Oct 30 | Commodity Week

Todd Gleason: 00:00

This is the October 30 edition of Commodity Week. Todd Gleason's services are made available to WILL by Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Dave Chatterton. He is with Strategic Farm Marketing right here in Champaign County, Illinois.

Todd Gleason: 00:23

We're also joined by the Ag Market team, including from Normal, Illinois, Kurt Kimmel, as well as Matt Bennett from Windsor, Illinois. Commodity Week, of course, is a production of Illinois Public Media. You can find us online at willag.org, willag.org, where you can buy your tickets today for the Farm Assets Conference that's coming up on the December. It'll be in Bloomington at the AGRA Center this year. And the IPAS or the Illinois Farm Economic Summit Series is the following week in DeKalb as well as Peoria and Mount Vernon.

Todd Gleason: 00:59

All the tickets are available and more details at willag.org willag.0rg. Let's get a list of items that we should talk about. I know that on the list, Dave Chatterton, will be the Thursday agreement between The United States and China. What else have you been watching?

Dave Chatterton: 01:19

Yeah, Todd. Obviously, of the list is geopolitics here. I think also we need to talk about the South American situation and in terms of they are planting and getting ready to grow a crop in what looks to be a record crop. Weather so far there has been highly favorable, I think, for for their outcome. Still a long ways to go, and certainly that's a soybean conversation, not necessarily a corn conversation at this point.

Dave Chatterton: 01:39

And you move beyond that, and I think there's still a lot of old crop in the hands of producers here, that's coming out of harvest and looking for a plan or looking for, an execution on those bushels, whether it's you know, do we hold? Do we do we do we sell a carry now? Do we wait? All kinds of opportunities here, all kinds of, I guess, ideas on how that should be done.

Todd Gleason: 02:00

Kurt Kimmel from agmarket.net on your list.

Curt Kimmel: 02:03

Well, I'd agree with what Dave said there. You could do a whole three day seminar on all those topics right there. But, yeah, just a lot of questions to go through. The volatility in the marketplace picked up. So there's gonna be a lot

Todd Gleason: 02:16

of different things to watch here as we move forward. And finally, Matt Bennett.

Matt Bennett: 02:21

Yeah. I mean, I would agree. I I think whenever we look at for from a timeliness standpoint, you look at, you know, input cost fertilizer. Guys are putting, trying to figure out what they're gonna do for next year. And I do think that seeing, Nova twenty six poke its head above $11 this week, makes an interesting discussion, with a cash strap grower.

Todd Gleason: 02:39

When you and I were talking on Thursday afternoon during the closing market report, it appeared certainly that secretary Rollins was telling us that the deal in China was 12,000,000 metric tons by January and then 25,000,000 metric tons of soybeans to China in '26, '27, and '28. All looked like calendar years, but it's clearly not quite that simple. It could be, but we don't know whether it's marketing year at this point or calendar year. Does it make much of a difference one versus the other?

Matt Bennett: 03:18

Yeah. It makes a lot of difference. If we're gonna do marketing year, then that means if it's 12,000,000 tons, it's between now and September, you know? And and do we include the the beans that they purchased, you know, earlier in the year? I mean, clearly, from a marketing standpoint, they haven't purchased anything.

Matt Bennett: 03:35

But, I mean, there's a whole different set of reasons we could look at this differently. But let's just say it is calendar year. If it's calendar year, then that means in the next fourteen months, we're gonna see 37,000,000 metric tons of soybeans exported to China. That'd be huge. And what it would be, it'd be a stabilizing factor.

Matt Bennett: 03:55

It it would make you feel good about the fact that, you know, the balance sheet isn't as out of whack as some of us were afraid that it would be. I mean, whenever we looked at China, it was just completely absent. Yeah. Export inspections haven't been too bad without China, but, clearly, the USDA was gonna have to drastically lower exports out of their balance sheet. Now maybe they don't.

Matt Bennett: 04:14

And so you're probably still looking at a snug balance sheet. But, yeah, it absolutely does matter, Todd.

Todd Gleason: 04:19

And if it's the other way around and it's not the calendar year and it's the marketing year?

Matt Bennett: 04:26

You know, if it's the marketing year, in all honesty, I don't think that it's bearish, so to speak, but it certainly isn't as bullish. I mean, what it does is it keeps the you know, some of these exports in your balance sheet, first of all. Second of all, if there's an assurance that is signed that we see 25 for three straight years, in my opinion, what it does, especially as we're ramping up domestic consumption of soybeans, It keeps your balance sheet pretty snug, and I think it calls for more soybean acres in the in the coming years.

Todd Gleason: 04:55

The cynic d and me says there probably won't be a signed document, but maybe I'm wrong about that. It is very transactional. We'll find out whether that's the case. Now I do want to get the idea Dave Chatterton from you about this 12,000,000 metric tons whether it is calendar year or this marketing year. Either way, it doesn't really change that much.

Todd Gleason: 05:22

I don't think what USDA has on its books in the September World Ag supply and demand estimate. And has it really changed the fundamentals of the marketplace very much?

Dave Chatterton: 05:34

Yeah, Todd. I mean, a little bit to unpack there. The first thing I would say is that anytime it's a deal with China and anytime it's an unsigned deal with China, you know, we have to use a little bit of caution here. China has a strong historical record of not living up to these agreements. So I don't wanna be, you know, saying that what what happened today was bearish because it's certainly not.

Dave Chatterton: 05:53

We're in a much better position now than we were a month ago, two months ago, or earlier in the year. And so whatever China buys is a bonus at this point. But if you break out that 12,000,000 and depending on whether it's 12,000,000 for this season, 12,000,000 for this calendar year, or 12,000,000 for the marketing year, I think makes a pretty big difference. Because if you look at where we're at, China this calendar year has bought almost 6,000,000 metric tons of beans already. Now those were old crop beans.

Dave Chatterton: 06:18

And we're now in the new crop season where they bought three cargoes or a 180,000 metric tons. Last year, China bought 22 and a half million metric tons total. So we have a long way to go. So if it's this year, calendar year, and we've already bought 6,000,000, we only have 6,000,000 to go. And if it's 12,000,000, we're doubling that into next fall.

Dave Chatterton: 06:41

Very big difference there in terms of what that carryout is going to look like in 2526. It could be 250, 200,000, 200,000,000 on the low side. It could be 500 on the high side depending on how that goes. And there's also been this mention of 19,000,000 metric tons for the other Southeast Asian countries. When we go back and look at the math, typically you look at those countries 20,000,000 a year about what they buy.

Dave Chatterton: 07:06

So that's great, but there was no time frame assigned to that. And we don't know that that's really anything more than they would normally buy. So I think there's still a lot of unanswered questions here. And we have to, I hate to say, proceed with a little bit of caution. Does it is it bearish the market from these levels?

Dave Chatterton: 07:22

I don't think so as as as Matt alluded to, but how bullish it becomes, I think we have to work our way into that.

Todd Gleason: 07:29

Well, thanks for adding one more bit of complexity to this by counting what we've already sold in this calendar year into that number and making the total 6,000,000 metric tons through January as opposed to 12. A lot easier to ship, by the way, if we if we can do that over the three months period. One last thing on this topic and then we can move on. And I think this is important related to the 26, 27, and 28, 25,000,000 metric ton expected purchases by China. What has been agreed to is a one year truce at this point.

Todd Gleason: 08:07

That mostly excludes all of next year's and every crop thereafter if something goes wrong or awry. And I'm wondering whether that makes a difference to you at this point or not, Kurt, or whether it's just something to be aware of.

Curt Kimmel: 08:25

When you look at long term, boy, I mean, next week's long term, so we'll see what unfolds. But three years out, you look at No26 beans, they were down on the day. So I think the urgency is up front here versus down the road. But one thing we've got to remember is all the strength is up front, the urgency is up front. This rally has put us most expensive beans in the world.

Curt Kimmel: 08:49

So where's the rest of the trade going to go? To the Southern Hemisphere. But from here on out we'll see if they follow through some of the interviews with the Asian traders where we are being encouraged to look at buying beans from The U. S. So is it mainly government's going to come in and buy the beans to replace their reserve or some of the private or other industries in China crushers going to buy these beans?

Curt Kimmel: 09:17

So there's a lot in front of us to see. But as a producer, I think we gotta manage some risk here at

Todd Gleason: 09:21

this higher level in case this whole thing falls apart because Trump did address the defense department to test nuclear weapons. And one final note before we leave this. As we look forward through the coming year, you might watch Kafka as the purchaser. It is the only company in China that is owned by the Communist Party, and I make mention of that because there remains a 35% tariff on soybeans imported into China from The United States. COFCO would be the easiest one for that tariff to be let go from by the party itself.

Todd Gleason: 09:58

Now let's turn our attention to the fundamentals of the marketplace. Where do we stand today as it relates to sales going across the scale and what producers should be doing? They don't have much time probably only corn at this point that's going to cross the scale. How do they deal with that and whether they want to pay the in charge or to look at making a cash sale?

Curt Kimmel: 10:25

Well for the most part I think the central part of the Midwest is fairly wrapped up. They've already made a decision on what to do with it. I think the top priority as a producer you got to kind of sit down, see where the market was when you put in storage or sold it, see where the market is now to see if it paid the in charge. My past experience, it's awful hard to get a producer to move cash grade once they paid the in charge or filled a bin. So just need to push the pencil to kinda see where you are.

Curt Kimmel: 10:57

The simplest thing to do is, if you wanna hang on, at least put a price floor in here and let the thing ride for a while.

Todd Gleason: 11:03

So corn and soybeans have rallied. Basis has tightened up in our part of the world for sure over time. What's that telling you about the marketplace? Is it that farmers are are done and they lock the bin door, or is it a smaller crop combination of both?

Matt Bennett: 11:21

You know, I think that the assumption most people make whenever you see basis tighten up the way that it has is that it's a smaller crop, but you gotta be careful in making that assumption. You know, I was just talking about this on a podcast, just last week, and I said, there's been more bags this year than ever before. I mean, yeah, I've been across quite a bit of the Midwest, and I see bags everywhere I go. And so people have bagged corn and soybeans. They saw the carry in the market.

Matt Bennett: 11:45

They said, hey. I'm not gonna sell at this wide basis. I'm gonna go ahead and sell the carry. Hopefully, sell the carry, but they saw the carry, and that's what put it in the bag. I had a guy that actually emailed me the following day and said that he tried to buy a bagger in August and could not find one in North America.

Matt Bennett: 12:03

And so that tells me that there's been more stuff bagged this year. Guys have put stuff on in an old shop that's got a concrete floor, government bins, you name it. But we've got a lot of corn that and soybeans that people are holding on to. And so I don't think that you can make the assumption the crop's smaller. Do I think the crop's smaller than USDA?

Matt Bennett: 12:22

Yes. I do think that. But is it wildly smaller? I'm not sure about that. I mean, we hear a lot of, horror stories on yields, and then you turn around and talk to someone that had 280 bushel corn.

Matt Bennett: 12:32

So, there's been some awfully good corn around. I think it'll average out, you know, three, four bushel below USDA on corn, currently would be where I'd I'd be at, and maybe just a shade under on soybeans. I don't think it's wildly lower on beans.

Todd Gleason: 12:45

Sage wisdom from Darrell Good that you and I both learned in the class or for me over twenty or thirty years of interviewing him every week was if something made you make a marketing change in your plans sell that today or at least a portion of that crop. If you were bagging it sell it. So now let's go with farmers who have a crop that they put away, that they did not make that sale on. What's your follow-up advice for them?

Dave Chatterton: 13:16

Yeah, Todd. I mean, would agree wholeheartedly with what Matt said. We have a customer who's a bagger dealer sold out early in the year and just, everywhere you go, you see grain. And I think farmers, you know, not that the USDA yields don't have to come down a little bit. I agree with Matt that they do, but I think farmers got very creative, in putting grain away, corn and soybeans both in the Midwest because of where prices were and because of where the carrier was.

Dave Chatterton: 13:40

I think the commercials, as a large part, came in empty and thinking they were gonna buy a lot at a very attractive basis to from their perspective, and it didn't come, and they've gotten caught. We've seen Decatur bean basis rally over 60¢, you know, from the harvest low. So at this point with the rally that we've seen, call it a dollar flat price in soybeans, call it, you know, 30¢, 20¢ in corn, you have to be able as a farmer to look at that and say, hey, we're pricing in some risk. We've made a rebound. There's carry in this marketplace, and that carry is your friend.

Dave Chatterton: 14:12

So we are still a proponent of selling rallies into the marketplace here and being, I guess, proactive on risk management. There's a time to play offense in terms of marketing. There's a time to play defense. Unfortunately, I think we're still on the defensive side. Doesn't mean you have to sell everything, but you know that that grain is going to have to move.

Dave Chatterton: 14:29

And even though Basis has rallied here, the board has rallied as well, and there is a lot of bushels that are gonna be looking for a home come late December, January, March, and so forth. So you're competing with a lot of storage bushels out there, and I think you have to be aware of that.

Todd Gleason: 14:44

So as Dave was telling us, there are two a couple of different ways that farmers are gonna have to deal with the crop, particularly if it's in the bin or on the farm or at the elevator. What kinds of things are you telling them at this point? I know you went through some of this, but, they have to deal with it differently. And at this point, they've got in charges. They've got interest rates to worry about.

Todd Gleason: 15:07

What kinds of advice do you have for them?

Curt Kimmel: 15:08

Yeah. You just gotta push the pencil, see what your options are is the main thing. The the thing to look at technically, when you look at the long term chart, Brian split our technical analyst. He's done a fantastic job of pointing out several important key elements on the chart. The thing in the bean is lead contract.

Curt Kimmel: 15:27

$11 is kind of a swing point in through here. Even though the deferred's gone a little higher than that, I think you gotta watch out on a close or see if we follow through. As producer, you can go ahead and move some beans here. Then we've been doing some simple bull call spreads, buying $11 call, selling a $12 call to help pay for it. That way, we go above $11, you're on board.

Curt Kimmel: 15:49

If not, you got your cash in your hand. It caps out at 12, but to go an extra dollar from here, you know, we'll see. Same thing on the corn chart, where foreman's kind of head and shoulders bottom. We had that hammer low here just not too long ago, so the corn's got so many here for a while. But if we kinda see this head and shoulders bottom take place in through here, we could have some more legs under it.

Curt Kimmel: 16:10

So same situation. Buy a $4.50 call, sell a $5 call. That way you've got a little bit of reownership, but it's just a matter of individual pushing the pencil and see where they are.

Todd Gleason: 16:21

Let's stay with, Brian Split in agmarket.net and talk a little bit more about soybeans. They did post an outside update on Thursday. However, there is a gap under that on the lead or on the November chart. On the daily and weekly nearby chart, there are two gaps, and I'm wondering how much of a draw that will be for the technicians to push this market lower as opposed to higher.

Matt Bennett: 16:53

Yeah. I mean, Brian and I were talking about this actually today, and I believe one m's in the ten sixty level, ten sixty one, somewhere in there. So, you know, one thing that he said is that, you know, he feels like anytime you take beans above $11, if you can establish yourself there, typically, you're gonna make a run towards 12. And so if we do get a pullback, you know, I know there's a lot of guys kinda wanting to own some beans here, especially if you got rid of your beans, this fall and you sold over $9.60 or 70. And I know that, there's some folks around there that did that, and I may have been one of them, to be honest with you, on some beans that we couldn't store.

Matt Bennett: 17:28

So, you know, if that's the case, you get a pullback and you wanna get some ownership, I think there's a lot you can do with that. The thing is is that historically, if you do go back 11 oh, above 11 like that and you establish yourself, chances are you're going above 12, maybe even at twelve fifty. So I hate to get too bold up, but it's certainly what historically the bean market does.

Dave Chatterton: 17:49

Yeah, Todd. I mean, great point by Matt that that and I think if you look at at the way things have changed here and and nothing against Brian or or, you know, the traditional way of looking at fundamentals, The market to me, you know, this day and age trades momentum, and it trades computers. And the old school technicians, it's not that they don't have the right approach, but I don't think gaps matter as much as they used to if I wanna put it in those terms. And and no offense to a technician. Having said that, think the momentum is clearly to the upside, especially in soybeans.

Dave Chatterton: 18:20

As you mentioned, you look at that outside day up, didn't have, you know, quite that momentum today, but when we look at where we're going, we did make a new high here for the move today. And in doing so, tomorrow is the end of the month. And then we're gonna look at those weekly and those monthly charge having a a nice reversal pattern. And Momentum wants to trade flow. And right now, the flow is on the buy side, and it's to the upside.

Dave Chatterton: 18:42

Now the fundamental side of the market may or may not support that. The China deal or whatever, you know, whatever iteration of that is realized is certainly not bearish the market. So I think we're in a situation here, Todd, where the the China deal kinda hit the over in terms of what the market was expecting. We may still see a higher old crop US carryout, in soybeans, which is is not necessarily bullish. But I think in the near term here, we're gonna have to give this market a little bit of time to see how aggressive China is in buying US soybeans.

Dave Chatterton: 19:11

And right now, I think there's a a level of patience there that in the spec community that's willing to wait and see if they're coming to the table. We don't have USDA, you know, export flash sales or weekly export reports, but we do have the cash market, and we do spreads that we can watch. And so those things are gonna be closely monitored here in the next few weeks.

Todd Gleason: 19:28

I do wanna ask each of you to go through in your own minds how things have changed over the years and decades that you have traded as it's related because you discussed gaps and technical technical markets, the seasonals potentially, what we would refer to as the winter doldrums, which might come up, those kinds of things. Are they still in play? Have things changed enough with I'll just simply call it black box trade that they don't matter as much? Clearly, you think the technicals gaps in some of the old school sorts of things are not in play. Do they choose moving averages?

Todd Gleason: 20:11

What is it they're working off of?

Dave Chatterton: 20:12

Yeah, Todd. I mean, they're looking at momentum indicators, and technicals do matter, and they matter a lot, especially to these spec traders who actually don't know a lot about the fundamentals of grain. When you talk to them, you would honestly be astonished at how little they do know. But they have they have a signal from a chart or a computer based and algorithmic based model that says buy or sell. And right now, that momentum is to the upside.

Dave Chatterton: 20:33

So we're, you know, we're moving that. I think we're in a situation now where it's not that technicals don't matter because they do, but they're used, I think, in a different way than they have been in the past. I think the seasonals somewhat and and some of the those issues have taken a little bit of a backseat to what I'll call spinning this geopolitical wheel. We have a tweet, a truth social post, a new headline every day about which way we're going, and, you know, the markets have been somewhat sensitive to that. And so right now, that's that's leading the leading the the horse from behind more than likely.

Dave Chatterton: 21:07

But fundamentals will have their day, but I don't know that it's necessarily in the in the short term here.

Todd Gleason: 21:12

Okay. So how things changed over your years in the business?

Curt Kimmel: 21:15

Shoot. When I started, we had the clacker board on the wall and the newswire in the corner. Today, you guys got these phones that get more information before I do. But, yeah, we're we're subject to social media, what can happen electronically, news wise in the middle of the night. It's just a different breed of cat.

Curt Kimmel: 21:34

But I do believe fundamentally, though, we still have that seasonality to put a low in before harvest as everybody dumps grain, if not two years of grain, and then reloads and have the seasonal up in into Thanksgiving. I still think that's probably in play this year. As far as the gaps and so forth, there's something to watch for guys who wanna buy lower and the market to go down is gonna go fill that gap for if you're already long, know this is a breakaway gap, and we get giddy up going here. But the trend used to be your friend. That's somewhat still true, but I think the commodity fund might be your friend.

Curt Kimmel: 22:09

They're long beans. They've been that way for some time. They've added to that. They were super short to meal, and they're covering those short meal positions. So it's a lot of moving parts.

Curt Kimmel: 22:21

You just don't watch the weather. You watch the funds and social media.

Matt Bennett: 22:25

Yeah. Absolutely. I think a a couple things that these guys said that come to mind. For one thing, the seasonals, I think, have changed somewhat due to the fact that we don't raise the largest soybean crop in the world anymore. And so seasonals might be more based on Brazilian weather than what they are ours.

Matt Bennett: 22:41

I mean, there's no doubt there's a Brazilian weather market that we have to deal with. You know, safrinha crop is obviously a lot smaller than what our corn crop is, but it's still important because they export a fair amount of corn. And so, you know, I think whenever whenever I first started, you know, I mean, it's completely different than what it is today. A lot of phone calls. Yeah.

Matt Bennett: 22:59

You watch the screen, but now you watch the screen, you click a button, and you just made a trade. You can do it very rapidly. You know, you don't have to handle all the paper. It's just been an incredible adjustment that we've seen over the course of time. But the availability of information, you know, one thing comes to mind whenever you talk about social media posts is, you know, I think you look at this cattle market over the last week and clearly one social media post just spooked the daylights out of the funds and the funds sold precipitously.

Matt Bennett: 23:30

You know, talking about Argentina bringing in four times the amount of the quota, that was going to raise our imports 1%. And you're not going to tell me that that ruined the market. What ruined the market is when we came out and said we're going to lower beef prices. And whenever someone says that that's running in The US, it's certainly what it did for the funds is they said, we're gonna have to get out of this thing. It's too volatile.

Matt Bennett: 23:50

And so, yes, you have to watch social media. You gotta see what's going on geopolitically. It all happens very fast, much faster than it used to.

Todd Gleason: 23:58

On the seasonality shifting from North America to South America, I'm wondering if that is an issue for this soybean market at this point. While it has been dry in parts of Brazil, particularly Mato Grosso or the Cinder West, it's not expected to stay that way, and they have what, by all accounts at this point, a a monster crop, a enormous crop bigger than last year that is coming on and will be harvested in 2026.

Matt Bennett: 24:32

Yeah. I mean, that's the assumption that you would have to make. I mean, clearly, these weather anomalies have been, abundant, though, over the last year or two, and so you don't know if they're gonna get dry in parts of Brazil. I've said all along, if you get a trade deal and Brazil weather, this bean market could get super interesting. But at this point, I mean, we know one thing's for sure.

Matt Bennett: 24:52

They plant more soybeans. It's a yearly tradition for them. They plant more beans every year. And so it what it does is that weather issues don't affect their ability to produce near as much as it did five years ago because they're planting significantly more beans than what they did five years ago. So there's no doubt right now.

Matt Bennett: 25:11

You've got to make the assumption they're gonna have a pretty darn big crop. But, you know, the news that we got this week gives us some assurance if it's all gonna come to pass, you know, that we're gonna be looking at good exports regardless.

Todd Gleason: 25:24

Eventually, over time, do you suppose that because the Brazilian size of the soybean crop is so large that The United States will become the residual supplier of soybeans? And what does that mean for the marketplace? We have wheat as an experience.

Dave Chatterton: 25:42

Well, I think in terms of soybeans, Todd, we're there. I mean, we our domestic and our biofuel use use has certainly gone up, and it's, you know, our our record crush month after record crush month. And thank goodness we do have that. And I think the deal that hopefully got cut here with China and them honoring all or part of the those volumes certainly helps us bridge the gap while we build out the remainder of that biofuel infrastructure and domestic usage. But, you know, if you look at where we're at right now and going back to this China deal and, you know, Brazilian beans right now, they had a record crop essentially last year that they're pulling forward, and their values on a five basis are 95¢, a dollar, a dollar 5 cheaper than US values from December forward.

Dave Chatterton: 26:25

So they're extending that old crop export window and changing the seasonality of the market and changing the seasonality of the export window for The US in doing so. And start harvesting in mid Jan and have beans on the water by probably early Feb at a discount to US values. And one thing that, you know, I think we've learned about China is that they are not they are a price and a value buyer. They're not going to buy a lot of beans at a at a premium probably to honor a deal. So I think again, I think we have to be a little bit cautious.

Dave Chatterton: 26:55

These framework type agreements that aren't enforceable, typically, China in the past has had an exclusionary clause in there that says, if beans are available elsewhere in the world cheaper, we don't have to honor that commitment. So we have some hurdles to overcome and and and do that. But certainly, especially being you know, wheat was the first example, beans are the current example of how that that world flow, I think, is changing. And we are now I won't say we're, I guess, a residual supplier is is maybe not the correct term. But, you know, China this year to this point before the trade deal got got announced needed somewhere in neighborhood of 10 to 12,000,000 metric tons of beans to get to Brazilian new crop harvest.

Dave Chatterton: 27:33

So maybe they buy that from The US, but next year with higher acres in Brazil, they're only gonna need 5,000,000 or 4,000,000. And the year after that, they can get by without any. Now it doesn't mean they won't buy US beans. I'm not trying to be the bear in their in their in the closet here, but I think we have to face reality that that's the market we're dealing with on the export side for soybeans.

Todd Gleason: 27:54

Turn your attention to corn. We have a 98,000,000 acre plus corn crop now in the bin. It was a good crop. The question is, how good? And I'm wondering how much pressure will come on the marketplace simply because the number of acres of corn that we harvested.

Curt Kimmel: 28:13

Well, listen to the commercial guys. They say there's just a wall of grain coming after the first of the year. We'll But this corn yield's still out to the jury yet because when I visit with guys, you talk to them one day, they're 20 bushel below last year. You talk to them, oh, you know, a week later, that's 10 bushel better than last year. So I think here in the Midwest, central part at least, it's not there.

Curt Kimmel: 28:36

There's portions of Iowa that I think is really struggling. So even though we have more acres, I don't necessarily think the yield's there. But corn demand's huge. It's strong. I think corn's got some legs under it, and I think, you know, ethanol exports are good.

Curt Kimmel: 28:52

So when you look at the corn supply demand balance sheet with you lower that yield a little bit, I I think it's gonna be a little tighter than what we've seen here last. But where are we with the USDA on crop reports? Because they were not out in the field taking surveys. So are we gonna rely on farmer surveys?

Todd Gleason: 29:09

That would come in December, and it seems like it may be the only place that we have to rely upon.

Matt Bennett: 29:14

Yeah. In December, you usually take that month off, you know, so we may actually have to work in December this year. You know, last year, I mean, clearly, we it would have been nice to know that lower corn yield that was coming. They they knew it before January. You know?

Matt Bennett: 29:28

And that's something I've talked to them about, you know, but regardless, whenever I look at the corn crop, in my opinion, it's it's again lower than what USDA said. One thing I gotta be cautious on is I do think USDA, little rich in their feed and residual usage number. That's gonna have to come down at some point. And I think when you take yield down, you're gonna bring that down to an extent. But at the same time, I think the combination, you know, of a little bit tighter balance sheet than what some people have been trading or thinking about along with a cash strapped grower that I alluded to at the start of the program, you know, I don't know what corn acres are gonna come in at this year, especially if you establish no beans, 26 over $11.

Matt Bennett: 30:06

I mean, there's a lot of conversations I think that are gonna be had that won't be all that comfortable, where a grower is gonna come to the realization they have to plant beans on some acres. And so I think your corn beans beans to corn guys tell you bean acres are really gonna come up with 98,000,000 acres planted in '25. But corn on corn, just looking at the cash flow, it looks rough. I mean, if you're gonna put on the fertilizer it takes for corn on corn for you to feel good about producing the yield that you think you need to produce, You can't come up with black ink at all unless you're very unrealistic as far as what you're spending or you're just cutting fertilizer. So I think that's gonna be a very interesting thing moving forward is what what kind of acres are we gonna get, is it gonna be enough to satisfy demand?

Todd Gleason: 30:50

One final thing to talk about on the international front is it's related to corn is Colombia, the number three importer of US corn. Free trade agreement that was pinned under the Obama administration in 2013. There is a big row between president Trump and the president of Colombia at this point. I'm wondering if there is very much concern that Colombia could disappear from The US export market for corn.

Dave Chatterton: 31:20

Yeah, Todd. It's a great question and certainly something that needs to be watched. I think when we look at that, Colombia is in a little different situation than a than a China or some of these other competing countries and that they probably do need The US a little bit more than than than we need them. And and I hate to say that. It sounds crass.

Dave Chatterton: 31:36

But in that sense, you know, they they are third largest buyer, but they're not the end all be all. And we need you know, because of these you know, the USDA adding in an additional three and a half million acres, you know, this summer and fall. We need every bushel of demand that we can get. Corn is a situation of a record record supply via, you know, old crop stocks and a record production year and record demand. And as, you know, Matt alluded to, I think the feed demand number can come down a little bit.

Dave Chatterton: 32:02

We need to keep that export line where it's at. And for corn to rally, you know, we need an event. We need a South American weather event. We need something that changes. And so, you know, keeping that demand base together, I think, is key for corn.

Dave Chatterton: 32:18

And, you know, you go into next year, the acre situation, I I don't know where we're gonna be. There was talk today about, you know, congress still working on a 12,000,000,000 bushel $12,000,000,000, excuse me, aid package for US farmers. And if we get the Trump deal and if we get those dollars and we get to spring, I'm not sure what the acreage ends up being. But to Matt's point, there I think there's a natural rotation out of high corn acres this year, there are going to be a certain amount of producers who are financially pinched that may not be able to to to to buy the inputs to plant the corn that they wanna plant in terms of acreage. So

Todd Gleason: 32:50

Let's get a final word from each of you, I think, Kurt Kimmel. We'll start with you from agmarket.net.

Curt Kimmel: 32:56

Wasn't that too long ago you saw on the media and magazines, the Chinese premier and Putin having drinks and having a good time, so I'm not quite for sure. Putin might be asking what's going on there. So we'll we'll see. Putin said he wanted peace, and there's no peace. So, you know, deal's a deal, but they're gonna follow through or not.

Curt Kimmel: 33:17

So the jury's out. We'll see what happens. But even though we're focused on this crop year, what to do with the bushels we have, don't fall asleep on 26 crop. Matt Bennett?

Matt Bennett: 33:28

Yeah. I would agree with Kurt. And I think, you know, one thing that we gotta be really careful of is our typical protocol is to get bullish when the market rallies. And we just had one heck of a soybean rally. And I'm not saying that you sell everything, but rewarding a rally isn't necessarily such a bad idea.

Matt Bennett: 33:43

And, yes, we need to take a look at 26. I mean, I'm of the opinion that on soybeans, I'd probably be a little more willing seller than what I would be on corn. I do think corn's gonna have to buy a few acres if this bean market stays as strong as what it is. But by all means, doing nothing is not the right thing to do at this stage.

Todd Gleason: 34:00

And Dave Chatterton.

Dave Chatterton: 34:01

Yeah. I mean, kudos to what these guys said. I mean, you know, have to stay disciplined into your plan here, and I think you have to reward rallies. Geopolitics and geopolitical turmoil, I guess, I'll say, are here to stay or at least they're here to stay as long as Trump, I think, is in office. And there's a good side to that and and certainly a bad side to that.

Dave Chatterton: 34:19

But I think you have to be willing to, to make some sales when the market does rally and give you the opportunity to either break even in terms of of one commodity or maybe make a little bit money in terms of the corn. So in doing so, you know, keep your eye again on '26. We are gonna see if we see a record South American crop and we see big, mean acres in The US, that $11 number could certainly be your friend. Options and and, you know, things that you can do on the board are always available to give you some upside and and and do so for a known cost and a known risk depending on how you structure them. So just, you know, play a little defense here.

Dave Chatterton: 34:55

We'll have our our offensive days, but I think for the foreseeable future, we have to be a little bit cautious and and be willing to take a kind of a a small profit here and and keep the operation going forward.

Todd Gleason: 35:05

Commodity Week is a production of Illinois Public Media. You may find and listen to the whole of the program anytime you'd like at willag.org, willag.0rg. Our thanks go to our panelists this week, including Dave Chatterton from Strategic Farm Marketing and from agmarket.net, Kurt Kimmel and Matt Bennett, I'm University of Illinois Extinction's Todd Gleeson.