August 7, 2025 • 34 mins
Panelists
- Chuck Shelby, RMCommodities.com
- Brian Splitt, AgMarket.net
- Chip Nellinger, BlueReef.ag
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the August 7 edition of Commodity Week.
(00:09):
Todd Gleason's services are madeavailable to WILL by Welcome to
Commodity Week. I am ToddGleason. Our panelists for the
day include Brian Split. He iswith agmarket.net.
Chuck Shelby is here from RiskManagement Commodities, Chip
Nellinger joins us from BlueReef Agrimarketing. Commodity
Week is a production of IllinoisPublic Medium. It is public
(00:30):
radio for the farming worldonline on demand anytime you'd
like to listen to us atwillag.org, willag.0rg. Chuck
Shelby at risk managementcommodities, I'd like to start
with you. What's on your list ofitems we should discuss for the
day?
Chuck Shelby (00:46):
Well, have the SBA report next week, and,
obviously, the market thinksit's a giant crop. Question is
how big it is? What's theweather gonna be in August? And,
we had, you know, this is ainteresting crop to say the
least and, certainly had plentyof
Todd Gleason (01:04):
water this year. Brian Split from agmarket.net. I
hope your list includes somechart techs for the day.
Brian Splitt (01:13):
Yeah. Absolutely. I think we could, definitely
cover some tech things. We'vegot, multiple agricultural
markets that are testing somevery big picture areas. We can
get into that as we discussmore.
Todd Gleason (01:23):
And finally Chip Nellinger of Blue Reef Agri
Marketing on your list.
Chip Nellinger (01:27):
Yeah, both those guys covered a lot Todd. The
crop report coming up, what arethe funds going to do going
forward? Have we built in thebiggest crop size right now with
some of these massive corn cropestimates we've got? And are we
going to see any trade deal outthere? I think the funds have
been a little handcuffed notwanting to put too big of a
(01:49):
position on in beans because ofthe uncertainty.
Just one tweet, one news story,could really change the name of
the game in the bean market. So,that could cause some choppy
trade going forward into August.
Todd Gleason (01:59):
Well, let's start with the USDA, WASDE, world
agricultural supply and domesticdemand estimates, the crop
production report, which areboth due out at 11AM central
noon in the Eastern time zone onTuesday of next week. Chuck
Shelby, you've looked at this.You always at risk management
commodities have a set ofnumbers you're thinking about as
(02:19):
it's related to yield nationalfor corn and soybeans. And I
also wanna know whether youthink Nebraska can make 200
bushel better corn this yearthan not. What are
Chuck Shelby (02:28):
you seeing? Looking close to one eighty five
on corn. You know, it's a reallygood crop out there. When you
look across the country, some ofthe states to the West,
interestingly enough, weresupposed to have bad and dry
weather and hot weather. Turnsout it's one of the wettest
growing seasons ever.
You know, there's some problemsout there. We keep seeing these
(02:50):
pollination issues. Know there'sa lot of diseases going around.
Guys are pretty good at treatingthat but will they put two
passes on? A lot of perfectionis hard to achieve at times so
right now, again, as the guyshave talked about, perfection is
the name of the game.
(03:12):
I think one thing that we willbe interested in seeing no
matter how high I believe it isa record crop, but what happens
next year? Can we duplicatethese conditions? I mean is this
the best we can be as far asmoisture? So I look at this crop
being a record and again it'sgoing to set the bar pretty high
for years to come. So will weduplicate this kind of weather?
(03:35):
How do we finish in August?Right now looks pretty good.
Todd Gleason (03:37):
Chip Nellinger, what numbers are you using at
Blue Reef AGRA marketing?
Chip Nellinger (03:41):
Yeah. Right now I think I'm in the one eighty
two, one eighty three range. Idon't think Chuck's out of line
to be one eighty five. I thinkit's an almost impossibility to
be up at the high end of some ofthese estimates there at 188,
one hundred eighty nine. Just avariable amount of problems out
there.
Chuck mentioned some of them,you know, I mean, we have plenty
(04:04):
of rain in July, but we had someawful hot temperatures. I'm
hearing producers also talkabout, man, I might actually
have an early harvest. I'mtalking some Northern Illinois
corn that has never stressed formoisture. The heat's really
pushing things along andtypically when you do that, it's
not the type of finish that youwant even if you get some
(04:25):
moisture along with it. So Ithink I'm in the 182 ish type
number.
I wouldn't be shocked in the endresult just to have it be 181,
182 and maybe kind of disappointthe market because we're trading
somewhere maybe well north ofthat, maybe even north of 185.
(04:45):
It's not where we finish, it'swhere we trade. You never know
that in real time, but I thinkwe may be going a long ways
towards factoring in maybe thebiggest yield especially in
corn.
Todd Gleason (04:57):
And Brian Split from agmarket.net.
Brian Splitt (05:00):
Yeah, so part of this is the art of trying to
figure out what the USDA mightsay versus what you really
believe internally that the cropis. So for the purpose of this,
we felt pretty comfortable to gojust a hair over 2% above trend.
A year ago, the USDA went 183.1,and with just, a lot of the
satellite imagery that's beingused, which is a big part of
(05:21):
their their yield estimate, sowe went 184.8. But I I think we
are at the point where themarket is pricing in more than
that. We've seen some privatenumbers that have been obviously
higher than that.
I think the the most well knownone is one eighty eight point
one out of Stonex. And so Ithink the market's more in
danger of of currently overdoingthe yield estimates to the
(05:43):
upside than they areunderestimating it. And Chip
made a really good point aboutthe overnight temperatures we've
seen, especially in the EasternCorn Belt. And I think that's
going to be something that kindof sneaks back into the market
here. But a lot of this crop I'mhearing is maybe twenty four
days ahead of schedule just bybeing pushed along further than
(06:04):
it should be at this stage.
That's going to have an impacton the crop. But again, a year
ago, the USDA raised yield inAugust. We had a dry August.
They raised it again inSeptember and October, and then
we really didn't get a major cutuntil January with a very small
revision in November. But themarket knew before the USDA told
us.
Todd Gleason (06:21):
Chuck, outside of Lafayette, Indiana, I know
you've probably been into thecornfields. What are you seeing
in your own crop? I was in a bitmore than a week ago. Good crop.
However, it is missing here andthere just a kernel, which
surprised me.
I don't know that I've comeacross that in years.
Chuck Shelby (06:43):
Well, it was kind of interesting ten days ago. I
was looking at our own sweetcorn and was gonna fix them
first time. We share a lane withone of our neighbors, and I
hadn't noticed it driving downthe road at 50 miles an hour but
once I stopped I noticed thesoaps were extremely long and I
pulled some ears and you knowreally poor pollination. I was
surprised now our our corndifferent variety and different
(07:06):
planting but it was fine so thatwas a shock to me. But you know,
as I talked to producers around,we have, you know, fields that
look great, but you really needto look at it.
I think there's going to be sometip back out there. The years
are extremely long, you know,sixteen, eighteen around. It's a
good crop, but I think Brianalluded to the fact and Chip, I
(07:28):
mean, the finish is reallyimportant. What we're going to
see now in this August reportis, you know, what farmers might
think, what the satellites looklike. A very good crop but how
far we blow it out to the topend I don't think we'll know
again as we get in the field andsee what the combines roll but a
lot of variability out there buta lot of really fantastic some
(07:50):
guys are gonna have the bestcrop ever.
Todd Gleason (07:52):
Okay Brian start with the tech for me in the
charts. What do you see afterthe three days this week where
we made new contract lows forcorn?
Brian Splitt (08:03):
So I'll start with what I would consider really the
big picture long term support,you know, that would be a
continuous chart. And what Imean by a continuous chart is,
it always plots the front monthcontract at any given time. And
so if we go back to 2020 anddraw the uptrend from 2020,
which were lows that we madeduring COVID, there were two
kind of distinct lows. One wasin April during the initial
(08:26):
onset of the bearishness when werealized what was going on in
the world was shutting down, andthen there was kind of a
secondary low in August. Thatstarted the uptrend.
The lows we made in August of ayear ago bottomed right at that
trend line, and so the lowsyesterday that we scored, this
is now the September contract at$3.75 was right against that
trend line. So you've got longterm trend line support on corn.
(08:48):
You could go into the soybeansand draw their long term uptrend
and this actually goes all theway back to the period of what
is this back in the early 2000s,02/2001, and draw that long term
uptrend. That is where the frontmonth beans bottomed out here
this week, and that's also rightwhere the short term uptrend
(09:09):
from August of a year ago toDecember comes in. So we're at
really some key long termsupport, it's not just corn and
soybeans.
You look at the continuous chartfor KC wheat, for example, we've
got the very same, falling wedgestructure that we had, in a
period between about 2008 and2010 that eventually bottomed
(09:30):
the market and we came screamingout of there into highs made in
2011. We've got that samedescending wedge here. It's just
a matter of really gettingthrough this downtrend and it
could be several months down theroad, but I think we're working
on consolidating into a bottomhere in the wheat market. And
you even look at a market likerice, you know, that's a market
that a lot of in the Delta arelooking at, and prices have been
(09:55):
substantially off of highsthere. But we've got a long term
uptrend in rice that startedback in about twenty fifteen,
sixteen, seventeen, eighteen,and we're at that uptrend in the
rice market as well.
So you've got a lot of theseagricultural commodities, that
have found themselves down tolong term uptrend support here
as we're pricing in very largecrops.
Todd Gleason (10:16):
Do you, from your tech side, think that we are at
this point where it's thesupport in it it should bounce?
Are you fearful that it mightbreak this to the downside?
Brian Splitt (10:27):
I think for what we know right now, we've
probably gone low enough for theshort term and and we might need
to see some more confirmation,actual field reports of big
yields. But when I think aboutwhere the market bottomed out
last year, was in August ago,Dees corn bottomed out at 3.85.
The low yesterday was at 3.96and 3 quarters. We're talking
(10:48):
just shy of 12¢, you know,higher than where we bottomed
out last year. And when webottomed out last year, we were
operating on the idea ofcarryout being about 2.037.
So you have to plug in, I thinkit's about a one eighty five
point five yield, using ourbalance sheets with, you know,
no change to demand whatsoeverto get your carryout to a 2.037
(11:11):
because of where the old cropcarrying, resides. So I think
the idea that we kind ofbottomed about a dime above last
year, when we're already talkingnumbers higher than one eighty
five, it really puts the onuson, actual field reports to
confirm that the crop is is whatit is. Because if it's not, it's
the same exact setup as lastyear where we're overdoing the
(11:33):
the yield expectation on paper.And meanwhile, as we're doing
that, prices are cheap and lookat our export book going on. I
mean, just sold over 3,000,000tons of corn last week, and
we're we're running at atremendous pace right now on our
demand.
Todd Gleason (11:46):
Chip, do you believe that that means we have
a sideways market in front of usfor a month or a month and a
half while we wait for thecombines to run-in corn across
the Midwest?
Chip Nellinger (11:55):
Well, think my biggest fear is the bean side.
Think to Brian's point, we hitsome pretty key support areas.
We were way overextendedoversold. We needed a bounce
anyway. And the way the marketsbottom is they usually bounce
(12:16):
like this.
You get people that wanna sellthat first bounce and then the
decision or the test comeswhether we can make new lows or
not. And so I think that's aheadof us. I think sideways, you
know, to me make some sense fora period of time, days, a couple
of weeks. I think it is going tobe important to see how we
(12:36):
react, how the market reacts towhatever number the USDA does
put out. They come out with a184 and the market rallies.
Maybe we are in the case wherewe have factored the biggest
crop in and it's not gonna be asbad. The other thing to keep in
mind, Brian mentioned this,demand has just been phenomenal
(12:57):
in corn. And, the way that USDAtypically works in their
economic models, when theyincrease supply like that, they
don't keep demand statictypically. So they assume that
with increasing supply pricesare gonna go lower, that
increases demand and it keeps,you know, that this big
burdensome carry out from beingrealized on paper. So that may
(13:20):
be enough to kind of keep thebears disappointed so to speak.
If we can't push into new lowswell under $4 and if we can't
make new lows, you know, sayback under $9.80 in the beans
real quick. I think we canbounce a little bit, maybe get
into, you know, September,October and kind of find out for
real what's out there fromactual harvest data.
Todd Gleason (13:42):
And Chuck, how do you see this playing out going
forward?
Chuck Shelby (13:45):
I think the biggest factor is when the funds
wanna get out. They're massivelyshort. Maybe we could go down,
like Brian said, a little bitlower, but you gotta look at the
meat on the bone for the funds.And when we go forward, I mean,
how much worse price can we lookat? Well you take inflation into
account.
These grains are extremely cheapand I think that's why world
(14:08):
buyers are coming to the table.Know do we make a harvest low on
futures before we get to youknow harvest? It wouldn't be
shocking but I think the thingto watch out for is a basis. The
basis is in some areas could bea problem if this crop in
certain areas is as big as itlooks. I know some areas are
starting to see the basis widenfor harvest delivery but I think
(14:31):
that's one thing producers needto you know be aware of and
watch out and make plans for.
Todd Gleason (14:36):
On that note JSA follows basis really closely.
What are they telling you Brian?
Brian Splitt (14:41):
Well we'd actually made a recommendation here
recently on corn, and this isreally specifically for bushels
that need to be sold out of thefield that you do not have on
farm storage. We want basislocked in on those bushels. We
do see that as being a problemas we get closer to harvest. And
there are some areas, especiallyif you're, you know, in the
(15:03):
Eastern Corn Belt where basis onold crop is still rather strong.
Basis on new crop, is, maybe notstrong, but acceptable.
Could be quite a bit worse. Andso, those are the bushels that
we're specifically concernedabout. You know, on a different
side of the market and lookingat soybeans, basis for soybeans
(15:26):
come fall in most areas justreally stinks. But if you kind
of look at what basis looks likemaybe as you get back out to
February delivery, for example,There's quite a bit of carry in
the cash market. Maybe goingfurther out, setting basis out
there in February if if that'san opportunity for you, try to
find a way to lock in the carryfrom NOV to March.
(15:48):
When I think about the amount ofcarry from November to March
right now, it's about 35, 35 anda half cents, and that's an
awful lot. So like 2023 was ayear where we built tremendous
carries. We're in a bear market.We had high interest rates for
the first time in a bear market,so we saw carries that we hadn't
seen. And the biggest carry thatwe saw from November, March in
2023 was 39 and a half cents.
(16:09):
We're 4¢ away from that, but wedidn't see 39 and a half cents a
carry that year until October 3.It's early August. I think we're
way overdoing the carry in themarket right now. I think the
commercials have pushed thecarry out here so they can lock
it in now before they get thebushels. And I think if you're a
producer, got to be thinking thesame way.
(16:29):
Locking the carry here, youcould do it on the board by
buying spread and set some basison some of these deferred
contracts if it makes sense foryou.
Todd Gleason (16:36):
I wanna follow-up, on a different area just a bit.
And Chuck or Chip, if you couldtake this up and maybe Chuck
maybe start. I'm thinking alittle bit about the wheat
market and the issues that cornhas with it, when wheat is
depressed in price and whetherit can manage to lead out of
this marketplace. We have theharvest done. The Northern
(16:59):
Hemisphere is the primary placewhere most of the wheat crop has
grown in The US other than orgrown, across the planet other
than Argentina and Australia.
Can we find a way to lift themarket or at least lead this
market as we go into the fall?
Chuck Shelby (17:16):
You know, it seems like the best hope for wheat
would be a cheap dollar, but,you know, wheat's just become a
crop that is the leastprofitable for producers to
produce. Know my answer has beenmake wheat the national cover
crop for a while and that wouldsolve the problem. It's
struggling when you also youknow you have to worry about the
(17:38):
problems in The Middle East, andwe're we're kind of a last
resort. I think wheat acres areprobably drift lower again. But
going forward, you know, I thinkthe hope for corn still lies in
the export business out there.
And wheat, I just can't see itget too excited at a point until
we maybe cut acres back evenmore going forward.
Todd Gleason (18:01):
Chip, I'll get to you on wheat in just a second,
but let me follow-up, Chuck,with you on on the export
market. Mexico has been ournumber one, export destination
for corn. The tariffs are pausedagain, relatively speaking with
that nation. It might give theman option to continue to import
(18:24):
corn into Mexico. Rails are youknow, the rail lines are the
way, and those trains go acrossevery day.
Will they take advantage of itand front load in fear that they
may end up in a tariffsituation? I know it's covered
by USMCA, but it coulddeteriorate.
Chuck Shelby (18:45):
Well I work with some farmers in Texas that have
been harvesting the crop and andthat's continually moving into
Mexico so you know Mexico hasbeen our best buyer as we go
forward you know maybe thetariffs are kinda like the stock
market reacted pretty negativelywhen tariffs were first
announced and and we recoveredthere. I think as time goes on,
(19:07):
maybe just the tariff word losessome of its concern. World
buyers, I mean if China's gonnabuy everything from South
America, those other countries,you know, come to us. Again, I
think it's a lot to do withprice. I mean, they look at
charge too.
They look at the crop coming.It's an opportunity I think you
(19:28):
know to load up here and I thinkthat demand is going to continue
to be there. Know if we try topredict the tariffs that's
pretty challenging from day today it might change but I'm
pretty comfortable that some ofthese countries are going to
continue to buy from us. Japan'sanother example and as we go
forward the tariffs will workthemselves out and I think a
(19:50):
function of price and what thiscrop is going to impact those
world buyers.
Todd Gleason (19:55):
And Chip, if you could follow-up in that export
market area and maybe say a wordabout wheat as well.
Chip Nellinger (20:02):
Yeah, I think it can go hand in hand. I think the
wheat, if you look at theexports of the last couple of
months, they've very quietlybeen above expectations, right?
And so some of that is the cheapwheat new contract lows. I think
that there's some talk that theRussian crop maybe is off
quality and maybe not as big ayielding as what we thought. And
(20:26):
so the seasonal post harvestrally is a little bit late in my
mind, but I think the rally inwheat, the last couple of days
off the lows has really helpedthe corn market taking some of
the pressure off of the cornmarkets.
Obviously they're competitivefeed grains. I agree with Chuck,
(20:47):
obviously in the short run atariff and increase in the
tariff or the breakdown of sometrade talks can have a short run
influence. I think it's a matterof price, right? And to the
point of China, they don'tnecessarily need our beans right
now. They might into winterahead of the new crop harvest.
(21:07):
Countries are going to do what'sin their best interest and make
deals that they feel is right.And whether our biggest
customers, whether that's Japan,Mexico, China to some extent,
when it pencils for them to buyour products, I think they still
will. And I think wheat's aperfect example of that. There
(21:28):
hasn't been a standout buyer,but just very quietly, we've
really seen a nice uptick inwheat exports. Obviously the
corn exports have been enormous.
I believe for this point of thecalendar for new crop were all
time record or very close secondin having a record amount of
(21:49):
corn booked ahead. The exportshave been tremendous. So, lot of
reasons to be bearish because oftrade deals and tariffs, but the
numbers just aren't proving itother than the Chinese bean
demand right now. And I'm notsure tariff or no tariff if
they'd be buying our beansanyway because of the size of
the Brazil crop.
Todd Gleason (22:09):
Brian, can you talk about the interplay,
between wheat and corn as it'srelated to the charts and how
one follows the other sometimesand what that means for
producers across the board.
Brian Splitt (22:24):
Well, I mean, it's when you have a wheat sometimes
becomes a feed component when itgets cheap enough enough
relative to corn, and that'sgonna help chew through some of
that extra wheat supply that youhave generally when it's when
it's priced low relative tocorn. But I think when you in
the context of the way that youasked the question earlier, I
(22:44):
don't think wheat is necessarilygoing to be what leads us out of
here. I think the market isprobably pretty comfortable with
the size of the wheat crop.There's really not going to be
much change there. We've alreadyseen the harvest.
So that's a demand story movingforward. Then Chip mentioned it,
wheat exports have been good.Not as stellar as the corn
exports here this week, butstill very good. And so I think
you've got the demand here isgoing to keep a steady hand
(23:05):
under the market. But the cornmarket probably has more
potential where we overshot theidea of how big the crop is
going to be, and then, you know,we might need to recorrect this
thing a little bit more becausewe still don't really know
what's out there.
We know what the wheat crop is.So I see this market maybe being
a little bit more of a cornleader here if the market does
(23:29):
perceive that we've overshot theyield. Now, the, big picture for
wheat, you know, we are holdingthe uptrend, that we've had in
place since the lows last year.We've been kind of meandering
about, we're at the low end of atrading range in wheat, we've
been in this trading range forthe last year. So, I think
you've got, you know, maybe somesome upside in wheat here.
I think the wheat market couldprobably, if we're looking at
(23:51):
yesterday, very good one daybar. We kind of had a long tail
below the market, open andclosed at the same price at the
upper end of the chart. You'dcall that a dragonfly doji,
which usually is a reversal hereoff the lows. And that should
bring some short covering in,and I think you probably could
see wheat rally 40 to 50¢ offthe lows we made yesterday. That
will help corn, but I I thinkthe leading element of this
(24:14):
might be the the corn marketoverdoing yield estimates to the
upside.
Todd Gleason (24:18):
Chuck, China's still not into the marketplace
for soybean imports. How much ofan issue is this going to be for
The US crop as we go intoharvest time and all the way
through January? When, if Brazilis predicted, as they do, to go
in early because of La Nina andrainfall coming there, we may
(24:41):
have a shorter export window.You know, it
Chuck Shelby (24:45):
certainly turned into a problem, especially as we
enter into harvest here.Concerning here, but I don't
think Trump is going to go overto talk to Zee or wherever they
might meet till October. So theymay just hang out and use that
as a kind of a negotiating tool.So it would be great to see them
(25:05):
start buying. They're reallygetting late for the time window
that they usually do.
I think it's just another demandproblem that we're going to have
to deal with and unfortunatelygoing into harvest we need those
kind of buys to pick up the paceand move the beans out at
harvest. An issue if they solvesomething and they decide that
(25:28):
they're gonna start buying downthe road, probably gives you a
pretty good jump in the market,but doesn't seem right now that
it's gonna happen anytime soon.
Todd Gleason (25:36):
Yeah. And, Chip, if this is the case, and it
appears it will be the case, itpresents a problem for producers
who generally store more corn onthe farm than they do soybeans.
What should they do in the casethat they're running beans
across the scale?
Chip Nellinger (25:53):
Yeah, that's a tough call Brian mentioned
earlier, bean basis in mostareas for fall, just abysmal
right now. And it's because ofthat, there may not be a real
good choice here other than bitethe bullet. A guy may want to
think about locking some of thatbasis sooner rather than later
as we get into the gut ofharvest in October, that fall
(26:17):
bean basis could be pretty ugly.I would say though that we even
without China, I have beensurprised that we continue to
sell beans, more beans than whatI had initially expected. I
think this world market isreally messed up.
The basis in South America,either they sold way more to
(26:39):
Brazil or to China and they'reout or it's logistic or
political. The basis is out ofwhack. In fact, there's reports
that on paper, it would evenpencil to import US beans into
Brazil right now. And that'sgiven us an upper hand right now
on some of these other countriesthat might be buying Brazil
(27:00):
outside of Chinese demand. Ithink the other thing that's
beneficial is crush margins arestill near a ten year high.
So we've got that demand andthat's a that doesn't matter if
beans are $14 or $4 a bushel. Ifthe crush margins are
profitable, crushers will buyevery bushel they can. And I
think that's helping offset someof the lost Chinese demand for
(27:22):
this point in time as well.
Todd Gleason (27:24):
Okay. And finally, before we get to our final word,
I'd like each of you to thinkand talk a little bit about
profit per acre bushels timesyield, and what producers really
have in the field if they havethis big of a corn crop and a
really pretty good soybean crop.How do they have to think about
that and manage it? Sometimesyou get caught up in just what
(27:47):
what price am I selling at asopposed to what my profit really
is per acre. Chuck, can you getme started on that one please?
Chuck Shelby (27:55):
I think it's a very good point Todd. Mean
producers are definitelydisappointed in the price but
when you look at the potentialand in a lot of areas to have a
really good too, maybe one ofthe best crops ever, It's not as
bad as it might seem.Unfortunately there are
producers in parts of Illinois,Indiana, Ohio, Kentucky, Eastern
Corn Belt that are struggling.It's not going to turn out the
(28:18):
way they hoped but again, whenyou look at maybe have a really
good beet yield, a good cornyield times prices, I think that
are obtainable or we can rallyback and get some more you know
opportunities. I think it's notas bad as it might seem.
I think we have to manage theexpectations. Questions still
(28:38):
become though that I think someof the guys what's out there in
the field it's still stillpretty big concern. We got a lot
of growing season to go on fillon corn and on soybeans too. So
you got to look at it a littlebit differently as we move into
the harvest season and and getprepared you know make a make a
plan here.
Todd Gleason (28:58):
Scout figure out what you think you have on the
bottom end make sure you havethat ready to go and to market.
What kind of targets might youset for those kinds of bushels,
Brian, split when you look atthe tech and the chart side?
Brian Splitt (29:12):
I mean, it's hard to say exactly how high the
market could go. We know themarket March corn, for example,
last year went four zero fourand then it rallied a dollar,
you know, into February. So themarket can obviously change
direction and make a largermove, in the opposite direction
than most people think in thebig picture. So, I think right
(29:32):
now it's really about managingyour high priority bushels, you
know, the stuff that needs to besold maybe of old crop, you
know, and those bushelsunfortunately are being sold
under duress. So if I'm if I'mliquidating those old crop
bushels, I would probably liketo find some type of an option
strategy to maintain ownershipfar enough into 2026 to, take
advantage of a change in marketsentiment.
(29:55):
And then it's the bushels thatyou can't store on farm. And if
there's one thing that I willalways tell a producer any year,
every given year, that I dothis, it is please do not pay
commercial storage. You can findways to own, on paper without
the downside risk of the market,cheaper than what they're gonna
charge you for commercialstorage. So do some apple to
apple comparisons.
Todd Gleason (30:14):
And, Chip, finally, managing total profit
per acre. How do you talk toproducers about that?
Chip Nellinger (30:19):
Yeah, Todd, think that's an interesting
question. I actually wasthinking about this earlier,
preparing for a presentation I'mdoing tonight in Burlington,
Iowa. And I was thinking aboutthis. I really think now these
are assuming bushels that arestored on farm, right? The over
the scale stuff at fall is adifferent animal and a different
(30:41):
plan.
But a lot of producers have alot of on farm storage anymore.
Between the carry in the marketand basis expected basis
appreciation out into winter.You know, I think it's really
possible for producers to kindof see a gross revenue back
towards $1,200 an acre on corn.And that should be kind of a
(31:02):
target rather than price. If youwant some upside ownership, you
know, add some calls to it orget some call spreads or
something.
If you can achieve that, I thinkthat's, you know, a 100 to $200
an acre profit, depending on theoperation. Beans are gonna be
the tough spot in my mind. I Ithink that if you get them back
towards $800 an acre, gross,that we ought to be maybe
(31:26):
thinking about playing defensethere. I know that's not making
much if any money, but that'skind of the way I'm thinking
about this to Brian's point.This thing could rally a lot
further than what we expect ifthe crop ends up shorter than
expected, but I think this is ayear to think about the the
carry in the market and learnhow to use that if you haven't
done it already.
(31:47):
Expected basis, that alonecarrying basis could be $60.70
bucks an acre, improvement fromwhat it looks like at fall. And
then look at those gross dollarsand have that as your goal
rather than an actual price thisyear.
Todd Gleason (32:01):
And let's wrap up as we usually do with a final
word from each of you. I'llstart with you Chuck Shelby at
risk management commodities inLafayette, Indiana. Your final
word, please.
Chuck Shelby (32:11):
I think we've been through a lot of negativity here
in agriculture. Don't know whenit'll turn around, I think the
funds have been pushing thismarket to the downside. I think
there'll be opportunities thatcan turn around. Look for
opportunities going forward andmake a plan for harvest here.
Todd Gleason (32:30):
Brian Split of agmarket.net your final word?
Brian Splitt (32:33):
Yeah I think you just really try and hone in on
what we were just talking aboutreally get an understanding of
your own operation. You know $4corn is not the same for an
individual in North Dakota as itfor a farmer in New York as it
is for one in Arkansas. Right?So you really just have to focus
on what your yield is, what yourcost structure is, and have
realistic expectations. Thenhave a plan in place of how
you're going to manage it if theprice gets to where you need it
(32:56):
to be.
Because a lot of times we kindof try to make decisions on the
fly rather than figuring outwhat we want to do ahead of time
and then executing that plan.
Todd Gleason (33:04):
And finally, Chip Nellinger of Blue Reef
Agrimarketing.
Chip Nellinger (33:07):
Yeah. Just reiterate what I what I said
earlier about the gross dollarand profit goals this year. I
mean, it's definitely differentthan what we're used to, right?
Then a few of the years pasthere, we're looking at $2.03,
400 an acre profit. We're not inthat environment anymore.
If we can see, know, 100 to $200an acre gains in corn and back
(33:28):
close to, you know, breakeven orsmall profitability and beans.
It may be worthwhile to pull thetrigger aggressively if you want
some upside, look at some callsor call spreads to to both Chuck
and Brian's point. You gottahave a plan. If you don't have a
plan, you're gonna watch therally come. You're gonna watch
it go, and you're not gonna haveacted on it.
(33:49):
So I I I would just agree withboth those guys too. You gotta
have a plan and you gottaimplement it.
Todd Gleason (33:54):
Commodity week, of course, is a production of
Illinois Public Media. It'spublic radio for the farming
world. You may find and listento the whole of the program
anytime you'd like. You can dothat on our website at
willag.org. That's willag.org.
Our thanks go to our paneliststoday including Chip Nellinger,
Brian Split, and Chuck Sheltonon University of Illinois
(34:15):
Extension's Todd Gleeson.
This is the August 7 edition of Commodity Week.
(00:09):
Todd Gleason's services are madeavailable to WILL by Welcome to
Commodity Week. I am ToddGleason. Our panelists for the
day include Brian Split. He iswith agmarket.net.
Chuck Shelby is here from RiskManagement Commodities, Chip
Nellinger joins us from BlueReef Agrimarketing. Commodity
Week is a production of IllinoisPublic Medium. It is public
(00:30):
radio for the farming worldonline on demand anytime you'd
like to listen to us atwillag.org, willag.0rg. Chuck
Shelby at risk managementcommodities, I'd like to start
with you. What's on your list ofitems we should discuss for the
day?
Chuck Shelby (00:46):
Well, have the SBA report next week, and,
obviously, the market thinksit's a giant crop. Question is
how big it is? What's theweather gonna be in August? And,
we had, you know, this is ainteresting crop to say the
least and, certainly had plentyof
Todd Gleason (01:04):
water this year. Brian Split from agmarket.net. I
hope your list includes somechart techs for the day.
Brian Splitt (01:13):
Yeah. Absolutely. I think we could, definitely
cover some tech things. We'vegot, multiple agricultural
markets that are testing somevery big picture areas. We can
get into that as we discussmore.
Todd Gleason (01:23):
And finally Chip Nellinger of Blue Reef Agri
Marketing on your list.
Chip Nellinger (01:27):
Yeah, both those guys covered a lot Todd. The
crop report coming up, what arethe funds going to do going
forward? Have we built in thebiggest crop size right now with
some of these massive corn cropestimates we've got? And are we
going to see any trade deal outthere? I think the funds have
been a little handcuffed notwanting to put too big of a
(01:49):
position on in beans because ofthe uncertainty.
Just one tweet, one news story,could really change the name of
the game in the bean market. So,that could cause some choppy
trade going forward into August.
Todd Gleason (01:59):
Well, let's start with the USDA, WASDE, world
agricultural supply and domesticdemand estimates, the crop
production report, which areboth due out at 11AM central
noon in the Eastern time zone onTuesday of next week. Chuck
Shelby, you've looked at this.You always at risk management
commodities have a set ofnumbers you're thinking about as
(02:19):
it's related to yield nationalfor corn and soybeans. And I
also wanna know whether youthink Nebraska can make 200
bushel better corn this yearthan not. What are
Chuck Shelby (02:28):
you seeing? Looking close to one eighty five
on corn. You know, it's a reallygood crop out there. When you
look across the country, some ofthe states to the West,
interestingly enough, weresupposed to have bad and dry
weather and hot weather. Turnsout it's one of the wettest
growing seasons ever.
You know, there's some problemsout there. We keep seeing these
(02:50):
pollination issues. Know there'sa lot of diseases going around.
Guys are pretty good at treatingthat but will they put two
passes on? A lot of perfectionis hard to achieve at times so
right now, again, as the guyshave talked about, perfection is
the name of the game.
(03:12):
I think one thing that we willbe interested in seeing no
matter how high I believe it isa record crop, but what happens
next year? Can we duplicatethese conditions? I mean is this
the best we can be as far asmoisture? So I look at this crop
being a record and again it'sgoing to set the bar pretty high
for years to come. So will weduplicate this kind of weather?
(03:35):
How do we finish in August?Right now looks pretty good.
Todd Gleason (03:37):
Chip Nellinger, what numbers are you using at
Blue Reef AGRA marketing?
Chip Nellinger (03:41):
Yeah. Right now I think I'm in the one eighty
two, one eighty three range. Idon't think Chuck's out of line
to be one eighty five. I thinkit's an almost impossibility to
be up at the high end of some ofthese estimates there at 188,
one hundred eighty nine. Just avariable amount of problems out
there.
Chuck mentioned some of them,you know, I mean, we have plenty
(04:04):
of rain in July, but we had someawful hot temperatures. I'm
hearing producers also talkabout, man, I might actually
have an early harvest. I'mtalking some Northern Illinois
corn that has never stressed formoisture. The heat's really
pushing things along andtypically when you do that, it's
not the type of finish that youwant even if you get some
(04:25):
moisture along with it. So Ithink I'm in the 182 ish type
number.
I wouldn't be shocked in the endresult just to have it be 181,
182 and maybe kind of disappointthe market because we're trading
somewhere maybe well north ofthat, maybe even north of 185.
(04:45):
It's not where we finish, it'swhere we trade. You never know
that in real time, but I thinkwe may be going a long ways
towards factoring in maybe thebiggest yield especially in
corn.
Todd Gleason (04:57):
And Brian Split from agmarket.net.
Brian Splitt (05:00):
Yeah, so part of this is the art of trying to
figure out what the USDA mightsay versus what you really
believe internally that the cropis. So for the purpose of this,
we felt pretty comfortable to gojust a hair over 2% above trend.
A year ago, the USDA went 183.1,and with just, a lot of the
satellite imagery that's beingused, which is a big part of
(05:21):
their their yield estimate, sowe went 184.8. But I I think we
are at the point where themarket is pricing in more than
that. We've seen some privatenumbers that have been obviously
higher than that.
I think the the most well knownone is one eighty eight point
one out of Stonex. And so Ithink the market's more in
danger of of currently overdoingthe yield estimates to the
(05:43):
upside than they areunderestimating it. And Chip
made a really good point aboutthe overnight temperatures we've
seen, especially in the EasternCorn Belt. And I think that's
going to be something that kindof sneaks back into the market
here. But a lot of this crop I'mhearing is maybe twenty four
days ahead of schedule just bybeing pushed along further than
(06:04):
it should be at this stage.
That's going to have an impacton the crop. But again, a year
ago, the USDA raised yield inAugust. We had a dry August.
They raised it again inSeptember and October, and then
we really didn't get a major cutuntil January with a very small
revision in November. But themarket knew before the USDA told
us.
Todd Gleason (06:21):
Chuck, outside of Lafayette, Indiana, I know
you've probably been into thecornfields. What are you seeing
in your own crop? I was in a bitmore than a week ago. Good crop.
However, it is missing here andthere just a kernel, which
surprised me.
I don't know that I've comeacross that in years.
Chuck Shelby (06:43):
Well, it was kind of interesting ten days ago. I
was looking at our own sweetcorn and was gonna fix them
first time. We share a lane withone of our neighbors, and I
hadn't noticed it driving downthe road at 50 miles an hour but
once I stopped I noticed thesoaps were extremely long and I
pulled some ears and you knowreally poor pollination. I was
surprised now our our corndifferent variety and different
(07:06):
planting but it was fine so thatwas a shock to me. But you know,
as I talked to producers around,we have, you know, fields that
look great, but you really needto look at it.
I think there's going to be sometip back out there. The years
are extremely long, you know,sixteen, eighteen around. It's a
good crop, but I think Brianalluded to the fact and Chip, I
(07:28):
mean, the finish is reallyimportant. What we're going to
see now in this August reportis, you know, what farmers might
think, what the satellites looklike. A very good crop but how
far we blow it out to the topend I don't think we'll know
again as we get in the field andsee what the combines roll but a
lot of variability out there buta lot of really fantastic some
(07:50):
guys are gonna have the bestcrop ever.
Todd Gleason (07:52):
Okay Brian start with the tech for me in the
charts. What do you see afterthe three days this week where
we made new contract lows forcorn?
Brian Splitt (08:03):
So I'll start with what I would consider really the
big picture long term support,you know, that would be a
continuous chart. And what Imean by a continuous chart is,
it always plots the front monthcontract at any given time. And
so if we go back to 2020 anddraw the uptrend from 2020,
which were lows that we madeduring COVID, there were two
kind of distinct lows. One wasin April during the initial
(08:26):
onset of the bearishness when werealized what was going on in
the world was shutting down, andthen there was kind of a
secondary low in August. Thatstarted the uptrend.
The lows we made in August of ayear ago bottomed right at that
trend line, and so the lowsyesterday that we scored, this
is now the September contract at$3.75 was right against that
trend line. So you've got longterm trend line support on corn.
(08:48):
You could go into the soybeansand draw their long term uptrend
and this actually goes all theway back to the period of what
is this back in the early 2000s,02/2001, and draw that long term
uptrend. That is where the frontmonth beans bottomed out here
this week, and that's also rightwhere the short term uptrend
(09:09):
from August of a year ago toDecember comes in. So we're at
really some key long termsupport, it's not just corn and
soybeans.
You look at the continuous chartfor KC wheat, for example, we've
got the very same, falling wedgestructure that we had, in a
period between about 2008 and2010 that eventually bottomed
(09:30):
the market and we came screamingout of there into highs made in
2011. We've got that samedescending wedge here. It's just
a matter of really gettingthrough this downtrend and it
could be several months down theroad, but I think we're working
on consolidating into a bottomhere in the wheat market. And
you even look at a market likerice, you know, that's a market
that a lot of in the Delta arelooking at, and prices have been
(09:55):
substantially off of highsthere. But we've got a long term
uptrend in rice that startedback in about twenty fifteen,
sixteen, seventeen, eighteen,and we're at that uptrend in the
rice market as well.
So you've got a lot of theseagricultural commodities, that
have found themselves down tolong term uptrend support here
as we're pricing in very largecrops.
Todd Gleason (10:16):
Do you, from your tech side, think that we are at
this point where it's thesupport in it it should bounce?
Are you fearful that it mightbreak this to the downside?
Brian Splitt (10:27):
I think for what we know right now, we've
probably gone low enough for theshort term and and we might need
to see some more confirmation,actual field reports of big
yields. But when I think aboutwhere the market bottomed out
last year, was in August ago,Dees corn bottomed out at 3.85.
The low yesterday was at 3.96and 3 quarters. We're talking
(10:48):
just shy of 12¢, you know,higher than where we bottomed
out last year. And when webottomed out last year, we were
operating on the idea ofcarryout being about 2.037.
So you have to plug in, I thinkit's about a one eighty five
point five yield, using ourbalance sheets with, you know,
no change to demand whatsoeverto get your carryout to a 2.037
(11:11):
because of where the old cropcarrying, resides. So I think
the idea that we kind ofbottomed about a dime above last
year, when we're already talkingnumbers higher than one eighty
five, it really puts the onuson, actual field reports to
confirm that the crop is is whatit is. Because if it's not, it's
the same exact setup as lastyear where we're overdoing the
(11:33):
the yield expectation on paper.And meanwhile, as we're doing
that, prices are cheap and lookat our export book going on. I
mean, just sold over 3,000,000tons of corn last week, and
we're we're running at atremendous pace right now on our
demand.
Todd Gleason (11:46):
Chip, do you believe that that means we have
a sideways market in front of usfor a month or a month and a
half while we wait for thecombines to run-in corn across
the Midwest?
Chip Nellinger (11:55):
Well, think my biggest fear is the bean side.
Think to Brian's point, we hitsome pretty key support areas.
We were way overextendedoversold. We needed a bounce
anyway. And the way the marketsbottom is they usually bounce
(12:16):
like this.
You get people that wanna sellthat first bounce and then the
decision or the test comeswhether we can make new lows or
not. And so I think that's aheadof us. I think sideways, you
know, to me make some sense fora period of time, days, a couple
of weeks. I think it is going tobe important to see how we
(12:36):
react, how the market reacts towhatever number the USDA does
put out. They come out with a184 and the market rallies.
Maybe we are in the case wherewe have factored the biggest
crop in and it's not gonna be asbad. The other thing to keep in
mind, Brian mentioned this,demand has just been phenomenal
(12:57):
in corn. And, the way that USDAtypically works in their
economic models, when theyincrease supply like that, they
don't keep demand statictypically. So they assume that
with increasing supply pricesare gonna go lower, that
increases demand and it keeps,you know, that this big
burdensome carry out from beingrealized on paper. So that may
(13:20):
be enough to kind of keep thebears disappointed so to speak.
If we can't push into new lowswell under $4 and if we can't
make new lows, you know, sayback under $9.80 in the beans
real quick. I think we canbounce a little bit, maybe get
into, you know, September,October and kind of find out for
real what's out there fromactual harvest data.
Todd Gleason (13:42):
And Chuck, how do you see this playing out going
forward?
Chuck Shelby (13:45):
I think the biggest factor is when the funds
wanna get out. They're massivelyshort. Maybe we could go down,
like Brian said, a little bitlower, but you gotta look at the
meat on the bone for the funds.And when we go forward, I mean,
how much worse price can we lookat? Well you take inflation into
account.
These grains are extremely cheapand I think that's why world
(14:08):
buyers are coming to the table.Know do we make a harvest low on
futures before we get to youknow harvest? It wouldn't be
shocking but I think the thingto watch out for is a basis. The
basis is in some areas could bea problem if this crop in
certain areas is as big as itlooks. I know some areas are
starting to see the basis widenfor harvest delivery but I think
(14:31):
that's one thing producers needto you know be aware of and
watch out and make plans for.
Todd Gleason (14:36):
On that note JSA follows basis really closely.
What are they telling you Brian?
Brian Splitt (14:41):
Well we'd actually made a recommendation here
recently on corn, and this isreally specifically for bushels
that need to be sold out of thefield that you do not have on
farm storage. We want basislocked in on those bushels. We
do see that as being a problemas we get closer to harvest. And
there are some areas, especiallyif you're, you know, in the
(15:03):
Eastern Corn Belt where basis onold crop is still rather strong.
Basis on new crop, is, maybe notstrong, but acceptable.
Could be quite a bit worse. Andso, those are the bushels that
we're specifically concernedabout. You know, on a different
side of the market and lookingat soybeans, basis for soybeans
(15:26):
come fall in most areas justreally stinks. But if you kind
of look at what basis looks likemaybe as you get back out to
February delivery, for example,There's quite a bit of carry in
the cash market. Maybe goingfurther out, setting basis out
there in February if if that'san opportunity for you, try to
find a way to lock in the carryfrom NOV to March.
(15:48):
When I think about the amount ofcarry from November to March
right now, it's about 35, 35 anda half cents, and that's an
awful lot. So like 2023 was ayear where we built tremendous
carries. We're in a bear market.We had high interest rates for
the first time in a bear market,so we saw carries that we hadn't
seen. And the biggest carry thatwe saw from November, March in
2023 was 39 and a half cents.
(16:09):
We're 4¢ away from that, but wedidn't see 39 and a half cents a
carry that year until October 3.It's early August. I think we're
way overdoing the carry in themarket right now. I think the
commercials have pushed thecarry out here so they can lock
it in now before they get thebushels. And I think if you're a
producer, got to be thinking thesame way.
(16:29):
Locking the carry here, youcould do it on the board by
buying spread and set some basison some of these deferred
contracts if it makes sense foryou.
Todd Gleason (16:36):
I wanna follow-up, on a different area just a bit.
And Chuck or Chip, if you couldtake this up and maybe Chuck
maybe start. I'm thinking alittle bit about the wheat
market and the issues that cornhas with it, when wheat is
depressed in price and whetherit can manage to lead out of
this marketplace. We have theharvest done. The Northern
(16:59):
Hemisphere is the primary placewhere most of the wheat crop has
grown in The US other than orgrown, across the planet other
than Argentina and Australia.
Can we find a way to lift themarket or at least lead this
market as we go into the fall?
Chuck Shelby (17:16):
You know, it seems like the best hope for wheat
would be a cheap dollar, but,you know, wheat's just become a
crop that is the leastprofitable for producers to
produce. Know my answer has beenmake wheat the national cover
crop for a while and that wouldsolve the problem. It's
struggling when you also youknow you have to worry about the
(17:38):
problems in The Middle East, andwe're we're kind of a last
resort. I think wheat acres areprobably drift lower again. But
going forward, you know, I thinkthe hope for corn still lies in
the export business out there.
And wheat, I just can't see itget too excited at a point until
we maybe cut acres back evenmore going forward.
Todd Gleason (18:01):
Chip, I'll get to you on wheat in just a second,
but let me follow-up, Chuck,with you on on the export
market. Mexico has been ournumber one, export destination
for corn. The tariffs are pausedagain, relatively speaking with
that nation. It might give theman option to continue to import
(18:24):
corn into Mexico. Rails are youknow, the rail lines are the
way, and those trains go acrossevery day.
Will they take advantage of itand front load in fear that they
may end up in a tariffsituation? I know it's covered
by USMCA, but it coulddeteriorate.
Chuck Shelby (18:45):
Well I work with some farmers in Texas that have
been harvesting the crop and andthat's continually moving into
Mexico so you know Mexico hasbeen our best buyer as we go
forward you know maybe thetariffs are kinda like the stock
market reacted pretty negativelywhen tariffs were first
announced and and we recoveredthere. I think as time goes on,
(19:07):
maybe just the tariff word losessome of its concern. World
buyers, I mean if China's gonnabuy everything from South
America, those other countries,you know, come to us. Again, I
think it's a lot to do withprice. I mean, they look at
charge too.
They look at the crop coming.It's an opportunity I think you
(19:28):
know to load up here and I thinkthat demand is going to continue
to be there. Know if we try topredict the tariffs that's
pretty challenging from day today it might change but I'm
pretty comfortable that some ofthese countries are going to
continue to buy from us. Japan'sanother example and as we go
forward the tariffs will workthemselves out and I think a
(19:50):
function of price and what thiscrop is going to impact those
world buyers.
Todd Gleason (19:55):
And Chip, if you could follow-up in that export
market area and maybe say a wordabout wheat as well.
Chip Nellinger (20:02):
Yeah, I think it can go hand in hand. I think the
wheat, if you look at theexports of the last couple of
months, they've very quietlybeen above expectations, right?
And so some of that is the cheapwheat new contract lows. I think
that there's some talk that theRussian crop maybe is off
quality and maybe not as big ayielding as what we thought. And
(20:26):
so the seasonal post harvestrally is a little bit late in my
mind, but I think the rally inwheat, the last couple of days
off the lows has really helpedthe corn market taking some of
the pressure off of the cornmarkets.
Obviously they're competitivefeed grains. I agree with Chuck,
(20:47):
obviously in the short run atariff and increase in the
tariff or the breakdown of sometrade talks can have a short run
influence. I think it's a matterof price, right? And to the
point of China, they don'tnecessarily need our beans right
now. They might into winterahead of the new crop harvest.
(21:07):
Countries are going to do what'sin their best interest and make
deals that they feel is right.And whether our biggest
customers, whether that's Japan,Mexico, China to some extent,
when it pencils for them to buyour products, I think they still
will. And I think wheat's aperfect example of that. There
(21:28):
hasn't been a standout buyer,but just very quietly, we've
really seen a nice uptick inwheat exports. Obviously the
corn exports have been enormous.
I believe for this point of thecalendar for new crop were all
time record or very close secondin having a record amount of
(21:49):
corn booked ahead. The exportshave been tremendous. So, lot of
reasons to be bearish because oftrade deals and tariffs, but the
numbers just aren't proving itother than the Chinese bean
demand right now. And I'm notsure tariff or no tariff if
they'd be buying our beansanyway because of the size of
the Brazil crop.
Todd Gleason (22:09):
Brian, can you talk about the interplay,
between wheat and corn as it'srelated to the charts and how
one follows the other sometimesand what that means for
producers across the board.
Brian Splitt (22:24):
Well, I mean, it's when you have a wheat sometimes
becomes a feed component when itgets cheap enough enough
relative to corn, and that'sgonna help chew through some of
that extra wheat supply that youhave generally when it's when
it's priced low relative tocorn. But I think when you in
the context of the way that youasked the question earlier, I
(22:44):
don't think wheat is necessarilygoing to be what leads us out of
here. I think the market isprobably pretty comfortable with
the size of the wheat crop.There's really not going to be
much change there. We've alreadyseen the harvest.
So that's a demand story movingforward. Then Chip mentioned it,
wheat exports have been good.Not as stellar as the corn
exports here this week, butstill very good. And so I think
you've got the demand here isgoing to keep a steady hand
(23:05):
under the market. But the cornmarket probably has more
potential where we overshot theidea of how big the crop is
going to be, and then, you know,we might need to recorrect this
thing a little bit more becausewe still don't really know
what's out there.
We know what the wheat crop is.So I see this market maybe being
a little bit more of a cornleader here if the market does
(23:29):
perceive that we've overshot theyield. Now, the, big picture for
wheat, you know, we are holdingthe uptrend, that we've had in
place since the lows last year.We've been kind of meandering
about, we're at the low end of atrading range in wheat, we've
been in this trading range forthe last year. So, I think
you've got, you know, maybe somesome upside in wheat here.
I think the wheat market couldprobably, if we're looking at
(23:51):
yesterday, very good one daybar. We kind of had a long tail
below the market, open andclosed at the same price at the
upper end of the chart. You'dcall that a dragonfly doji,
which usually is a reversal hereoff the lows. And that should
bring some short covering in,and I think you probably could
see wheat rally 40 to 50¢ offthe lows we made yesterday. That
will help corn, but I I thinkthe leading element of this
(24:14):
might be the the corn marketoverdoing yield estimates to the
upside.
Todd Gleason (24:18):
Chuck, China's still not into the marketplace
for soybean imports. How much ofan issue is this going to be for
The US crop as we go intoharvest time and all the way
through January? When, if Brazilis predicted, as they do, to go
in early because of La Nina andrainfall coming there, we may
(24:41):
have a shorter export window.You know, it
Chuck Shelby (24:45):
certainly turned into a problem, especially as we
enter into harvest here.Concerning here, but I don't
think Trump is going to go overto talk to Zee or wherever they
might meet till October. So theymay just hang out and use that
as a kind of a negotiating tool.So it would be great to see them
(25:05):
start buying. They're reallygetting late for the time window
that they usually do.
I think it's just another demandproblem that we're going to have
to deal with and unfortunatelygoing into harvest we need those
kind of buys to pick up the paceand move the beans out at
harvest. An issue if they solvesomething and they decide that
(25:28):
they're gonna start buying downthe road, probably gives you a
pretty good jump in the market,but doesn't seem right now that
it's gonna happen anytime soon.
Todd Gleason (25:36):
Yeah. And, Chip, if this is the case, and it
appears it will be the case, itpresents a problem for producers
who generally store more corn onthe farm than they do soybeans.
What should they do in the casethat they're running beans
across the scale?
Chip Nellinger (25:53):
Yeah, that's a tough call Brian mentioned
earlier, bean basis in mostareas for fall, just abysmal
right now. And it's because ofthat, there may not be a real
good choice here other than bitethe bullet. A guy may want to
think about locking some of thatbasis sooner rather than later
as we get into the gut ofharvest in October, that fall
(26:17):
bean basis could be pretty ugly.I would say though that we even
without China, I have beensurprised that we continue to
sell beans, more beans than whatI had initially expected. I
think this world market isreally messed up.
The basis in South America,either they sold way more to
(26:39):
Brazil or to China and they'reout or it's logistic or
political. The basis is out ofwhack. In fact, there's reports
that on paper, it would evenpencil to import US beans into
Brazil right now. And that'sgiven us an upper hand right now
on some of these other countriesthat might be buying Brazil
(27:00):
outside of Chinese demand. Ithink the other thing that's
beneficial is crush margins arestill near a ten year high.
So we've got that demand andthat's a that doesn't matter if
beans are $14 or $4 a bushel. Ifthe crush margins are
profitable, crushers will buyevery bushel they can. And I
think that's helping offset someof the lost Chinese demand for
(27:22):
this point in time as well.
Todd Gleason (27:24):
Okay. And finally, before we get to our final word,
I'd like each of you to thinkand talk a little bit about
profit per acre bushels timesyield, and what producers really
have in the field if they havethis big of a corn crop and a
really pretty good soybean crop.How do they have to think about
that and manage it? Sometimesyou get caught up in just what
(27:47):
what price am I selling at asopposed to what my profit really
is per acre. Chuck, can you getme started on that one please?
Chuck Shelby (27:55):
I think it's a very good point Todd. Mean
producers are definitelydisappointed in the price but
when you look at the potentialand in a lot of areas to have a
really good too, maybe one ofthe best crops ever, It's not as
bad as it might seem.Unfortunately there are
producers in parts of Illinois,Indiana, Ohio, Kentucky, Eastern
Corn Belt that are struggling.It's not going to turn out the
(28:18):
way they hoped but again, whenyou look at maybe have a really
good beet yield, a good cornyield times prices, I think that
are obtainable or we can rallyback and get some more you know
opportunities. I think it's notas bad as it might seem.
I think we have to manage theexpectations. Questions still
(28:38):
become though that I think someof the guys what's out there in
the field it's still stillpretty big concern. We got a lot
of growing season to go on fillon corn and on soybeans too. So
you got to look at it a littlebit differently as we move into
the harvest season and and getprepared you know make a make a
plan here.
Todd Gleason (28:58):
Scout figure out what you think you have on the
bottom end make sure you havethat ready to go and to market.
What kind of targets might youset for those kinds of bushels,
Brian, split when you look atthe tech and the chart side?
Brian Splitt (29:12):
I mean, it's hard to say exactly how high the
market could go. We know themarket March corn, for example,
last year went four zero fourand then it rallied a dollar,
you know, into February. So themarket can obviously change
direction and make a largermove, in the opposite direction
than most people think in thebig picture. So, I think right
(29:32):
now it's really about managingyour high priority bushels, you
know, the stuff that needs to besold maybe of old crop, you
know, and those bushelsunfortunately are being sold
under duress. So if I'm if I'mliquidating those old crop
bushels, I would probably liketo find some type of an option
strategy to maintain ownershipfar enough into 2026 to, take
advantage of a change in marketsentiment.
(29:55):
And then it's the bushels thatyou can't store on farm. And if
there's one thing that I willalways tell a producer any year,
every given year, that I dothis, it is please do not pay
commercial storage. You can findways to own, on paper without
the downside risk of the market,cheaper than what they're gonna
charge you for commercialstorage. So do some apple to
apple comparisons.
Todd Gleason (30:14):
And, Chip, finally, managing total profit
per acre. How do you talk toproducers about that?
Chip Nellinger (30:19):
Yeah, Todd, think that's an interesting
question. I actually wasthinking about this earlier,
preparing for a presentation I'mdoing tonight in Burlington,
Iowa. And I was thinking aboutthis. I really think now these
are assuming bushels that arestored on farm, right? The over
the scale stuff at fall is adifferent animal and a different
(30:41):
plan.
But a lot of producers have alot of on farm storage anymore.
Between the carry in the marketand basis expected basis
appreciation out into winter.You know, I think it's really
possible for producers to kindof see a gross revenue back
towards $1,200 an acre on corn.And that should be kind of a
(31:02):
target rather than price. If youwant some upside ownership, you
know, add some calls to it orget some call spreads or
something.
If you can achieve that, I thinkthat's, you know, a 100 to $200
an acre profit, depending on theoperation. Beans are gonna be
the tough spot in my mind. I Ithink that if you get them back
towards $800 an acre, gross,that we ought to be maybe
(31:26):
thinking about playing defensethere. I know that's not making
much if any money, but that'skind of the way I'm thinking
about this to Brian's point.This thing could rally a lot
further than what we expect ifthe crop ends up shorter than
expected, but I think this is ayear to think about the the
carry in the market and learnhow to use that if you haven't
done it already.
(31:47):
Expected basis, that alonecarrying basis could be $60.70
bucks an acre, improvement fromwhat it looks like at fall. And
then look at those gross dollarsand have that as your goal
rather than an actual price thisyear.
Todd Gleason (32:01):
And let's wrap up as we usually do with a final
word from each of you. I'llstart with you Chuck Shelby at
risk management commodities inLafayette, Indiana. Your final
word, please.
Chuck Shelby (32:11):
I think we've been through a lot of negativity here
in agriculture. Don't know whenit'll turn around, I think the
funds have been pushing thismarket to the downside. I think
there'll be opportunities thatcan turn around. Look for
opportunities going forward andmake a plan for harvest here.
Todd Gleason (32:30):
Brian Split of agmarket.net your final word?
Brian Splitt (32:33):
Yeah I think you just really try and hone in on
what we were just talking aboutreally get an understanding of
your own operation. You know $4corn is not the same for an
individual in North Dakota as itfor a farmer in New York as it
is for one in Arkansas. Right?So you really just have to focus
on what your yield is, what yourcost structure is, and have
realistic expectations. Thenhave a plan in place of how
you're going to manage it if theprice gets to where you need it
(32:56):
to be.
Because a lot of times we kindof try to make decisions on the
fly rather than figuring outwhat we want to do ahead of time
and then executing that plan.
Todd Gleason (33:04):
And finally, Chip Nellinger of Blue Reef
Agrimarketing.
Chip Nellinger (33:07):
Yeah. Just reiterate what I what I said
earlier about the gross dollarand profit goals this year. I
mean, it's definitely differentthan what we're used to, right?
Then a few of the years pasthere, we're looking at $2.03,
400 an acre profit. We're not inthat environment anymore.
If we can see, know, 100 to $200an acre gains in corn and back
(33:28):
close to, you know, breakeven orsmall profitability and beans.
It may be worthwhile to pull thetrigger aggressively if you want
some upside, look at some callsor call spreads to to both Chuck
and Brian's point. You gottahave a plan. If you don't have a
plan, you're gonna watch therally come. You're gonna watch
it go, and you're not gonna haveacted on it.
(33:49):
So I I I would just agree withboth those guys too. You gotta
have a plan and you gottaimplement it.
Todd Gleason (33:54):
Commodity week, of course, is a production of
Illinois Public Media. It'spublic radio for the farming
world. You may find and listento the whole of the program
anytime you'd like. You can dothat on our website at
willag.org. That's willag.org.
Our thanks go to our paneliststoday including Chip Nellinger,
Brian Split, and Chuck Sheltonon University of Illinois
(34:15):
Extension's Todd Gleeson.
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