August 21, 2025 • 31 mins
Panelists
- Dave Chatterton, SFarmMarketing.com
- Curt Kimmel, AgMarket.net
- Brian Stark, AndersonsGrain.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 21 edition of Commodity Week.
(00:09):
Todd Gleason services are madeavailable to WILL by University
of Illinois Extension. Welcometo Commodity Week. I am Todd
Gleason. Our panelists for theday include Brian Stark.
He's with the Andersons inMansfield, Illinois. Dave
Chatterton is here withStrategic Farm Marketing out of
Champaign, Illinois. And we'rejoined by Kurt Kimmel of
agmarket.net in Normal,Illinois. Commodity week is a
(00:31):
production of Illinois publicmedia, public radio for the
farming world online atwillag.org, willag.0rg. Next
week, we'll be at the FarmProgress Show in Decatur.
Our commodity week programs rundaily at 10:00. The farm doc
team is there at 11:30, and thecrop scientists are with us on
(00:53):
stage in the University ofIllinois tent at 11AM. The full
schedule is online atwillag.org. Check it each day.
We have many folks that'll bedropping by, and we'd like to
see you there as well.
Again, the calendar all in redin the calendar. You'll find
what's happening in theUniversity of Illinois tent each
and every day at the FarmProgress Show in Decatur. Let's
(01:15):
begin with Kurt Kimmel who, willbe making his way to the Farm
Progress Show next week. Thankyou very much for doing that.
This week, however, we need totalk about the Pro Farmer crop
tour, which took place.
By the time this airs, we'llhave the final numbers from Pro
Farmer, which will be theirnational and statewide numbers.
(01:37):
They differ widely from what yousee on the crop tour because
they do a lot of adjustments.However, what do you think of
the numbers that have beencoming out of crop tour to this
point?
Curt Kimmel (01:49):
Well well, the bean podcaster is huge. Man, if you
go ahead and finish off goodshape. We'll have a fairly
larger bean crop on that. Thereis some sudden death, some stem
rot. The thing on this, some ofthese fungus and diseases are a
little earlier than usual.
It feels a little later here inSeptember, but it can maybe take
(02:11):
a little bit off the top. Butthe biggest observation probably
is in the corn, that southernrust. And watching some of the
videos, and I don't think theywere AI altered, but some of
those participants come outorange and there's heavy rust.
I'm not quite for sure some ofthose participants went to the
hardware store to get someWD-forty to spray the shuck to
(02:32):
loosen it up to count thekernels. I mean, I was really
surprised how thick that is,particularly in Iowa.
So let's see how that unfolds inthrough here. Guys are really
testing the fungicide here onlongevity of it and whether they
sprayed or not. The other thingtoo is I heard some guys went a
(02:52):
little heavier on population, sothe ear counts are fairly good
in some areas. And the bottomline is we still have a little
bit of time here. We'll justhave to see how the crop
finishes out.
Todd Gleason (03:05):
In the state of Illinois, the USDA put this
year's crop at 221 bushels tothe acre. That was on August 1.
The crop scouts on their tour,which includes not Southern
Illinois, so it takes in thebest two thirds, maybe 80% of
the state, really, I guess, theupper half for them when you
(03:27):
look at their routes. They're atone ninety nine plus about four
and a half bushels, so they'rearound two zero four, roughly
speaking, for a statewideaverage. Do you think it's only
that good, really?
Brian Stark (03:41):
Yeah. I think that's probably true. I think,
obviously, you mentioned thatthey make adjustments here.
We'll get to final state yield,but certainly, over the last two
or three weeks in East CentralIllinois where it's been dry,
Kurt mentioned disease even inthis area. Rust has been a a big
issue, and I think it's tooearly to tell how much of a
negative impact it is, but thedisease pressures run rampant.
(04:05):
You generally see that when youhave wet and warm conditions
earlier around pollination andnow we've entered a period of
dry weather. So to me, it feelslike everyone we've talked to
feels like the crop size, whilegood, is not as big as last
year's in an Illinois sector.
Todd Gleason (04:21):
Brian Stark, of course, is with the Andersons.
Dave Chatterton, when you thinkabout that number that came out
from USDA that was looking atthe crop sites on August 1, do
you think nationally that's thebiggest number we might come up
with for the year? Where do yousuppose the September figure
might land?
Dave Chatterton (04:39):
Yeah, Todd. Always a little bit of a of a,
you know, spin the wheel type ofa deal with USDA, but I think
we're in a position where themarket when you when you kinda
back off and maybe look at thebigger picture of the pro farmer
numbers in general, we've beentalking about Illinois. When you
look at them in general, I thinkthe market wanted to look at two
things. One, I think there wasthe the confirmation that the
record yield potential that theUSDA indicated in the August
(05:00):
report was going to be there.And I think we checked that box.
I think there's no doubt aboutthat, particularly in the
Western Corn Belt as Kurtalluded to. I think the second
thing that that the trade wasreally looking for in terms of
price was, are these yieldsactually gonna go higher? And
there was a a lot of talk. Bigcrops get bigger. USDA, you
know, has a tendency to walkthis crop up.
I think there's a big questionmark about that. And, I think
(05:22):
the price action to this pointwould tell you that the market
is betting the under, that theyields actually from the USDA
probably will have to softengoing forward. Illinois is the
prime example for that crop forthat, Todd. I mean, I was on a
crop tour last week. I was inIllinois, Missouri, Nebraska,
South Dakota, Minnesota, Iowa,and then back to Illinois.
And I can tell you that we'rethe driest area of that entire,
(05:45):
you know, that entire trip. Andthe fact that the ProFarmers
finding numbers below last yearin corn in Illinois isn't, I
don't think, too big of asurprise. So, you know, that's a
great example where to get tothat record deal that the USDA
is talking about that one eightyeight plus type of a number,
need a lot of things to goright. And if Illinois is not
gonna pull the lever, you know,the West can make up for some
degree of that. But not sayingwe have a bad crop.
(06:08):
I'm not saying we don't have arecord crop, but I think the
high watermark is in.
Todd Gleason (06:11):
I wondered about that thinking about what Ohio
and Indiana, those numberscoming out of those two states
to begin with and that Illinoiswas probably pivotal because the
West was just gonna pick upwhatever Ohio and Indiana, which
are smaller states in cornproduction for sure. Ohio, I
think, is eight or nine. They'rewell down the line. Indiana,
(06:32):
right, ranks five or sixdepending on what year it is.
Kansas sometime is in front ofthem, which tells you a lot
about the size of Indiana aswell.
When you take all of that intoconsideration, Illinois being
pivotal, if Illinois comes outwith a quick yield, not the two
(06:52):
twenty one, but they come outwith, let's say, a record yield
at two eleven again, or even ifthey're at the two zero four,
how big is that national yield?Are we at one eighty six or
seven rather than one nearly 89?
Brian Stark (07:11):
Yeah. I think, the yield overall, it's gonna be
hard even with Illinois comingdown with the way the Western
Corn Belt is set up today todrop too much. So, you know, low
end might be one eighty four inmy mind today. It feels like
with what we're seeing. But,again, I think the big variable
always is, and maybe thepopulations as Kurt alluded to,
will help offset this.
But what this disease pressureis really gonna do as we finish
(07:33):
the crop, I think that's theunknown variable that is not
able to be predicted until thecombines roll through the field
here in late September andOctober. But irregardless, I
stand the fact that it feelslike this crop is a new record.
It's just a question of how bigof a record it will be.
Todd Gleason (07:49):
So the trade in Chicago is determining on the
futures how big the crop is.However, the elevator system is
making a different sort ofhedge, relatively speaking, on
it's a big crop, and we have tofigure out how to put it and the
soybeans away, and that's gonnabe hard on basis already is.
Yeah.
Brian Stark (08:08):
I think you've seen, like, some of the major
processors, Decatur, 33 underthe x, which is the cheapest I
can remember them being thisearly in the in the year, just
trying to figure out how withouta soybean export program, no
China, you know, what thatinterior demand and what they're
able to absorb is gonna be. Wetalked a little bit about it
before the show that it feelslike with the farmer undersold
(08:30):
today to generate cash even witha weaker basis, they probably
still lean into soybeans. Theyhave to move in selling soybeans
across the scale simply togenerate cash because they can
move and generate cash in asmaller volume. So I think
that's gonna pressure bean basiscould be much uglier than corn,
but corn is gonna be awfullywide, if some of these, record
(08:50):
breaking crops come to fruition.
Todd Gleason (08:52):
When you talk to producers about which crop they
need to put in the bin forstorage, when they have space
that they really feel like theycan swap out, what are you
telling them? Well, basically,
Curt Kimmel (09:04):
like Brian alluded there, they're gonna move beans.
Beans is a natural one to move.They like to hang on or store
corn. A lot of guys have gone tosome alternative storage
options, bags. Ethan in ouroffice, he had to drive clear to
Minnesota to get a baggingmachine because there's just
none around.
There's some in Canada, but hewas worried about getting back
(09:26):
into The US, so he naturallywent to Minnesota there. But
yeah, it's a matter of findingsome storage and be able to ride
the storm out here.
Dave Chatterton (09:37):
Yeah, Todd. I mean, to Kurt's point, think,
know, beans are the natural,beans are the traditional
fallback. I think producersshould be aware of and taking a
look at what's available, youknow, maybe storing corn
temporarily in what wouldnormally, you know, outside in a
bag or or or a pile and andusing utilizing what would
normally be corn space forsoybeans. When you look at these
cash carries even into justNovember, let alone December or
(09:59):
January, some very big numbershere. And, you know, good, Maybe
a point to think about that wehaven't talked about.
You even talk about futures and,you know, the crop estimates and
when the market bottom and take,you know, good example of the
corn market last year. Thesecorn bottomed on August 26.
We're right in that time period.But a futures bottom and a cash
bottom are two very differentthings. And, you know, looking
(10:20):
at the logistical challengesthat we're going to have this
year now, one good thing wehave, commercial space is mostly
empty, but it's going to fillvery quickly and, based on this
size of the crop.
So look at your alternativeoptions. Do you know, it's time
to get creative. It's time to dothings that maybe you're outside
of your comfort zone or thinkabout it anyway. And, you know,
that bagger that Kurt mentioned,I mean, it's like talking about,
(10:42):
the election COVID politics.Some people love them, some
people hate them, verypolarizing subject, but, you
know, nontraditional.
Maybe it's filling yourfertilizer shed. Maybe it's
doing something a little alittle out of whack. But when
you can pick up $30.40, 50¢ ofcarry in a matter of thirty,
forty five, or sixty days in ain a margin environment that
we're in currently with withkind of low commodity prices,
(11:04):
definitely have to be flexiblehere.
Todd Gleason (11:05):
I'd like to ask you a little bit, Brian, about
logistics and basis and naturalbarriers across The United
States, the rivers. So theMississippi, the Illinois, the
Ohio. Because sometimes you canreally see from one side of the
river to the other. There is a abasis difference. Just the the
(11:28):
river seems to be a natural spotfor basis to change.
Can you tell me when there is ahuge crop in the Western United
States, what it does to basis,and logistically, how that
changes?
Brian Stark (11:40):
Yeah. I think the biggest thing is is you look at
the Western Corn Belt, and,obviously, that tends to have a
pull. When you have no exportprogram or a minimal export
program, booked out The Gulf,say, for soybeans, you could see
cheap basis, up to South Dakota,North Dakota, dollar 50, dollar
60 under start to be competitiveto the river, and that ends up
(12:01):
influencing not just the overallspace at the elevator, the
processor interior in theEastern Corn Belt basis, but
also the fact that now theelevator in the East starts to
feel pressure because they'renot as competitive with some of
the Western bushels that startto work East. And I think that
is a big risk that we're gonnasee. Obviously, without a big
book, in The Gulf, for soybeans,you don't have that program.
(12:23):
We're already seeing the Delta,come off with some of their
crop, moving to the river, andthat's had some pressure with a
lack of of demand. And the onebright spot, if I flip the
script a little bit, is that ourcorn program continues to be
very robust. We saw big exportnumbers for the new crop,
compete. Brazil, Argentinacontinue to be at a premium to
(12:44):
The US offers out front. So thatis a good positive for the
demand standpoint to supportbasis to what Dave was saying.
If you could ride the storm outthe next thirty to sixty days on
the basis side, you might beable to
Todd Gleason (12:57):
pick up some really good cash carry. There
was a good futures market onThursday for soybeans,
particularly for soybean oil. Isuppose it may have to do
something with an announcementcoming Friday from Washington
DC. I don't know whether we havevery much information about
that. Did you hear anything?
What are the rumors as they'rerelated to those issues?
Dave Chatterton (13:20):
Yeah, Todd. What you're referencing is the
the small refinery exemption. Ibelieve there's a 196 exemptions
on that list or, you know,pending exemptions, I should
say, that go all the way back to2016. And then Reuters and
Bloomberg, Bigwire services bothreported today that the EPA is
ready to make announcement onthose waivers as early as
tomorrow, and that it will bespeculation is that it will be a
(13:43):
little more favorable maybe forthe ag side than what we
initially thought, and thatignited a soybean rally today.
If some of those exemptions,aren't aren't granted, it it
helps us, you know, with ahigher biofuel mandate, and
blending requirement that, youknow, we're we're still in the
bullish side of the crush andthe oil demand.
So we will see how that playsout. When you look at soybeans
(14:05):
to your point, Todd, I mean,we're 75, 76 off of that low
that we made in early August.We're the highest level we've
been in beans in seven weekssince the mid June. And
certainly for farmers who needto make catch up sales to
Brian's point, and particularlyin beans, you know, you need to
be paying attention. I'm notsaying, you know, picking a top
is pretty much useless here,but, you you know, you have to
(14:27):
be able to take some smallvictories in this market and to
you know, one more, you know,point on the logistics that he
said.
I think it's complicated furtherthis year, the fact that China
has bought zero new crop beans.And in doing so, that's normally
a very strong PNW market thathelps lift some of that Western
crop away in that NorthwesternBelt. This year that there's no
bid going to the PNW for beans.So those beans are gonna compete
(14:49):
in our system, in our riversystem, in our rail, in our
processing system, and add evena little additional pressure.
So, I mean, be aware of thosefactors and and how you're
planning things and and and howbasis can be dynamic here.
Todd Gleason (15:00):
Can you clarify for me why it is that the small
refinery exemption, which has todo mostly with ethanol actually,
all with ethanol because ethanolproducers would have an impact
on soybean oil. Is it about theadvanced biofuel that
substitutes into the, biofuelspace that sometimes that that
(15:25):
ethanol fills sometimes in theadvanced side?
Brian Stark (15:29):
Yeah. I think that's probably correct. I
think, obviously, as youmentioned, it's mostly tied to
the corn based side, but I thinkthat the fact the advanced when
you talk about renewable dieseland some of the initiatives that
you're seeing with the oil, Ithink that's a component of why
the the that's our weightpotential waivers are such a big
deal to the bean market. The onething I will also add on to what
(15:51):
Dave has said, the bean market,we have to be cautious. I think
beans as a whole, because ofthe, the RVO and what that all
means long term, are stronger tofind what true value is because
while oil is potentially a verybullish item, we've talked about
before meal is kind of the thedeadweight, potentially hanging
(16:12):
down on the market because,obviously, you you don't
generate 60% of your bean ismeal.
So, obviously, we have to figureout long term what that means
for meal demand even if we havea bullish oil scenario and where
beans fit in the whole spectrum.You cannot store meal nearly as
long as some other products, andso I think that could be a
challenge to figure out wherefair value is for soybeans.
(16:34):
Renewable volume obligations orthe RVOs, the oil and the meal,
of course,
Todd Gleason (16:39):
the products of the crush from the soybean, and
the meal can be shippedoverseas. Difficult because we
don't have the rail lines comingout of the Western Corn Belt
yet, really, headed towards theP And W. So the meal's gonna
pile up somewhere, I suppose,and it's just gonna be a drag.
Brian Stark (16:59):
Yeah. It's gonna be a drag. I think that's the
biggest, thing that is yet to bedetermined. I think that's why
it's been hard even with theprojected tight carryout, that
we saw with the acreage shifthere a week or so ago, with
beans losing acres that kindaignite a little bit of a
friendliness with the projectedcarryout and strong demand, but
you still have this product, ameal that is is a deadweight
(17:20):
trying to figure out what we dowith it to offload it if we are
really gonna crush more beansfor oil.
Todd Gleason (17:25):
On the acreage changes, Brian reminded me
there's more corn acres outthere, and USDA still put that
record yield on this cropdespite the fact that they're in
more marginal areas or some ofthem are, of course. It looks
like those areas are gonnareally produce. Again, I come
(17:46):
back to the idea is the Westgoing to overcompensate for
everything that might be goingon East Of The Mississippi
River.
Curt Kimmel (17:55):
Well, they they say as you drive through Nebraska,
you can't see where theirirrigation pivots are because
the ends are just as green. So,yeah, it's gonna be a fairly
good crop as a whole. I don'tknow how you can have record,
record yields when you've gotsome holes around, but we're
fixing to find out. But onething you've got to remember too
with this disease issue is thequestion of test weight. And so
(18:18):
when you start messing with testweight later on, which we don't
know now, that can probably be abig factor too.
When you look at where we are,probably national yield, they
won't probably address it untilthe January report. It's last
year in January report theydropped the corn yield of four
bushels an acre. The JSA teamfeels we're kinda at a one
(18:39):
eighty five area when you factorall this stuff in at the moment.
Todd Gleason (18:44):
I will say that because the crop is so good and
test weights may vary from oneplace to the other, When farmers
store all of this crop on theirfarm in the bin, they probably
won't know how many bushels theyhave. They'll have an idea, but
they could be way off becausetest weight will make them way
(19:05):
off. It's a 30,000 bushel bin,but how many bushels are really
in there if it's test weighted58 bushel or 58 pounds? And so
these are things that will keepthis a mystery probably all the
way, I guess, through, well,next fall. They might be okay in
(19:29):
January, but that's a survey offarmers, relatively speaking, of
what what they think their cropsize was.
So there there's a lot ofvariables still coming in this
marketplace.
Dave Chatterton (19:38):
Yeah, Todd. And to your point, I think, you
know, this year is a greatexample. I think what we found
out is there was a lot ofnaysaying in the commercial
circles about corn in the USDAgot the crop wrong and had to be
bigger than indicated becausebasis and spreads were so weak
in the old crop through thespring, the summer, and it
really into the fall. And Ithink our view on that is that
(19:58):
what happened is actually theperformance of corn was better.
The starch content was better,so the ethanol yields were
better.
The feed conversions werebetter. All the ways that we use
corn, it took less corn to getto those those, those issues. So
you're gonna reverse that thisyear. If we have this light
test, you're actually gonnacreate a little bit of
additional demand, and it canadd up to 200, 250, 300,000,000
(20:19):
bushels over time, but you'renot gonna know that until
probably well into next year.So, you know, can it be an
issue?
Yeah. Is it an issue that'sgonna affect prices probably
here between now and the firstof the year? You know? Not
unless we have some prettydramatic problems, I don't
think.
Todd Gleason (20:35):
So I hauled off a 58. He's down at 52 on some of
those pounds. Number two yellowcorn is 56 unless it's in the
export market where it's £54when you ship it overseas. The
elevator really does know whatthey put in in the bin Mhmm.
(20:56):
Because they have weights.
Mhmm. That that makes adifference, I suppose, on the
elevator side. It does make adifference, but, you know, some
of
Brian Stark (21:03):
the larger farmers, you could also say have scales
when they bring it in too. A lotof them, if they don't have a
scale where they unload intotheir bin, they've got a scale
in their water wagon. So I thinkpounds is really what you're
looking at, in conversion tobushels, and you're gonna have a
feel for that as you go throughthe field if you've got a scale
system. And I think that's couldbe important to know what you,
know, absolutely have. I thinkthe other phantom, component
(21:26):
that we experienced here thispast fall was how dry the crop
was coming in.
You don't understand how muchyou give up in yield when you're
harvesting 13% corn out of thefield versus the standard,
number two fifteen o. So I thinkthere were some bushels lost in.
I'm not saying this year isgonna be the repeat of last '24
and dry, but I certainly, we'vehad a lot of heat. I think the
(21:49):
welcome weather of cooling downcertainly will help allow
elongate the the cycle of theplant, and and maybe we don't
dry down and lose so much yield,from shatter loss and things in
the field as we get out therethis fall.
Todd Gleason (22:01):
So we've talked about a lot of things, but
really we haven't come to thecrux of the matter, which are
prices are low, based on whatthe PharmDoc team put out this
week with updated numbers. Andthey used a fairly large corn
price still, and a decentsoybean price. They're still
looking at losses, in CentralIllinois on a cash rented farm
(22:25):
of 70 or $80 an acre for corn.Farmers have to figure out how
to manage that kind of loss, andit's not easy. What kind of
strategies do each of you thinkthey might try to deploy?
Curt Kimmel (22:41):
Well, that's a tough one. It varies from
individual to individual, butwe've been in the advice part as
we can find some decent basis,which there is none now to move
it and replace a little bit ofit. But we're kind of looking at
storing this crop into year end.I don't know if guys really want
(23:02):
to sell a whole lot here becausethey're pretty well where they
want to be this year. It's inthe next year where they want
the income, that's where theuncertainty is on it.
So, you know, with this bump upin through here, I think you can
put some hedges on and at least,protect your downside that way
at these levels a little higher.
Dave Chatterton (23:20):
Yeah. Todd, to your point, you're really tough
from a per acre p and l on thefarm just looking at commodity
prices. So I think you have todo a couple of things. One, as
as we've talked about cash carryin the market and being able you
know, just because there's carrythere, don't fall asleep. Make
sure you're looking.
You have offers in to sell thatthat crop and capture that
carry. But ARC and PLC are otherthings that you need to look at.
(23:41):
There's a cash flow issue there,but because of the changes that
have made been made, twoimportant things. One, this
year, you're gonna get thebetter of ARC or PLC regardless
of what you chose at the FSAoffice because of the changes
made inside the big better theBBB. Additionally to that, we
have raised the reference priceson on PLC, and we've increased
the coverage from 86 to sick 86%to 90% on ARC.
(24:04):
Those add about call it CentralIllinois, rough math, $20.22,
$25 an acre to that protective,deal. And when we're calculating
those values today at some ofthese prices, we're we're
getting close to $800 an acre atsome points. So every county is
different. We'll have to waitand see. Keep in mind, those
payments do not come out untilOctober next June.
(24:25):
Beneath that, you've got cropinsurance. If you're in an SEO
or an ECO environment where youtook 95% coverage, you're
certainly in a position whereyour yield trigger is very, very
high. If you're at a typical 80or 85% crop insurance level,
you're probably not in aposition where we're gonna
harvest a lot of income fromthat. But picking up these
little pieces of income alongthe way, there's rumors today
(24:47):
that the USDA and several folksfrom congress are talking to the
Trump administration about a anaid package for beans because of
the situation with China and notbuying any any beans from The
US, at least at this point.We'll have to wait and see where
that goes.
But you're gonna have to combinewhat you can do on the
commodity, you know, revenueside with what you can get
(25:07):
through these governmentprograms and these ag hoc
disaster programs and pick upevery rock along the way.
Todd Gleason (25:12):
An MFP payment Yeah. Seems like it would be a
hard sell in Washington DC giventariffs across the board with
everybody to pay out farmers,but it's been done in the past.
We'll see whether that happens.What's your advice to producers?
I I think
Brian Stark (25:28):
right now is simple and maybe as non risk management
as it will sound. To Dave'spoint, I think if you have a
sound crop insurance policy withECO or SCO on top, I think the
worst thing that could happenright now is for the market to
start rallying in the month ofOctober. I think you have to
understand what your actualyield is compared to your APH.
(25:50):
And I've even thought for guys,the few handful of people that
might be, you know, further soldthan than most, maybe looking at
cheap out of the money calls, assome upside protection against
potentially losing thatinsurance indemnity. Because I
think there's a very good chancefor those that have a county
based write on product to their,individual underlier, could lose
(26:12):
their payment if we steadilyclimb, during the month of
October.
We've seen that happen before.Outside of that, I think Dave
also mentioned, I agree with hima 100%. You have to look to sell
the cash carry. Obviously,that's dictated how far out you
go based on when you need cashflow. But I think when you have
large carries, when you have bigcrops, what ends up tends to end
(26:32):
up happening is the lead futuresmonth, wherever it goes off the
board, the next one gravitateslower towards it.
So you lose that carry if you
Todd Gleason (26:40):
don't lock that in and sell it ahead of time. Let's
get a final word now from eachof you. Kurt Kimmel of
agmarket.net. I'll start withyou for the day.
Curt Kimmel (26:50):
As a livestock feeder, think you gotta be on
your toes here and takeadvantage of some wide basis and
some cheaper feed needs herethis fall, early winter.
Conspiracy theory is they camein at the high yield this year
because they underestimated lastyear's crop, they're trying to
balance it out. Whether or not,who knows? But lastly, too, is
(27:11):
the yield does maybe come downand through here they got demand
so high that one might offsetthe other here for a little
while. But the bottom line iswith lower test waste and a huge
corn demand, I don't think so.
Todd Gleason (27:25):
I'm pretty sure we don't deal with conspiracy
theories most of the time, butsome of the time, probably. Dave
Chatterton of Strategic FarmMarketing. Your final word for
the day.
Dave Chatterton (27:37):
I wanna ask Kurt to check on the moon cycle
here. We'll talk to him. Beyondthat, look, I mean, we've talked
about a lot of stuff, commodityprices. I'm gonna mention kinda
one good thing that did happentoday. We got kinda some news
from the the RMA and through thethe reconciliation bill that
crop insurance is actually goingto improve for next year.
We're gonna get higher subsidieson your traditional RP products.
(27:58):
We're gonna see the subsidizedrate for SEO and ECO both go to
80%. So you're talking about aproduct that can take you up to
90 or 95% coverage subsidized bythe government at 80% makes it
very affordable for next year.With the PLC reference prices
coming up, we've got a bettersafety net going into next year.
So starting to think ahead, stayin touch with your con with your
with your crop insurance agentand how some of these changes
(28:19):
may affect you.
And keep in mind next year hereI mean, one thing we didn't talk
about, Todd, I mean, pretty bigacreage swing being penciled in
next year and a lot of soybeanacres coming in. If we don't
have that China program, be sureyou're staying ahead of
yourself. We made we talkedabout the old crop soybean
market and up 75¢ off thoselows. But using some premium
products, you can see $11 floorson that new crop 26 here. A one
(28:42):
by two contract, any kind of a astructured or, you know,
accumulating type of a structurethat you wanna talk about.
Those have their ups and downs,but be sure you're looking out
and making ahead and lookingahead to next year, particularly
in the soybean market with whatlooks like a trade war, you
know, definitely in place here.
Todd Gleason (28:58):
Gary Shnicki, agricultural economist at the
University of Illinois, hasalready looked at these numbers
as it relates to SCO and thehigher subsidies and simply says
every farmer should probably notonly consider it for next year,
but should probably take it.Your final word as well, Brian
Stark from the Andersons.
Brian Stark (29:16):
Well, Dave stole my thunder a little bit because I
think the best sale to to youwhat he said is to look out to
'26. I I think right now,there's not a lot of good
options. I think the first thingwould be if you can cash flow, I
think there's certainly someopportunities, some real good
interior basis and beans,locking in cash carry, utilizing
storage versus the conventionalselling them across the scale to
(29:39):
generate cash. But obviously,each individual farm is gonna be
different, but that would be myrecommendation to move a little
more corn during fall, just toavoid some of the wide bean
basis we'll see. And then, toDave's point, I think you need
to look out towards '26.
That tends to be the best,protective or at least
opportunity, environment for thefarmer right now. Take advantage
(30:00):
of maybe some carry and somegood values that might be closer
to the cost of production, maybeeven a little profitable
compared to what we're seeinghere in the '25 values.
Commodity week is
Todd Gleason (30:11):
a production of Illinois public media. You may
hear the whole of the programonline at willag.0rg. Our thanks
go to our panelists today. Theyinclude Brian Stark of The
Andersons, Dave Chatterton fromStrategic Farm Marketing, and
Kurt Kimmel of agmarket.net.Don't forget that you can drop
by the University of Illinoistent on the Farm Progress Show
(30:33):
site next week on Tuesday,Wednesday, and Thursday.
Our commodity week panels are at10:00 in the morning the first
two days and at nine a. M. Andwe'll also be joined by Arlen
Suderman. You want to drop infor that one. Matt Bennett will
be along as will Colin Waters ofthe Illinois Corn Growers
Association.
(30:53):
That's at 9AM on Thursdaymorning. Check out our website
at willag.org and the calendarof events. You can see all the
things that are happening in theUniversity of Illinois tent
throughout the day. I'm IllinoisExtension's Todd Gleason.
This is the August 21 edition of Commodity Week.
(00:09):
Todd Gleason services are madeavailable to WILL by University
of Illinois Extension. Welcometo Commodity Week. I am Todd
Gleason. Our panelists for theday include Brian Stark.
He's with the Andersons inMansfield, Illinois. Dave
Chatterton is here withStrategic Farm Marketing out of
Champaign, Illinois. And we'rejoined by Kurt Kimmel of
agmarket.net in Normal,Illinois. Commodity week is a
(00:31):
production of Illinois publicmedia, public radio for the
farming world online atwillag.org, willag.0rg. Next
week, we'll be at the FarmProgress Show in Decatur.
Our commodity week programs rundaily at 10:00. The farm doc
team is there at 11:30, and thecrop scientists are with us on
(00:53):
stage in the University ofIllinois tent at 11AM. The full
schedule is online atwillag.org. Check it each day.
We have many folks that'll bedropping by, and we'd like to
see you there as well.
Again, the calendar all in redin the calendar. You'll find
what's happening in theUniversity of Illinois tent each
and every day at the FarmProgress Show in Decatur. Let's
(01:15):
begin with Kurt Kimmel who, willbe making his way to the Farm
Progress Show next week. Thankyou very much for doing that.
This week, however, we need totalk about the Pro Farmer crop
tour, which took place.
By the time this airs, we'llhave the final numbers from Pro
Farmer, which will be theirnational and statewide numbers.
(01:37):
They differ widely from what yousee on the crop tour because
they do a lot of adjustments.However, what do you think of
the numbers that have beencoming out of crop tour to this
point?
Curt Kimmel (01:49):
Well well, the bean podcaster is huge. Man, if you
go ahead and finish off goodshape. We'll have a fairly
larger bean crop on that. Thereis some sudden death, some stem
rot. The thing on this, some ofthese fungus and diseases are a
little earlier than usual.
It feels a little later here inSeptember, but it can maybe take
(02:11):
a little bit off the top. Butthe biggest observation probably
is in the corn, that southernrust. And watching some of the
videos, and I don't think theywere AI altered, but some of
those participants come outorange and there's heavy rust.
I'm not quite for sure some ofthose participants went to the
hardware store to get someWD-forty to spray the shuck to
(02:32):
loosen it up to count thekernels. I mean, I was really
surprised how thick that is,particularly in Iowa.
So let's see how that unfolds inthrough here. Guys are really
testing the fungicide here onlongevity of it and whether they
sprayed or not. The other thingtoo is I heard some guys went a
(02:52):
little heavier on population, sothe ear counts are fairly good
in some areas. And the bottomline is we still have a little
bit of time here. We'll justhave to see how the crop
finishes out.
Todd Gleason (03:05):
In the state of Illinois, the USDA put this
year's crop at 221 bushels tothe acre. That was on August 1.
The crop scouts on their tour,which includes not Southern
Illinois, so it takes in thebest two thirds, maybe 80% of
the state, really, I guess, theupper half for them when you
(03:27):
look at their routes. They're atone ninety nine plus about four
and a half bushels, so they'rearound two zero four, roughly
speaking, for a statewideaverage. Do you think it's only
that good, really?
Brian Stark (03:41):
Yeah. I think that's probably true. I think,
obviously, you mentioned thatthey make adjustments here.
We'll get to final state yield,but certainly, over the last two
or three weeks in East CentralIllinois where it's been dry,
Kurt mentioned disease even inthis area. Rust has been a a big
issue, and I think it's tooearly to tell how much of a
negative impact it is, but thedisease pressures run rampant.
(04:05):
You generally see that when youhave wet and warm conditions
earlier around pollination andnow we've entered a period of
dry weather. So to me, it feelslike everyone we've talked to
feels like the crop size, whilegood, is not as big as last
year's in an Illinois sector.
Todd Gleason (04:21):
Brian Stark, of course, is with the Andersons.
Dave Chatterton, when you thinkabout that number that came out
from USDA that was looking atthe crop sites on August 1, do
you think nationally that's thebiggest number we might come up
with for the year? Where do yousuppose the September figure
might land?
Dave Chatterton (04:39):
Yeah, Todd. Always a little bit of a of a,
you know, spin the wheel type ofa deal with USDA, but I think
we're in a position where themarket when you when you kinda
back off and maybe look at thebigger picture of the pro farmer
numbers in general, we've beentalking about Illinois. When you
look at them in general, I thinkthe market wanted to look at two
things. One, I think there wasthe the confirmation that the
record yield potential that theUSDA indicated in the August
(05:00):
report was going to be there.And I think we checked that box.
I think there's no doubt aboutthat, particularly in the
Western Corn Belt as Kurtalluded to. I think the second
thing that that the trade wasreally looking for in terms of
price was, are these yieldsactually gonna go higher? And
there was a a lot of talk. Bigcrops get bigger. USDA, you
know, has a tendency to walkthis crop up.
I think there's a big questionmark about that. And, I think
(05:22):
the price action to this pointwould tell you that the market
is betting the under, that theyields actually from the USDA
probably will have to softengoing forward. Illinois is the
prime example for that crop forthat, Todd. I mean, I was on a
crop tour last week. I was inIllinois, Missouri, Nebraska,
South Dakota, Minnesota, Iowa,and then back to Illinois.
And I can tell you that we'rethe driest area of that entire,
(05:45):
you know, that entire trip. Andthe fact that the ProFarmers
finding numbers below last yearin corn in Illinois isn't, I
don't think, too big of asurprise. So, you know, that's a
great example where to get tothat record deal that the USDA
is talking about that one eightyeight plus type of a number,
need a lot of things to goright. And if Illinois is not
gonna pull the lever, you know,the West can make up for some
degree of that. But not sayingwe have a bad crop.
(06:08):
I'm not saying we don't have arecord crop, but I think the
high watermark is in.
Todd Gleason (06:11):
I wondered about that thinking about what Ohio
and Indiana, those numberscoming out of those two states
to begin with and that Illinoiswas probably pivotal because the
West was just gonna pick upwhatever Ohio and Indiana, which
are smaller states in cornproduction for sure. Ohio, I
think, is eight or nine. They'rewell down the line. Indiana,
(06:32):
right, ranks five or sixdepending on what year it is.
Kansas sometime is in front ofthem, which tells you a lot
about the size of Indiana aswell.
When you take all of that intoconsideration, Illinois being
pivotal, if Illinois comes outwith a quick yield, not the two
(06:52):
twenty one, but they come outwith, let's say, a record yield
at two eleven again, or even ifthey're at the two zero four,
how big is that national yield?Are we at one eighty six or
seven rather than one nearly 89?
Brian Stark (07:11):
Yeah. I think, the yield overall, it's gonna be
hard even with Illinois comingdown with the way the Western
Corn Belt is set up today todrop too much. So, you know, low
end might be one eighty four inmy mind today. It feels like
with what we're seeing. But,again, I think the big variable
always is, and maybe thepopulations as Kurt alluded to,
will help offset this.
But what this disease pressureis really gonna do as we finish
(07:33):
the crop, I think that's theunknown variable that is not
able to be predicted until thecombines roll through the field
here in late September andOctober. But irregardless, I
stand the fact that it feelslike this crop is a new record.
It's just a question of how bigof a record it will be.
Todd Gleason (07:49):
So the trade in Chicago is determining on the
futures how big the crop is.However, the elevator system is
making a different sort ofhedge, relatively speaking, on
it's a big crop, and we have tofigure out how to put it and the
soybeans away, and that's gonnabe hard on basis already is.
Yeah.
Brian Stark (08:08):
I think you've seen, like, some of the major
processors, Decatur, 33 underthe x, which is the cheapest I
can remember them being thisearly in the in the year, just
trying to figure out how withouta soybean export program, no
China, you know, what thatinterior demand and what they're
able to absorb is gonna be. Wetalked a little bit about it
before the show that it feelslike with the farmer undersold
(08:30):
today to generate cash even witha weaker basis, they probably
still lean into soybeans. Theyhave to move in selling soybeans
across the scale simply togenerate cash because they can
move and generate cash in asmaller volume. So I think
that's gonna pressure bean basiscould be much uglier than corn,
but corn is gonna be awfullywide, if some of these, record
(08:50):
breaking crops come to fruition.
Todd Gleason (08:52):
When you talk to producers about which crop they
need to put in the bin forstorage, when they have space
that they really feel like theycan swap out, what are you
telling them? Well, basically,
Curt Kimmel (09:04):
like Brian alluded there, they're gonna move beans.
Beans is a natural one to move.They like to hang on or store
corn. A lot of guys have gone tosome alternative storage
options, bags. Ethan in ouroffice, he had to drive clear to
Minnesota to get a baggingmachine because there's just
none around.
There's some in Canada, but hewas worried about getting back
(09:26):
into The US, so he naturallywent to Minnesota there. But
yeah, it's a matter of findingsome storage and be able to ride
the storm out here.
Dave Chatterton (09:37):
Yeah, Todd. I mean, to Kurt's point, think,
know, beans are the natural,beans are the traditional
fallback. I think producersshould be aware of and taking a
look at what's available, youknow, maybe storing corn
temporarily in what wouldnormally, you know, outside in a
bag or or or a pile and andusing utilizing what would
normally be corn space forsoybeans. When you look at these
cash carries even into justNovember, let alone December or
(09:59):
January, some very big numbershere. And, you know, good, Maybe
a point to think about that wehaven't talked about.
You even talk about futures and,you know, the crop estimates and
when the market bottom and take,you know, good example of the
corn market last year. Thesecorn bottomed on August 26.
We're right in that time period.But a futures bottom and a cash
bottom are two very differentthings. And, you know, looking
(10:20):
at the logistical challengesthat we're going to have this
year now, one good thing wehave, commercial space is mostly
empty, but it's going to fillvery quickly and, based on this
size of the crop.
So look at your alternativeoptions. Do you know, it's time
to get creative. It's time to dothings that maybe you're outside
of your comfort zone or thinkabout it anyway. And, you know,
that bagger that Kurt mentioned,I mean, it's like talking about,
(10:42):
the election COVID politics.Some people love them, some
people hate them, verypolarizing subject, but, you
know, nontraditional.
Maybe it's filling yourfertilizer shed. Maybe it's
doing something a little alittle out of whack. But when
you can pick up $30.40, 50¢ ofcarry in a matter of thirty,
forty five, or sixty days in ain a margin environment that
we're in currently with withkind of low commodity prices,
(11:04):
definitely have to be flexiblehere.
Todd Gleason (11:05):
I'd like to ask you a little bit, Brian, about
logistics and basis and naturalbarriers across The United
States, the rivers. So theMississippi, the Illinois, the
Ohio. Because sometimes you canreally see from one side of the
river to the other. There is a abasis difference. Just the the
(11:28):
river seems to be a natural spotfor basis to change.
Can you tell me when there is ahuge crop in the Western United
States, what it does to basis,and logistically, how that
changes?
Brian Stark (11:40):
Yeah. I think the biggest thing is is you look at
the Western Corn Belt, and,obviously, that tends to have a
pull. When you have no exportprogram or a minimal export
program, booked out The Gulf,say, for soybeans, you could see
cheap basis, up to South Dakota,North Dakota, dollar 50, dollar
60 under start to be competitiveto the river, and that ends up
(12:01):
influencing not just the overallspace at the elevator, the
processor interior in theEastern Corn Belt basis, but
also the fact that now theelevator in the East starts to
feel pressure because they'renot as competitive with some of
the Western bushels that startto work East. And I think that
is a big risk that we're gonnasee. Obviously, without a big
book, in The Gulf, for soybeans,you don't have that program.
(12:23):
We're already seeing the Delta,come off with some of their
crop, moving to the river, andthat's had some pressure with a
lack of of demand. And the onebright spot, if I flip the
script a little bit, is that ourcorn program continues to be
very robust. We saw big exportnumbers for the new crop,
compete. Brazil, Argentinacontinue to be at a premium to
(12:44):
The US offers out front. So thatis a good positive for the
demand standpoint to supportbasis to what Dave was saying.
If you could ride the storm outthe next thirty to sixty days on
the basis side, you might beable to
Todd Gleason (12:57):
pick up some really good cash carry. There
was a good futures market onThursday for soybeans,
particularly for soybean oil. Isuppose it may have to do
something with an announcementcoming Friday from Washington
DC. I don't know whether we havevery much information about
that. Did you hear anything?
What are the rumors as they'rerelated to those issues?
Dave Chatterton (13:20):
Yeah, Todd. What you're referencing is the
the small refinery exemption. Ibelieve there's a 196 exemptions
on that list or, you know,pending exemptions, I should
say, that go all the way back to2016. And then Reuters and
Bloomberg, Bigwire services bothreported today that the EPA is
ready to make announcement onthose waivers as early as
tomorrow, and that it will bespeculation is that it will be a
(13:43):
little more favorable maybe forthe ag side than what we
initially thought, and thatignited a soybean rally today.
If some of those exemptions,aren't aren't granted, it it
helps us, you know, with ahigher biofuel mandate, and
blending requirement that, youknow, we're we're still in the
bullish side of the crush andthe oil demand.
So we will see how that playsout. When you look at soybeans
(14:05):
to your point, Todd, I mean,we're 75, 76 off of that low
that we made in early August.We're the highest level we've
been in beans in seven weekssince the mid June. And
certainly for farmers who needto make catch up sales to
Brian's point, and particularlyin beans, you know, you need to
be paying attention. I'm notsaying, you know, picking a top
is pretty much useless here,but, you you know, you have to
(14:27):
be able to take some smallvictories in this market and to
you know, one more, you know,point on the logistics that he
said.
I think it's complicated furtherthis year, the fact that China
has bought zero new crop beans.And in doing so, that's normally
a very strong PNW market thathelps lift some of that Western
crop away in that NorthwesternBelt. This year that there's no
bid going to the PNW for beans.So those beans are gonna compete
(14:49):
in our system, in our riversystem, in our rail, in our
processing system, and add evena little additional pressure.
So, I mean, be aware of thosefactors and and how you're
planning things and and and howbasis can be dynamic here.
Todd Gleason (15:00):
Can you clarify for me why it is that the small
refinery exemption, which has todo mostly with ethanol actually,
all with ethanol because ethanolproducers would have an impact
on soybean oil. Is it about theadvanced biofuel that
substitutes into the, biofuelspace that sometimes that that
(15:25):
ethanol fills sometimes in theadvanced side?
Brian Stark (15:29):
Yeah. I think that's probably correct. I
think, obviously, as youmentioned, it's mostly tied to
the corn based side, but I thinkthat the fact the advanced when
you talk about renewable dieseland some of the initiatives that
you're seeing with the oil, Ithink that's a component of why
the the that's our weightpotential waivers are such a big
deal to the bean market. The onething I will also add on to what
(15:51):
Dave has said, the bean market,we have to be cautious. I think
beans as a whole, because ofthe, the RVO and what that all
means long term, are stronger tofind what true value is because
while oil is potentially a verybullish item, we've talked about
before meal is kind of the thedeadweight, potentially hanging
(16:12):
down on the market because,obviously, you you don't
generate 60% of your bean ismeal.
So, obviously, we have to figureout long term what that means
for meal demand even if we havea bullish oil scenario and where
beans fit in the whole spectrum.You cannot store meal nearly as
long as some other products, andso I think that could be a
challenge to figure out wherefair value is for soybeans.
(16:34):
Renewable volume obligations orthe RVOs, the oil and the meal,
of course,
Todd Gleason (16:39):
the products of the crush from the soybean, and
the meal can be shippedoverseas. Difficult because we
don't have the rail lines comingout of the Western Corn Belt
yet, really, headed towards theP And W. So the meal's gonna
pile up somewhere, I suppose,and it's just gonna be a drag.
Brian Stark (16:59):
Yeah. It's gonna be a drag. I think that's the
biggest, thing that is yet to bedetermined. I think that's why
it's been hard even with theprojected tight carryout, that
we saw with the acreage shifthere a week or so ago, with
beans losing acres that kindaignite a little bit of a
friendliness with the projectedcarryout and strong demand, but
you still have this product, ameal that is is a deadweight
(17:20):
trying to figure out what we dowith it to offload it if we are
really gonna crush more beansfor oil.
Todd Gleason (17:25):
On the acreage changes, Brian reminded me
there's more corn acres outthere, and USDA still put that
record yield on this cropdespite the fact that they're in
more marginal areas or some ofthem are, of course. It looks
like those areas are gonnareally produce. Again, I come
(17:46):
back to the idea is the Westgoing to overcompensate for
everything that might be goingon East Of The Mississippi
River.
Curt Kimmel (17:55):
Well, they they say as you drive through Nebraska,
you can't see where theirirrigation pivots are because
the ends are just as green. So,yeah, it's gonna be a fairly
good crop as a whole. I don'tknow how you can have record,
record yields when you've gotsome holes around, but we're
fixing to find out. But onething you've got to remember too
with this disease issue is thequestion of test weight. And so
(18:18):
when you start messing with testweight later on, which we don't
know now, that can probably be abig factor too.
When you look at where we are,probably national yield, they
won't probably address it untilthe January report. It's last
year in January report theydropped the corn yield of four
bushels an acre. The JSA teamfeels we're kinda at a one
(18:39):
eighty five area when you factorall this stuff in at the moment.
Todd Gleason (18:44):
I will say that because the crop is so good and
test weights may vary from oneplace to the other, When farmers
store all of this crop on theirfarm in the bin, they probably
won't know how many bushels theyhave. They'll have an idea, but
they could be way off becausetest weight will make them way
(19:05):
off. It's a 30,000 bushel bin,but how many bushels are really
in there if it's test weighted58 bushel or 58 pounds? And so
these are things that will keepthis a mystery probably all the
way, I guess, through, well,next fall. They might be okay in
(19:29):
January, but that's a survey offarmers, relatively speaking, of
what what they think their cropsize was.
So there there's a lot ofvariables still coming in this
marketplace.
Dave Chatterton (19:38):
Yeah, Todd. And to your point, I think, you
know, this year is a greatexample. I think what we found
out is there was a lot ofnaysaying in the commercial
circles about corn in the USDAgot the crop wrong and had to be
bigger than indicated becausebasis and spreads were so weak
in the old crop through thespring, the summer, and it
really into the fall. And Ithink our view on that is that
(19:58):
what happened is actually theperformance of corn was better.
The starch content was better,so the ethanol yields were
better.
The feed conversions werebetter. All the ways that we use
corn, it took less corn to getto those those, those issues. So
you're gonna reverse that thisyear. If we have this light
test, you're actually gonnacreate a little bit of
additional demand, and it canadd up to 200, 250, 300,000,000
(20:19):
bushels over time, but you'renot gonna know that until
probably well into next year.So, you know, can it be an
issue?
Yeah. Is it an issue that'sgonna affect prices probably
here between now and the firstof the year? You know? Not
unless we have some prettydramatic problems, I don't
think.
Todd Gleason (20:35):
So I hauled off a 58. He's down at 52 on some of
those pounds. Number two yellowcorn is 56 unless it's in the
export market where it's £54when you ship it overseas. The
elevator really does know whatthey put in in the bin Mhmm.
(20:56):
Because they have weights.
Mhmm. That that makes adifference, I suppose, on the
elevator side. It does make adifference, but, you know, some
of
Brian Stark (21:03):
the larger farmers, you could also say have scales
when they bring it in too. A lotof them, if they don't have a
scale where they unload intotheir bin, they've got a scale
in their water wagon. So I thinkpounds is really what you're
looking at, in conversion tobushels, and you're gonna have a
feel for that as you go throughthe field if you've got a scale
system. And I think that's couldbe important to know what you,
know, absolutely have. I thinkthe other phantom, component
(21:26):
that we experienced here thispast fall was how dry the crop
was coming in.
You don't understand how muchyou give up in yield when you're
harvesting 13% corn out of thefield versus the standard,
number two fifteen o. So I thinkthere were some bushels lost in.
I'm not saying this year isgonna be the repeat of last '24
and dry, but I certainly, we'vehad a lot of heat. I think the
(21:49):
welcome weather of cooling downcertainly will help allow
elongate the the cycle of theplant, and and maybe we don't
dry down and lose so much yield,from shatter loss and things in
the field as we get out therethis fall.
Todd Gleason (22:01):
So we've talked about a lot of things, but
really we haven't come to thecrux of the matter, which are
prices are low, based on whatthe PharmDoc team put out this
week with updated numbers. Andthey used a fairly large corn
price still, and a decentsoybean price. They're still
looking at losses, in CentralIllinois on a cash rented farm
(22:25):
of 70 or $80 an acre for corn.Farmers have to figure out how
to manage that kind of loss, andit's not easy. What kind of
strategies do each of you thinkthey might try to deploy?
Curt Kimmel (22:41):
Well, that's a tough one. It varies from
individual to individual, butwe've been in the advice part as
we can find some decent basis,which there is none now to move
it and replace a little bit ofit. But we're kind of looking at
storing this crop into year end.I don't know if guys really want
(23:02):
to sell a whole lot here becausethey're pretty well where they
want to be this year. It's inthe next year where they want
the income, that's where theuncertainty is on it.
So, you know, with this bump upin through here, I think you can
put some hedges on and at least,protect your downside that way
at these levels a little higher.
Dave Chatterton (23:20):
Yeah. Todd, to your point, you're really tough
from a per acre p and l on thefarm just looking at commodity
prices. So I think you have todo a couple of things. One, as
as we've talked about cash carryin the market and being able you
know, just because there's carrythere, don't fall asleep. Make
sure you're looking.
You have offers in to sell thatthat crop and capture that
carry. But ARC and PLC are otherthings that you need to look at.
(23:41):
There's a cash flow issue there,but because of the changes that
have made been made, twoimportant things. One, this
year, you're gonna get thebetter of ARC or PLC regardless
of what you chose at the FSAoffice because of the changes
made inside the big better theBBB. Additionally to that, we
have raised the reference priceson on PLC, and we've increased
the coverage from 86 to sick 86%to 90% on ARC.
(24:04):
Those add about call it CentralIllinois, rough math, $20.22,
$25 an acre to that protective,deal. And when we're calculating
those values today at some ofthese prices, we're we're
getting close to $800 an acre atsome points. So every county is
different. We'll have to waitand see. Keep in mind, those
payments do not come out untilOctober next June.
(24:25):
Beneath that, you've got cropinsurance. If you're in an SEO
or an ECO environment where youtook 95% coverage, you're
certainly in a position whereyour yield trigger is very, very
high. If you're at a typical 80or 85% crop insurance level,
you're probably not in aposition where we're gonna
harvest a lot of income fromthat. But picking up these
little pieces of income alongthe way, there's rumors today
(24:47):
that the USDA and several folksfrom congress are talking to the
Trump administration about a anaid package for beans because of
the situation with China and notbuying any any beans from The
US, at least at this point.We'll have to wait and see where
that goes.
But you're gonna have to combinewhat you can do on the
commodity, you know, revenueside with what you can get
(25:07):
through these governmentprograms and these ag hoc
disaster programs and pick upevery rock along the way.
Todd Gleason (25:12):
An MFP payment Yeah. Seems like it would be a
hard sell in Washington DC giventariffs across the board with
everybody to pay out farmers,but it's been done in the past.
We'll see whether that happens.What's your advice to producers?
I I think
Brian Stark (25:28):
right now is simple and maybe as non risk management
as it will sound. To Dave'spoint, I think if you have a
sound crop insurance policy withECO or SCO on top, I think the
worst thing that could happenright now is for the market to
start rallying in the month ofOctober. I think you have to
understand what your actualyield is compared to your APH.
(25:50):
And I've even thought for guys,the few handful of people that
might be, you know, further soldthan than most, maybe looking at
cheap out of the money calls, assome upside protection against
potentially losing thatinsurance indemnity. Because I
think there's a very good chancefor those that have a county
based write on product to their,individual underlier, could lose
(26:12):
their payment if we steadilyclimb, during the month of
October.
We've seen that happen before.Outside of that, I think Dave
also mentioned, I agree with hima 100%. You have to look to sell
the cash carry. Obviously,that's dictated how far out you
go based on when you need cashflow. But I think when you have
large carries, when you have bigcrops, what ends up tends to end
(26:32):
up happening is the lead futuresmonth, wherever it goes off the
board, the next one gravitateslower towards it.
So you lose that carry if you
Todd Gleason (26:40):
don't lock that in and sell it ahead of time. Let's
get a final word now from eachof you. Kurt Kimmel of
agmarket.net. I'll start withyou for the day.
Curt Kimmel (26:50):
As a livestock feeder, think you gotta be on
your toes here and takeadvantage of some wide basis and
some cheaper feed needs herethis fall, early winter.
Conspiracy theory is they camein at the high yield this year
because they underestimated lastyear's crop, they're trying to
balance it out. Whether or not,who knows? But lastly, too, is
(27:11):
the yield does maybe come downand through here they got demand
so high that one might offsetthe other here for a little
while. But the bottom line iswith lower test waste and a huge
corn demand, I don't think so.
Todd Gleason (27:25):
I'm pretty sure we don't deal with conspiracy
theories most of the time, butsome of the time, probably. Dave
Chatterton of Strategic FarmMarketing. Your final word for
the day.
Dave Chatterton (27:37):
I wanna ask Kurt to check on the moon cycle
here. We'll talk to him. Beyondthat, look, I mean, we've talked
about a lot of stuff, commodityprices. I'm gonna mention kinda
one good thing that did happentoday. We got kinda some news
from the the RMA and through thethe reconciliation bill that
crop insurance is actually goingto improve for next year.
We're gonna get higher subsidieson your traditional RP products.
(27:58):
We're gonna see the subsidizedrate for SEO and ECO both go to
80%. So you're talking about aproduct that can take you up to
90 or 95% coverage subsidized bythe government at 80% makes it
very affordable for next year.With the PLC reference prices
coming up, we've got a bettersafety net going into next year.
So starting to think ahead, stayin touch with your con with your
with your crop insurance agentand how some of these changes
(28:19):
may affect you.
And keep in mind next year hereI mean, one thing we didn't talk
about, Todd, I mean, pretty bigacreage swing being penciled in
next year and a lot of soybeanacres coming in. If we don't
have that China program, be sureyou're staying ahead of
yourself. We made we talkedabout the old crop soybean
market and up 75¢ off thoselows. But using some premium
products, you can see $11 floorson that new crop 26 here. A one
(28:42):
by two contract, any kind of a astructured or, you know,
accumulating type of a structurethat you wanna talk about.
Those have their ups and downs,but be sure you're looking out
and making ahead and lookingahead to next year, particularly
in the soybean market with whatlooks like a trade war, you
know, definitely in place here.
Todd Gleason (28:58):
Gary Shnicki, agricultural economist at the
University of Illinois, hasalready looked at these numbers
as it relates to SCO and thehigher subsidies and simply says
every farmer should probably notonly consider it for next year,
but should probably take it.Your final word as well, Brian
Stark from the Andersons.
Brian Stark (29:16):
Well, Dave stole my thunder a little bit because I
think the best sale to to youwhat he said is to look out to
'26. I I think right now,there's not a lot of good
options. I think the first thingwould be if you can cash flow, I
think there's certainly someopportunities, some real good
interior basis and beans,locking in cash carry, utilizing
storage versus the conventionalselling them across the scale to
(29:39):
generate cash. But obviously,each individual farm is gonna be
different, but that would be myrecommendation to move a little
more corn during fall, just toavoid some of the wide bean
basis we'll see. And then, toDave's point, I think you need
to look out towards '26.
That tends to be the best,protective or at least
opportunity, environment for thefarmer right now. Take advantage
(30:00):
of maybe some carry and somegood values that might be closer
to the cost of production, maybeeven a little profitable
compared to what we're seeinghere in the '25 values.
Commodity week is
Todd Gleason (30:11):
a production of Illinois public media. You may
hear the whole of the programonline at willag.0rg. Our thanks
go to our panelists today. Theyinclude Brian Stark of The
Andersons, Dave Chatterton fromStrategic Farm Marketing, and
Kurt Kimmel of agmarket.net.Don't forget that you can drop
by the University of Illinoistent on the Farm Progress Show
(30:33):
site next week on Tuesday,Wednesday, and Thursday.
Our commodity week panels are at10:00 in the morning the first
two days and at nine a. M. Andwe'll also be joined by Arlen
Suderman. You want to drop infor that one. Matt Bennett will
be along as will Colin Waters ofthe Illinois Corn Growers
Association.
(30:53):
That's at 9AM on Thursdaymorning. Check out our website
at willag.org and the calendarof events. You can see all the
things that are happening in theUniversity of Illinois tent
throughout the day. I'm IllinoisExtension's Todd Gleason.
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