Oct 14 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report. It's the October. Coming up, we'll talk about the commodity markets with Naomi Bloem and the weather with Don Day. Along the way, we'll explore a couple of policies related to soybeans, the tariffs, of course, and then 45Z and the blenders tax credit on this Tuesday edition of the closing market report from Illinois Public Media.

announce: 00:27

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

Todd Gleason: 00:32

December corn for the day settled at $4.13, up two and a quarter. The March at $4.29 and a quarter 2 higher for the day. The nearby May contract finished at $4.38. That was up a penny and a half. November beans at $10, 6 and a half, a penny and a quarter lower.

Todd Gleason: 00:49

January at $10.24 and a quarter, down one. And the March, a half lower at $10.39 and a half. Bean meal up 20¢. The bean oil 3¢ lower. Wheat futures December contract at $5 and a quarter.

Todd Gleason: 01:02

That's up 3 and a half cents, $5 and a quarter of a cent that is. And the December futures at $4.88 and a half up 7 and a quarter cents. Live cattle futures in Chicago a dollar 75 higher. Feeders up $4.60 and lean hogs down a dollar and 70¢ per 100 pounds. You're listening to the closing market report.

Todd Gleason: 01:25

Naomi Bloom from totalfarmmarketing.com out of West Bend, Wisconsin now joins us. Hi, Naomi. Thanks for being with us today.

Naomi Blohm: 01:32

Yes. Thank you for having me.

Todd Gleason: 01:34

Oh, well, let's start with the green on the screen. There is some not big numbers, but at least there's some green still.

Naomi Blohm: 01:42

Yes. The market's having a little bit of a pop higher today with corn finishing one to two higher. Chicago wheat looking to finish about three to four higher, while the Kansas City wheat up 7¢ and posting a bullish key reversal after testing the pit of despair for prices here recently. Beans today, though, down a penny. Boy, did they come back up from their lows of the day, gaining about 5¢ back from their morning lows.

Naomi Blohm: 02:07

So a little bit of encouragement there that the market, finding some resilience as we see harvest progress, and nice to see that little bit of green on the screen.

Todd Gleason: 02:17

Well, tell me about that pit of despair and coming out of it for the hard red winter wheat and what you think that might mean, if anything at all, at this time of year.

Naomi Blohm: 02:25

Well, I think part of today's action had to do with the weekly export inspections. So even though the government is shut down, this report is coming out. Now, of course, normally it's released Monday, but with yesterday being, Columbus Day, the report came out today at 10:00. And weed inspections totaled 444,000 tons, better than where we were last year at this time. Not quite as much as last week, but we're still exporting product, plus I think there was just good value when the wheat market got below that $5 handle, traders coming back in, trying to push it back up with the December Kansas wheat near four eighty eight and a half at the close, and December Chicago wheat able to climb back above $5.

Naomi Blohm: 03:12

And it wasn't just, the weed market that had good export inspections today. Corn came in at 1,130,000 metric tons. Again, a little bit lower than last week, but better than last year at this time. And the bean number, fantastic. 994,000 tons, which was up from last week, but of course not quite as much as last year.

Naomi Blohm: 03:34

So we are moving product in spite of government being shut down. I think that helps to explain why the basis levels have been firm at harvest, and we'll see if the funds bite onto this and maybe see some short covering, if there's any additional news that transpires in the coming days. We're gonna keep an eye on what maybe comes out of the White House with the talks with Argentina. Maybe that's something that affects the cattle market. There was rumors that maybe we start to import more beef from Argentina, so we'll keep an eye on that if there's anything that transpires out of those conversations.

Todd Gleason: 04:09

So the other item that is on the policy list, and there are several of them, China, of course, among them, but Mexico, is due to have, at the end of this month, some kind of trade trade agreement talks or framework in place. How concerned should we be that we're not hearing much from them and the Trump administration about Mexico yet?

Naomi Blohm: 04:36

Well, that's a great question. And part of me wonders if if that's where some of these early corn export sales and export inspections are headed to, is Mexico before that date comes up. It's just another reminder of the volatility that is going to come into play here as we head towards the October. As you brought up huge point with Mexico, I had actually kinda forgotten about that, so I'm glad you reminded me. And then also, that's when President Trump maybe, maybe isn't gonna be in South Korea and talking with President Xi of China at one of the events happening there, and then we'll start to get into early November with the Supreme Court taking a look at the decision if the tariffs are legal or not.

Naomi Blohm: 05:18

So a lot of trade activity that's gonna be coming together at the end of the month. We'll see if the government reopens, and then we're still gonna get a handle on where these yield results come in for the grain markets, continuing to hear the corn yield very, very consistently, all over the place, with a theme of being not necessarily as great as last year. So we'll see if that has any effect on the marketplace. And so many little factors behind the scenes happening that could really potentially either escalate the grain markets and get them to have a little bit of a bounce higher here or keep them in a very modest trading range if we don't get the fresh news. So you just have to be ready for anything as the October unfolds.

Todd Gleason: 06:00

You did not mention a big rally to the upside. What does that tell you about, grain and oilseeds, corn and soybeans that need to go across the scale and into the elevator and how producers should manage them?

Naomi Blohm: 06:13

Yes. If you are making cash sales right now at harvest, if you don't have room to store at home, if you're looking to generate cash and you're making those cash sales, I strongly feel that you should take a look at different reownership strategies with call options because if this corn yield comes to fruition, that it is less than last year, that would be a reason why we could see a competition for acres, in the coming months between corn and soybeans. And then also if China comes in and does agree to some buying of soybeans, that would be supportive for the market as well. And seasonally, this is the time of year where a lot of times grain markets will start to pick up steam and rally higher into the end of the year. So do be open to reownership ideas.

Naomi Blohm: 06:58

And a lot of the corn options right now, depending on the time you're looking purchase, between 10 and 20¢, with soybean options between about 20 to 40¢, depending on the time that you're looking for.

Todd Gleason: 07:09

Any quick item on the livestock we should be watching?

Naomi Blohm: 07:12

Well, keep an eye on boxed beef values. They've been a little bit firmer. Cash market's said to be a little bit firmer, Technically speaking here, still no sign of a top. So we're gonna be waiting to see if there's anything that comes out of this Argentina talk tomorrow. Of course, keeping an eye on the Mexican border and if that ever reopens.

Naomi Blohm: 07:30

But demand still continues to be strong for the beef market with our domestic market. I guess that's good news for our livestock producers. No sign of a top yet.

Todd Gleason: 07:39

Hey. Thanks much, Naomi.

Naomi Blohm: 07:41

Thank you.

Todd Gleason: 07:41

That's Naomi Bloom. She is with totalfarmmarketing.com. The Democratic National Committee held a press conference this morning to put it on the offensive in farm country across the Midwest during the upcoming midterm elections. It included Minnesota governor Tim Walls, a member of the house of representative Charisse David from Kansas, the deputy executive director of the DNC, and quite literally starred McHenry County, Illinois farmer John Bartman. Now Politico this morning reported a thirty second ad with Bartman will run on YouTube TV targeting a dozen Midwestern house districts.

Todd Gleason: 08:23

Here's the audio from that ad.

John Bartman: 08:26

I got to farm with my dad every day. It's a wonderful way of life, and it's at risk. It shouldn't be. My name is John Bartman. You're at Bartman Farm in Moringa, Illinois.

John Bartman: 08:37

Farming is hard enough as it is this year, especially because of the tariffs that have been put upon us. This is really putting a major strain on all farmers right now. We don't want a bailout. We want a market. Bailouts are Band Aids.

John Bartman: 08:48

What he is doing is destroying our markets. And when those markets disappear, we're not gonna get them back.

Todd Gleason: 08:54

Again, that audio from a Democratic National Committee commercial to be launched on YouTube TV going into next year's midterm election. Its star, John Bartman, is a farmer in Moringo, Illinois. You may recognize his name as one of the Illinois Farm Bureau's Farm Week Crop Watchers over time. Bartman was on the press conference this morning and as it happens mentioned the crop budgets produced by the University of Illinois Farm Doc team.

John Bartman: 09:20

We're in the University of Illinois. The average grain farmer is gonna lose a $100 an acre this year. Why? Because there's nearly 1,000,000,000, 1,000,000,000 bushels of soybeans that don't have a home right now. During most of my life, Midwestern farmers would listen to the great farm broadcaster, Orient Samuelson.

John Bartman: 09:44

He would often preach the need for a marketing plan in order to lock in profitability. He would say, if you don't have a plan, you're playing Vegas with the markets. And if you aren't careful, you can lose your farm. Well, this year, thanks to Trump, most farmers never had the opportunity to lock in profitability. That is the reason why so many farmers are hurting right now.

Todd Gleason: 10:07

Neither the DNC nor Bartman offered a solution to the lost soybean markets, not even resolving the tariffs. The Biden administration left some of the previous Trump administration's tariffs in place and China maintained reciprocal measures targeting US soybeans over that four year period. You're listening to the closing market report on this Tuesday afternoon. Our theme music is written, performed, produced in courtesy of Logan County, Illinois farmer, Tim Cleason. Do visit our website.

Todd Gleason: 10:46

The address is willag.orgwillag.0rg and there you'll find a way to sign up for the farm assets conference for the Illinois farm economic summits too. Both are coming up in the month of December. The Farm Assets Conference will be held at the Agra Center in Bloomington. That's out on Route 9. It's easy to get to and we have a great lineup for you.

Todd Gleason: 11:10

You can check it all out and purchase your tickets right now today at willag.org. Willag.org. I will say that for the Farm Assets Conference we have a limited number of seats because of the size of the AgriCenter. Don't wait, get yourself registered today. The cost is just $80 and of course include your noon hour meal.

Todd Gleason: 11:35

Now let's stay with soybeans but we'll talk about domestic issues with Andrew Larson. He's the director of governmental relations and strategy at the Illinois Soybean Association. I asked him to tell me something about a couple of things related to soy diesel and renewable diesel. First, I wanted to know about the expiration of the blender's tax credit that took place at the beginning of the year and its impact on those two products.

Andrew Larson: 12:02

This is one of the least discussed, impacts because there's been a lot of impacts, of course, on agriculture and markets from government policy this year. But the transition away from the Blenders Tax Credit or 40 a to 45 z, was a major problem for the traditional, what we call the fatty acid methyl ester biodiesel industry. So there's biodiesel and there's renewable diesel. Biodiesel is something we've been making for over twenty years, particularly here in Illinois, make a lot of it, use a lot of it, and, that industry is is relatively small business centered. Not large refineries, small foot plants, small plants making a lot of the bioties that we're using in state, and the blenders credit was really helpful to helping them market and sell their product to truck stops or other fuel retailers.

Andrew Larson: 12:49

Either the biodiesel producer could sell their product at a premium and capture or and and pass on the ability to take the tax credit to the blender, or they could blend it themselves and sell the product at a at a lower cost in the market rate so they could make that business arrangement. That policy worked really well for over twenty years with the when cutting something out of the Bush administration. And, unfortunately, as of January 1, that went away. And in theory, it transitioned to 45 z, but 45 z is very different in how it operates. And for other fuels and other commodities that didn't weren't eligible under 40 a or didn't have a pathway there, 45 g looks really good.

Andrew Larson: 13:30

But for those who did have a pathway before and the prickly, the soybean demand and the biodiesel made here in the Midwest, it's really quite challenging. Is there still biodiesel renewable diesel being pulled into California through their LCFS and other other other mechanisms? Yes. But that demand for bio all biodiesel needs several layers of policy and to help it be successful, all biofuels that is, to in in the marketplace. And the blenders credit was a really successful program that helped pair well with our state sales tax exemption on biodiesel blends, which helped have us be a leader in the usage of biodiesel in the country.

Andrew Larson: 14:06

Unfortunately, a lot of plants, small, biodiesel plants around the country have either shuttered or are or dramatically reduced their volume in terms of capacity and production, and they're 40 miles of soybean oil they're buying this year. Now in a macro scale, some of those numbers don't show up in some of the reports because you're seeing some of this demand pull continue to go into California and other places for renewable diesel and other products. But we certainly have an advanced market for biodiesel, advanced usage system that worked really well for a long time. And with the removal of 48 and transition to 45Z, at least as it was planned, that really put that into the question. We believe that using more of that product here in Illinois helps create a broader demand for soybean oil.

Andrew Larson: 14:54

And we wanna make sure that we're is creating as much demand as possible.

Todd Gleason: 14:57

Earlier in the year, I believe there was a piece of legislation put forward that would extend the blender's tax credit for a couple of years. That's kind of a normal function. However, this one would be in order to help promulgate 45 z in a way that would fill that gap that that is now there related to the tax credit. Where is that legislation on the docket?

Andrew Larson: 15:24

Sure. So every the the blunders tax credit typically always got renewed in a end of the year tax extender deal along with a bunch of other items. They were previously called the Bush tax cuts many years ago. They got extended even under Obama. This administration has still got called that.

Andrew Larson: 15:41

This isn't a task I think 45 z was an an under the IRA was an attempt to get away from that, but it was an attempt to get away from do some other things that the original intent of how 45 g was crafted by senator Wyden from Oregon doesn't exist isn't isn't in the new 45 z. Unfortunately, the Trump administration and the treasury department has said that they aren't gonna have rules ready on 45 z until sometime in 2026, which basically makes 2025 a lost year. So bringing back retroactively for '25 and and hopefully into '26 as well, something like the blenders credit helps keep that industry alive. As you mentioned, legislation was filed this year. It's been a bipartisan effort from Illinois.

Andrew Larson: 16:23

We have, so I think over five members of our Illinois delegation, house delegation on the letter, signal strong support from our senate, folks as well. From from other states, we know that the entire Iowa house delegation is on is on that bill as well. Hopefully, when the government opens and we get through some of the challenges that they have to face in in in DC here in the next in in the near term as part of an end of the year tax extenders push, which we do believe there'll also be some other other items of interest as well. Particularly, we would note that the uncertainty due to the 45 z rules and the broader status of the ag economy do do necessitate making sure that we have as much continuation and certainty in the marketplace as possible, because certainly we've faced a great deal of disruption and uncertainty, so having this in our cap, we think would continue to be a strong demand driver for ag products and something that we wanna continue to push Congress on making sure it happens. Certainly the pathway to spending anything, anytime you're asking to spend money or tax incentives, it's always a challenging pathway, whether that's Springfield, Washington, or your local level.

Andrew Larson: 17:35

But we certainly think that there is a great narrative, the story makes a lot of sense, to do this now.

Todd Gleason: 17:40

Remind me as we close out what the blenders tax credit is exactly. I think it's a dollar a gallon, for FAME, and maybe a dollar and a penny for renewable diesel, but you can correct me. I I I saw that somewhere. And if there's anything else I should know.

Andrew Larson: 17:57

Yeah. So the the blenders tax credit is basically pretty simple. It's a refundable federal tax credit. So that's one of the big differences that doesn't get talked about enough with 45 z too is 45 z is an income tax credit, whereas the 40 a was a refundable tax credit. The mechanisms and and the trading and how the finances work on all that is still a little uncertain how 45 z would work, but 40 a was pretty simple.

Andrew Larson: 18:22

If you blended for every gallon of b 100, you blended into the infrastructure, you got a $1 per gallon or one dollar federal tax credit, and that was refundable, redeemable by the entity that did the blending. And it was a really effective program for many, many years, incentivized quite a bit of production. It applied to both renewable diesel and biodiesel. We'd be open to having it applied to just biodiesel here to save that industry because they're in the most dire straits at the moment, but we certainly are open to a lot of those conversations and open to conversations about, does it have to be the full dollar, but just something to make sure that that industry remains able to continue to keep the lights on, keep the doors open, and keep buying soybean oil and other lipid feedstocks to make sure that we're making that biodiesel and getting it under the roads.

Todd Gleason: 19:14

Thank you much, Andrew.

Andrew Larson: 19:15

Yep. Thank you very much.

Todd Gleason: 19:17

Andrew Larson is with the Illinois Soybean Association. He serves as its director of governmental relations and strategy. Do visit our website today if you can, willag.org, willag.0rg. You'll find information there from the crop scientists, the ag economist, and the animal scientists here on the Urbana Champaign campus of the U of I. In fact, we'll be talking about all three of those subjects during the farm assets conference and we'd like to have you in Bloomington for it.

Todd Gleason: 19:46

You can find a way to sign up and all the information about it on our website. The address is will.org, willag.0rg. The Farm Assets Conference is Friday, December 12 in Bloomington at the AGRA Center, the Illinois Farm Economic Summits take place the next week. They begin in DeKalb on Monday, Peoria on Tuesday, and on Wednesday in Mount Vernon. You can sign up for them as well by visiting willag.0rg.

Todd Gleason: 20:17

There's a link there in the farm assets conference information. Up next, we'll talk about the weather. Let's check-in on the weather forecast now with Don Day. He's a day weather in Cheyenne, Wyoming. Hi, Don.

Todd Gleason: 20:42

Thanks for being with us. I appreciate you taking some time with me.

Don Day: 20:45

Good to be here.

Todd Gleason: 20:46

Let's begin in the Southwest. Tell me about those rainfalls that they had over the weekend.

Don Day: 20:51

Well, I tell you, they were they were big and significant. Some folks may or may not know that the Southwest United States has been under pretty severe drought here for a while. Arizona, parts of California, the Great Basin states down into the Southern Rockies, parts of Colorado and Utah. Well, the remains of what was Hurricane Priscilla, came up out of Mexico and into the Southwestern United States. We had flash flooding.

Don Day: 21:16

We had lots and lots of rain, some of it coming down too quickly, but beggars can't be choosers. It's gonna go a long way to help with drought conditions as, we have rainfall amounts of two, four, five, six, seven inches of rain in some areas.

Todd Gleason: 21:31

Those would be just unbelievable numbers. Like, year numbers for some of those places, I would think.

Don Day: 21:38

Yeah. In some yeah. In some of those desert areas, that that is as much rain as you'll get in six or seven months, and to your point, as much as a year. That's the way it falls in the deserts, not gently, usually all at once.

Todd Gleason: 21:49

Okay. And then turn your attention to the Corn Belt. Does any of this rain or did any of this rain make its way our way, or very much? And what do we look like over the next couple of weeks?

Don Day: 22:02

Well, it looks like a very progressive pattern across the Lower 48, meaning systems are moving through fairly quickly. And while some of that moisture from the Southwest United States will result in a little bit of shower activity over the nation's midsection off and on, we don't see any concentrated or widespread rains, and temperatures will be moderate. The fast progression of systems across the Pacific then into The US kind of locks up the really cold air out of Canada, not giving it an opportunity to penetrate too far south. And at least for another week, that's going to happen. I do see at the end of the month, right around that Halloween time, some of those releases of bigger colder air masses out of Canada kicking into gear where you get more in the way of widespread colder weather.

Don Day: 22:51

But in the meantime, for another week or so, it's gonna be a lot like the past week.

Todd Gleason: 22:55

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

Don Day: 22:58

Sounds good.

Todd Gleason: 22:59

That's Don Day. He is with Day Weather in Cheyenne, Wyoming. Joined us on this Tuesday edition of the closing market report that came to you from Illinois Public Media. I'm Todd Gleason.