December 18, 2025 • 31 mins
Panelists
- Dave Chatterton, SFarmMarketing.com
- Curt Kimmel, AgMarket.net
- Greg Johnson, TGM TotalGrainMarketing.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the December 18 edition of Commodity
(00:03):
Week. Todd Gleason's servicesare made available to WILL by
University of IllinoisExtension. Well, welcome to
Commodity Week. I am ToddGleason. Our panelists for the
day include Kurt Kimmel.
He is with agmarket.net. GregJohnson is here too from TGM,
(00:25):
that's Total Grain Marketing,and from Strategic Farm
Marketing online atsfarmmarketing.com. We're joined
by Dave Chatterton. CommodityWeek is a production of Illinois
Public Media. It is public radiofor the farming world online on
demand at willag.org, W I L L AG dot O R G.
Let's get a list of items thatwe might need to discuss for the
(00:47):
day. We'll start with you, DaveChatterton. What's on your list?
Dave Chatterton (00:50):
Yeah, Todd. Just real quick, Merry Christmas
to all of all in the studio hereand everyone listening out
there. I three think big thingsin agricultural or the grain
markets currently. I think oneis obviously China and how much
they're going to buy, whenthey're going to buy and how the
trade agreement will unfold. Twoof course is going to be South
America and when I say SouthAmerica, in particular the
(01:11):
weather in Brazil and Argentinaand what it means for the
potential of what looks like arecord crop brewing in that part
of the world.
And three I think is corn demandreally. I mean it's wow is a
good word to put to it. It'sbeen very impressive. But
holding that pace I think may bean issue and something we need
to look forward going to. Andthen finally, maybe the January
(01:31):
report is something we ought totalk about and it's coming up
here and not too awful long.
Todd Gleason (01:35):
Kurt Kimmel, he covered the gamut. Anything else
Curt Kimmel (01:37):
on Oh your boy, we could go a whole day seminar
with that there, Dave. Prettywell covered. Maybe one other
factor, outside market activity,consumer confidence maybe.
Todd Gleason (01:47):
And finally, Greg Johnson, anything in the grain
markets cash side that we oughtto take, maybe take and pay
attention to?
Greg Johnson (01:55):
Well, to what Dave said, not only do we need to
monitor Chinese soybeanpurchases, but there's some
rumors late in the week thatChina might be interested in US
corn for the first time inseveral, several years. So
that's something that it's oneof those wild cards, one of
those unexpected things that youjust never know but, you know,
it's good to keep in mind thatsomething unexpected could
happen in this marketplace.
Todd Gleason (02:16):
Well, let's start with China and China and China
to begin with because there area whole lot of things that have
not been happening, some thathave happened. I think they have
purchased maybe a bit more thanhalf of the expectation,
somewhere around 7,000,000metric tons. Is that right, Dave
Chatterton of soybeans?
Dave Chatterton (02:33):
Yeah, Todd. I think that's the current going
estimate. Of course, we're stillwaiting on some of those sales
to become public in terms of howthey move between COFCO US and
COFCO China and finally make itonto the USDA's wire. It's
generally thought that they havegotten to at least a 7,000,000
metric ton or a little bit overthe half of that 12,000,000
metric ton commitment. I thinkjust looking at the price
(02:53):
action, the rally that we hadafter the trade deal was
announced in late October andkind of peaking out last month
and kind of where we have comeback to really I think we are on
the backside of theannouncement.
And the 12,000,000 metric tons,keep in mind that's great.
That's demand we didn't have.They were at zero. I think it is
a foregone conclusion or it'saccepted conclusion that they're
(03:13):
going to reach that level. Itmay not be right away.
What they buy may not ship untillater next year certainly. But
the question is then what? And Ithink if you look at that
12,000,000 metric tons, that'sfour forty million bushels give
or take. Keep in mind last yearthey bought eight eighty million
metric tons. So we still haveless than half of what they did
(03:35):
a year ago.
We have a very big I guess I'llcall it a hole to fill here in
terms of how we are going tomake up for that additional
demand. Certainly, Record Crushis helping to do that. We have
some non Chinese exportdestinations that we can talk
about. But when it comes to thatsoybean export whether it's The
US, whether it's Brazil, whetherit's Argentina, any other
(03:55):
country, it's China. And whenChina is not buying from The US,
we have some issues that we needto take account of.
Todd Gleason (04:01):
As Dave said, in the recent time, China has
purchased in that eight eightymillion bushel amount, around
24,000,000 metric tons. They saythey're going to buy 25 in
whatever calendar year they'retalking about, whether it's U.
S. Or the Chinese calendar yearcoming up, will they be in the
(04:23):
marketplace? It seems to me,from my perspective, that is a
very big if about next fall, anda zero for some time would be
really bad.
How soon does the market getconcerned about such things in
the new crop year and what areyou thinking about it?
Curt Kimmel (04:41):
Well, near term, they need to stop buying because
every time there is a salesannouncement, the market goes
down. So we're fulfilling thoseprior commitments. The big thing
is we need to help in Asia fromthe private sector right now.
It's the government replacingstocks. So if we could see some
demand pickup, we will hopefullylook into next year and see that
(05:05):
fulfill that need for the mostpart.
But we got South America comingonline and they will be in the
market here in another two orthree months. So when you push
on out past the spring, it'skind of questionable. But right
now, the USDA or WASDE isshowing a carryout of two ninety
million bushel and if we don'tsee weather concerns, the
(05:26):
Southern Hemisphere is going beawful hard to move back higher.
Todd Gleason (05:28):
Greg Johnson, related to the January report
and the WASDE, the update thatwill come from them starting
with the May World Ag Supply andDemand Estimate, USDA has not
really backed off on theirexports. Either they got it
right then and understood howmany soybeans China might buy
(05:50):
and or what the ancillary costsmight be to other places,
meaning there would be otherpurchases, or an adjustment
still has to be made at somepoint.
Greg Johnson (06:01):
It I I'm in the camp that an adjustment still
has to be made at some point intime. Keep in mind, we haven't
seen the details of thisagreement. There's a lot of
people that think that this12,000,000 metric ton purchase
this year, 25,000,000 metric tonin subsequent years, has a
stipulation that they will buythat only if we are the lowest
(06:21):
price if that's a pricecompetitive price that we're
offering. Otherwise, they do nothave to purchase that entire
amount And given what happenedthe first trade agreement, they
did not buy that amount becausewe were higher priced than
Brazil. So I think that's stilla big concern is, you know, yes,
that's in the agreement, butwhat other terms are in the
(06:43):
agreement?
Nobody has seen the agreementand so we don't know whether
they're committed to buy it, youknow, price insensitive or if
the price is a factor in howmany bushels they in fact do are
required to buy.
Todd Gleason (06:54):
Okay. So if we're thinking in those terms, Dave
Chatterton, how should aproducer approach what they have
left to sell for the twentyfive-twenty six crop year?
Dave Chatterton (07:05):
Yeah, Todd. Think in a general reference,
producers have sold more beansthan corn and at this point, I
think that's a good thing. AsKurt alluded to, really if
you're talking about what'sgoing to rally the soybean
market from here, it's eitherChina getting more active and
more aggressive and when we lookat the signs and Greg kind of
pointed to this, if you look atthe port stocks in China,
(07:26):
they're near record highs. Youlook at how U. S.
Beans compare to South Americanbeans and after the first of the
year, they look very expensive.If you look at crush margins in
China, they're not necessarilygreat. If you look at what
they're trying to do with theirhog herd and shrink those
numbers, there's not a big andeasy path there that has them
(07:46):
buying US soybeans beyond this12,000,000 metric ton commitment
which we think they're going toget to. At that point, it's a
political I think proposition.They're going to buy as many
beans from The US as they thinkthey need to in order for Trump
to keep the tariff in check onthe billions and billions and
(08:07):
billions of dollars of consumergoods that they export to The
US.
So it's really kind of soybeansare caught as a little bit of a
game. I think in that situationwith no weather handle right now
to really work with in terms ofthe South American crop, You
have to be very defensive hereand we've seen that action here
of corn stabilizing, goinghigher, beans going lower and
really I'm afraid that we havesome additional downside. I
(08:29):
think you have to be a prettyopportunistic marketer of
soybeans, whether that's oldcrop or new crop going forward.
And we can talk about theacreage mix and some other
things in there. But it's adelicate dance and hopefully,
you're going to have to becertainly more aggressive
pulling the trigger on soybeansI think than corn here.
Curt Kimmel (08:47):
We've got really on the beans, two types of markets
or two different scenarios. Herein the East, most of producers
sold beans right across thescale, elvirs for the most part
about 70%, 80%. Normally whatthey take it in. As far as the
West, they pretty well storedthem or found a home for them
because the basis was $1.1.5dollars under. So this Chinese
(09:08):
demand out of the PacificNorthwest needs to materialize
here to get those beans movedout of that Northwest area.
As far as here, I think you makecash grain sales. You come back
in and replace some callstrategies because basically
option volatility is fairly low.You can get a lot of bang for
your dollar if we run into someweather conditions here in the
(09:29):
Midwest during the growingseason. Greg, of
Todd Gleason (09:32):
the customer base at TGM in Champaign County, how
are they doing on making sales?I know you told us on the air
that they did a good job at $11Yeah.
Greg Johnson (09:42):
Yeah. Kurt and Dave are both right. Soybean
sales are much better percentagewise than corn at this point. It
might be in that 50% to 60%. Idon't know if they're 70% sold
on old crop beans.
Maybe some people are in furthereast. But I would say in our
territory, 50% to 60% which ispretty good. There were high
storage charges in the fall, bigcarries in the market. Farmers
(10:04):
didn't want to pay those storagecharges. So if they didn't have
their own on farm storage, a lotof beans got sold across the
scale for cash flow purposes.
And at that point, there waspretty good export demand for
corn so farmers were tightholders of corn and they still
remain tight holders of corn. SoI agree. I think the beans have
been very well marketed and nowthis dollar sell off is just a
(10:26):
reminder and we try to remindpeople this is why we have
offers in. If we thought $11 wasgood, keep that offer in because
the next time they bounce backup, you have to have offers in.
They just don't stay there verylong.
Todd Gleason (10:37):
Okay. So let's look southward to South America.
Brazil and Argentina, Brazil hadhad some difficulties. There
were some thoughts that thingsmight turn dry enough that it
would be a problem. Clearly notthe case according to all the
meteorologists at this point.
They've gotten wet. And EricSnodgrass, others are saying
(10:58):
it's not that they are just wet,it's that if they stay wet,
that's when they get to have aproblem at this point in time.
Otherwise, they have got a heckof a crop running.
Dave Chatterton (11:06):
Yeah, Todd. I mean the conversation there were
a few dry areas in SouthernBrazil to get started. The rainy
season started a little bit slowbut it has really accelerated
and now the problem is, are wegoing to have too much rain when
it comes time to startharvesting? And we have got a
few combines rolling in, let'ssay, Northern Mato Grosso right
now. It's a very small amountbut that will pick up speed here
(11:27):
as we go through the Decemberinto January.
And I would say that come thatFebruary, you could probably say
that Mato Grosso is goingharvest somewhere between 800 to
eight fifty, 900,000,000 bushelsof beans. So they're going be
coming rather quickly assumingthey're not out. But crop
estimates remain high. Keep inmind they increased their
(11:47):
acreage a little over 3% againthis year. We don't have the
problems in Argentina that wedid last year in terms of their
weather and their potentialproduction.
Probably a little bit more of acorn issue but when you look at
combined Brazil and Argentinatogether, throwing Uruguay,
Paraguay, we're looking on paperanyway. It looks like what will
be the fourth year in a row ofrecord soybean production in
(12:08):
South America. And that's adirect competitor to The U. S.
Obviously, know that China'spreference has been for those
South American beans to thispoint.
So there are some whispernumbers out there that Brazil
could see its first ever180,000,000 metric ton soybean
crop. Now, we're probably alittle bit below that. I think
agmarket.net and some of theothers as well. But certainly
(12:29):
the miss here seems to be on thehigh side for that bean crop at
the moment.
Todd Gleason (12:34):
Do you suppose we have weather premium built into
the marketplace from earlier inthe year still? Some of the the
drop in, I guess, first explainthe 60¢ to a dollar drop that
we've had in in the in thesoybean market and what you
think precipitated that. Is itbetter weather in Brazil? Is it
(12:55):
the idea that China may or maynot finish out their 12,000,000
metric tons by the time we getto, well, it was supposed to be
now, but February? What orcombination?
What are you thinking?
Curt Kimmel (13:06):
Yeah, I think it's all the above. Back in October,
we had a breakout and the marketwent straight up on anticipation
of some type of deal beingstruck. I'm not quite for sure
if Asia did not come in as afund and hedge that purchase and
bought it. Now when they'reactually physically buying the
product here, they're taking thehedge off, having the market
(13:29):
drift lower. But yeah, we've gotfavorable weather and the trade
pretty well is dialed in thatthis bean crop in the Southern
Hemisphere is going to beavailable and it's going be a
buck, buck 20 cheaper.
Greg Johnson (13:41):
We need to keep in mind too that while we were
getting this rally, thegovernment was shut down so we
weren't getting commitment totraders reports from the CFTC.
Come to find out, now that we'reback up and running, the funds
amassed the second largest longposition in history in soybeans.
And so I think a lot of thepaper trade happened ahead of
(14:05):
the actual announcements of thesales to China. So the funds
were long and the old rule ofthumb is to fade the funds. When
they were as long as they were,obviously in hindsight, that
would have been the perfect timeto sell beans.
Todd Gleason (14:17):
Are they still long?
Greg Johnson (14:19):
They are. They they we've commitment numbers up
through December 2. We're stillnot entirely current, but we're
getting closer to the currentnumbers. And they've sold off
quite a bit, but they're stillvery long. There's still more
room for downside if they decideto liquidate the rest of that
long position.
Todd Gleason (14:37):
Is that a 45Z and renewable diesel thing coming
into the tax year that goes intoplace January 1?
Dave Chatterton (14:45):
I think it could be to part on that, Todd.
I mean, that's certainly part ofthe equation here and we look at
crushes as still holding in verywell, but these bean oil stocks
are starting to rise. I thinkit's a very different situation
maybe than the 2024 where weknew the tax credits were going
to expire and everybody wastrying to push through as many
as they possibly could. Butprice decline in beans I think
(15:06):
is just simply it's money flowand funds. When you look to
Greg's point, we had them at onepoint.
It looks like they got longabout net long, 230,000
contracts of soybeans. Two sixtywould be the record that we
have. And now they're startingto bleed that off but still long
and as we estimated today,probably around 150,000 to
160,000 contracts. You can trackthe open interest on the CME
(15:29):
soybean contracts and see thatit went up a like amount. Think
it was around 120,000 netcontracts.
So like I said, when I mentionedwe're on the backside of that, I
think now they're in thatliquidation phase and
unfortunately they have more toliquidate assuming we are going
to not find a spark that getsthe market going higher.
Todd Gleason (15:50):
You did scare me. I was thinking if they are still
long, they have got liquidationyet to go and I don't know what
that means for the downsidepotentially. Curt, I know you
have been thinking about thisfor a while and have a good idea
where the commercials havepositioned themselves based on
what you are hearing in themarketplace.
Curt Kimmel (16:09):
Well, the commercials hedge those off when
they bought physical but openinterest will go get down next
week because we have the Januaryoptions expiring and you will
have January futures puts andcalls all matching up so you
have a natural drop in openinterest on the beans or any
(16:29):
product when the options expire.
Todd Gleason (16:31):
On the 45C, Greg Johnson, I know this is a little
out of your bailiwick but duringthe Farm Assets Conference,
Scott Irwin was talking aboutbiofuels on SAF which could be
soybeans, but more likely jet toalcohol or alcohol to jet. For
SAF, he's actually bearish atthis point, but on just an
(16:56):
ethanol plant, 45z has about 32¢by his calculation that will be,
in his words, helicoptered intoethanol plants starting January
1. One, have you heard aboutthat? And two, will it impact
bases or is it already for corn?
Greg Johnson (17:16):
Well, number one, that's a proposal. I think the
Trump administration is tryingto walk a fine line between
pleasing big oil and pleasingbig ag. You know, obviously, big
oil does not wanna see this. Bigag does. So we don't know how
that's gonna all shake out atthis point.
Yes. If if everything comes tofruition, that would be friendly
(17:38):
corn, but I think this getskicked down the road for
several, several, several moremonths. I don't think that's
anything you want to base yourmarketing strategy on at this
point.
Todd Gleason (17:50):
Now on corn, what are your thoughts?
Greg Johnson (17:54):
Export demand is excellent. Now we have the China
rumors that they may be buyingor wanting to buy corn off the
Pacific Northwest. So even ifthat's not true, the actual
export numbers we've seen havebeen very good. There's even
talk about increasing exports to3,200,000,000 bushels which
would have been unheard of ayear ago. So good export demand,
(18:17):
farmers are tight holders ofcorn, High input costs mean we
should plant less corn here.
South America is growing cornbut they use a lot of that for
their own ethanol production.And the lateness to the bean
crop isn't going to hurt theSouth American bean crop but it
could affect the timing of thecorn second crop corn planting,
(18:38):
which could turn that corn intopollinating during the dry
season. So there's a lot ofpotentially friendly things out
there and I think that's whypeople are a little bit more
willing to hold on to corn andhave sold beans and thank
goodness we did sell as manybeans as we did.
Todd Gleason (18:53):
When you're talking to customers, Dave
Chatterton, what are you tellingthem about the corn they have
left in the bin? Because clearlythey do. I also kind of want to
hear about what you think grainstocks for corn are going to
look like.
Dave Chatterton (19:06):
Yeah, Todd. I mean we're I guess concerned
holders of corn at the moment.The market has been range bound
here and call nearby futures inthe March roughly a $2.35 to a
$2.5 type of a pricing range onthe board. And basis has been
okay. It depends on the part ofthe belt that you're in.
(19:27):
But we're somewhat optimisticabout corn but I think you have
to watch the demand cues toGreg's idea that we've had I
don't know, I guess an 8¢ movehere in the last two days on
these rumors of China takingsome cargos off the PNW. I hope
I'm wrong about this but boy,just don't see them taking any
sizable amount of U. S. Corn.They are sitting on a domestic
(19:49):
crop that is a record crop forthem, large stocks, cheap
prices, hog margins are poor.
It may happen but and maybe itdoes. But we are in a situation
where U. Export demand, if youlook at the weekly numbers, we
are starting to slow the pacedown a little bit. We were on
fire early and I think I usedthe word wow. It is starting to
(20:11):
slow down and we're now with theUSDA again in that December
report raising the export targetanother 125,000,000.
We're starting to get at a pacewhere we're balancing exports
where their projection is at. Sothe question becomes how do we
get that higher and I thinkthat's a very tough ask at this
particular point.
Curt Kimmel (20:28):
Yeah, corn is going be a hot topic. As Greg
mentioned, one other thing,ethanol. Ethanol demands
crushing for a lot of ethanol.We're using ethanol. Ethanol
stocks are lower.
So the demand side is real good.As Dave mentioned here, if you
look at a chart, we're sidewaysbetween $2.35 and $0.5 you go
(20:51):
back to that Southern Hemisphereweather, not this crop but that
second supreme corn crop. If weget into a situation where they
have a little bit of weatherscare and all of a sudden, we
get optimistic, we poke out thathigher end, I think the funds
will jump on it. Oftentimesfunds or investors look for
undervalued commodities when youcompare corn and beans to gold,
(21:12):
silver and some of these the Dowor any other investment, grain
market is fairly reasonablyundervalued.
Todd Gleason (21:19):
Can you make a case as well for both corn and
soybeans to go higher or willsoybeans act as a drag on the
corn market in your opinion?
Greg Johnson (21:27):
I agree with Dave. We've been in this trading
range. We're about 15¢ off ofthe top end of the trading
range. I think March corn's up4.4 four, four point four five
and the high has been 4.6. SoI'm friendly.
Can we get to 4.6? Yes. Shouldwe be selling corn when it gets
to $4.60? Yes. I mean, so yes.
I think we're going to wait forthe January 12 crop report.
(21:50):
Let's hope that they lower theyield and let's hope they don't
lower the feed demand just quiteyet. And if they do, we might be
able to get a bounce, but thisis not the beginning of a bull
market. This is an opportunityto get old crop corn and maybe
even some new crop corn sold.
Todd Gleason (22:05):
That brings me back to the grain stocks report
because we'll know what firstquarter usage looks like or at
least what's in the bin. Apretty good accounting from
USTA's side. We have had avianinfluenza. We have, the smallest
cattle herd on record. Lots ofthings going across the border
(22:26):
but that's not being fed here.
Feed and residual number isgoing to be an interesting one
to keep track of in this case.
Curt Kimmel (22:33):
Well, the feed and residual use, you got to
remember that's a miscellaneouscategory. That's always a tough
one to figure. But when you lookat, yes, influenza but on the
cattle on feed and they'reactually feeding at a heavier
weight. We're feeding a lot ofgrain. But two, the corn
exports, we're moving a lot ofcorn to Mexico to feed out
(22:54):
feeders and fats down to Mexicotoo.
So I think this corn marketoverall has got some real good
support there and I think it'sjust going offer some
opportunities here to get somecatch up sales after the first
year when you need someadditional cash dollars to pay
some bills.
Todd Gleason (23:09):
Yeah. So the grain stocks will give us a feed and
residual number but of coursethe WASI will have a feed number
in it. Greg hopes that it staysthe same in January. I don't
know. That sounds like it'spretty helpful to me but Merry
Christmas.
Dave Chatterton (23:26):
I think it is hopeful. I mean, as you
mentioned, Todd, smallest onfeed cattle supply since the
1950s. We are to Curt's pointtaking these cattle heavier or
pushing 1,600 pounds. Maybewe're feeding those cattle an
additional, I don't know, 20bushels of corn if you do the
math. But we're alsoslaughtering 2,000,000 to
3,000,000 less cattle per year.
So there's a give and take inthat. And you look at the USDA's
(23:51):
demand profile in corn rightnow, they have got exports up
12% versus last year, feed up12% versus last year with that
animal number that we just spokeof and they have got ethanol up
a more modest 3%. Overall demandis up 7.5%, 8% year on year and
that is the bar I think that weare trying to get to. And for
whatever the USDA may add on toexports, I think they take it
(24:11):
away from feed and that isprobably their thesis going
forward. So we have got corn isa situation of very good demand
but we also produced a recordcrop and we're in balance with
that but it doesn't leave us aroom to really rally above that
$4.5 mark in my opinion.
Todd Gleason (24:27):
Given all the adjustments, yield, exports,
feed usage, 2,000,000,000 stillas a carryout in your opinion?
Dave Chatterton (24:35):
I think it creeps up eventually towards 2.3
or 2.4. The USDA is expected tocut yield here come January. Now
the biggest non major droughtyear or maybe throughout the
flood year of 1993, the biggestcut that we have seen in that
January report for corn yield isabout 3%. And if they followed
that, we would get to a 180 typeof a yield. You take almost
(24:57):
$500,000,000 off of the top lineof production.
I'm not saying that they do thatbut that's your historical
precedent. If they back offsomewhere in the middle of that,
we do improve the balance sheeta little bit. But I think over
time, we're going to end upunfortunately coming up a little
bit short in terms of the feedyou should side And I think
ethanol is a question mark.Although we're producing a
record amount of ethanol, we'reusing less corn to do that.
(25:20):
These guys have gotten moreefficient and effectively the
ethanol yield or the conversionrate from corn to ethanol is
above three gallons a bushel.
We need this demand to continue.It's like you just can't let up
on the accelerator here. All ofa sudden, those stocks start to
creep a little bit. So two, fourdon't let that scare you. I
(25:40):
think maybe that could happenover time.
We will see what the USDA has tosay in January. But the biggest
support that we have got rightnow is the demand is good and
the USDA might cut yield. Butthe opportunity window isn't
forever. You have to be you haveto have a plan and It's stay
still
Todd Gleason (25:53):
a out but ending stocks from both of you?
Curt Kimmel (25:56):
Yeah, I think we're below 2,000,000,000 bushel
myself. I think demand is goingto offset some other adjustments
along with some smaller yield.But the thing is, we can talk
bigger or smaller but to getreal bullish corn, you got to
have that ending stocks cleardown to 1.5, 1.4 to get the
trade excited.
Greg Johnson (26:17):
I think I'm right in the middle at 2.021.
Hopefully we get the two pointzero or 1.9 number in January
and then if Dave says we gohigher eventually month by
month, we get up eventually totwo point three, two point four,
hopefully the farmers have takenadvantage of that little price
rally that we get when thatnumber comes out below
2,000,000,000 bushels. Like Isay, the big picture is without
(26:41):
a weather problem, we still havean ample supply of corn. We need
to sell it at some point intime, so why not sell it at the
upper end of the range? I'm notlooking for new highs to be
made.
I want to sell corn at the upperend of this range that we've
been in for several months.
Todd Gleason (26:53):
Is there anything on the global side for corn,
soybeans or wheat stocks forthat matter that you see of
concern or that gives you hope?
Dave Chatterton (27:04):
Well, I mean wheat stocks globally among the
major exporters are just toolarge and we continue to see
wheat kind of consolidate aroundthe bottom of its recent trading
range. We're heading into asituation I think from a farmer
perspective or a marketingperspective in 2026 where if you
look at the global stocks,especially among the world's
exporters, are going to be heavywheat and they are going to be
(27:26):
heavy corn and they look likethey could be pretty heavy in
soybeans. Now, the global cornpicture will depend a lot on
what happens with Brazil'ssafrinha crop which they haven't
even planted yet. So we have aways to go on that. And one
thing maybe we haven't talkedabout so far is acreage for next
year.
And of course, there is a bigexpectation that corn acres will
come down in The US. Bean acreswill go up. We will have a
(27:48):
rotation of from where we were ayear ago. But I guess I'm a
little cautious on thatstatement. I think if you look
at the margins for a lot of thesmaller grains, so if you look
at cotton, if you look at rice,if you look at what's happening
in the Southeast, the Delta andthe Plains, they don't have very
many good choices.
So maybe we get a few more cornacres than I think the trade is
thinking or maybe the better wayto say it is the corn acres
(28:09):
don't go down quite as much aswhat the trade has thought
about.
Todd Gleason (28:12):
Are you above 94,000,000 acres?
Dave Chatterton (28:16):
I think it's I don't think I'm above that
number, but I don't think I'm alot below it.
Todd Gleason (28:22):
Numbers from the two of you, what do you think
for corn acres?
Curt Kimmel (28:25):
I think we're at four.
Todd Gleason (28:27):
And Greg?
Greg Johnson (28:28):
I agree. We were 98.7. I mean, so 94 is almost a
5,000,000 acre drop and that's apretty good shift from year to
year.
Todd Gleason (28:35):
What do we get for soybean numbers if we have a 94?
We have a lot of acres that wecould have big soybean numbers
still, suppose.
Dave Chatterton (28:43):
Oh yeah. You could see that thing jump from
81 to 85, 'eighty six and I meanmy fear is that we see corn not
fall as much as is expected andbeans of course take the big
jump that's been indicated.That's a what if. There's a lot
of time to go on that situation.When we're on the path I guess
to get back to where we startedof assuming weather is not
(29:05):
horrible.
We're going to keep producingthese big crops and we're going
to keep adding to our stocks.
Greg Johnson (29:10):
Let's turn our attention to the final word from
each of you. Greg Johnson fromTGM Total Grain Marketing right
here in Champaign County. Yourfinal word for the day. I think
this sell off in soybeans is agood reminder to producers to
have offers in to take advantageof those times when the market
does spike up because without aweather problem somewhere in the
world, we're growing too muchcorn and soybeans for the
(29:33):
demand. So have your offers inat realistic levels, use the
upper end of this trading rangefor corn and soybeans, we've
probably seen our highs unlesswe have a weather problem.
You're just going have to loweryour sights and get those rest
of the beans sold at lowervalues.
Todd Gleason (29:47):
Kurt Kimmel from agmarket.net.
Curt Kimmel (29:49):
Yeah, that's well said, Greg. From a speculative
point of view, I'd maybe take astab on the long side of the
beans and put a sell stopunderneath this week's low here.
The beans have returned to thepoint of the breakout to the
upside from last October. So ifyou're one that likes to roll
the dice and look for anopportunity, I would maybe take
a look at that. Otherwise, havea safe and enjoyable holiday.
Todd Gleason (30:11):
And Dave Chatterton from Strategic Farm
Marketing.
Dave Chatterton (30:14):
Yeah, to Kurt's point, mean the sell off that
we've had in beans, I think youwant to be a little bit even
though I've talked probably asbearish as any of the three of
us here today, I think you haveto be a little bit cautious
about being too bearish here inthe near term just considering
how much we've fallen and howoversold we've become and we're
going into a holiday period.Having said that, that doesn't
mean fall asleep at the wheel.Think I always talk to our
(30:35):
clients in terms of marketing ofbeing either offensive or
defensive in terms of the pricesand the goals that they're
looking for. I think it's stillvery much a time to be playing
defense, particularly withsoybeans over corn, but really
even in both cases.
Todd Gleason (30:51):
Commodity Week of course is a production of
Illinois Public Meeting. Mayfind and listen to the whole of
the program anytime you'd likeon our website at willag.org.
That's willag.org. Our thanks goto our panelists this week, Kurt
Kimmel, Dave Chatterton and GregJohnson. I'm University of
Illinois Extension's ToddGleason.
This is the December 18 edition of Commodity
(00:03):
Week. Todd Gleason's servicesare made available to WILL by
University of IllinoisExtension. Well, welcome to
Commodity Week. I am ToddGleason. Our panelists for the
day include Kurt Kimmel.
He is with agmarket.net. GregJohnson is here too from TGM,
(00:25):
that's Total Grain Marketing,and from Strategic Farm
Marketing online atsfarmmarketing.com. We're joined
by Dave Chatterton. CommodityWeek is a production of Illinois
Public Media. It is public radiofor the farming world online on
demand at willag.org, W I L L AG dot O R G.
Let's get a list of items thatwe might need to discuss for the
(00:47):
day. We'll start with you, DaveChatterton. What's on your list?
Dave Chatterton (00:50):
Yeah, Todd. Just real quick, Merry Christmas
to all of all in the studio hereand everyone listening out
there. I three think big thingsin agricultural or the grain
markets currently. I think oneis obviously China and how much
they're going to buy, whenthey're going to buy and how the
trade agreement will unfold. Twoof course is going to be South
America and when I say SouthAmerica, in particular the
(01:11):
weather in Brazil and Argentinaand what it means for the
potential of what looks like arecord crop brewing in that part
of the world.
And three I think is corn demandreally. I mean it's wow is a
good word to put to it. It'sbeen very impressive. But
holding that pace I think may bean issue and something we need
to look forward going to. Andthen finally, maybe the January
(01:31):
report is something we ought totalk about and it's coming up
here and not too awful long.
Todd Gleason (01:35):
Kurt Kimmel, he covered the gamut. Anything else
Curt Kimmel (01:37):
on Oh your boy, we could go a whole day seminar
with that there, Dave. Prettywell covered. Maybe one other
factor, outside market activity,consumer confidence maybe.
Todd Gleason (01:47):
And finally, Greg Johnson, anything in the grain
markets cash side that we oughtto take, maybe take and pay
attention to?
Greg Johnson (01:55):
Well, to what Dave said, not only do we need to
monitor Chinese soybeanpurchases, but there's some
rumors late in the week thatChina might be interested in US
corn for the first time inseveral, several years. So
that's something that it's oneof those wild cards, one of
those unexpected things that youjust never know but, you know,
it's good to keep in mind thatsomething unexpected could
happen in this marketplace.
Todd Gleason (02:16):
Well, let's start with China and China and China
to begin with because there area whole lot of things that have
not been happening, some thathave happened. I think they have
purchased maybe a bit more thanhalf of the expectation,
somewhere around 7,000,000metric tons. Is that right, Dave
Chatterton of soybeans?
Dave Chatterton (02:33):
Yeah, Todd. I think that's the current going
estimate. Of course, we're stillwaiting on some of those sales
to become public in terms of howthey move between COFCO US and
COFCO China and finally make itonto the USDA's wire. It's
generally thought that they havegotten to at least a 7,000,000
metric ton or a little bit overthe half of that 12,000,000
metric ton commitment. I thinkjust looking at the price
(02:53):
action, the rally that we hadafter the trade deal was
announced in late October andkind of peaking out last month
and kind of where we have comeback to really I think we are on
the backside of theannouncement.
And the 12,000,000 metric tons,keep in mind that's great.
That's demand we didn't have.They were at zero. I think it is
a foregone conclusion or it'saccepted conclusion that they're
(03:13):
going to reach that level. Itmay not be right away.
What they buy may not ship untillater next year certainly. But
the question is then what? And Ithink if you look at that
12,000,000 metric tons, that'sfour forty million bushels give
or take. Keep in mind last yearthey bought eight eighty million
metric tons. So we still haveless than half of what they did
(03:35):
a year ago.
We have a very big I guess I'llcall it a hole to fill here in
terms of how we are going tomake up for that additional
demand. Certainly, Record Crushis helping to do that. We have
some non Chinese exportdestinations that we can talk
about. But when it comes to thatsoybean export whether it's The
US, whether it's Brazil, whetherit's Argentina, any other
(03:55):
country, it's China. And whenChina is not buying from The US,
we have some issues that we needto take account of.
Todd Gleason (04:01):
As Dave said, in the recent time, China has
purchased in that eight eightymillion bushel amount, around
24,000,000 metric tons. They saythey're going to buy 25 in
whatever calendar year they'retalking about, whether it's U.
S. Or the Chinese calendar yearcoming up, will they be in the
(04:23):
marketplace? It seems to me,from my perspective, that is a
very big if about next fall, anda zero for some time would be
really bad.
How soon does the market getconcerned about such things in
the new crop year and what areyou thinking about it?
Curt Kimmel (04:41):
Well, near term, they need to stop buying because
every time there is a salesannouncement, the market goes
down. So we're fulfilling thoseprior commitments. The big thing
is we need to help in Asia fromthe private sector right now.
It's the government replacingstocks. So if we could see some
demand pickup, we will hopefullylook into next year and see that
(05:05):
fulfill that need for the mostpart.
But we got South America comingonline and they will be in the
market here in another two orthree months. So when you push
on out past the spring, it'skind of questionable. But right
now, the USDA or WASDE isshowing a carryout of two ninety
million bushel and if we don'tsee weather concerns, the
(05:26):
Southern Hemisphere is going beawful hard to move back higher.
Todd Gleason (05:28):
Greg Johnson, related to the January report
and the WASDE, the update thatwill come from them starting
with the May World Ag Supply andDemand Estimate, USDA has not
really backed off on theirexports. Either they got it
right then and understood howmany soybeans China might buy
(05:50):
and or what the ancillary costsmight be to other places,
meaning there would be otherpurchases, or an adjustment
still has to be made at somepoint.
Greg Johnson (06:01):
It I I'm in the camp that an adjustment still
has to be made at some point intime. Keep in mind, we haven't
seen the details of thisagreement. There's a lot of
people that think that this12,000,000 metric ton purchase
this year, 25,000,000 metric tonin subsequent years, has a
stipulation that they will buythat only if we are the lowest
(06:21):
price if that's a pricecompetitive price that we're
offering. Otherwise, they do nothave to purchase that entire
amount And given what happenedthe first trade agreement, they
did not buy that amount becausewe were higher priced than
Brazil. So I think that's stilla big concern is, you know, yes,
that's in the agreement, butwhat other terms are in the
(06:43):
agreement?
Nobody has seen the agreementand so we don't know whether
they're committed to buy it, youknow, price insensitive or if
the price is a factor in howmany bushels they in fact do are
required to buy.
Todd Gleason (06:54):
Okay. So if we're thinking in those terms, Dave
Chatterton, how should aproducer approach what they have
left to sell for the twentyfive-twenty six crop year?
Dave Chatterton (07:05):
Yeah, Todd. Think in a general reference,
producers have sold more beansthan corn and at this point, I
think that's a good thing. AsKurt alluded to, really if
you're talking about what'sgoing to rally the soybean
market from here, it's eitherChina getting more active and
more aggressive and when we lookat the signs and Greg kind of
pointed to this, if you look atthe port stocks in China,
(07:26):
they're near record highs. Youlook at how U. S.
Beans compare to South Americanbeans and after the first of the
year, they look very expensive.If you look at crush margins in
China, they're not necessarilygreat. If you look at what
they're trying to do with theirhog herd and shrink those
numbers, there's not a big andeasy path there that has them
(07:46):
buying US soybeans beyond this12,000,000 metric ton commitment
which we think they're going toget to. At that point, it's a
political I think proposition.They're going to buy as many
beans from The US as they thinkthey need to in order for Trump
to keep the tariff in check onthe billions and billions and
(08:07):
billions of dollars of consumergoods that they export to The
US.
So it's really kind of soybeansare caught as a little bit of a
game. I think in that situationwith no weather handle right now
to really work with in terms ofthe South American crop, You
have to be very defensive hereand we've seen that action here
of corn stabilizing, goinghigher, beans going lower and
really I'm afraid that we havesome additional downside. I
(08:29):
think you have to be a prettyopportunistic marketer of
soybeans, whether that's oldcrop or new crop going forward.
And we can talk about theacreage mix and some other
things in there. But it's adelicate dance and hopefully,
you're going to have to becertainly more aggressive
pulling the trigger on soybeansI think than corn here.
Curt Kimmel (08:47):
We've got really on the beans, two types of markets
or two different scenarios. Herein the East, most of producers
sold beans right across thescale, elvirs for the most part
about 70%, 80%. Normally whatthey take it in. As far as the
West, they pretty well storedthem or found a home for them
because the basis was $1.1.5dollars under. So this Chinese
(09:08):
demand out of the PacificNorthwest needs to materialize
here to get those beans movedout of that Northwest area.
As far as here, I think you makecash grain sales. You come back
in and replace some callstrategies because basically
option volatility is fairly low.You can get a lot of bang for
your dollar if we run into someweather conditions here in the
(09:29):
Midwest during the growingseason. Greg, of
Todd Gleason (09:32):
the customer base at TGM in Champaign County, how
are they doing on making sales?I know you told us on the air
that they did a good job at $11Yeah.
Greg Johnson (09:42):
Yeah. Kurt and Dave are both right. Soybean
sales are much better percentagewise than corn at this point. It
might be in that 50% to 60%. Idon't know if they're 70% sold
on old crop beans.
Maybe some people are in furthereast. But I would say in our
territory, 50% to 60% which ispretty good. There were high
storage charges in the fall, bigcarries in the market. Farmers
(10:04):
didn't want to pay those storagecharges. So if they didn't have
their own on farm storage, a lotof beans got sold across the
scale for cash flow purposes.
And at that point, there waspretty good export demand for
corn so farmers were tightholders of corn and they still
remain tight holders of corn. SoI agree. I think the beans have
been very well marketed and nowthis dollar sell off is just a
(10:26):
reminder and we try to remindpeople this is why we have
offers in. If we thought $11 wasgood, keep that offer in because
the next time they bounce backup, you have to have offers in.
They just don't stay there verylong.
Todd Gleason (10:37):
Okay. So let's look southward to South America.
Brazil and Argentina, Brazil hadhad some difficulties. There
were some thoughts that thingsmight turn dry enough that it
would be a problem. Clearly notthe case according to all the
meteorologists at this point.
They've gotten wet. And EricSnodgrass, others are saying
(10:58):
it's not that they are just wet,it's that if they stay wet,
that's when they get to have aproblem at this point in time.
Otherwise, they have got a heckof a crop running.
Dave Chatterton (11:06):
Yeah, Todd. I mean the conversation there were
a few dry areas in SouthernBrazil to get started. The rainy
season started a little bit slowbut it has really accelerated
and now the problem is, are wegoing to have too much rain when
it comes time to startharvesting? And we have got a
few combines rolling in, let'ssay, Northern Mato Grosso right
now. It's a very small amountbut that will pick up speed here
(11:27):
as we go through the Decemberinto January.
And I would say that come thatFebruary, you could probably say
that Mato Grosso is goingharvest somewhere between 800 to
eight fifty, 900,000,000 bushelsof beans. So they're going be
coming rather quickly assumingthey're not out. But crop
estimates remain high. Keep inmind they increased their
(11:47):
acreage a little over 3% againthis year. We don't have the
problems in Argentina that wedid last year in terms of their
weather and their potentialproduction.
Probably a little bit more of acorn issue but when you look at
combined Brazil and Argentinatogether, throwing Uruguay,
Paraguay, we're looking on paperanyway. It looks like what will
be the fourth year in a row ofrecord soybean production in
(12:08):
South America. And that's adirect competitor to The U. S.
Obviously, know that China'spreference has been for those
South American beans to thispoint.
So there are some whispernumbers out there that Brazil
could see its first ever180,000,000 metric ton soybean
crop. Now, we're probably alittle bit below that. I think
agmarket.net and some of theothers as well. But certainly
(12:29):
the miss here seems to be on thehigh side for that bean crop at
the moment.
Todd Gleason (12:34):
Do you suppose we have weather premium built into
the marketplace from earlier inthe year still? Some of the the
drop in, I guess, first explainthe 60¢ to a dollar drop that
we've had in in the in thesoybean market and what you
think precipitated that. Is itbetter weather in Brazil? Is it
(12:55):
the idea that China may or maynot finish out their 12,000,000
metric tons by the time we getto, well, it was supposed to be
now, but February? What orcombination?
What are you thinking?
Curt Kimmel (13:06):
Yeah, I think it's all the above. Back in October,
we had a breakout and the marketwent straight up on anticipation
of some type of deal beingstruck. I'm not quite for sure
if Asia did not come in as afund and hedge that purchase and
bought it. Now when they'reactually physically buying the
product here, they're taking thehedge off, having the market
(13:29):
drift lower. But yeah, we've gotfavorable weather and the trade
pretty well is dialed in thatthis bean crop in the Southern
Hemisphere is going to beavailable and it's going be a
buck, buck 20 cheaper.
Greg Johnson (13:41):
We need to keep in mind too that while we were
getting this rally, thegovernment was shut down so we
weren't getting commitment totraders reports from the CFTC.
Come to find out, now that we'reback up and running, the funds
amassed the second largest longposition in history in soybeans.
And so I think a lot of thepaper trade happened ahead of
(14:05):
the actual announcements of thesales to China. So the funds
were long and the old rule ofthumb is to fade the funds. When
they were as long as they were,obviously in hindsight, that
would have been the perfect timeto sell beans.
Todd Gleason (14:17):
Are they still long?
Greg Johnson (14:19):
They are. They they we've commitment numbers up
through December 2. We're stillnot entirely current, but we're
getting closer to the currentnumbers. And they've sold off
quite a bit, but they're stillvery long. There's still more
room for downside if they decideto liquidate the rest of that
long position.
Todd Gleason (14:37):
Is that a 45Z and renewable diesel thing coming
into the tax year that goes intoplace January 1?
Dave Chatterton (14:45):
I think it could be to part on that, Todd.
I mean, that's certainly part ofthe equation here and we look at
crushes as still holding in verywell, but these bean oil stocks
are starting to rise. I thinkit's a very different situation
maybe than the 2024 where weknew the tax credits were going
to expire and everybody wastrying to push through as many
as they possibly could. Butprice decline in beans I think
(15:06):
is just simply it's money flowand funds. When you look to
Greg's point, we had them at onepoint.
It looks like they got longabout net long, 230,000
contracts of soybeans. Two sixtywould be the record that we
have. And now they're startingto bleed that off but still long
and as we estimated today,probably around 150,000 to
160,000 contracts. You can trackthe open interest on the CME
(15:29):
soybean contracts and see thatit went up a like amount. Think
it was around 120,000 netcontracts.
So like I said, when I mentionedwe're on the backside of that, I
think now they're in thatliquidation phase and
unfortunately they have more toliquidate assuming we are going
to not find a spark that getsthe market going higher.
Todd Gleason (15:50):
You did scare me. I was thinking if they are still
long, they have got liquidationyet to go and I don't know what
that means for the downsidepotentially. Curt, I know you
have been thinking about thisfor a while and have a good idea
where the commercials havepositioned themselves based on
what you are hearing in themarketplace.
Curt Kimmel (16:09):
Well, the commercials hedge those off when
they bought physical but openinterest will go get down next
week because we have the Januaryoptions expiring and you will
have January futures puts andcalls all matching up so you
have a natural drop in openinterest on the beans or any
(16:29):
product when the options expire.
Todd Gleason (16:31):
On the 45C, Greg Johnson, I know this is a little
out of your bailiwick but duringthe Farm Assets Conference,
Scott Irwin was talking aboutbiofuels on SAF which could be
soybeans, but more likely jet toalcohol or alcohol to jet. For
SAF, he's actually bearish atthis point, but on just an
(16:56):
ethanol plant, 45z has about 32¢by his calculation that will be,
in his words, helicoptered intoethanol plants starting January
1. One, have you heard aboutthat? And two, will it impact
bases or is it already for corn?
Greg Johnson (17:16):
Well, number one, that's a proposal. I think the
Trump administration is tryingto walk a fine line between
pleasing big oil and pleasingbig ag. You know, obviously, big
oil does not wanna see this. Bigag does. So we don't know how
that's gonna all shake out atthis point.
Yes. If if everything comes tofruition, that would be friendly
(17:38):
corn, but I think this getskicked down the road for
several, several, several moremonths. I don't think that's
anything you want to base yourmarketing strategy on at this
point.
Todd Gleason (17:50):
Now on corn, what are your thoughts?
Greg Johnson (17:54):
Export demand is excellent. Now we have the China
rumors that they may be buyingor wanting to buy corn off the
Pacific Northwest. So even ifthat's not true, the actual
export numbers we've seen havebeen very good. There's even
talk about increasing exports to3,200,000,000 bushels which
would have been unheard of ayear ago. So good export demand,
(18:17):
farmers are tight holders ofcorn, High input costs mean we
should plant less corn here.
South America is growing cornbut they use a lot of that for
their own ethanol production.And the lateness to the bean
crop isn't going to hurt theSouth American bean crop but it
could affect the timing of thecorn second crop corn planting,
(18:38):
which could turn that corn intopollinating during the dry
season. So there's a lot ofpotentially friendly things out
there and I think that's whypeople are a little bit more
willing to hold on to corn andhave sold beans and thank
goodness we did sell as manybeans as we did.
Todd Gleason (18:53):
When you're talking to customers, Dave
Chatterton, what are you tellingthem about the corn they have
left in the bin? Because clearlythey do. I also kind of want to
hear about what you think grainstocks for corn are going to
look like.
Dave Chatterton (19:06):
Yeah, Todd. I mean we're I guess concerned
holders of corn at the moment.The market has been range bound
here and call nearby futures inthe March roughly a $2.35 to a
$2.5 type of a pricing range onthe board. And basis has been
okay. It depends on the part ofthe belt that you're in.
(19:27):
But we're somewhat optimisticabout corn but I think you have
to watch the demand cues toGreg's idea that we've had I
don't know, I guess an 8¢ movehere in the last two days on
these rumors of China takingsome cargos off the PNW. I hope
I'm wrong about this but boy,just don't see them taking any
sizable amount of U. S. Corn.They are sitting on a domestic
(19:49):
crop that is a record crop forthem, large stocks, cheap
prices, hog margins are poor.
It may happen but and maybe itdoes. But we are in a situation
where U. Export demand, if youlook at the weekly numbers, we
are starting to slow the pacedown a little bit. We were on
fire early and I think I usedthe word wow. It is starting to
(20:11):
slow down and we're now with theUSDA again in that December
report raising the export targetanother 125,000,000.
We're starting to get at a pacewhere we're balancing exports
where their projection is at. Sothe question becomes how do we
get that higher and I thinkthat's a very tough ask at this
particular point.
Curt Kimmel (20:28):
Yeah, corn is going be a hot topic. As Greg
mentioned, one other thing,ethanol. Ethanol demands
crushing for a lot of ethanol.We're using ethanol. Ethanol
stocks are lower.
So the demand side is real good.As Dave mentioned here, if you
look at a chart, we're sidewaysbetween $2.35 and $0.5 you go
(20:51):
back to that Southern Hemisphereweather, not this crop but that
second supreme corn crop. If weget into a situation where they
have a little bit of weatherscare and all of a sudden, we
get optimistic, we poke out thathigher end, I think the funds
will jump on it. Oftentimesfunds or investors look for
undervalued commodities when youcompare corn and beans to gold,
(21:12):
silver and some of these the Dowor any other investment, grain
market is fairly reasonablyundervalued.
Todd Gleason (21:19):
Can you make a case as well for both corn and
soybeans to go higher or willsoybeans act as a drag on the
corn market in your opinion?
Greg Johnson (21:27):
I agree with Dave. We've been in this trading
range. We're about 15¢ off ofthe top end of the trading
range. I think March corn's up4.4 four, four point four five
and the high has been 4.6. SoI'm friendly.
Can we get to 4.6? Yes. Shouldwe be selling corn when it gets
to $4.60? Yes. I mean, so yes.
I think we're going to wait forthe January 12 crop report.
(21:50):
Let's hope that they lower theyield and let's hope they don't
lower the feed demand just quiteyet. And if they do, we might be
able to get a bounce, but thisis not the beginning of a bull
market. This is an opportunityto get old crop corn and maybe
even some new crop corn sold.
Todd Gleason (22:05):
That brings me back to the grain stocks report
because we'll know what firstquarter usage looks like or at
least what's in the bin. Apretty good accounting from
USTA's side. We have had avianinfluenza. We have, the smallest
cattle herd on record. Lots ofthings going across the border
(22:26):
but that's not being fed here.
Feed and residual number isgoing to be an interesting one
to keep track of in this case.
Curt Kimmel (22:33):
Well, the feed and residual use, you got to
remember that's a miscellaneouscategory. That's always a tough
one to figure. But when you lookat, yes, influenza but on the
cattle on feed and they'reactually feeding at a heavier
weight. We're feeding a lot ofgrain. But two, the corn
exports, we're moving a lot ofcorn to Mexico to feed out
(22:54):
feeders and fats down to Mexicotoo.
So I think this corn marketoverall has got some real good
support there and I think it'sjust going offer some
opportunities here to get somecatch up sales after the first
year when you need someadditional cash dollars to pay
some bills.
Todd Gleason (23:09):
Yeah. So the grain stocks will give us a feed and
residual number but of coursethe WASI will have a feed number
in it. Greg hopes that it staysthe same in January. I don't
know. That sounds like it'spretty helpful to me but Merry
Christmas.
Dave Chatterton (23:26):
I think it is hopeful. I mean, as you
mentioned, Todd, smallest onfeed cattle supply since the
1950s. We are to Curt's pointtaking these cattle heavier or
pushing 1,600 pounds. Maybewe're feeding those cattle an
additional, I don't know, 20bushels of corn if you do the
math. But we're alsoslaughtering 2,000,000 to
3,000,000 less cattle per year.
So there's a give and take inthat. And you look at the USDA's
(23:51):
demand profile in corn rightnow, they have got exports up
12% versus last year, feed up12% versus last year with that
animal number that we just spokeof and they have got ethanol up
a more modest 3%. Overall demandis up 7.5%, 8% year on year and
that is the bar I think that weare trying to get to. And for
whatever the USDA may add on toexports, I think they take it
(24:11):
away from feed and that isprobably their thesis going
forward. So we have got corn isa situation of very good demand
but we also produced a recordcrop and we're in balance with
that but it doesn't leave us aroom to really rally above that
$4.5 mark in my opinion.
Todd Gleason (24:27):
Given all the adjustments, yield, exports,
feed usage, 2,000,000,000 stillas a carryout in your opinion?
Dave Chatterton (24:35):
I think it creeps up eventually towards 2.3
or 2.4. The USDA is expected tocut yield here come January. Now
the biggest non major droughtyear or maybe throughout the
flood year of 1993, the biggestcut that we have seen in that
January report for corn yield isabout 3%. And if they followed
that, we would get to a 180 typeof a yield. You take almost
(24:57):
$500,000,000 off of the top lineof production.
I'm not saying that they do thatbut that's your historical
precedent. If they back offsomewhere in the middle of that,
we do improve the balance sheeta little bit. But I think over
time, we're going to end upunfortunately coming up a little
bit short in terms of the feedyou should side And I think
ethanol is a question mark.Although we're producing a
record amount of ethanol, we'reusing less corn to do that.
(25:20):
These guys have gotten moreefficient and effectively the
ethanol yield or the conversionrate from corn to ethanol is
above three gallons a bushel.
We need this demand to continue.It's like you just can't let up
on the accelerator here. All ofa sudden, those stocks start to
creep a little bit. So two, fourdon't let that scare you. I
(25:40):
think maybe that could happenover time.
We will see what the USDA has tosay in January. But the biggest
support that we have got rightnow is the demand is good and
the USDA might cut yield. Butthe opportunity window isn't
forever. You have to be you haveto have a plan and It's stay
still
Todd Gleason (25:53):
a out but ending stocks from both of you?
Curt Kimmel (25:56):
Yeah, I think we're below 2,000,000,000 bushel
myself. I think demand is goingto offset some other adjustments
along with some smaller yield.But the thing is, we can talk
bigger or smaller but to getreal bullish corn, you got to
have that ending stocks cleardown to 1.5, 1.4 to get the
trade excited.
Greg Johnson (26:17):
I think I'm right in the middle at 2.021.
Hopefully we get the two pointzero or 1.9 number in January
and then if Dave says we gohigher eventually month by
month, we get up eventually totwo point three, two point four,
hopefully the farmers have takenadvantage of that little price
rally that we get when thatnumber comes out below
2,000,000,000 bushels. Like Isay, the big picture is without
(26:41):
a weather problem, we still havean ample supply of corn. We need
to sell it at some point intime, so why not sell it at the
upper end of the range? I'm notlooking for new highs to be
made.
I want to sell corn at the upperend of this range that we've
been in for several months.
Todd Gleason (26:53):
Is there anything on the global side for corn,
soybeans or wheat stocks forthat matter that you see of
concern or that gives you hope?
Dave Chatterton (27:04):
Well, I mean wheat stocks globally among the
major exporters are just toolarge and we continue to see
wheat kind of consolidate aroundthe bottom of its recent trading
range. We're heading into asituation I think from a farmer
perspective or a marketingperspective in 2026 where if you
look at the global stocks,especially among the world's
exporters, are going to be heavywheat and they are going to be
(27:26):
heavy corn and they look likethey could be pretty heavy in
soybeans. Now, the global cornpicture will depend a lot on
what happens with Brazil'ssafrinha crop which they haven't
even planted yet. So we have aways to go on that. And one
thing maybe we haven't talkedabout so far is acreage for next
year.
And of course, there is a bigexpectation that corn acres will
come down in The US. Bean acreswill go up. We will have a
(27:48):
rotation of from where we were ayear ago. But I guess I'm a
little cautious on thatstatement. I think if you look
at the margins for a lot of thesmaller grains, so if you look
at cotton, if you look at rice,if you look at what's happening
in the Southeast, the Delta andthe Plains, they don't have very
many good choices.
So maybe we get a few more cornacres than I think the trade is
thinking or maybe the better wayto say it is the corn acres
(28:09):
don't go down quite as much aswhat the trade has thought
about.
Todd Gleason (28:12):
Are you above 94,000,000 acres?
Dave Chatterton (28:16):
I think it's I don't think I'm above that
number, but I don't think I'm alot below it.
Todd Gleason (28:22):
Numbers from the two of you, what do you think
for corn acres?
Curt Kimmel (28:25):
I think we're at four.
Todd Gleason (28:27):
And Greg?
Greg Johnson (28:28):
I agree. We were 98.7. I mean, so 94 is almost a
5,000,000 acre drop and that's apretty good shift from year to
year.
Todd Gleason (28:35):
What do we get for soybean numbers if we have a 94?
We have a lot of acres that wecould have big soybean numbers
still, suppose.
Dave Chatterton (28:43):
Oh yeah. You could see that thing jump from
81 to 85, 'eighty six and I meanmy fear is that we see corn not
fall as much as is expected andbeans of course take the big
jump that's been indicated.That's a what if. There's a lot
of time to go on that situation.When we're on the path I guess
to get back to where we startedof assuming weather is not
(29:05):
horrible.
We're going to keep producingthese big crops and we're going
to keep adding to our stocks.
Greg Johnson (29:10):
Let's turn our attention to the final word from
each of you. Greg Johnson fromTGM Total Grain Marketing right
here in Champaign County. Yourfinal word for the day. I think
this sell off in soybeans is agood reminder to producers to
have offers in to take advantageof those times when the market
does spike up because without aweather problem somewhere in the
world, we're growing too muchcorn and soybeans for the
(29:33):
demand. So have your offers inat realistic levels, use the
upper end of this trading rangefor corn and soybeans, we've
probably seen our highs unlesswe have a weather problem.
You're just going have to loweryour sights and get those rest
of the beans sold at lowervalues.
Todd Gleason (29:47):
Kurt Kimmel from agmarket.net.
Curt Kimmel (29:49):
Yeah, that's well said, Greg. From a speculative
point of view, I'd maybe take astab on the long side of the
beans and put a sell stopunderneath this week's low here.
The beans have returned to thepoint of the breakout to the
upside from last October. So ifyou're one that likes to roll
the dice and look for anopportunity, I would maybe take
a look at that. Otherwise, havea safe and enjoyable holiday.
Todd Gleason (30:11):
And Dave Chatterton from Strategic Farm
Marketing.
Dave Chatterton (30:14):
Yeah, to Kurt's point, mean the sell off that
we've had in beans, I think youwant to be a little bit even
though I've talked probably asbearish as any of the three of
us here today, I think you haveto be a little bit cautious
about being too bearish here inthe near term just considering
how much we've fallen and howoversold we've become and we're
going into a holiday period.Having said that, that doesn't
mean fall asleep at the wheel.Think I always talk to our
(30:35):
clients in terms of marketing ofbeing either offensive or
defensive in terms of the pricesand the goals that they're
looking for. I think it's stillvery much a time to be playing
defense, particularly withsoybeans over corn, but really
even in both cases.
Todd Gleason (30:51):
Commodity Week of course is a production of
Illinois Public Meeting. Mayfind and listen to the whole of
the program anytime you'd likeon our website at willag.org.
That's willag.org. Our thanks goto our panelists this week, Kurt
Kimmel, Dave Chatterton and GregJohnson. I'm University of
Illinois Extension's ToddGleason.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
The Joe Rogan Experience
The official podcast of comedian Joe Rogan.