. I asked him first to lay out the biofuels sector as it stands today.

Scott Irwin: 02:06

Big picture first Yes. Was second Trump administration. What was going to be their policy bias pro ag or pro big oil in the second administration. That was the big question that hung over everything. In the first Trump administration, decidedly pro big oil.

Scott Irwin: 02:34

So that was the first question that everyone's wonder was wondering about. And the answer to that is basically a complete reversal in Trump two point o compared to Trump one point zero. You know, big oil was in the driver's seat firmly in the first Trump administration. All these signs now are that it's been a one eighty, and now ag is in the driver's seat or ag and biofuels, however you wanna say it.

Todd Gleason: 03:08

If agriculture gets an MFP payment, I suppose that will tell that will be a real telltale sign. Well Ag's gonna stay in the I know there's a differentiation, but I feel like that tells us that ag, given the amount of tariffs that are going on across all kinds of different industries.

Scott Irwin: 03:25

Although, I would still say it's still a change in kind because in the first Trump administration, there were large trade payments.

Todd Gleason: 03:31

Right.

Scott Irwin: 03:32

But biofuels policy clearly went in in the direction of the interest of the oil industry. This time Yeah. Probably we're gonna get both.

Todd Gleason: 03:43

Maybe. And and and if we don't get both and we only get the RVO, I I'm I'm trying to suggest that there may it may have swapped positions. Oh. But we'll see. It's it that's a policy issue yet to come.

Scott Irwin: 03:55

That's gonna we do have well defined data points now on biofuels that we can talk about.

Todd Gleason: 04:01

Tell me about them.

Scott Irwin: 04:02

So the first one was last June, the new Trump administration, EPA, which is responsible for setting the RFS mandates, came out with their first major rule making, and it was for setting what are called the RVOs or the mandates for 2026 and 02/1927. So that was point number one. And, wow, they surprised everyone with how aggressive they set the mandate levels and some of the trade restricting rules that were new in that rulemaking.

Todd Gleason: 04:47

Used cooking oil not being able to come in and be used in renewable diesel, for instance.

Scott Irwin: 04:54

Well, that's a different policy. What they did in the RFS rule making specifically was ruled to comply with the mandates, obligated parties, which are the refiners and importers, have to turn in something called RIN credits. They proposed in June that if you are complying through an imported biofuel or a domestically produced biofuel from imported feedstock, like used cooking oil from China, you only get half a RIN. I mean 50% of if you use domestic feedstocks and compared, you get twice as much RIN revenue if you use domestic biofuels made from domestic feedstocks. That is a if that survives to the final rule making, which I think it will, that's a very bullish development in terms of biofuels and feedstock markets right there.

Todd Gleason: 06:12

Can you convert that to bushels in bullish development? Or

Scott Irwin: 06:16

Oh, I haven't really spent much time doing that. It it's very hard to do that on

Todd Gleason: 06:25

oil. Okay.

Scott Irwin: 06:26

Say that. But it certainly increases particularly the demand for soybean oil, and a lot of discussion about where that's headed. So that that's data point number one. Data point number two was in the big beautiful bill, a revised tax credit for biofuels. So the brief history there is we had a biodiesel $1 gallon biodiesel tax credit for a long time.

Scott Irwin: 06:52

02/2022, in the IRA bill under the Biden administration, that was converted to something called 45 z with the level of the credit keyed to carbon intensity scores. So that's what happened there. In the BBB, there were a number of features of the new 45 z that was passed under the Biden administration that ag was very upset about. And they successfully dramatically changed the rules for the 45 tax credit in the BBB that was passed in July. For example, now almost every corn ethanol plant in The United States is gonna probably be eligible for a 10 to 15¢ tax credit at least under under that bill, and they had not been getting anything since 02/2011.

Scott Irwin: 07:52

And, you know, there's a variety of changes there, but the big one was that told you ag was in control was that they eliminated in the carbon scoring something called ILUC, ILUC or indirect land use chargers. Those went away and really puts plant based vegetable oils in the biofuels tax credit world on an even footing with the things like used cooking oil, tallow, and animal based fats and grease. And so that's data point number two. That was a bullish development. Data point number three is something that was released last Friday called an SRE ruling, small refinery exemptions.

Scott Irwin: 08:43

And without getting into all the gory details, there's a way that small refineries can petition to be exempted from the obligations. In the first Trump administration, these were used as a backdoor means of cutting the mandates. That's all you need to know. And so everybody's wondering, huge uncertainty for legal and political reasons. There was this incredible backlog of these SRE petitions going all the way back to 02/2016.

Scott Irwin: 09:14

You know, billions and billions and billions of gallons of biofuels and as a demand is was an essence at stake. And so they released their rulemaking, and on net, it's it's got a lot of dimensions to it, very bullish. And there's really only one more domino to fall in my opinion before we have, at least in the biofuels in in especially renewable diesel and fame, a pretty explosive situation, and that's a technical issue called reallocation. So so the idea is if you award an exemption from the RFS mandates to these small refiners, what happens? Under the first Trump administration, they, in essence, just subtracted from the mandates.

Scott Irwin: 10:09

Reallocation is just transferring the obligation, you know, the gallons from the small to the larger refiners. That decision is still outstanding. And but the press release last Friday, everything I'm picking up from talking to people in DC is that, it's going to be something in the ballpark near full reallocation.

Todd Gleason: 10:45

And Which means all the SREs that are forgiven, all those billions and billions of gallons get transferred and must be absorbed by the large refineries.

Scott Irwin: 10:56

In the future. In the future. Yes. And and now they did a very cute trick that's gonna clear to end up in court. For the two thousands the old 2016 through 2022 SRE petitions, which there were, by my estimation, at least 10,000,000,000 gallons of those things were potentially in play.

Scott Irwin: 11:20

They awarded them all, but gave them back in return their old RINs which are worthless. Oh, the small refiners' heads were exploding, and they're gonna take that to court immediately. And so this whole story is not over, but that'll play out in the courts years and years into the future. So, you know, what the basically, the EPA did under Trump is they didn't give out as many. Most of what they gave out were worthless, and so there's maybe around 3,000,000,000 gallons of worth of RINs that are at play in reallocation.

Scott Irwin: 12:01

And I think I don't know what the number will be, but it'll be at least two, two and a half billion likely to be reallocated.

Todd Gleason: 12:08

A clarification point for me because sometimes when we talk about RINs and them being reallocated, they've been these are already produced gallons, already used gallons. But if they're reallocated and pushed forward, are these gallons that the large refiners are now obligated to produce going forward and that's why we're bullish?

Scott Irwin: 12:35

Yes. Well, it's a combination, Todd. Number one, I'm assuming that the final mandate levels will be about what was released in June. I I think that's not hopefully very controversial position. They're high.

Scott Irwin: 12:53

And there's this half rim part of that. So they're high, and they're gonna add on top of that some SRE reallocation and and and then you've got restrictions on imported feedstocks that were a part of 45 as well, and I will use the e word. This is setting up to be explosive price action in the 2026 in RINs, biofuels, and some feedstock markets.

Todd Gleason: 13:34

Now usually when we're talking about this, we're think thinking about corn and ethanol. But in this case, you're talking about fame

Scott Irwin: 13:41

Yes.

Todd Gleason: 13:41

Or soybeans and biodiesel. Yes. Not renewable diesel, but bio Both.

Scott Irwin: 13:49

Both. Both. Will highly benefit from this.

Todd Gleason: 13:53

Scott Irwin, agricultural economist here on the Urbana Champaign campus of the University of Illinois. We'll have an update from Scott, by the way, during the farm assets conference coming up on the December in Bloomington, Illinois. It looks like it should be a fantastic day. You can see the agenda online now at our website at willag.org, willag.0rg, and soon enough at the PharmDoc daily website is, well, the PharmAssets Conference sponsored by University of Illinois Extension and the PharmDoc team. Check it out.

Todd Gleason: 14:27

All the details online now at willag.org and a registration link as well. I hope to see you on the December. It's a Friday in Bloomington, Illinois. Up next, you know, weed control remains a problem in farm fields across the Corn Belt. Much of this has to do with the development of resistance to the chemistries now available.

Todd Gleason: 15:01

University of Illinois weed scientist Aaron Hager has more on the issues and what to expect.

Aaron Hager: 15:07

Pretty much. We'll we'll see one or one or two new active ingredients coming probably next year, but they'll be new to us. But, actually, these are fairly old active ingredients from Europe. Diflufenacin is one active ingredient that Bear Crop Science will bring into the marketplace. The original concept from the company several years ago was to bring it only as a as a premixed product with one or two different other active ingredients.

Aaron Hager: 15:39

But, apparently, that decision now has been changed, and it will be straight diflufinacin. It can be fairly active on the amaranthus complex, but, again, by itself, like so many other examples that we've looked at now for close to thirty years, there's very, very few active ingredients, especially in the pre emergence marketplace that'll take us all the way from planting through the post application timing.

Todd Gleason: 16:02

Is this a corn or a soybean herbicide?

Aaron Hager: 16:06

It'll actually be both. I don't know not really for sure what the push will be. The first year, it'll be kind of a limited launch, I think, in '26, but, more full scale, I'm sure, launch there on more broad acres and starting about 2027.

Todd Gleason: 16:22

If you're in a limited if you have the ability and you're a producer in the limited launch area, would you decide to make that choice?

Aaron Hager: 16:31

It it you know, quite frankly, it's it's it will be another option for farmers. It's it's not the only option that they have. Several years ago, we we started to take a, I guess you could call it, another look or a fresh look at metribuzin in soybean simply because that is an active ingredient that allows us to exploit one of the very few weaknesses of the resistance complex that we see in in our waterhemp populations here in Illinois. And that is the fact that when we see resistance to the photosystem two inhibitors or the p s two inhibitors, that type of resistance is always, almost always non target site. So in other words, it's it's a metabolic type of resistance.

Aaron Hager: 17:20

And by that, we mean the target site remains in a sensitive formation, but yet the plant is actively able to metabolize the herbicides before it causes any sort of detrimental effect. So when you have metabolic triazine resistance, that would render things like atrazine and Princep ineffective, but metribuzin being an asymmetrical triazine still remains effective. But many people here, you almost have to have a little bit of gray hair to remember how we used to use metribuzin in soybean here in Illinois back in the seventies and eighties. But what we have found is that it can still be one of the most effective soil residual herbicides that we have now on on multiple resistant populations. But just like every other product, we have to make sure that we get the application right, correct, based on the soil texture for for the individual field that we're gonna be applying it to.

Todd Gleason: 18:17

Based on soil texture?

Aaron Hager: 18:18

Soil texture and organic matter. Very important. A lot of a lot of the most recent use and by recent use, we'll say within the last twenty to twenty five years would be about five ounces or five and a third ounces of a 75 d f equivalent product, and that's simply on the dark prairie soils. It's simply not enough. We need to make sure that we've got those application rates where they need to be.

Aaron Hager: 18:43

The work that we have done primarily in Champaign County would suggest if we're running something like a 75 d f formulated product, we should be looking at about eight to 10 ounces on most of the fields. And we, in our work that we actually put this on a population resistant to herbicides from six different classes, once we hit that 10 ounce rate at six weeks after planting, we were still more than greater than 90% waterhemp control.

Todd Gleason: 19:12

Is this what you suggest producers do for next season?

Aaron Hager: 19:16

Again, it it's another option that we can you know, the more the more tactics that we can bring to bear on these populations, the better off in the long run we're gonna be because, you know, we and we we really haven't changed the story now for almost thirty years, but we cannot chemically solve this problem that we have with waterhemp. It's not gonna work. You know, we we've gone through an era where, you know, when I started here thirty two years ago, some of the ALS inhibitors, things like Pursuit and Classic and Pinnacle, pretty much had the majority of the soybean market. But because resistance evolved primarily in waterhemp, we do not see the extensive use of that chemistry. We had to find something else in soybean that turned into the diphenyl ethers, things like the Flexstars and the Cobras.

Aaron Hager: 20:03

We have widespread resistance to that. About the time that was happening along came 1996 in the first year of the glyphosate of the Roundup Ready technology. And a lot of people looked at the weed science community and said, we don't need you anymore. Lysiator Roundup is gonna be all that we're gonna need. Well, history has shown us again that this species has adapted to that.

Aaron Hager: 20:27

So we now have you know, I can remember a time almost thirty years ago when our group published a paper that showed two way resistance in a waterhemp population, and and that was just you know, that was that was news at the time. Now we're up to six in one population, and eventually, we'll find seven, and eventually, we'll get to eight.

Todd Gleason: 20:48

So this fall when producers are in the combines, what do they need to pay attention to?

Aaron Hager: 20:54

Yeah. We always say that the combine is really the last scouting science scouting opportunity for a growing season. So, obviously, you know what your program was, and that's your last real look to see, okay, how effective was it? If we see that we've got clean fields, what did we do right? Go back, look at the rates, look at the rainfall application, look at the parameters that you had on your post application.

Aaron Hager: 21:17

If it worked that well, I wouldn't recommend changing a whole awful lot if you have if you don't have any surviving weeds. If you have surviving weeds, that's a different ballgame. Why did they survive? Are we talking about the continued evolution of resistance? Are you talking about something like waterhemp, maybe even giant ragweed in Northern Illinois that simply emerged after that herbicide had dissipated from the soil?

Aaron Hager: 21:40

What sort of adjustment do you need to do? Because ultimately and and we've we've tried to convince this message now for years. You know, the way that you actually win, so to speak, against, you know, an amaranthus population resistant to herbicides from six or seven different classes is not just open up a new jug. It's not gonna work indefinitely. The weakness, of course, is the fact the seeds do not remain viable indefinitely in the seed bank.

Aaron Hager: 22:07

So doing whatever it is that you can do to try to limit seed production, if you can do that for three or four consecutive years, it's not uncommon to see the waterhemp populations in a field dramatically decline very, very quickly. That's how you stay in front of it. That's how you get back in front of it.

Todd Gleason: 22:24

Anything we didn't talk about that you think people should know about?

Aaron Hager: 22:29

No. I mean, there there's always an opportunity, I think, in the fall of the year after you do that scouting operation. If you see things like a lot of winter annual species emerging, if you've got the time to do that, you know, perhaps something like a fall application would be something that could be fairly beneficial for you because, generally speaking, the winter annuals are always gonna be more sensitive in the fall of the year than they are the following spring after they've overwintered and resumed growth.

Todd Gleason: 22:53

Aaron Hager is a weed scientist based on the campus here at the University of Illinois. I spoke with him about herbicides and new chemistries that might be introduced sooner rather than later. You've been listening, of course, to the closing market report on this Wednesday afternoon. I'm Todd Gleason.