August 14, 2025 • 33 mins
Panelists
- Naomi Blohm, TotalFarmMarketing.com
- Greg Johnson, TGM TotalGrainMarketing
- Mike Zuzolo, GlobalCommResearch.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the August 14 edition of Commodity Week.
announcer (00:07):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:12):
Well, welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Naomi Blome. She's a
totalfarmmarketing.com out ofWest Bend, Wisconsin. Greg
Johnson is here from TGM,totalgrainmarketing.com out of
Champaign, Illinois, theelevator operated by FS Grow
Mark.
And Mike Zuzlow is here fromglobalcomresearch.com out of
(00:34):
Atchison, Kansas. CommodityWeek, of course, is a production
of Illinois Public Media. It'spublic radio for the farming
world online, on demand atwillag.org willag.0rg. This
week, the Illinois State Faircontinues through Sunday and
then next week we'll be watchingChip Florian company, the Pro
(00:55):
Farmer Midwest crop tour headsoff across, seven states. Try to
try to stay up to speed on whatthey're actually finding in the
field.
And then finally, the followingweek is farm progress show.
That'll be in Decatur this yearand Mike Zuzlow does plan to
make the trip in. Thank you Mikefor doing that. I look forward
(01:17):
to having you on stage at theUniversity of Illinois tent and
I suspect you'll be talking tomany other farm broadcasters
while you're here too.
Mike Zuzolo (01:27):
It's a great time of year. It brings back a lot of
memories, brings back a lot offond memories of starting in in
the business and Will Radiobeing the very first one out
there that took this poor sap ofa man on and let him talk on the
air. So that was really nice tobe out there with you again,
Todd.
Todd Gleason (01:45):
Do you know what year it is you started with WIL?
Mike Zuzolo (01:48):
9096. '96 with Charlie Lindy. I was filling in
for Bob Utterback who was on theroad trip. He was the Farm
Journal economist. Couldn't makethe one of the dailies, and, or
maybe it was a commodity week.
I can't remember which. But,yeah, it was '96.
Todd Gleason (02:03):
1996. Well, thank you much, and thank you for the
service. We appreciate that hereat Illinois Public Media. Naomi
Bloem is with us as well attotalfarmmarketing.com. Hello,
Naomi.
Thank you for being with ustoday. You're the newest one
with us on the list, and GregJohnson is here from TGM. Greg
(02:24):
has been on
Mike Zuzolo (02:24):
the air.
Todd Gleason (02:25):
Do you know how long Greg at WILO by chance?
Greg Johnson (02:29):
I really don't, but I do remember Charlie Lindy.
So, whatever his last year was,probably a few years before
that.
Todd Gleason (02:35):
Okay. So back in the early, late early two
thousands, late nineteennineties, one of the two for you
as well. So let's start, Naomi,with you. Since you are the
youngster amongst the crew of uswho have been working with WILL,
what is your what is on yourlist of things that we ought to
(02:55):
discuss today?
Naomi Blohm (02:56):
Well, would say just keeping an eye on the
soybean market. Of course, theUSDA report had some very
supportive tones to it, but westill need China to show up and
buy some beans. So I'd like todo a little bit of a deeper dive
on that.
Todd Gleason (03:10):
Greg Johnson, what's on your list?
Greg Johnson (03:13):
Well, all the farmers are asking me what the
correlation is between cropconditions, percentage good and
excellent versus final yield,because they're just having a
hard time believing that we havea 188.8 corn crop out there. So
that correlation, I think we candiscuss that a little bit. This
dry August, at least here inEast Central Illinois, I don't
(03:36):
know if it's that wayeverywhere, but what impact will
that have on finishing up thecorn crop and filling out the
beans? And then as Naomi said, Ithink that US China trade
negotiation is huge. The lasttime that, China did not buy
beans from us, what kind of animpact did that have on not only
the futures price, but the cashbasis levels as well that fall.
Todd Gleason (03:57):
And Mike Zislow on your list.
Mike Zuzolo (03:59):
Yeah. Just dovetailing with the other two's
great comments. I I think thisis is a huge amount of deja vu
with August when we didn't makethat commodity demand low that I
was hoping for at the July,August 1, it really started to
feel like deja vu all over againin the August with this weather
coming on now with the hotter,drier bias and and the wheat not
(04:23):
being able to make a low, butthe beans making one first. It
just keeps rolling on and on asfar as how similar this year is
to last.
Todd Gleason (04:30):
Okay. So, Naomi, why don't you recap for me the
USDA report that came outearlier this week? And within
that, of course, we might wantto put some context to the CONAB
numbers which were releasedearlier today too.
Naomi Blohm (04:45):
Right, so for the USDA report, the big overview on
the corn side of things, theUSDA raised acres, they raised
yield and they raised yield justan astronomical number. We're
now at 188.8, up 7.8 from theUSDA trend line number prior.
(05:06):
This was the largest everproduction and yield jump we've
ever seen in an August report.The previous big yield jump was
in 2016. They raised yieldsseven bushels then and
production was up 600,000,000bushels.
So that was the showstopper,just this huge crop out there.
(05:27):
On the soybean side of things,we had lower acres, but bigger
yield. And the net resultthough, was that production for
soybeans down from where we wereexpecting and that dropped
ending stocks. Now the USDA didlower exports. And so that shows
(05:50):
that they're aware China is notbuying yet.
So they're trying to keep thesituation real, but it was a
really friendly number forsoybeans. Not a lot of big
changes on the USDA report fromSouth America, but for CONAB
today, you know, they just,they're going to have a big crop
and when you convert it tobushels, so thank you for that
(06:14):
information that you had sharedwith us earlier, their August
production number for corn inBrazil, 5,394,000,000 bushels up
from their July number of 5.196.So we're still looking at a big
crop in Brazil for corn that'sgetting harvested and coming to
(06:34):
market yet to compete with ourAmerican products. And on the
soybean side, still just bigproduction numbers for soybeans
out of Brazil. 6.234 is what thenumber came in at, up from 6.228
in July.
So CONAB doubling down on whatthey have for production. USDA
(06:59):
was very slow to do any changeson this most recent report, but
we'll see if that'll become anissue going forward.
Todd Gleason (07:07):
Always interesting to hear those numbers from
Brazil in bushels and thinkingabout the size of their soybean
crop being over 6,000,000,000bushels larger than ours, but
their corn crop about the samesize as our soybean crop in that
that 5,000,000,000 bushel range.Now, Greg Johnson, I would like
you to talk about the USDAreport numbers as it relates to
(07:30):
the question farmers have beenasking you. Does it correlate
very well to crop progressreports? And tell me you looked
up the long ago Farm Doc Dailyon this particular topic level.
Greg Johnson (07:45):
Well, I assuming that we have normal finishing
weather in August and September,there is a little bit of a
correlation there. It's notexact, and this year could be
one of those years where it'snot because, like I say, farmers
that have been scouting theirfields are finding, you know,
the fields look nice, dark greenfrom the roadside but when they
(08:05):
get in, they see a few issues,you know, the bottom, the last
one to two inches tip back, someuneven pollination due to some
tassel wrap. It's certainlybelievable since we've had some
extremely warm days and warmnights in June and July and now
it sounds like here in August,we're going to get another
return of hot hot weather andhot dry weather And like I say,
(08:28):
here in East Central Illinois,the rainfall totals have been
near record lows for the August,and we really don't have a lot
of subsoil moisture from theJune and July rain. So, you
know, I guess I could see wherethis could be an outlier, where
this may not exactly line upwith the crop conditions, but we
(08:49):
just don't know yet, I guess.We'll have to wait another
thirty days.
We'll get the results from thefirst actual sampling from
fields versus just infraredvegetative health index, farmer
surveys, that type of thing. Sothis is the number we have to
work with for the next thirtydays. We can argue it or we can
agree with it, but that's whatwe've got to work with.
Todd Gleason (09:10):
Yes. The PharmDoc team, I think it was Darrell
Good and probably Scott Irwin,as you suggest, made note that
early on the crop conditiontradings don't really mean a
lot, and they don't correlate atall. However, the further into
the season we get, the closerthey get in July with the July
(09:31):
numbers. They correlate fairlywell actually with, what USDA
generally finds in the size ofthe crop. Now Mike Zuzlow at
globalcomresearch.com, you and Ihave talked about a commodity
demand low a couple of timesover the last two weeks on the
closing market report.
First, can you define what youmean by that? And then tell me
(09:54):
whether you think it might be inplay this year or not.
Mike Zuzolo (09:58):
Yeah. The the great questions, Todd. The the key
with the commodity demand lowsis kind of what you're picturing
in your mind or what has beenback in history, and it kind of
does go back to where we werebefore the 9596 rally in corn
and beans and how we had to,other than the 1993 weather
market and the terrific floodingfrom the Mississippi River, we
(10:18):
had, you know, periods, longerperiods of very narrow trading
ranges at the lower end of thefive and ten year price action.
And wheat is a great example.We're still dancing as of the
end of this week, close to $5wheat.
Last year's low, $4.93 and ahalf, takes you all the way back
if you go below that to themajor low made last year, which
(10:42):
was also a five year low. And sowheat has been setting up
narrowing ranges for the mostpart. And as a result of that,
and the fact that the mostsignificant tailwind or wind in
the sail type fundamental factorwe've had as a result of the
tariffs has been this 10%decline in the dollar index.
(11:03):
Interesting to note that theBrazilian real has now hit a one
year high against the US dollarthis week. And so all of a
sudden, when you look at theglobal prices, even with the
tariffs factored in, in cornespecially, we're still cheaper
even with the tariffs factoredin.
And so we started to see that,and and USDA had to continue to
drop their 24, 25 ending stocksnumber again this week. We I
(11:28):
think in November, we were at2,000,000,000 bushels, and now
we're at 1,300,000,000. And fornew crop, they introduced
545,000,000 more bushels oftotal demand in one month, and
that really surprised me. Butthese all put together would
suggest the market's been lowenough, long enough that it is
(11:48):
getting used to these cheaperprices. We're feeding bigger
animals.
We're rebuilding hog herds inThe US. We're rebuilding poultry
herd poultry flocks all aroundthe country and the world
because of the the bird fluissues. And all of sudden, the
demand is not breaking down ornot backing down. So that was
the idea, kinda like a 02/2004,2005 time period.
Todd Gleason (12:12):
So turning our attention to how USDA changed
the supply and demand tables,particularly the demand side,
Naomi. It increased feed andresidual usage to 250 by
250,000,000 bushels. Ethanolwent up by a 100,000,000
bushels, and exports went up200,000,000 bushels. Are you
(12:36):
satisfied with those numbers? Doyou think they actually can be
achieved?
Naomi Blohm (12:40):
Well, I think if prices stay cheap, they can sure
be achieved. So that 'll be thequestion going forward. It does
seem to be commonplace that USDAwill increase that demand when
prices get cheap enough, whensupplies get big enough, and
they'll tweak and massage it asthe marketing year goes on for
the new marketing year. Butoverall, I mean, we do have
(13:01):
decent ethanol demand right now.The USDA revised things, of
course, a bit for the old crop.
But in the big picture, thedemand is there for ethanol. I
think I read that the Corn Boardwas looking to lobby Washington
to try to get E15 or E85 yearround again, because we have
(13:22):
this higher production. Thatmight be something that would be
really fabulous going forward.As far as exports go, yeah,
absolutely. I think we are acountry that we're able to
properly store corn.
We can keep it in condition andwe deliver it on time around the
world when people want it. So Ido think that we will see the
(13:45):
corn export number continue toinch higher. And I like the
numbers that the USDA gave us.
Todd Gleason (13:51):
E 15, that is exactly what the national corn
growers and many of the statecorn boards are actually
lobbying the federal governmentfor. I talked with the president
of the NCGA earlier in the weekat the Illinois State Fair. He
happens to be an Illinoisfarmer, and Kenny Hartman
reiterated that that was wherethey were headed and hopeful
that the Trump administrationmight see things their way.
(14:14):
Although there are headwindsthat come out of the other side
of that, which, of course, isthe, oil industry that are not
as happy about that. And it doestake with the e 15 at least, to
have a a different pump, thatcan manage that.
It's set up. If you see ityou'll see it at at different
pumps, and Casey's in particularwill carry E15, but it's always
(14:36):
at a different pump. It isusable in everything that's 2001
and newer, I believe. This allbrings me to you. We've been
talking, Greg Johnson, a coupleof times over the past week
about, basis levels going intothe fall, and I want to talk
(14:56):
about booking trains because ifUSDA is right and the feed and
residual number and ethanolnumbers are as good as they're
expecting, you would think thatan awful lot of trains would be
booked, and it would be reallyhard to get one in the fall.
What are you hearing, and whatare you having problems with
(15:18):
trying to move corn this fall,if anything at all yet?
Greg Johnson (15:22):
Not really, other than the fact that there's no
demand for export beans at thispoint. Until China steps back in
the market, we cannot exportbeans. And that's usually what
we move in the fall. We, I saywe, the Central Midwest, there's
a lot of beans exported in thefall, that October, November
(15:43):
timeframe is kind of our sweetspot for when China buys beans
from us instead of SouthAmerica. That may or may not
happen, it's beginning to looklike it may not happen this
year.
If it doesn't happen, obviously,we can we can ship some corn
trains, but there's a limited,you know, there's there's a
limited amount of corn exportbusiness that needs to be done
(16:03):
every week or every month. Andso you can't, you know, double
up the corn exports just becauseyou're not shipping beans. So
the way it's shaping up rightnow, unless we get a deal done
with China in the next thirtydays prior to harvest, if takes
longer than that, this may nothappen. Thirty days or less we
(16:25):
could still see soybean exportsout of The Gulf. If not, beans
are going to back up into theCentral Midwest, basis levels
probably will get weaker, trainswill be cheaper.
And even though the corn demandis very good, space is space.
And so if elevators are storingmore beans than normal, that
(16:46):
leaves less space for corn. Andso that has a spillover effect
as far as weakening the cornbasis. But the primary emphasis
would be an immediate weakeningof the bean basis if we don't
get a trade deal done.
Todd Gleason (16:57):
So the folks that are listening understand what
size of an elevator, thefacility here is, and how often
you turn it, relativelyspeaking, what what the
throughput is. It's not small.How how big is the elevator, and
what's your draw area? It's 80mile radius, 60 mile radius,
(17:18):
something like that?
Greg Johnson (17:20):
Yeah. We we store 12,000,000 bushels of grain here
at the elevator.
Todd Gleason (17:24):
Inside?
Greg Johnson (17:25):
Inside. Yes. If if if we can't keep up and and ship
enough out, we can put anywherefrom two to 4,000,000 bushels of
corn on the ground. We prefernot to put more than a million
or so on the ground, but we haveput 4,000,000 on the ground in
the past. So that's our capacityas far as our draw territory.
We'll go as far east as thestate line of Indiana, that's
(17:48):
45, 50 miles east. We'll gethalfway to Decatur and then
Decatur starts drawing from theWest and then from the north, 30
miles north or south.
Todd Gleason (17:58):
Okay. So a fairly large, facility. How often do
you load trains?
Greg Johnson (18:03):
Probably right now, we're loading, one and a
half trains every week just toget empty. I would say we
probably average a train a week.So a train is a and we load 100
car units, which is 425,000 to440,000 bushels every week.
Todd Gleason (18:20):
Okay. So just so everybody has an idea of of how
much you actually move. It's alot of grain. In in in context,
I suppose it's a lot of grain.And and you're worried that,
like yourself, many elevatorswill be full very quickly.
(18:41):
Basis level will break orthey'll try to keep producers
keeping things on the farm. So,Mike Zuslow, when that's the
case, how should farmers managethe carry in the market that
might be there so that they cantake advantage of it,
particularly when basis in thefall is breaking hard?
Mike Zuzolo (19:02):
Yeah. That's that's a great question. I think this
is where, as a person and ananalyst that has been pushing
harder on new crop bean salesthan corn sales, one would I'd
I'd have to ask myself thequestion, why were you doing
that? And it's all because ofThe US stocks versus world
stocks, Todd. And so that'simportant coming into harvest
(19:23):
because we still have severalcompetitors, Ukraine and Russia,
out there that have not gottentheir crop made yet in wheat and
especially in corn in the caseof Ukraine.
And they could lose yield justlike we could lose yield. And so
I don't have any problem abovebreakeven doing some selling of
(19:46):
the carry into the July '26. Ifyou can get profitable in the
next fifteen to twenty days, thebiggest issue I'm gonna have to
work with because I've been solight on '25 sales is getting my
off the combine bushels done.And this next ten days is gonna
dictate for my clients, Iprobably talked to at least a
(20:07):
dozen clients since a weekbefore the report and especially
since the report, almost all ofthem universally saying it's
just not there. What what theVIIRS satellite imagery that
Greg was referring to was thatpicture snapshot taken on July
27 with U S which USDA alwaystells us when it stops.
It's just not the same crop, inmy opinion, because of the
(20:29):
opinion of the producers on bothsides of the Mississippi River,
whether it's too wet or whetherwe've lost test weight or
whether we've got grain fillissues and kernel depth issues
that are starting to presentthemselves. And this is right
along the Greg's area of what hepicks up grain for, say,
Petersburg, Indiana, you know,Covington, Indiana, clients in
(20:51):
those areas telling me that verystrongly right now. So my
mindset is, okay. If I can getthe beans to lead this market
higher and we can get up to tenseventy five area, that old high
from earlier this year on theweather, then getting some off
the combine corn bushels sold isis, I think, gonna be a good
idea. I would be looking then atthe back end to see where the
(21:12):
carry was.
Notice Thursday, though, theSeptember corn moved and and the
back end did not. The spreadwoke up a little bit. I wanna
see if that doesn't continuebecause in my opinion, we still
have very razor thin old cropstocks. I wanna see if that
carry gets pushed back into thefront end, especially with
September corn in delivery. Sobut the key here is is if you're
(21:33):
looking at the marketing on aworld stocks basis, you really
wanna be looking at what China,Ukraine is looking at here in
the next thirty days becausethey could make or break the
difference between a trendchange or not on the supply
demand fundamentals.
Because even after this week'sreport, even after one eighty
nine yield, our ending stocksworldwide in corn are still the
(21:53):
lowest since 2012 because wedidn't go over last year's
ending stocks of two eightythree. So it's a real
interesting dynamic, one I don'treally remember ever seeing
before having such a tight worldending stocks number, such an
ample US ending stocks number,and as I said, wheat trading
near five year lows and cornbarely being able to hang above
(22:14):
$4 in the in the new crop.
Todd Gleason (22:17):
Those two different sets of stocks, Naomi,
make it hard for producersreally to think about it because
they look out into their fields,and they see so much. Not as
much as what USDA is tellingthem, but they see so much, and
the numbers are overwhelming.But on the global side, not as
large. How are you helping themdeal with what has to come off
(22:39):
the combine at this point?
Naomi Blohm (22:41):
Yeah, so we're doing a few things. For those
who are concerned that theirbasis is getting wider, they are
looking to lock in basiscontracts and then looking to
hopefully see some sort of atechnical bounce on charts to
lock in the December cornfutures price later on as the
(23:01):
weeks progress. We also havefolks who are making cash sales
now and then looking at reownership strategies with call
option spreads out to July. Wehave people who are capturing
carry by selling March calls orMay calls on corn to try to
capture some time value erosionif this market continues to
(23:21):
trade sideways. So there'smultiple ways that you can
participate in the marketdepending on your budget,
depending on your deliverymeans, depending on your storage
capabilities, and you just haveto sit down and know the risks
and rewards and returns to whatyou're doing.
But with this crop out there,back to being over 2,000,000,000
(23:42):
bushels, it's just gonna keepthe market most likely for corn
in a sideways trading patternwhere my thought would be
support would be $3.85 onDecember futures, resistance at
$4.00 5 in the short term onDecember futures, maybe four ten
until we get a better idea forsure what is out there or not.
(24:03):
Because right, as we've beentalking, there have been some
potential pollination issues andwe'll get a better handle on
that hopefully with the profarmer tour as they're actually
in the fields. Then the nextUSDA report will have boots on
the ground to get an idea foryield as well. We'll also be
keeping an eye on the funds. Ifwe start to see the fund traders
(24:25):
exit their hefty short position,to me that would be a cue of the
market trying to find a bottom.
That's what in hindsighthappened last year. We were
dealing with this perception of2,000,000,000 bushel carry out.
All of a sudden the marketstarts creeping higher and
higher and higher and the fundswere taking profits on short
(24:45):
positions and buying them back.A lot of moving parts here, a
lot of great conversation andreminders that keeping an eye on
not only US production, globalproduction, keeping an eye and
being aware of when SouthAmerica is able to deliver on
their products as well. There'sa lot of competition on corn
(25:10):
right now in a sense for endusers around the world to
purchase from.
I think The US will gain a lotof that business, but we
definitely have competition todeal with.
Todd Gleason (25:21):
Why or how, Greg Johnson, do you think that the
trade was able to discern, andthis is only based off the
reaction after the report, thatnot only yield would be larger.
I don't know if it managed theone eighty eight plus, but that
also it would go up in acreage.I mean, we did put an extra
(25:42):
billion bushels on this on thesupply and demand table, and we
didn't just drop like a rock forcorn. In fact, we recovered
fairly fairly quickly at thispoint. How did the marketplace
manage that?
Greg Johnson (25:58):
I think historically, the, acreage
number in the August report isnot based off of FSA data. To
some extent, it is, but, a lotof times they wait till
September, even October beforethey truly fully incorporate the
FSA data, the the data thatfarmers report to the FSA as far
as actually how many acres ofcorn, beans, and wheat they did
(26:20):
plant. This time, USDA said thatthey fully used the FSA data.
Maybe their computers aregetting more efficient, whatever
the reason, and for that reasonthere is a correlation, very
strong correlation betweennumber of acres reported by the
farmers and the eventual plantedacreage number. So the USDA went
(26:42):
ahead and incorporated that FSAdata in this report, and that's
why we came up with the extra2,100,000 acres of corn and
2,500,000 less acres of soybeansthis time around.
Todd Gleason (26:53):
Yeah. But what I wanna know is how the trade knew
it. I mean, it feels like thetrade must have known something
Oh. Because a billion bushels isan enormous figure.
Greg Johnson (27:02):
Well, the the acre the yield, you know, people had
talked you know, Stonex hadtheir 188 out there. I mean, so
they're, you know, based on thecrop conditions, know, there
were people talking about a muchhigher yield, but I'm not sure I
heard a lot of people talkingabout an extra 2,000,000 acres
of corn and 2,000,000 less acresof beans. I think this is a game
(27:23):
changer really for the soybeans.2,000,000 less acres of beans,
they raise the yield by abushel, but if we stay dry, we
could give that bushel back andall of a sudden the soybean
situation is very tight.
Todd Gleason (27:35):
A game changer, Mike Souzlo, but only if it is a
demand low led by China beingback in the marketplace.
Mike Zuzolo (27:42):
To a degree over the long term, yes. But I would
also say and this is, you know,some of the reporting that U of
I has done as well. But when Iwent back and looked at some of
the analysis back in 2018 2017,2018, I was using an export
figure of 1,700,000,000.0 in mysupply demand tables. That's
2324 number also, but thatmatches up really nicely because
(28:05):
that's what USD took our exportsdown. So they've been tracking
exports down.
Well, I think what would hurtthe soybean market the most in
the more immediate term, Todd,is if we heard anything about
EPA and a policy adjustment. Bigoil is very unhappy about the
import changes on biodiesel,biofuel that the the EPA is
(28:27):
proposing, and we're gonna behearing a lot more about that
right around harvest, suspect,right around the September,
October, November time period.That was a big boon to the
soybean market earlier in thisyear. It helped support us when
the supply demand fundamentalslooked really tough. That's
baked into the cake now sincethe USDA moved with the EPA
(28:47):
proposal, I think in the Julyreport.
That's really what I'm honing inon as far as the most negative
feature, even more negativemaybe than US China in the near
term between now and and harvestpost harvest.
Todd Gleason (29:00):
Yeah. This is because they were able to import
Malaysian palm oil to someextent, but mostly used cooking
oil into The United States tomake renewable diesel that was
coming into the West Coast andwas also meeting their carbon me
needs and the sustainableaviation fuel, possibilities in
the future eventually in a in adifferent way. And it depends a
(29:24):
lot on where those refineriesare, and these were on the West
Coast. Refineries are on theGulf Coast as well. So we'll see
how all of that plays out.
Let's get a final word now fromeach of you. I think Naomi Blome
at totalfarmmarketing.com inWest Bend, Wisconsin. We'll
start with you. What's yourfinal word on this August 14
(29:45):
commodity week?
Naomi Blohm (29:45):
Yeah. I would say in the short term, just keep an
eye on sideways, quiet rangetrading for the grain markets. A
lot of the bearishness for cornhas likely been priced in, but
we don't have a bullish catalystyet. On the soybeans, we have
some bullish fundamental supportwith lower production, but we
still need China to show up andbuy something. Until we do, we
(30:08):
might see that soybean markettrade in a little bit of a
sideways range.
If you are a cattle producertomorrow at 11:30, Secretary
Rollins is making a bigannouncement about cattle and
Mexico and, the border. So wewanna keep an eye out for that.
That might've been part of thereason why cattle markets had a
little bit of a sell off today.We just don't know for sure what
(30:30):
she's gonna say, but, that comesout at 11:30.
Todd Gleason (30:34):
And Greg Johnson from TGM,
totalgrainmarketing.com. Yourfinal word?
Greg Johnson (30:38):
For farmers that have on farm storage, your bins
are gonna be gold this year. Butdon't just put it in there.
Don't set it and forget it, asthe old saying goes. Capture
that carry. I fully expect apost harvest rebound.
We saw one last year. I thinkwe'll see one again this year.
But the cash carry already incorn is $0.49 from the cash bid
(31:01):
in the fall to the cash bid inJuly. So you could lock that
$0.49 in today and say that yourbins are worth $0.49 And then if
we get a $0.30 rally in thefutures on top of that, those
bins are definitely going to payfor themselves. There's $0.68
carry in cash beans from cashfall to cash July prices.
So your bins are going to cover,a lot of expenses, a lot of the
(31:25):
cost. And, so just keep that inmind, and and be ready to
capture that carry on some postharvest rallies.
Todd Gleason (31:32):
And finally, Mike Zuzlow at globalcomresearch.com
out of Atchison, Kansas.
Mike Zuzolo (31:37):
And number one, like Naomi, watching the
screwworm, announcement by thesecretary of agriculture along
with The US, Russia negotiationsand what I would call a summit,
especially as it pertains to thedollar and crude oil markets and
whether that translates into abetter wheat market or a weaker
wheat market. Number two, thethe clean WASDE report for
(31:58):
soybeans, clean meaning supplydemand numbers made sense. The
fact that we do have some cropweather issues out there that
maybe would present ourselvesthe second half of this month
would suggest pretty stronglybeans the leader to the upside
in the short term. Thursday, wesaw August expiration. Did that
pull back did that pull back wasthat created by August?
(32:19):
Let's see if September canretake that strength with drier,
hotter weather. If we can getthrough that 10/25 and a half
high that August made, that'sthe twenty six week move twenty
six week moving averageresistance level, Todd. If we
can get through ten, twenty fiveand a half, technicals could
turn positive, gives us maybeanother leg up. And with that
(32:40):
extension of that bean cornratio, beans pull the corn
higher. That's kind of thepathway of, of upside potential
that I'll be watching for.
Todd Gleason (32:48):
Thank you all. I appreciate it. Commodity week,
of course, is a production ofIllinois, a public medium. It is
public radio for the farmingworld online on demand
@willag.org. Our thanks go toour panelists this week, Mike
Suzlow, Greg Johnson, and NaomiBlum.
I'm University of IllinoisExtension's Todd Gleeson.
This is the August 14 edition of Commodity Week.
announcer (00:07):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:12):
Well, welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Naomi Blome. She's a
totalfarmmarketing.com out ofWest Bend, Wisconsin. Greg
Johnson is here from TGM,totalgrainmarketing.com out of
Champaign, Illinois, theelevator operated by FS Grow
Mark.
And Mike Zuzlow is here fromglobalcomresearch.com out of
(00:34):
Atchison, Kansas. CommodityWeek, of course, is a production
of Illinois Public Media. It'spublic radio for the farming
world online, on demand atwillag.org willag.0rg. This
week, the Illinois State Faircontinues through Sunday and
then next week we'll be watchingChip Florian company, the Pro
(00:55):
Farmer Midwest crop tour headsoff across, seven states. Try to
try to stay up to speed on whatthey're actually finding in the
field.
And then finally, the followingweek is farm progress show.
That'll be in Decatur this yearand Mike Zuzlow does plan to
make the trip in. Thank you Mikefor doing that. I look forward
(01:17):
to having you on stage at theUniversity of Illinois tent and
I suspect you'll be talking tomany other farm broadcasters
while you're here too.
Mike Zuzolo (01:27):
It's a great time of year. It brings back a lot of
memories, brings back a lot offond memories of starting in in
the business and Will Radiobeing the very first one out
there that took this poor sap ofa man on and let him talk on the
air. So that was really nice tobe out there with you again,
Todd.
Todd Gleason (01:45):
Do you know what year it is you started with WIL?
Mike Zuzolo (01:48):
9096. '96 with Charlie Lindy. I was filling in
for Bob Utterback who was on theroad trip. He was the Farm
Journal economist. Couldn't makethe one of the dailies, and, or
maybe it was a commodity week.
I can't remember which. But,yeah, it was '96.
Todd Gleason (02:03):
1996. Well, thank you much, and thank you for the
service. We appreciate that hereat Illinois Public Media. Naomi
Bloem is with us as well attotalfarmmarketing.com. Hello,
Naomi.
Thank you for being with ustoday. You're the newest one
with us on the list, and GregJohnson is here from TGM. Greg
(02:24):
has been on
Mike Zuzolo (02:24):
the air.
Todd Gleason (02:25):
Do you know how long Greg at WILO by chance?
Greg Johnson (02:29):
I really don't, but I do remember Charlie Lindy.
So, whatever his last year was,probably a few years before
that.
Todd Gleason (02:35):
Okay. So back in the early, late early two
thousands, late nineteennineties, one of the two for you
as well. So let's start, Naomi,with you. Since you are the
youngster amongst the crew of uswho have been working with WILL,
what is your what is on yourlist of things that we ought to
(02:55):
discuss today?
Naomi Blohm (02:56):
Well, would say just keeping an eye on the
soybean market. Of course, theUSDA report had some very
supportive tones to it, but westill need China to show up and
buy some beans. So I'd like todo a little bit of a deeper dive
on that.
Todd Gleason (03:10):
Greg Johnson, what's on your list?
Greg Johnson (03:13):
Well, all the farmers are asking me what the
correlation is between cropconditions, percentage good and
excellent versus final yield,because they're just having a
hard time believing that we havea 188.8 corn crop out there. So
that correlation, I think we candiscuss that a little bit. This
dry August, at least here inEast Central Illinois, I don't
(03:36):
know if it's that wayeverywhere, but what impact will
that have on finishing up thecorn crop and filling out the
beans? And then as Naomi said, Ithink that US China trade
negotiation is huge. The lasttime that, China did not buy
beans from us, what kind of animpact did that have on not only
the futures price, but the cashbasis levels as well that fall.
Todd Gleason (03:57):
And Mike Zislow on your list.
Mike Zuzolo (03:59):
Yeah. Just dovetailing with the other two's
great comments. I I think thisis is a huge amount of deja vu
with August when we didn't makethat commodity demand low that I
was hoping for at the July,August 1, it really started to
feel like deja vu all over againin the August with this weather
coming on now with the hotter,drier bias and and the wheat not
(04:23):
being able to make a low, butthe beans making one first. It
just keeps rolling on and on asfar as how similar this year is
to last.
Todd Gleason (04:30):
Okay. So, Naomi, why don't you recap for me the
USDA report that came outearlier this week? And within
that, of course, we might wantto put some context to the CONAB
numbers which were releasedearlier today too.
Naomi Blohm (04:45):
Right, so for the USDA report, the big overview on
the corn side of things, theUSDA raised acres, they raised
yield and they raised yield justan astronomical number. We're
now at 188.8, up 7.8 from theUSDA trend line number prior.
(05:06):
This was the largest everproduction and yield jump we've
ever seen in an August report.The previous big yield jump was
in 2016. They raised yieldsseven bushels then and
production was up 600,000,000bushels.
So that was the showstopper,just this huge crop out there.
(05:27):
On the soybean side of things,we had lower acres, but bigger
yield. And the net resultthough, was that production for
soybeans down from where we wereexpecting and that dropped
ending stocks. Now the USDA didlower exports. And so that shows
(05:50):
that they're aware China is notbuying yet.
So they're trying to keep thesituation real, but it was a
really friendly number forsoybeans. Not a lot of big
changes on the USDA report fromSouth America, but for CONAB
today, you know, they just,they're going to have a big crop
and when you convert it tobushels, so thank you for that
(06:14):
information that you had sharedwith us earlier, their August
production number for corn inBrazil, 5,394,000,000 bushels up
from their July number of 5.196.So we're still looking at a big
crop in Brazil for corn that'sgetting harvested and coming to
(06:34):
market yet to compete with ourAmerican products. And on the
soybean side, still just bigproduction numbers for soybeans
out of Brazil. 6.234 is what thenumber came in at, up from 6.228
in July.
So CONAB doubling down on whatthey have for production. USDA
(06:59):
was very slow to do any changeson this most recent report, but
we'll see if that'll become anissue going forward.
Todd Gleason (07:07):
Always interesting to hear those numbers from
Brazil in bushels and thinkingabout the size of their soybean
crop being over 6,000,000,000bushels larger than ours, but
their corn crop about the samesize as our soybean crop in that
that 5,000,000,000 bushel range.Now, Greg Johnson, I would like
you to talk about the USDAreport numbers as it relates to
(07:30):
the question farmers have beenasking you. Does it correlate
very well to crop progressreports? And tell me you looked
up the long ago Farm Doc Dailyon this particular topic level.
Greg Johnson (07:45):
Well, I assuming that we have normal finishing
weather in August and September,there is a little bit of a
correlation there. It's notexact, and this year could be
one of those years where it'snot because, like I say, farmers
that have been scouting theirfields are finding, you know,
the fields look nice, dark greenfrom the roadside but when they
(08:05):
get in, they see a few issues,you know, the bottom, the last
one to two inches tip back, someuneven pollination due to some
tassel wrap. It's certainlybelievable since we've had some
extremely warm days and warmnights in June and July and now
it sounds like here in August,we're going to get another
return of hot hot weather andhot dry weather And like I say,
(08:28):
here in East Central Illinois,the rainfall totals have been
near record lows for the August,and we really don't have a lot
of subsoil moisture from theJune and July rain. So, you
know, I guess I could see wherethis could be an outlier, where
this may not exactly line upwith the crop conditions, but we
(08:49):
just don't know yet, I guess.We'll have to wait another
thirty days.
We'll get the results from thefirst actual sampling from
fields versus just infraredvegetative health index, farmer
surveys, that type of thing. Sothis is the number we have to
work with for the next thirtydays. We can argue it or we can
agree with it, but that's whatwe've got to work with.
Todd Gleason (09:10):
Yes. The PharmDoc team, I think it was Darrell
Good and probably Scott Irwin,as you suggest, made note that
early on the crop conditiontradings don't really mean a
lot, and they don't correlate atall. However, the further into
the season we get, the closerthey get in July with the July
(09:31):
numbers. They correlate fairlywell actually with, what USDA
generally finds in the size ofthe crop. Now Mike Zuzlow at
globalcomresearch.com, you and Ihave talked about a commodity
demand low a couple of timesover the last two weeks on the
closing market report.
First, can you define what youmean by that? And then tell me
(09:54):
whether you think it might be inplay this year or not.
Mike Zuzolo (09:58):
Yeah. The the great questions, Todd. The the key
with the commodity demand lowsis kind of what you're picturing
in your mind or what has beenback in history, and it kind of
does go back to where we werebefore the 9596 rally in corn
and beans and how we had to,other than the 1993 weather
market and the terrific floodingfrom the Mississippi River, we
(10:18):
had, you know, periods, longerperiods of very narrow trading
ranges at the lower end of thefive and ten year price action.
And wheat is a great example.We're still dancing as of the
end of this week, close to $5wheat.
Last year's low, $4.93 and ahalf, takes you all the way back
if you go below that to themajor low made last year, which
(10:42):
was also a five year low. And sowheat has been setting up
narrowing ranges for the mostpart. And as a result of that,
and the fact that the mostsignificant tailwind or wind in
the sail type fundamental factorwe've had as a result of the
tariffs has been this 10%decline in the dollar index.
(11:03):
Interesting to note that theBrazilian real has now hit a one
year high against the US dollarthis week. And so all of a
sudden, when you look at theglobal prices, even with the
tariffs factored in, in cornespecially, we're still cheaper
even with the tariffs factoredin.
And so we started to see that,and and USDA had to continue to
drop their 24, 25 ending stocksnumber again this week. We I
(11:28):
think in November, we were at2,000,000,000 bushels, and now
we're at 1,300,000,000. And fornew crop, they introduced
545,000,000 more bushels oftotal demand in one month, and
that really surprised me. Butthese all put together would
suggest the market's been lowenough, long enough that it is
(11:48):
getting used to these cheaperprices. We're feeding bigger
animals.
We're rebuilding hog herds inThe US. We're rebuilding poultry
herd poultry flocks all aroundthe country and the world
because of the the bird fluissues. And all of sudden, the
demand is not breaking down ornot backing down. So that was
the idea, kinda like a 02/2004,2005 time period.
Todd Gleason (12:12):
So turning our attention to how USDA changed
the supply and demand tables,particularly the demand side,
Naomi. It increased feed andresidual usage to 250 by
250,000,000 bushels. Ethanolwent up by a 100,000,000
bushels, and exports went up200,000,000 bushels. Are you
(12:36):
satisfied with those numbers? Doyou think they actually can be
achieved?
Naomi Blohm (12:40):
Well, I think if prices stay cheap, they can sure
be achieved. So that 'll be thequestion going forward. It does
seem to be commonplace that USDAwill increase that demand when
prices get cheap enough, whensupplies get big enough, and
they'll tweak and massage it asthe marketing year goes on for
the new marketing year. Butoverall, I mean, we do have
(13:01):
decent ethanol demand right now.The USDA revised things, of
course, a bit for the old crop.
But in the big picture, thedemand is there for ethanol. I
think I read that the Corn Boardwas looking to lobby Washington
to try to get E15 or E85 yearround again, because we have
(13:22):
this higher production. Thatmight be something that would be
really fabulous going forward.As far as exports go, yeah,
absolutely. I think we are acountry that we're able to
properly store corn.
We can keep it in condition andwe deliver it on time around the
world when people want it. So Ido think that we will see the
(13:45):
corn export number continue toinch higher. And I like the
numbers that the USDA gave us.
Todd Gleason (13:51):
E 15, that is exactly what the national corn
growers and many of the statecorn boards are actually
lobbying the federal governmentfor. I talked with the president
of the NCGA earlier in the weekat the Illinois State Fair. He
happens to be an Illinoisfarmer, and Kenny Hartman
reiterated that that was wherethey were headed and hopeful
that the Trump administrationmight see things their way.
(14:14):
Although there are headwindsthat come out of the other side
of that, which, of course, isthe, oil industry that are not
as happy about that. And it doestake with the e 15 at least, to
have a a different pump, thatcan manage that.
It's set up. If you see ityou'll see it at at different
pumps, and Casey's in particularwill carry E15, but it's always
(14:36):
at a different pump. It isusable in everything that's 2001
and newer, I believe. This allbrings me to you. We've been
talking, Greg Johnson, a coupleof times over the past week
about, basis levels going intothe fall, and I want to talk
(14:56):
about booking trains because ifUSDA is right and the feed and
residual number and ethanolnumbers are as good as they're
expecting, you would think thatan awful lot of trains would be
booked, and it would be reallyhard to get one in the fall.
What are you hearing, and whatare you having problems with
(15:18):
trying to move corn this fall,if anything at all yet?
Greg Johnson (15:22):
Not really, other than the fact that there's no
demand for export beans at thispoint. Until China steps back in
the market, we cannot exportbeans. And that's usually what
we move in the fall. We, I saywe, the Central Midwest, there's
a lot of beans exported in thefall, that October, November
(15:43):
timeframe is kind of our sweetspot for when China buys beans
from us instead of SouthAmerica. That may or may not
happen, it's beginning to looklike it may not happen this
year.
If it doesn't happen, obviously,we can we can ship some corn
trains, but there's a limited,you know, there's there's a
limited amount of corn exportbusiness that needs to be done
(16:03):
every week or every month. Andso you can't, you know, double
up the corn exports just becauseyou're not shipping beans. So
the way it's shaping up rightnow, unless we get a deal done
with China in the next thirtydays prior to harvest, if takes
longer than that, this may nothappen. Thirty days or less we
(16:25):
could still see soybean exportsout of The Gulf. If not, beans
are going to back up into theCentral Midwest, basis levels
probably will get weaker, trainswill be cheaper.
And even though the corn demandis very good, space is space.
And so if elevators are storingmore beans than normal, that
(16:46):
leaves less space for corn. Andso that has a spillover effect
as far as weakening the cornbasis. But the primary emphasis
would be an immediate weakeningof the bean basis if we don't
get a trade deal done.
Todd Gleason (16:57):
So the folks that are listening understand what
size of an elevator, thefacility here is, and how often
you turn it, relativelyspeaking, what what the
throughput is. It's not small.How how big is the elevator, and
what's your draw area? It's 80mile radius, 60 mile radius,
(17:18):
something like that?
Greg Johnson (17:20):
Yeah. We we store 12,000,000 bushels of grain here
at the elevator.
Todd Gleason (17:24):
Inside?
Greg Johnson (17:25):
Inside. Yes. If if if we can't keep up and and ship
enough out, we can put anywherefrom two to 4,000,000 bushels of
corn on the ground. We prefernot to put more than a million
or so on the ground, but we haveput 4,000,000 on the ground in
the past. So that's our capacityas far as our draw territory.
We'll go as far east as thestate line of Indiana, that's
(17:48):
45, 50 miles east. We'll gethalfway to Decatur and then
Decatur starts drawing from theWest and then from the north, 30
miles north or south.
Todd Gleason (17:58):
Okay. So a fairly large, facility. How often do
you load trains?
Greg Johnson (18:03):
Probably right now, we're loading, one and a
half trains every week just toget empty. I would say we
probably average a train a week.So a train is a and we load 100
car units, which is 425,000 to440,000 bushels every week.
Todd Gleason (18:20):
Okay. So just so everybody has an idea of of how
much you actually move. It's alot of grain. In in in context,
I suppose it's a lot of grain.And and you're worried that,
like yourself, many elevatorswill be full very quickly.
(18:41):
Basis level will break orthey'll try to keep producers
keeping things on the farm. So,Mike Zuslow, when that's the
case, how should farmers managethe carry in the market that
might be there so that they cantake advantage of it,
particularly when basis in thefall is breaking hard?
Mike Zuzolo (19:02):
Yeah. That's that's a great question. I think this
is where, as a person and ananalyst that has been pushing
harder on new crop bean salesthan corn sales, one would I'd
I'd have to ask myself thequestion, why were you doing
that? And it's all because ofThe US stocks versus world
stocks, Todd. And so that'simportant coming into harvest
(19:23):
because we still have severalcompetitors, Ukraine and Russia,
out there that have not gottentheir crop made yet in wheat and
especially in corn in the caseof Ukraine.
And they could lose yield justlike we could lose yield. And so
I don't have any problem abovebreakeven doing some selling of
(19:46):
the carry into the July '26. Ifyou can get profitable in the
next fifteen to twenty days, thebiggest issue I'm gonna have to
work with because I've been solight on '25 sales is getting my
off the combine bushels done.And this next ten days is gonna
dictate for my clients, Iprobably talked to at least a
(20:07):
dozen clients since a weekbefore the report and especially
since the report, almost all ofthem universally saying it's
just not there. What what theVIIRS satellite imagery that
Greg was referring to was thatpicture snapshot taken on July
27 with U S which USDA alwaystells us when it stops.
It's just not the same crop, inmy opinion, because of the
(20:29):
opinion of the producers on bothsides of the Mississippi River,
whether it's too wet or whetherwe've lost test weight or
whether we've got grain fillissues and kernel depth issues
that are starting to presentthemselves. And this is right
along the Greg's area of what hepicks up grain for, say,
Petersburg, Indiana, you know,Covington, Indiana, clients in
(20:51):
those areas telling me that verystrongly right now. So my
mindset is, okay. If I can getthe beans to lead this market
higher and we can get up to tenseventy five area, that old high
from earlier this year on theweather, then getting some off
the combine corn bushels sold isis, I think, gonna be a good
idea. I would be looking then atthe back end to see where the
(21:12):
carry was.
Notice Thursday, though, theSeptember corn moved and and the
back end did not. The spreadwoke up a little bit. I wanna
see if that doesn't continuebecause in my opinion, we still
have very razor thin old cropstocks. I wanna see if that
carry gets pushed back into thefront end, especially with
September corn in delivery. Sobut the key here is is if you're
(21:33):
looking at the marketing on aworld stocks basis, you really
wanna be looking at what China,Ukraine is looking at here in
the next thirty days becausethey could make or break the
difference between a trendchange or not on the supply
demand fundamentals.
Because even after this week'sreport, even after one eighty
nine yield, our ending stocksworldwide in corn are still the
(21:53):
lowest since 2012 because wedidn't go over last year's
ending stocks of two eightythree. So it's a real
interesting dynamic, one I don'treally remember ever seeing
before having such a tight worldending stocks number, such an
ample US ending stocks number,and as I said, wheat trading
near five year lows and cornbarely being able to hang above
(22:14):
$4 in the in the new crop.
Todd Gleason (22:17):
Those two different sets of stocks, Naomi,
make it hard for producersreally to think about it because
they look out into their fields,and they see so much. Not as
much as what USDA is tellingthem, but they see so much, and
the numbers are overwhelming.But on the global side, not as
large. How are you helping themdeal with what has to come off
(22:39):
the combine at this point?
Naomi Blohm (22:41):
Yeah, so we're doing a few things. For those
who are concerned that theirbasis is getting wider, they are
looking to lock in basiscontracts and then looking to
hopefully see some sort of atechnical bounce on charts to
lock in the December cornfutures price later on as the
(23:01):
weeks progress. We also havefolks who are making cash sales
now and then looking at reownership strategies with call
option spreads out to July. Wehave people who are capturing
carry by selling March calls orMay calls on corn to try to
capture some time value erosionif this market continues to
(23:21):
trade sideways. So there'smultiple ways that you can
participate in the marketdepending on your budget,
depending on your deliverymeans, depending on your storage
capabilities, and you just haveto sit down and know the risks
and rewards and returns to whatyou're doing.
But with this crop out there,back to being over 2,000,000,000
(23:42):
bushels, it's just gonna keepthe market most likely for corn
in a sideways trading patternwhere my thought would be
support would be $3.85 onDecember futures, resistance at
$4.00 5 in the short term onDecember futures, maybe four ten
until we get a better idea forsure what is out there or not.
(24:03):
Because right, as we've beentalking, there have been some
potential pollination issues andwe'll get a better handle on
that hopefully with the profarmer tour as they're actually
in the fields. Then the nextUSDA report will have boots on
the ground to get an idea foryield as well. We'll also be
keeping an eye on the funds. Ifwe start to see the fund traders
(24:25):
exit their hefty short position,to me that would be a cue of the
market trying to find a bottom.
That's what in hindsighthappened last year. We were
dealing with this perception of2,000,000,000 bushel carry out.
All of a sudden the marketstarts creeping higher and
higher and higher and the fundswere taking profits on short
(24:45):
positions and buying them back.A lot of moving parts here, a
lot of great conversation andreminders that keeping an eye on
not only US production, globalproduction, keeping an eye and
being aware of when SouthAmerica is able to deliver on
their products as well. There'sa lot of competition on corn
(25:10):
right now in a sense for endusers around the world to
purchase from.
I think The US will gain a lotof that business, but we
definitely have competition todeal with.
Todd Gleason (25:21):
Why or how, Greg Johnson, do you think that the
trade was able to discern, andthis is only based off the
reaction after the report, thatnot only yield would be larger.
I don't know if it managed theone eighty eight plus, but that
also it would go up in acreage.I mean, we did put an extra
(25:42):
billion bushels on this on thesupply and demand table, and we
didn't just drop like a rock forcorn. In fact, we recovered
fairly fairly quickly at thispoint. How did the marketplace
manage that?
Greg Johnson (25:58):
I think historically, the, acreage
number in the August report isnot based off of FSA data. To
some extent, it is, but, a lotof times they wait till
September, even October beforethey truly fully incorporate the
FSA data, the the data thatfarmers report to the FSA as far
as actually how many acres ofcorn, beans, and wheat they did
(26:20):
plant. This time, USDA said thatthey fully used the FSA data.
Maybe their computers aregetting more efficient, whatever
the reason, and for that reasonthere is a correlation, very
strong correlation betweennumber of acres reported by the
farmers and the eventual plantedacreage number. So the USDA went
(26:42):
ahead and incorporated that FSAdata in this report, and that's
why we came up with the extra2,100,000 acres of corn and
2,500,000 less acres of soybeansthis time around.
Todd Gleason (26:53):
Yeah. But what I wanna know is how the trade knew
it. I mean, it feels like thetrade must have known something
Oh. Because a billion bushels isan enormous figure.
Greg Johnson (27:02):
Well, the the acre the yield, you know, people had
talked you know, Stonex hadtheir 188 out there. I mean, so
they're, you know, based on thecrop conditions, know, there
were people talking about a muchhigher yield, but I'm not sure I
heard a lot of people talkingabout an extra 2,000,000 acres
of corn and 2,000,000 less acresof beans. I think this is a game
(27:23):
changer really for the soybeans.2,000,000 less acres of beans,
they raise the yield by abushel, but if we stay dry, we
could give that bushel back andall of a sudden the soybean
situation is very tight.
Todd Gleason (27:35):
A game changer, Mike Souzlo, but only if it is a
demand low led by China beingback in the marketplace.
Mike Zuzolo (27:42):
To a degree over the long term, yes. But I would
also say and this is, you know,some of the reporting that U of
I has done as well. But when Iwent back and looked at some of
the analysis back in 2018 2017,2018, I was using an export
figure of 1,700,000,000.0 in mysupply demand tables. That's
2324 number also, but thatmatches up really nicely because
(28:05):
that's what USD took our exportsdown. So they've been tracking
exports down.
Well, I think what would hurtthe soybean market the most in
the more immediate term, Todd,is if we heard anything about
EPA and a policy adjustment. Bigoil is very unhappy about the
import changes on biodiesel,biofuel that the the EPA is
(28:27):
proposing, and we're gonna behearing a lot more about that
right around harvest, suspect,right around the September,
October, November time period.That was a big boon to the
soybean market earlier in thisyear. It helped support us when
the supply demand fundamentalslooked really tough. That's
baked into the cake now sincethe USDA moved with the EPA
(28:47):
proposal, I think in the Julyreport.
That's really what I'm honing inon as far as the most negative
feature, even more negativemaybe than US China in the near
term between now and and harvestpost harvest.
Todd Gleason (29:00):
Yeah. This is because they were able to import
Malaysian palm oil to someextent, but mostly used cooking
oil into The United States tomake renewable diesel that was
coming into the West Coast andwas also meeting their carbon me
needs and the sustainableaviation fuel, possibilities in
the future eventually in a in adifferent way. And it depends a
(29:24):
lot on where those refineriesare, and these were on the West
Coast. Refineries are on theGulf Coast as well. So we'll see
how all of that plays out.
Let's get a final word now fromeach of you. I think Naomi Blome
at totalfarmmarketing.com inWest Bend, Wisconsin. We'll
start with you. What's yourfinal word on this August 14
(29:45):
commodity week?
Naomi Blohm (29:45):
Yeah. I would say in the short term, just keep an
eye on sideways, quiet rangetrading for the grain markets. A
lot of the bearishness for cornhas likely been priced in, but
we don't have a bullish catalystyet. On the soybeans, we have
some bullish fundamental supportwith lower production, but we
still need China to show up andbuy something. Until we do, we
(30:08):
might see that soybean markettrade in a little bit of a
sideways range.
If you are a cattle producertomorrow at 11:30, Secretary
Rollins is making a bigannouncement about cattle and
Mexico and, the border. So wewanna keep an eye out for that.
That might've been part of thereason why cattle markets had a
little bit of a sell off today.We just don't know for sure what
(30:30):
she's gonna say, but, that comesout at 11:30.
Todd Gleason (30:34):
And Greg Johnson from TGM,
totalgrainmarketing.com. Yourfinal word?
Greg Johnson (30:38):
For farmers that have on farm storage, your bins
are gonna be gold this year. Butdon't just put it in there.
Don't set it and forget it, asthe old saying goes. Capture
that carry. I fully expect apost harvest rebound.
We saw one last year. I thinkwe'll see one again this year.
But the cash carry already incorn is $0.49 from the cash bid
(31:01):
in the fall to the cash bid inJuly. So you could lock that
$0.49 in today and say that yourbins are worth $0.49 And then if
we get a $0.30 rally in thefutures on top of that, those
bins are definitely going to payfor themselves. There's $0.68
carry in cash beans from cashfall to cash July prices.
So your bins are going to cover,a lot of expenses, a lot of the
(31:25):
cost. And, so just keep that inmind, and and be ready to
capture that carry on some postharvest rallies.
Todd Gleason (31:32):
And finally, Mike Zuzlow at globalcomresearch.com
out of Atchison, Kansas.
Mike Zuzolo (31:37):
And number one, like Naomi, watching the
screwworm, announcement by thesecretary of agriculture along
with The US, Russia negotiationsand what I would call a summit,
especially as it pertains to thedollar and crude oil markets and
whether that translates into abetter wheat market or a weaker
wheat market. Number two, thethe clean WASDE report for
(31:58):
soybeans, clean meaning supplydemand numbers made sense. The
fact that we do have some cropweather issues out there that
maybe would present ourselvesthe second half of this month
would suggest pretty stronglybeans the leader to the upside
in the short term. Thursday, wesaw August expiration. Did that
pull back did that pull back wasthat created by August?
(32:19):
Let's see if September canretake that strength with drier,
hotter weather. If we can getthrough that 10/25 and a half
high that August made, that'sthe twenty six week move twenty
six week moving averageresistance level, Todd. If we
can get through ten, twenty fiveand a half, technicals could
turn positive, gives us maybeanother leg up. And with that
(32:40):
extension of that bean cornratio, beans pull the corn
higher. That's kind of thepathway of, of upside potential
that I'll be watching for.
Todd Gleason (32:48):
Thank you all. I appreciate it. Commodity week,
of course, is a production ofIllinois, a public medium. It is
public radio for the farmingworld online on demand
@willag.org. Our thanks go toour panelists this week, Mike
Suzlow, Greg Johnson, and NaomiBlum.
I'm University of IllinoisExtension's Todd Gleeson.
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