Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report for the 9th day of September 2024. I'm Extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Kurt Kimmel. He's at agmarket.net. We'll discuss water river levels with Frane Olson and the impact they have on basis.

Todd Gleason: 00:20

He's from North Dakota State University Extension and an ag economist there in Fargo. And then as we close out our time together, we'll continue that conversation with Mark Russo of Everstream Analytics. He's a meteorologist and logistics specialist. We'll do that on this Monday edition of the closing market report from Illinois Public Media.

Narrator: 00:41

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

Todd Gleason: 00:47

December corn for the day at 407 at a quarter finished a penny higher, the March at 4 26, up 1 and a half, and May up a penny and a half at 4.37. November beans today at $10.18, finished 13 higher. The January at 10.35 and a half, up 13 as well. And the March contract, also 13 higher at $10.49 and a half. Bean meal futures at 3.20.70 down a dime in the October.

Todd Gleason: 01:11

December up 60¢ at 3.25. And the bean oil for the day at 4107.86¢ higher. We'd futures soft red December up a penny and a half at 5.68 and a half, and the hard red December at 5.75 and 3 quarters down a penny and 3 quarters of a cent. Live cattle futures a dollar 75 higher at a $176.92 and a half cents in the October. October feeders at $234.72 and a half for £100, $3.77 and a half cents higher, and lean hogs at $78.80, down 70¢ per day.

Todd Gleason: 01:47

The crude oil at $68.74 a barrel, a dollar 7¢ higher. And the gasoline at a dollar 91.7. That's up 2 and a tenth of a cent per gallon. Kurt Kimmel from agmarket.net now joins us to take a look at what happened in the marketplace. Hi, Kurt.

Todd Gleason: 02:04

Thanks for being with us today.

Curt Kimmel: 02:05

Glad to be here, Todd. Thank you.

Todd Gleason: 02:07

At the end of the week, well, Thursday actually, USDA will release the next crop production report. That'll be coupled along with the world ag supply and demand estimates or the WASDE numbers. What kinds of changes does the trade and or agmarket.net expect?

Curt Kimmel: 02:24

Main thing is the the yield. You know, with the dryness, I think yields probably maybe is a little slightly lower than what we're gonna see here towards the end of the week on Thursday, but the average trade guess is about half a bushel below the number we saw, a 183.1 there in August. The ag market team's about 182.6. You know, this is gonna be a shade, lower on corn there. And on the soybean yield, that August, we were at 53 point 2.

Curt Kimmel: 02:58

The average trade guess is right there at 53.3 bushels to the acre. The ink market team's at 52.9, just slightly below, the August estimate there. So, you know, yields, still a moving target, but not as much as it was earlier here in the growing season. The main thing is actual yield reports that we'll see here as we move over the next week or 2. Here here locally, just east of town, some 105 day corn.

Curt Kimmel: 03:29

It's about 22% moisture. Came in 225. Last year, it was 230. It's a little bit below, but that's good. You know, the producer thought was for that early of a corn.

Curt Kimmel: 03:40

Yield estimates, you know, just all over the place. Over towards Wayne's area over there across the field north, there's a big patch of beans coming out, and there's 70 bushels plus. For most part, most of the yields are a little better than expected and then plus too. A lot of producers are quiet, so that has a tendency to say yields are are fairly good shape here, at least starting out. The overall thing is we're we're all we'll be wrapping up the old crop, inventory, the 23, crop, and they're looking for some slightly lower estimates.

Curt Kimmel: 04:15

Then from August, the idea that maybe, particularly corn demand was a little better, as we went towards the end of the marketing year. New crop ending stocks expected to be down about 40,000,000 bushels from last month, and the bean ending stocks just about unchanged slightly higher. But the bean ending stocks, 560,000,000 bushel continues to be a concern fund fundamentally on that. But once again, the analysts are gonna have about 3 guesses on this report. As we move forward, they're gonna have what they think the USD or was is gonna be, this week.

Curt Kimmel: 04:52

They're gonna say, well, I really think it's here right now. And, of course, in January, it it'll be another number. So we've got 3 shots added in through here, and it's gonna continue to be a moving target. As as we go through the marketing season here, we're gonna shift from the production side of the equation to the demand side of the equation. It's gonna be very important to continue to see, like we saw this morning, of China coming in buying another 133,000 tons of US beanstalk.

Todd Gleason: 05:18

Do you think they'll be in? We're still at fairly low levels for soybeans, lower, you know, 50¢ off the bottom. Still, this is the time of the year that China should be in the marketplace, I suppose.

Curt Kimmel: 05:32

We believe so, because basically, earlier here this summer, traditionally, when they come in, they'll cut they they came in and bought, you know, a 1000000 metric tons here, half a 1000000 metric tons there. But what we've been doing we're seeing in through here is small lot business. You know, a 100,000 tons here, a 100,000 tons there, not trying to shake the trade up so they don't have to, chase a higher. But we gotta remember that they're gonna buy just what they need to get by until that South American crop is available, this spring. Then plus 2, not really replenishing, inventories or or reserves for the most part.

Curt Kimmel: 06:11

You know, if word gets out on that, you know, we could probably see some additional, business take place. Then 2, lastly, the world meat situation is pretty good, as far as the southern hemisphere providing China some additional meat. So unless, China's, livestock herd starts to pick up in through here, we look for at least some steady business going into end of the year after that. The trade's gonna start focusing on South American weather.

Todd Gleason: 06:40

So that was my next question. Has the trade yet begun to focus on South America weather? Is it worried at all, and is that reflected, or is that something we're still waiting to happen?

Curt Kimmel: 06:50

Well, you tell me your position, I'll tell you what the news is. It's both ways. The the front front center is they're gonna be dry for another 2 weeks, but this is their dry season. And, actually, you know, we've seen many years as dry, and the key is is we get into October, November to make sure they receive, you know, some moisture. So the bear is gonna say the moisture is on this way.

Curt Kimmel: 07:14

The bull said, man, it's really dry. But, you know, we're we don't have the crop in in the ground. They're they'll be starting that process here fairly quickly. For those listening, it's basically 6 months office of us. When we're harvesting, they'll be planting.

Curt Kimmel: 07:29

And when we are planting, they are harvesting. So, that's the thing we gotta remember. We've got a lot of crops going growing clear around the world.

Todd Gleason: 07:39

Anything else that you've been watching that we should be aware of before I let you go for the day?

Curt Kimmel: 07:42

I'm kinda watching this energy market. Man, it's all bullish and it's all bearish, kinda up and down. But, from a producer's point of view here, if the retailer would cooperate a little bit, wouldn't hurt maybe looking at getting some fuel needs booked at.

Todd Gleason: 07:58

K. Thank you much. I appreciate it.

Curt Kimmel: 07:59

You bet. Take care.

Todd Gleason: 08:00

You too. That's Kirk Kimmell. He's with agmarket.net. Joined us here on the closing market report. It comes to you from Illinois Public Media each and every business day of the year.

Todd Gleason: 08:09

Find us online on demand. Listen to us anytime you'd like. You can do that at will ag.org.willag.org. And there you'll find updated information from the agricultural economist, the crop scientist, and the animal scientist from right here on the Urbana Champaign campus of the University of Illinois.

Todd Gleason: 08:36

We're now joined by North Dakota State University Agricultural Economist, Frane Olson. Thank you, Frane, for being with us. I take it on this Monday that you are busy on the trading floor. Well, the faux trading floor that you have at NDSU.

Frayne Olson: 08:53

Yeah. We we have, we have a a group of, international buyers into the university here for a 2 week program. And this morning, in a actually, in about a half an hour, we're gonna be going through some some live trading exercises. We were set up in our computer lab to be able to do, it's it's it as you said, it's kinda mock trading where the the information coming in is real time, so it is real live information. But the trades that are going on by the participants don't go back out into the system. So my joke is we don't, if you make some money, we don't have to pay you. And on the flip side, if they lose some money, they don't have to pay us. So that's a good thing.

Todd Gleason: 09:32

It's a good thing. Hey. I I have a question about this, before we get on to the marketplace, particularly. How long is the how long have you done this kind of trading? I think it's for quite some time there. And did is it long enough that you had to change the way the computers and or the floor was set up from open outcry to, digital?

Frayne Olson: 09:59

No. So the the the the trading room that we have, which is is really set up much like the big corporate trading rooms where they're kind of an open open architecture, but they have the computers and all that kind of stuff set up. We that opened in 2012. And so by the time we started that for for the demonstrations and for not only university students, but also for for adult learners, everything had moved to an electronic trading platform. One of the new things that was added kind of later on was the algorithmic trading, where you could actually write a computer program to do trading for you. And the software we use actually has that capacity. We've had a couple graduate students set that up and tried to play with it a little bit to to just to experiment with algorithm and trading. It's not something we teach necessarily in class or at these programs, but that has been one of those newer developments that's that's come along the lines.

Todd Gleason: 10:54

Fantastic. That's really fun. I that that just sounds like too much fun to be involved in. Now let's turn your attention directly to the marketplace. You and I had a little discussion before we started. And, the point we thought might be of interest were the water levels on the Mississippi, and not only the Mississippi, but other rivers across the planet. Let's start with the Mississippi River, and what impact low water levels have on bases and trying to calculate or look forward into the harvest season to see how it impacts different areas.

Frayne Olson: 11:29

Right. And and obviously, depending upon where you are on the Mississippi or some of the, the the, tributaries will have an impact on on again, what happens to basis levels, what happens to movement. So, as the Mississippi river level drops, it becomes more difficult to navigate. There's more there's more logs and things that come up, but also you have sandbars. It just becomes a lot more difficult. So 2 things that the barge companies have to do to adjust. First, they can't load each of the each of the barges as heavily. You can't sit down on the water as far. And then the second thing is sometimes they have to shorten them. They can't put as many barges in a single tow because they have to try and navigate or or or move around, zigzag around some of these sandbars. So it's not that the volume stops. It's just the volume slows down. It can slow down fairly significantly, again, depending upon the time. And as as the Mississippi River levels come down, especially as you head into harvest now, we're expecting very large corn numbers. We're looking at some very large soybean numbers. A lot of that, in particular, for soybeans has been booked already for for harvest delivery and harvest sale. The vessels are all lined up ready to go. So this could be a challenge for not only the barge companies, but for those those people at those companies that have already prebooked or presold some of those some of those bushels. Now that is on kind of the seller. Right? They've already booked in, typically booked in basis. But for any kind of new sales, those farmers that are trying to clean out some bins that haven't priced anything yet, or looking at making some additional sales into this harvest season, we may start to see those basis levels starting to wide widen. So it's not necessarily a futures play. It's not that the futures market is gonna respond really, really quickly to this, but it's gonna be your local market. Because the local market is trying to figure out how do we make sure the right amount of grain gets to the right place at the right time. So depending upon where you are on the river or near the river, depending upon the tributaries and and kind of the flow of grain, the ability to divert some of those bushels from a barge onto a train, which is going to be more expensive, Each of those basis levels, because basis is unique to a location, can be somewhat different, and they're gonna respond a little bit differently and adjust differently. So just the caution is coming into harvest now, whether you're cleaning out the bins from last year, trying to get ready for for new crop harvest, or you're thinking about making some additional sales into harvest and anticipating a big crop, be very, very cautious about those basis levels. There will likely be, I'm guessing now, but there will likely be a pretty large incentive to be able to find a home for that stored in the farm, at least for a while until we work our way through this logistical challenge. And then we can pull that back out again. So, when you think about the cost of storage, the cost of carry, you also have to think then about what is that change in the basis. Is there gonna be enough incentive to to, again, to take the extra work, the extra interest cost to put it in the bin and pull it back out again, let's say, a a few weeks or a month later?

Todd Gleason: 14:35

Okay. Now you and I also talked about other places across the planet, particularly in South America. The Parana River, and I had not made note of this yet, also very, very low at this time. That causes a unique situation in your view.

Frayne Olson: 14:53

Yeah. In particular for Argentina, because the Argentinians, given their logistical system, rely very hard to kinda kinda like the the Padanar River in Argentina. It's very much like the Mississippi, but a little bit bigger. They can take ocean vessels and go quite a ways up into the river the mouth of the river and load them, at port. And now when you have low river levels there, that has a completely different connotation because now you're talking ocean vessels, not necessarily barges. And, of course, the demerge or the cost for not filling an ocean vessel is much, much higher than it would be for a barge because you're looking at bigger volumes. Again, for Argentina, many times, what they'll do is they'll bring the ocean vessel upriver. If the water levels are very low, they'll only load that vessel partially full, let's say, half full or 3 quarter full. They'll get it closer to the mouth of the river once the water levels get a little deeper, and then they'll top that off. But that means 2 stops. Right? That's gonna be slower. It's gonna be not as efficient. So there's some concern now in particular for shipments, in my my mind for US farmers in particular for corn, because most of the soybeans that leave Argentina are processed first. So they're exporting soybean oil or soybean meal, not necessarily a lot of whole soy. But it can have a pretty pretty big impact on on their, corn corn movements as well as potentially wheat, but they're not quite in the wheat harvest phase yet. So this is primarily corn play in my mind. The other part of that, though, is we think about logistics even within, Brazil. There's some issues that might appear there as well. So it's it's not something from the Brazilian standpoint that I'm really concerned about yet. It's more of an Argentinian problem or Argentinian issue. But the question is, okay, if if buyers are not being able to get corn out of the out of the Argentinian, system, and the US system looks like it might be slowing down a little bit, where are they gonna turn for corn and corn, export volumes? So again, it's it's not something we can predict with certainty and what this might look like, but it is something to really start being paying attention to and thinking about as we come into harvest here in US.

Todd Gleason: 17:03

And that would be, reflected in the futures market as opposed to the basis market, which could be very wide just because of the logistics. But the futures might might or might not try to move demand of corn in some form.

Frayne Olson: 17:20

Yep. That is that is correct. That is correct. That that because it's a global global, condition and really the futures market is trying to put a value on US corn, that would be more of a futures play. The basis would be something with US logistics problems. US basis levels would would impact, but futures may not. On the flip side, you're absolutely right. If this is an international problem, futures market will likely take, you know, take note of that. And if there is a problem or we start to see a shift of export volume from, let's say, the Argentinians into the US, that would definitely be something that would impact the futures market.

Todd Gleason: 17:57

We will watch and see. Thank you much.

Frayne Olson: 17:59

Yep. Always always a visitor pleasure visiting with you. I appreciate it.

Todd Gleason: 18:02

Thank you, Frane. That's Frane Olson. He's an agricultural economist at North Dakota State University Extension in Fargo.

Todd Gleason: 18:21

Now let's check the weather forecast with Mark Russo at Everstream Analytics. Hi, Mark. Thank you very much for being with us today.

Mark Russo: 18:28

Hello, Todd. Thanks for having me.

Todd Gleason: 18:30

Let's start with river water levels. Begin at the Mississippi River. We were discussing, with Frane Olson at North Dakota State University what issues this might have logistically on the marketplace. Where does it stand today and what might impact those river levels going forward?

Mark Russo: 18:52

Yeah. Well, where we stand today looking at a location such as Memphis, Tennessee, Mississippi River is basically tied with last year for the lowest levels at this time of year. And that's also similar here further north, up towards the confluence of the Mississippi River and Ohio River. And then down south in New Orleans, it's little bit better here. Still below normal, but, you know, not as not not one of the lowest tier of the, of the past, 5 years there right now. What's gonna change these river levels in a significant way is, is is significant rain activity coming up either from a mid latitude storm system or from a tropical system. And, there will be some rain activity here coming up, in the southern part of the Mississippi River Basin, primarily Memphis southward. And a lot of that moisture is actually gonna be associated with a tropical storm, Francine, which is tracking towards the area.

Todd Gleason: 19:50

How soon might it come into play?

Mark Russo: 19:52

Well, it looks like the center of Francine will be making landfall most likely later in the day on Wednesday in kind of the coastal areas of Louisiana. Like, right now, best, location looks to be the central coast of Louisiana, but the rain shield associated with it is gonna be a bit more wide spread. So those rains will be starting as early as early Wednesday and then even continue on throughout the day on Thursday.

Todd Gleason: 20:21

And then, if you could turn your attention to a different river system, this one serving South America, the Paranam, begins in Brazil, if I remember correctly, and travels into and through Argentina, where the ports there can manage much larger vessels, actually ocean going vessels. And so I'm wondering what conditions are like for it today.

Mark Russo: 20:47

Yeah. Parana River continues to be at below normal levels. In fact, for this time of year, it currently registers as the 2nd lowest level at the port of, Rosario, 2nd lowest level of the past 10 years, and similar to at least at this time of year, similar to what we saw back in 2,021. As we look at the forecast here coming up, some stabilization as there will be some rain activity, within Argentina, within the river basin, and then also up into southern Brazil as well. So, so it continues to be something to watch. We're not expecting any major improvement over the next few weeks, but at least some stabilization or, you know, lack of further declines here.

Todd Gleason: 21:37

Since we are in South America and the planting season has begun, I know the latest reports out of Brazil suggest that first crop corn, has been planted to the rate of about 15%, the last thing I saw. But soybean planting, apparently has not started just yet.

Mark Russo: 21:55

Yeah. Well, one of the primary reasons for the lack of any kind of quick planting is the critically low soil moisture across much of center west and for that matter, eastern Brazil. And, it's basically at some of the lowest soil moisture levels on record, and farmers tend to, you know, wait for the rainy system rainy season to kick in across that area. It's typically is, you know, right around September 15th, throughout the second half of September. This year is looking a little bit delayed. Certainly, nothing, is expected the next 15 days across center West Brazil, but there are indications that by month end, rain activity could begin picking up across the region. And if that were to materialize, yeah, that would be about a 2 week delay or so in the rainy season. Nothing severe, but, you know, a little bit delayed from what we've seen in recent years.

Todd Gleason: 22:48

Thank you for all the updates. We appreciate it.

Mark Russo: 22:50

You're welcome, Todd.

Todd Gleason: 22:51

It's Mark Russo. He's with Everstream Analytics joined us on this Monday edition of the closing Market Report from Illinois Public Media. It's public radio for the farming world. Our theme music is written, performed, and produced by Logan County, Illinois farmer, Tim Gleason. I'm University of Illinois Extensions, Todd Gleason.