July 17, 2025 • 31 mins
Panelists
- Naomi Blohm, TotalFarmMarketing.com
- Jim McCormick, AgMarket.net
- Mike Zuzolo, GlobalCommResearch.com
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the July 17 edition of Commodity Week.
announcer (00:09):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:14):
Well, welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Naomi Bloem. She's
at totalfarmmarketing.com out ofWest Bend, Wisconsin. Jim
McCormick is here atagmarket.net in Barrington,
Illinois.
And Mike Zusolo joins us fromglobalcomresearch.com in
Atchison, Kansas. Thank you allfor being with us. I think we'll
(00:35):
start with a list of items thatwe might want to discuss for the
day. Mike Zuslow, I'll startwith you. What's on your mind
this week?
Mike Zuzolo (00:44):
You know, post July 4 and post WASDE report, we've
seen the market try and lurchtowards a low and wondering
whether this might not be maybea commodity demand low in
general as trade confidencestarts to grow a little bit
more, it seems, Todd. So maybeyou want to discuss that.
Todd Gleason (01:03):
Jim McCormick from agmarket.net.
Jim McCormick (01:05):
Well, I know, I think a big conversation with
the clients we have is, youknow, this crop is definitely
bigger than Trent by mostaccounts. And, what are what are
producers gonna do, especiallywith those bushels that they
store, you know, into the fall,and they're gonna have to make a
decision to the pay commercialstorage, dump it, maybe
something they should bethinking about before harvest
ramps up.
Todd Gleason (01:26):
And Naomi Bloom from totalfarmmarketing.com on
your list.
Noami Blohm (01:30):
Yes. So let's definitely echo, what these two
gentlemen have said and talkingabout getting ready for what
marketplace might bring for thenext month for the grains. And
then also looking at cattlemarket a little bit, we've got a
cattle on feed and cattleinventory next week report next
Friday. So we want to gear upand get ready for that.
Todd Gleason (01:51):
Okay, let's start Mike with you Post WASDE in
July, what are thepossibilities, and I have
started to ask this questionfrom time to time, that a
contract low in corn madeearlier in this week might be an
actual low. Can this marketplaceclimb higher through the harvest
(02:11):
season? And what would be inplace that would cause such a
thing to happen?
Mike Zuzolo (02:17):
Yeah. My take right now, Todd, is it's not likely
that it can continue all the waythrough the harvest season. I I
think what I would be looking atis to get back up to a value
level. First stop would be thosegaps left over from the July 4
holiday around $4.33 in Decorand $10.44 plus and Nove beans.
Get those gaps filled and thensee if we've got some trade
(02:40):
deals done.
And in specific trade dealsrelated to agriculture, I'd like
to hear what Naomi and Jim haveto say about this as well. But
the two major things I'm hearingon LaSalle Street or anyone
affiliated with ag commoditiesis I'm not going to buy if I'm
an investor fund. I'm not goingto cover shorts if I'm an
investor fund. And I'm not goingto buy out if I'm an end user
(03:03):
commercial because of the factthat we don't have enough
details in these trade deals.Agriculture has been a sticking
point with Japan, with SouthKorea, with India.
And so the trade, very nervous,but I also would say clients
have been calling in saying, DoI need to protect my crop
insurance base price at thispoint, in case we get a decent
(03:25):
price action that can give us aretracement in this in this
market. And the USDA WASDEnumbers kept demand at least the
same or better worldwide, andwe're still getting tighter and
tighter on corn and wheatsupplies. And while, yes, we've
got a big crop coming on here inthe August report and most
likely going to get biggeryields, my price model would say
(03:48):
at the 3.95 SEP corn price,we're at a 2,200,000,000 bushel
crop anyway at this stage. SoI'm going to say it this way. I
think the demand low could be inif we continue to get some good
news the next week or two by theend of the this month.
And that as long as we don'ttake out $4.00 7 and a half and
$9.88 a quarter, those are ourour July 14 lows. I'm gonna say
(04:12):
a low is in at this point.
Todd Gleason (04:13):
Jim McCormick, do you think that trade agreements
can be made by the August 1deadline that the president has
put in place or at leastsomething that says agricultural
trade agreements are in place?
Jim McCormick (04:25):
I think that's gonna be the real key, Todd.
President Trump has come out alot of times that we've made
these trade agreements, but alot of them are more frameworks.
The one the two that I'mactually watching, Todd,
interesting right now areessentially Japan and South
Korea. Our number two and numberfour corn buyers. You know,
president Trump is threateningto flap a 25% tariff on both of
those countries.
(04:46):
Okay? And if he would do that, Ithink that'd be very, very hard
on their auto industry. And Ithink they will push back. And
the situation that we're inright now, how could they push
back? Brazil's got this monstercrop they're hoarding, or excuse
me, they're harvesting rightnow.
And it's a situation I'm veryleery that if we do go to a bare
(05:06):
knuckle brawl, are they going toessentially rip the same chapter
that China did and do everythingthey can to move away from US
agriculture? And they have aperfect opportunity potentially
to buy Brazilian corn who Icould argue could be very
receptive to sell them cornaggressively due to the fact
that we're threatening tosanction or tariff Brazilian
(05:27):
imports at 50%. So I give theodds of this going to ugly, very
slim, but I think it easilycould happen. The other thing
I'm looking at is I hope we putthe low end, but when I just
look at where we're at, theeconomic modeling of old crop
carryout and how tight it issuggests we should, we're a lot
lower than we should be. So themodeling doesn't seem quite
(05:48):
right.
My belief near term is this cropgoes to 185. You're looking
about a 16,000,000,000 crop. Youadd in the carry in, you're
looking over a 17,000,000,000supply. So you got
17,000,000,000 bushel supply. Agood chunk of it unfortunately
is on price.
Half it'll stay on farm. Theother half is going to come to
the market. If I'm one of thesefunds that are short 180,000
(06:11):
bushels, 180,000 contracts plus,why do I get out now? Why do I
just wait over the next couplemonths knowing this grain is
going to come to market when itgets hedged, it'll be put into
the commercial's hands and thatshort position by the fund will
be transferred from the fund tothe commercial over the fall.
And then that'll put the bottomin and then we'll get that
winter spring rally into 2026.
(06:33):
That's what I believe.
Todd Gleason (06:34):
Because I don't know the answer to this
question, does anybody knowwhether Xeno and Bunge actually
were able to buy, a terminal inthe Port Of Santos in Brazil
last year because they did nothave a have a terminal at that
point, at least Zindo, which isconsolidated grain and barge.
(06:54):
I'm trying to get at, Jim, howeasy it would be for the
Japanese company that is theprimary exporter of US corn to
that nation to move its itswhere where it gets corn from to
South America. And do we do weknow? Did they get that purchase
(07:18):
done at this point? I I don'tsee it on the web at this point
other than they expected to itlast year at some point.
Jim McCormick (07:25):
I don't know. Like I said, Todd, it could just
be the threat of it could beenough to bring the
administration back to thetable. It's just one of those
situations that once you look atwhere we're at, it's just
something I think we've got tobe cognizant of. I put the odds
of that happening less than 10%.But you know, if it would, it
could get ugly at leasttemporarily, I fear.
(07:47):
So just something I'm tellingclients, you know, be that black
swan events do seem to be flyingaround more and more often near
nowadays, it seems like.
Todd Gleason (07:55):
I'll try to follow-up on some information in
that in the closing marketreport to see whether there's
actually, a stake in Brazil byZinno, which is the Japanese
company, that exports corn tothat nation through the
consolidated grain and barge,grain elevator system in The
United States. So Naomi Blohm,you've been listening to this
(08:16):
conversation as it's related todemand, where the price
currently is, and what themarketplace might do. What are
your thoughts?
Noami Blohm (08:24):
Well, I think we put in a nice, short term low
this past week as tradersrealized, okay, maybe we need to
just take a step back here andnot assume that it's this huge
record crop as social mediastarted to blow up with
different sorts of pollinationissues. The traders I think
said, okay, well, it's probably180 or 181, but maybe we
(08:46):
shouldn't assume it's 185 or 186quite yet. So we saw funds buy
back some of those shortpositions this past week, but we
did not see a lot of new buying.My best guess is that for the
next couple of weeks, we'regoing to see corn prices trade
sideways where the Decembercontract has pretty darn good
(09:07):
support at 4.1 area andresistance is going to be at
four thirty. Hopefully we canfill that gap.
But once we fill that gap,that's right where the forty and
fifty day moving averages cometogether and the downward
channel and resistance linethat's held since April. So
probably quiet markets until weget a better handle on where the
(09:29):
yield is. As Jim pointed out, ifthe yield ends up being 185 or
186, then we're having2,000,000,000 bushel carryout.
But if yield comes in actuallyat this USDA number of 181,
well, that's actually a littlebit of a different story where
carry out is 1,600,000,000bushels. Then that is a good
(09:50):
supportive price point area atthis $4 value to where I think
you'll see end users step up.
So over the next couple ofweeks, end users domestically
and other countries around theworld who buy our products, I
think are waiting to see whatour yield is. If there's a
threat that it's not as good aswhat's been broadcast, you're
(10:10):
going to see those countriesshow up quick and agreed to
trade deals because they'regoing to try to buy this grain
while it's cheap. But on theother hand, if the 185, 186
number comes to fruition, thenit's going to be companies and
countries just buying hand tomouth, assuming that there'll be
enough of a supply that theAmericans can get us through
until winter, until then thatBrazil crop starts to get
(10:32):
harvested in March. So that's my2¢ worth.
Todd Gleason (10:36):
Well, it's an interesting it's a different
story for each of those.However, it remains a very low
price in both cases for you,does it not?
Noami Blohm (10:45):
Right. So we're we're seeing the the reality of
a big crop. If the big crop getsbigger, then you're gonna see a
reason why corn prices probablygo below $4 down to $3.75. If if
the crop is deemed smaller, $4value holds a support, and we
find our harvest low early.
Todd Gleason (11:03):
Mike, anything to follow-up there on how you see
this marketplace developing?
Mike Zuzolo (11:07):
No, I'm in total agreement with both. I I think,
know, there's some there's sometechnical analysis or some
fundamental analysis here thatwould suggest that the the short
covering potential could bemeaningful if we get some decent
trade negotiations done and notmake them general, make them
(11:27):
more specific. The only otherthing I would add is one of the
areas that I think is much likewe've seen the last few months,
and we see it again onThursday's trade going into
Friday's close. We've gotanother monthly low in the soft
road wheat, even though Russiaand Ukraine's cash corn and
excuse me, cash, corn and wheatprices are hitting one to one
(11:49):
and a half month highs right nowthat suggests to me that they
have some issues over there withtight supplies and a lack of
farmer selling as well. And Ithink there's a real issue
brewing in Ukraine that inanother ten to fifteen days, it
seems like a lot's comingtogether here as we get towards
the July, US yield trade deals.
And now I'm gonna throw outthere the Ukrainian corn crop as
(12:11):
them as the number four exporterin the world for $25.26. But
some of the pictures I've seenin Central Ukraine this week
look like Indiana and Illinoisin 2012. And they are supposed
to get some rains, but we're notsure how much they're gonna get
and how widespread it's gonnabe. So think we're gonna be
stuck again in this mindset ofdo the funds look at the world
(12:33):
numbers or look at The USnumbers. And we know the answer
that if the trade deals aresigned, sealed, and delivered,
they'll probably look at theworld numbers.
But if we keep havingprotectionism, we'll keep
looking and trading at The USnumbers.
Todd Gleason (12:47):
Jim McCormick, you wanted to talk about how big the
crop is, how big it could be,and what folks should do with
those extra bushels. I thinkthis is the time and the place
to pick that out of your brain.What are you thinking?
Jim McCormick (13:00):
Well, like the the group says, I mean, this is
gonna be very tricky and a lotis gonna hinge on how these
trade deals. I've had a lot ofclients, like I said, like, you
know, if you got to move bushelsthat you know you can't store,
I've been actually looking outwith some October options. I
don't want to be caught sellingshort here at low prices per se
at the moment because the tradedeal could come tomorrow with
(13:21):
president Trump. You just don'tknow where it's going to be. But
until we dial in how big's big,it's a relatively cheap way to
protect yourself past thatAugust and September WASDE when
I figure if this crop is goingto get bigger based on all these
models, based on good toexcellent ratings, it's going to
show up.
The longer range maps, Toddcontinue to say we're going to
turn hot and dry in August.We'll see if that comes to
(13:44):
fruition. I think, one thing alot of people are starting to
talk about is the warm nights. Alot of people are saying, if you
look at the ratings for the lastmonth, they've been some of the
warmest overnight temperaturehighs we've had on record. So
that's something a couple of myclients are a little bit
concerned about.
You know, the uncertainty isthere, so use an option to floor
it in case this crop is big andthe trade deals do not get cut.
(14:05):
But leave yourself open in casewe do cut a deal and maybe the
crop does shrink back.
Todd Gleason (14:08):
Let's follow-up on on some of those thoughts just a
little bit with you, Jim, asit's related to protecting, and
I think I heard you say this,the the crop insurance price,
meaning we're far enough downthat farmers are now thinking,
well, I may have a cropinsurance payment that would
come unless we rally again. Youcould do that with the options.
(14:32):
I kind of think that's where youwere at, but how do you go about
it exactly?
Jim McCormick (14:35):
Well, me, I was actually talking about for the
protecting grain that youactually have to sell that, you
know, I can't store it. I thinkDavid was saying that on the
call, I think it was David whowas saying that buy them, you
know, people are, if prices getlow enough, you're in a
indemnification. And if themarket would start to rally back
up and you think, wow, you know,the crops either shrinking a
(14:56):
trade deal, you're turningbullish, whatever it is, the
technicals levels hold. Thenwhat some clients would do is
they'll come in and buy futures,others will buy calls because
remember the crop insurance isset during the average price of
October. So if we do bottomearly and you start getting a
rally and you're in anindemnification portion now and
the price would rally, let's say50¢ and you'd lose that
(15:18):
potential crop insurance payout.
That's how you could defend it.But, you know, part of it's
timing, Todd. You wanna try toget closer to the bottom price
wise as you can.
Todd Gleason (15:28):
Mike, I I'm wondering when you talk to
producers around the nation,what are they telling you about
the crop? I know we hear someabout, you know, the one number
that may have had a NIC issue,but are there places that we
really have to be concernedabout?
Mike Zuzolo (15:43):
Yeah. It's funny you asked that, Todd, because, a
longtime Will radio listener wastexting me this morning after
I'd done a program on Wednesdaywith someone else and talking
about the good yields in TheUnited States and how this next
big rain could assure us of apretty large, if not record
crop. Because of what UST did onharvested acres by taking them
(16:05):
down some, probably covered someof the problems in Southern
Illinois would be my guess. Buthe was very adamant that we
really don't know what's goingon out in the fields in
Illinois, specifically aroundKankakee County and Iroquois
County Counties, and thatthere's some real issues out
there with the crop and the corncrop specifically, because of
(16:28):
the heat and because of the lackof precip. And so I'm very
sensitive to that, because Ithink there are several holes in
the Dakotas and Indiana,Illinois, Ohio, parts of
Southern Illinois still aquestion mark.
And so I think that it'sprobably above where USDA is at
right now from their long termprojections, but not sure it's
(16:48):
much above at this stage of thegame until we get, you know,
maybe another fifteen, twentydays down the road just because
the crop did get put in indifferent times. The early
April, mid April looksfantastic. But later May doesn't
look as good in some areas. It'sexact opposite in other areas
like Ohio. So you know, that'sjust something to keep in mind
(17:09):
as we go through this with thebasis and with what Jim is
talking about as far as gettingsome sales made.
I I'm like him. I'd rather be inthe paper positions, leave the
basis alone right now unless,you know, the client says, I've
got just a tremendous crop.Like, Central Iowa would be an
area where you could probablytake take a cash sale and not
(17:30):
think the basis is gonna comeback and eat you up.
Todd Gleason (17:32):
Naomi, are you in the same place that you wanna
put, things into paper productsrather than actual cash sales or
basis contracts?
Noami Blohm (17:40):
Well, it's just a mixed bag, of course, depending
on where folks live in on theirbudget right now. For those who
have grain yet to price or whofeel that they're gonna have a
big crop and they're worriedabout prices going lower, We
have been looking at usingOctober corn puts. They're based
on December futures and gooduntil the September. That would
(18:01):
get us through the harvest lowtimeframe. But as the
conversation also wasdiscussing, should there be a
rally and market prices workhigher and then that insurance
price disappears during themonth of October, there is
tremendous value that you'regoing to want to protect.
Right now the November cerealcorn options are not available,
(18:23):
which would get you through theOctober, so you have to go out
with December options and maybetake a look at buying an out of
the money corn call and theDecember options that'll get you
till about Thanksgiving. Thatway you're protected in case the
market does start to rallysimilar to what happened last
year. You just have to have abalanced approach going into
this because we're just at sucha point of unknown. Of course,
(18:48):
like we talked about, it dependson where this yield ends up
being at. Then of course,keeping an eye on the export
demand.
Again, a balanced approach. Beready for any scenario to
unfold. If it's a big crop, Ithink we're going to go see
$3.75 on December futures. Butif the crop looks like it's
getting smaller, then yeah,we've got every reason for that
(19:09):
Dec corn price to rally highernorth of 4.5 as the months
progress.
Todd Gleason (19:15):
All farmers are from the Show Me State,
Missouri, and they want to knowwhat the next month will look
like. You wanted to talk aboutthe price of grains over the
next month. What do you thinkwill happen, Naomi?
Noami Blohm (19:26):
So looking at the price of grains, I'm I'm
guessing kind of quiet marketshere for a little bit. Now next
week, we got some pretty bigheat coming into the forecast.
But ultimately I feel like thesemoving averages and technicals
and day trading are going torule us until we have a legit
weather threat that makes thefunds either exit their short
(19:49):
positions and start to buy themback. But if the funds catch
wind that this crop is as big assome of the industry are
suggesting, they're short200,000 contracts. Historically,
if they wanna beat us up andsell this thing off more, they
can take it to where they'reshort 300,000 contracts or
potentially 350,000 contracts.
(20:11):
So the next week to two weeksare critical. Again, I I feel
like we'll see just quiet tradefor a little bit until we know
for sure what that Augustweather is gonna be looking
like.
Todd Gleason (20:20):
Jim, your stable mate there in Barrington, Brian
Split, is a good technician. Isuspect that you have been
talking to him about some ofthese chart gaps and where the
market might be headed. What'she telling you?
Jim McCormick (20:34):
Well, I think the points we've talked about are
very, very common points to fillthe gap right around that, you
know, that week gap lower comingout of the holiday weekend, four
thirty two and a quarter. Yourfifty day moving average is
right there at four thirty five.I believe you got a head and
shoulder pattern on the Deescorn. That neckline's also right
around that four thirty twolevel. So I think that's gonna
be a first major resistance.
(20:55):
You take it out the downturnline off the head and shoulder
pattern crosses around fourforty. If you look at the
ultimate long term chart, Todd,like we're going multiple years
back to two years back, thatinteresting enough crosses
around $4.70, which would be theupper most end, which is
interesting because that's thelevel everyone kept thinking
we'd work to $4.70 was obviouslythe insurance price. There's
(21:17):
been historical bias that wetest that $4.70 price during the
summer or sometime during theyear. So that would be the
ultimate long term price. Idon't see that happening anytime
soon unless for some reason thiscrop is not here or we get one
heck of a trade agreement fromChina per se.
But I would say just logically,just until we get a better
handle of the crop, a dead capbounce back up toward toward the
(21:37):
$4.35 is where I'd be looking tomake up those catch up sales,
especially those bushels thatyou are feel comfortable with
marketing knowing that you donot have room to store on farm.
Todd Gleason (21:46):
Mike, let's talk a little bit about soybeans. I
want you to turn your attentionto China. I know you look at
macroeconomics often. What's thecondition of their economy at
this point, and what does ittell you about its ability to
hold off buying US commodities,particularly soybeans during its
(22:08):
normal season from about theJuly all the way through
January.
Mike Zuzolo (22:14):
Yeah. I think the best way to say it with them
coming out with a five point 2%second quarter GDP this week,
Todd, is that they benefitedfrom the flurry of the trade
tariffs and then the pause. Andso they are hanging in there.
They're doing a lot ofnegotiating on their Belt and
Road initiative. High speed railports continue to be negotiated
(22:39):
very aggressively with ASEANcountries, the the countries
that like Indonesia, we just gota trade deal with.
Vietnam, we just got a tradedeal with. And so president Xi
and president Trump are workingthe phones very aggressively on
bilateral trade deals againstone another as they negotiate
their own trade deal with oneanother. That's kinda how I see
(23:03):
it. I I think I'm glad youbrought the beans into it
because what we've seen thisweek is kind of a pickup in the
pork and bean spread or pork andbean trade where both hogs and
beans have have found somesupport. And I think that is in
part due to president Trumpeasing the NVIDIA chip sales to
China as kind of an olivebranch.
Asian newspapers, US newspapersare suggesting that a meeting
(23:25):
between the two could be veryclose within within weeks. I
think Marco Rubio, Secretary ofState said not too long ago. If
that would happen, that would, Ithink, frame up what we're
talking about here on thisprogram about giving the market
a reason to go higher and maybeeven break above the gaps from
the from the post July 4holiday. Having said that, if we
(23:46):
don't get a Chinese trade deal,I still think beans are the most
susceptible to the biggestdownward move, and that's where
I continue to be very undersoldon new crop corn next to no
sales at this point, and veryaggressively sold at times on
beans, because of thegeopolitics. Whether The US and
China will ever get together orwhether president Trump really
(24:08):
wants to bring manufacturingback here in The United States.
And if he does, it's gonna comeat the expense of China.
Todd Gleason (24:13):
Naomi Bloom, when you look at the soybean market,
what are the things that you'rewatching most closely?
Noami Blohm (24:18):
Continuing, it's it's threefold. It's it's
watching the potential for USyield, keeping an eye on our
domestic demand. We know that wehave solid demand here for our
soy products. The USDA made anaggressive shift on the twenty
five-twenty six balance sheetwhen they lowered bean oil
(24:39):
exports a billion pounds. Butdomestic use for biofuel surged
£1,600,000,000 to a record 15.5.
So the demand for the biofuelsis fantastic and that's
supportive for soybeansdomestically. But then that
third part continues to be thequestion mark surrounding the
(25:01):
exports. So I'm watching that$10 price area on the November
beans. I'm watching politics,I'm watching weather, watching
just NOPA crush reports thatcome out. We had good numbers on
the most recent NOPA crushreport.
So it's a three headed monsterin my opinion right now on
(25:24):
soybeans. Right now they're allpretty well balanced, but at any
one point, one of the monstersof the three could really rear
its head and become the leadingindicator for the market, either
bullish or bearish. So you gottawatch all three pretty equally.
Todd Gleason (25:39):
Jim, if farmers are going to run a grain across
the scale, during the harvestseason, and they have a choice,
they will push soybeans,generally speaking, across the
scale. How should they considerthe marketing options at this
time?
Jim McCormick (25:53):
I'm like, Naomi, I'm looking at that $10 level. I
think that's something you needto keep an eye on technically.
You take that out, it will lookkinda ugly. I would do the same
situation I I'd recommend rightnow. If you have bushels and you
know your crops look good,although it's for you know,
we're not there in Augustcritically yet.
I'd sell them. Otherwise, I'duse same situation consider
using an options. I mean, we'rehearing reports that we were
(26:16):
selling beans out of the golftoday for August, you know, for
August. So we are hearing some,you know, at least, you know,
people kicking around the tiresof maybe buying some beans.
We'll see.
Like I said, there's all sortsof rumors that China and The US
are getting close to a tradedeal. I'm not quite as
optimistic about it, ToddBerthley. The last go around, it
(26:36):
took two years, something liketwelve separate meetings before
a deal was done. So I'm a littlebit pessimistic about it, but
you never know where we're atwith how aggressive president
Trump wants to be in cutting adeal. So but, you know, if we
can't get a trade deal done andwe have good August weather, I
would guess the beans have somemore downward pressure to go.
So use an option same as a cornis the way to defend that until
(26:58):
we get a little clearer pictureof yield as well as demand.
Todd Gleason (27:01):
Before we get a final word from each of you,
Naomi did, ask about the cattleand the cattle and feed reports
that are due out soon. I think,Naomi, I'll have you follow-up.
I don't wanna check with Mikebecause he's there in Atchison,
Kansas closer to some of thosefeedlots. Mike, what are you
hearing about the cattle marketand demand from it?
Mike Zuzolo (27:21):
We're surprised that the USDA raised the 26 beef
production by 540,000,000pounds, and now it's gonna be
only, like, a one and a halfpercent less than this year
given the screwworm issue andthe border shut between The US
and Mexico. So that's what we'rereally talking about out here
is, are we really going to havebigger feedlot placements this
fall, like USDA says we are intheir last report, to be able to
(27:45):
get that kind of productionnumber. But that was a real
question mark, and I think itreally slowed down the bowl on
this last go around.
Todd Gleason (27:51):
And Naomi, I know you've been watching this
closely. What are your thoughts?
Noami Blohm (27:54):
Yeah, balancing act between understanding where our
herd size is going to be. We'llget updates with that on next
Friday's report. Again, that'sthe cattle inventory report and
just the regular cattle and feedreport. But we're also keeping
an eye on tariffs with Brazil.Right now our imports are
already up 35% on the year.
(28:16):
So imports of beef from Brazil,New Zealand, Australia. And if
we're raising tariffs onimported beef from those
countries, it's going to make ita little bit trickier for the
consumer, I think, to keeppaying up for this higher price
value because eventually that isgoing to trickle to the consumer
as far as who has to pay theextra money. We're already in a
(28:38):
seasonal decline for boxed beefvalues and we saw that two days
this week. I think that's whatmade the market rally of just
pause here. Traders are going tobe watching not only domestic
demand, but our weekly exportsales this week were terrible,
really not good at all.
25% lower than the last week andabout 30% lower than the four
(28:59):
week average. The juggling actcontinues between watching the
domestic demand, watching exportdemand, understanding where the
herd is in our country, and thenkeeping an eye on imported
cattle coming across the borderfrom Mexico and then just
importing frozen product aswell. So a balancing act to
(29:22):
watch as we have these historichigh values continue.
Todd Gleason (29:26):
Let's get a final word now from each of you. Jim
McCormick from agmarket.net outof Barrington, Illinois. We'll
start with you this afternoon.Your final thoughts for the day.
Jim McCormick (29:35):
Well, I mean, we're gonna come to a very
critical kind of a weatherperiod over the next couple
weeks. We have the first realsecond round of heat coming in
over the next week, week and ahalf, the heat dome setting in.
We'll see how long that sticksaround. This seems to give us a
little of an opportunity. Ifyou're a producer out there, I'm
gonna encourage you as you know,consider at least risk managing
the bush, because you know youcan't store.
(29:56):
I think if you can store thegrain into the fall winter in
the next spring, you will berewarded. But, you know, trying
to protect the bushels you haveto sell, don't be afraid to do
it.
Todd Gleason (30:05):
Mike Zuzalo at globalcommresearch.com out of
Atchison, Kansas. Your finalthoughts?
Mike Zuzolo (30:10):
The one thing we didn't say, you know, that I
didn't talk about as much as thewheat, and and I think the wheat
and the crude oil, they're backto almost a 91% positive price
relationship right now on a fiveweek basis, Todd. So if we see a
corn and bean rally, and wethink it's a row crop rally, but
we also see crude and wheatrallying with those two, that
may give us some extra punch tothe upside because that would
lend me to think that the demandside is back in play, and the
(30:34):
investment funds may wanna coversome shorts.
Todd Gleason (30:36):
And finally, Naomi Blome at totalfarmmarketing.com
out of West Bend, Wisconsin.Your thoughts.
Noami Blohm (30:42):
I really feel that producers need to have a
balanced approach right now.We're at that point where things
could price wise get a littlebit worse before they get
better. But again, watching theweather forecast for August
could really change thingsaround. So just be ready for why
the market for corn might drop30 or 40 more cents lower or
suddenly could shift and we'restarting to trend into a higher
(31:04):
pattern. And again, it alldepends on perception of yield
and then what the fund tradersare gonna be doing.
So be ready for anything. Don'tget complacent and stay on your
toes watching markets everysingle day.
Todd Gleason (31:18):
Commodity week, of course, is a production of
Illinois Public Media. You mayfind and listen to the whole of
the program anytime you'd likeon our website at willag.org or
in your favorite podcastapplications. Just search out
commodity week. Our thanks go toour panelists this week
including Naomi Blohm, JimMcCormick, and Mike Zusolo. I'm
University of IllinoisExtension's Todd Gleeson.
This is the July 17 edition of Commodity Week.
announcer (00:09):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:14):
Well, welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Naomi Bloem. She's
at totalfarmmarketing.com out ofWest Bend, Wisconsin. Jim
McCormick is here atagmarket.net in Barrington,
Illinois.
And Mike Zusolo joins us fromglobalcomresearch.com in
Atchison, Kansas. Thank you allfor being with us. I think we'll
(00:35):
start with a list of items thatwe might want to discuss for the
day. Mike Zuslow, I'll startwith you. What's on your mind
this week?
Mike Zuzolo (00:44):
You know, post July 4 and post WASDE report, we've
seen the market try and lurchtowards a low and wondering
whether this might not be maybea commodity demand low in
general as trade confidencestarts to grow a little bit
more, it seems, Todd. So maybeyou want to discuss that.
Todd Gleason (01:03):
Jim McCormick from agmarket.net.
Jim McCormick (01:05):
Well, I know, I think a big conversation with
the clients we have is, youknow, this crop is definitely
bigger than Trent by mostaccounts. And, what are what are
producers gonna do, especiallywith those bushels that they
store, you know, into the fall,and they're gonna have to make a
decision to the pay commercialstorage, dump it, maybe
something they should bethinking about before harvest
ramps up.
Todd Gleason (01:26):
And Naomi Bloom from totalfarmmarketing.com on
your list.
Noami Blohm (01:30):
Yes. So let's definitely echo, what these two
gentlemen have said and talkingabout getting ready for what
marketplace might bring for thenext month for the grains. And
then also looking at cattlemarket a little bit, we've got a
cattle on feed and cattleinventory next week report next
Friday. So we want to gear upand get ready for that.
Todd Gleason (01:51):
Okay, let's start Mike with you Post WASDE in
July, what are thepossibilities, and I have
started to ask this questionfrom time to time, that a
contract low in corn madeearlier in this week might be an
actual low. Can this marketplaceclimb higher through the harvest
(02:11):
season? And what would be inplace that would cause such a
thing to happen?
Mike Zuzolo (02:17):
Yeah. My take right now, Todd, is it's not likely
that it can continue all the waythrough the harvest season. I I
think what I would be looking atis to get back up to a value
level. First stop would be thosegaps left over from the July 4
holiday around $4.33 in Decorand $10.44 plus and Nove beans.
Get those gaps filled and thensee if we've got some trade
(02:40):
deals done.
And in specific trade dealsrelated to agriculture, I'd like
to hear what Naomi and Jim haveto say about this as well. But
the two major things I'm hearingon LaSalle Street or anyone
affiliated with ag commoditiesis I'm not going to buy if I'm
an investor fund. I'm not goingto cover shorts if I'm an
investor fund. And I'm not goingto buy out if I'm an end user
(03:03):
commercial because of the factthat we don't have enough
details in these trade deals.Agriculture has been a sticking
point with Japan, with SouthKorea, with India.
And so the trade, very nervous,but I also would say clients
have been calling in saying, DoI need to protect my crop
insurance base price at thispoint, in case we get a decent
(03:25):
price action that can give us aretracement in this in this
market. And the USDA WASDEnumbers kept demand at least the
same or better worldwide, andwe're still getting tighter and
tighter on corn and wheatsupplies. And while, yes, we've
got a big crop coming on here inthe August report and most
likely going to get biggeryields, my price model would say
(03:48):
at the 3.95 SEP corn price,we're at a 2,200,000,000 bushel
crop anyway at this stage. SoI'm going to say it this way. I
think the demand low could be inif we continue to get some good
news the next week or two by theend of the this month.
And that as long as we don'ttake out $4.00 7 and a half and
$9.88 a quarter, those are ourour July 14 lows. I'm gonna say
(04:12):
a low is in at this point.
Todd Gleason (04:13):
Jim McCormick, do you think that trade agreements
can be made by the August 1deadline that the president has
put in place or at leastsomething that says agricultural
trade agreements are in place?
Jim McCormick (04:25):
I think that's gonna be the real key, Todd.
President Trump has come out alot of times that we've made
these trade agreements, but alot of them are more frameworks.
The one the two that I'mactually watching, Todd,
interesting right now areessentially Japan and South
Korea. Our number two and numberfour corn buyers. You know,
president Trump is threateningto flap a 25% tariff on both of
those countries.
(04:46):
Okay? And if he would do that, Ithink that'd be very, very hard
on their auto industry. And Ithink they will push back. And
the situation that we're inright now, how could they push
back? Brazil's got this monstercrop they're hoarding, or excuse
me, they're harvesting rightnow.
And it's a situation I'm veryleery that if we do go to a bare
(05:06):
knuckle brawl, are they going toessentially rip the same chapter
that China did and do everythingthey can to move away from US
agriculture? And they have aperfect opportunity potentially
to buy Brazilian corn who Icould argue could be very
receptive to sell them cornaggressively due to the fact
that we're threatening tosanction or tariff Brazilian
(05:27):
imports at 50%. So I give theodds of this going to ugly, very
slim, but I think it easilycould happen. The other thing
I'm looking at is I hope we putthe low end, but when I just
look at where we're at, theeconomic modeling of old crop
carryout and how tight it issuggests we should, we're a lot
lower than we should be. So themodeling doesn't seem quite
(05:48):
right.
My belief near term is this cropgoes to 185. You're looking
about a 16,000,000,000 crop. Youadd in the carry in, you're
looking over a 17,000,000,000supply. So you got
17,000,000,000 bushel supply. Agood chunk of it unfortunately
is on price.
Half it'll stay on farm. Theother half is going to come to
the market. If I'm one of thesefunds that are short 180,000
(06:11):
bushels, 180,000 contracts plus,why do I get out now? Why do I
just wait over the next couplemonths knowing this grain is
going to come to market when itgets hedged, it'll be put into
the commercial's hands and thatshort position by the fund will
be transferred from the fund tothe commercial over the fall.
And then that'll put the bottomin and then we'll get that
winter spring rally into 2026.
(06:33):
That's what I believe.
Todd Gleason (06:34):
Because I don't know the answer to this
question, does anybody knowwhether Xeno and Bunge actually
were able to buy, a terminal inthe Port Of Santos in Brazil
last year because they did nothave a have a terminal at that
point, at least Zindo, which isconsolidated grain and barge.
(06:54):
I'm trying to get at, Jim, howeasy it would be for the
Japanese company that is theprimary exporter of US corn to
that nation to move its itswhere where it gets corn from to
South America. And do we do weknow? Did they get that purchase
(07:18):
done at this point? I I don'tsee it on the web at this point
other than they expected to itlast year at some point.
Jim McCormick (07:25):
I don't know. Like I said, Todd, it could just
be the threat of it could beenough to bring the
administration back to thetable. It's just one of those
situations that once you look atwhere we're at, it's just
something I think we've got tobe cognizant of. I put the odds
of that happening less than 10%.But you know, if it would, it
could get ugly at leasttemporarily, I fear.
(07:47):
So just something I'm tellingclients, you know, be that black
swan events do seem to be flyingaround more and more often near
nowadays, it seems like.
Todd Gleason (07:55):
I'll try to follow-up on some information in
that in the closing marketreport to see whether there's
actually, a stake in Brazil byZinno, which is the Japanese
company, that exports corn tothat nation through the
consolidated grain and barge,grain elevator system in The
United States. So Naomi Blohm,you've been listening to this
(08:16):
conversation as it's related todemand, where the price
currently is, and what themarketplace might do. What are
your thoughts?
Noami Blohm (08:24):
Well, I think we put in a nice, short term low
this past week as tradersrealized, okay, maybe we need to
just take a step back here andnot assume that it's this huge
record crop as social mediastarted to blow up with
different sorts of pollinationissues. The traders I think
said, okay, well, it's probably180 or 181, but maybe we
(08:46):
shouldn't assume it's 185 or 186quite yet. So we saw funds buy
back some of those shortpositions this past week, but we
did not see a lot of new buying.My best guess is that for the
next couple of weeks, we'regoing to see corn prices trade
sideways where the Decembercontract has pretty darn good
(09:07):
support at 4.1 area andresistance is going to be at
four thirty. Hopefully we canfill that gap.
But once we fill that gap,that's right where the forty and
fifty day moving averages cometogether and the downward
channel and resistance linethat's held since April. So
probably quiet markets until weget a better handle on where the
(09:29):
yield is. As Jim pointed out, ifthe yield ends up being 185 or
186, then we're having2,000,000,000 bushel carryout.
But if yield comes in actuallyat this USDA number of 181,
well, that's actually a littlebit of a different story where
carry out is 1,600,000,000bushels. Then that is a good
(09:50):
supportive price point area atthis $4 value to where I think
you'll see end users step up.
So over the next couple ofweeks, end users domestically
and other countries around theworld who buy our products, I
think are waiting to see whatour yield is. If there's a
threat that it's not as good aswhat's been broadcast, you're
(10:10):
going to see those countriesshow up quick and agreed to
trade deals because they'regoing to try to buy this grain
while it's cheap. But on theother hand, if the 185, 186
number comes to fruition, thenit's going to be companies and
countries just buying hand tomouth, assuming that there'll be
enough of a supply that theAmericans can get us through
until winter, until then thatBrazil crop starts to get
(10:32):
harvested in March. So that's my2¢ worth.
Todd Gleason (10:36):
Well, it's an interesting it's a different
story for each of those.However, it remains a very low
price in both cases for you,does it not?
Noami Blohm (10:45):
Right. So we're we're seeing the the reality of
a big crop. If the big crop getsbigger, then you're gonna see a
reason why corn prices probablygo below $4 down to $3.75. If if
the crop is deemed smaller, $4value holds a support, and we
find our harvest low early.
Todd Gleason (11:03):
Mike, anything to follow-up there on how you see
this marketplace developing?
Mike Zuzolo (11:07):
No, I'm in total agreement with both. I I think,
know, there's some there's sometechnical analysis or some
fundamental analysis here thatwould suggest that the the short
covering potential could bemeaningful if we get some decent
trade negotiations done and notmake them general, make them
(11:27):
more specific. The only otherthing I would add is one of the
areas that I think is much likewe've seen the last few months,
and we see it again onThursday's trade going into
Friday's close. We've gotanother monthly low in the soft
road wheat, even though Russiaand Ukraine's cash corn and
excuse me, cash, corn and wheatprices are hitting one to one
(11:49):
and a half month highs right nowthat suggests to me that they
have some issues over there withtight supplies and a lack of
farmer selling as well. And Ithink there's a real issue
brewing in Ukraine that inanother ten to fifteen days, it
seems like a lot's comingtogether here as we get towards
the July, US yield trade deals.
And now I'm gonna throw outthere the Ukrainian corn crop as
(12:11):
them as the number four exporterin the world for $25.26. But
some of the pictures I've seenin Central Ukraine this week
look like Indiana and Illinoisin 2012. And they are supposed
to get some rains, but we're notsure how much they're gonna get
and how widespread it's gonnabe. So think we're gonna be
stuck again in this mindset ofdo the funds look at the world
(12:33):
numbers or look at The USnumbers. And we know the answer
that if the trade deals aresigned, sealed, and delivered,
they'll probably look at theworld numbers.
But if we keep havingprotectionism, we'll keep
looking and trading at The USnumbers.
Todd Gleason (12:47):
Jim McCormick, you wanted to talk about how big the
crop is, how big it could be,and what folks should do with
those extra bushels. I thinkthis is the time and the place
to pick that out of your brain.What are you thinking?
Jim McCormick (13:00):
Well, like the the group says, I mean, this is
gonna be very tricky and a lotis gonna hinge on how these
trade deals. I've had a lot ofclients, like I said, like, you
know, if you got to move bushelsthat you know you can't store,
I've been actually looking outwith some October options. I
don't want to be caught sellingshort here at low prices per se
at the moment because the tradedeal could come tomorrow with
(13:21):
president Trump. You just don'tknow where it's going to be. But
until we dial in how big's big,it's a relatively cheap way to
protect yourself past thatAugust and September WASDE when
I figure if this crop is goingto get bigger based on all these
models, based on good toexcellent ratings, it's going to
show up.
The longer range maps, Toddcontinue to say we're going to
turn hot and dry in August.We'll see if that comes to
(13:44):
fruition. I think, one thing alot of people are starting to
talk about is the warm nights. Alot of people are saying, if you
look at the ratings for the lastmonth, they've been some of the
warmest overnight temperaturehighs we've had on record. So
that's something a couple of myclients are a little bit
concerned about.
You know, the uncertainty isthere, so use an option to floor
it in case this crop is big andthe trade deals do not get cut.
(14:05):
But leave yourself open in casewe do cut a deal and maybe the
crop does shrink back.
Todd Gleason (14:08):
Let's follow-up on on some of those thoughts just a
little bit with you, Jim, asit's related to protecting, and
I think I heard you say this,the the crop insurance price,
meaning we're far enough downthat farmers are now thinking,
well, I may have a cropinsurance payment that would
come unless we rally again. Youcould do that with the options.
(14:32):
I kind of think that's where youwere at, but how do you go about
it exactly?
Jim McCormick (14:35):
Well, me, I was actually talking about for the
protecting grain that youactually have to sell that, you
know, I can't store it. I thinkDavid was saying that on the
call, I think it was David whowas saying that buy them, you
know, people are, if prices getlow enough, you're in a
indemnification. And if themarket would start to rally back
up and you think, wow, you know,the crops either shrinking a
(14:56):
trade deal, you're turningbullish, whatever it is, the
technicals levels hold. Thenwhat some clients would do is
they'll come in and buy futures,others will buy calls because
remember the crop insurance isset during the average price of
October. So if we do bottomearly and you start getting a
rally and you're in anindemnification portion now and
the price would rally, let's say50¢ and you'd lose that
(15:18):
potential crop insurance payout.
That's how you could defend it.But, you know, part of it's
timing, Todd. You wanna try toget closer to the bottom price
wise as you can.
Todd Gleason (15:28):
Mike, I I'm wondering when you talk to
producers around the nation,what are they telling you about
the crop? I know we hear someabout, you know, the one number
that may have had a NIC issue,but are there places that we
really have to be concernedabout?
Mike Zuzolo (15:43):
Yeah. It's funny you asked that, Todd, because, a
longtime Will radio listener wastexting me this morning after
I'd done a program on Wednesdaywith someone else and talking
about the good yields in TheUnited States and how this next
big rain could assure us of apretty large, if not record
crop. Because of what UST did onharvested acres by taking them
(16:05):
down some, probably covered someof the problems in Southern
Illinois would be my guess. Buthe was very adamant that we
really don't know what's goingon out in the fields in
Illinois, specifically aroundKankakee County and Iroquois
County Counties, and thatthere's some real issues out
there with the crop and the corncrop specifically, because of
(16:28):
the heat and because of the lackof precip. And so I'm very
sensitive to that, because Ithink there are several holes in
the Dakotas and Indiana,Illinois, Ohio, parts of
Southern Illinois still aquestion mark.
And so I think that it'sprobably above where USDA is at
right now from their long termprojections, but not sure it's
(16:48):
much above at this stage of thegame until we get, you know,
maybe another fifteen, twentydays down the road just because
the crop did get put in indifferent times. The early
April, mid April looksfantastic. But later May doesn't
look as good in some areas. It'sexact opposite in other areas
like Ohio. So you know, that'sjust something to keep in mind
(17:09):
as we go through this with thebasis and with what Jim is
talking about as far as gettingsome sales made.
I I'm like him. I'd rather be inthe paper positions, leave the
basis alone right now unless,you know, the client says, I've
got just a tremendous crop.Like, Central Iowa would be an
area where you could probablytake take a cash sale and not
(17:30):
think the basis is gonna comeback and eat you up.
Todd Gleason (17:32):
Naomi, are you in the same place that you wanna
put, things into paper productsrather than actual cash sales or
basis contracts?
Noami Blohm (17:40):
Well, it's just a mixed bag, of course, depending
on where folks live in on theirbudget right now. For those who
have grain yet to price or whofeel that they're gonna have a
big crop and they're worriedabout prices going lower, We
have been looking at usingOctober corn puts. They're based
on December futures and gooduntil the September. That would
(18:01):
get us through the harvest lowtimeframe. But as the
conversation also wasdiscussing, should there be a
rally and market prices workhigher and then that insurance
price disappears during themonth of October, there is
tremendous value that you'regoing to want to protect.
Right now the November cerealcorn options are not available,
(18:23):
which would get you through theOctober, so you have to go out
with December options and maybetake a look at buying an out of
the money corn call and theDecember options that'll get you
till about Thanksgiving. Thatway you're protected in case the
market does start to rallysimilar to what happened last
year. You just have to have abalanced approach going into
this because we're just at sucha point of unknown. Of course,
(18:48):
like we talked about, it dependson where this yield ends up
being at. Then of course,keeping an eye on the export
demand.
Again, a balanced approach. Beready for any scenario to
unfold. If it's a big crop, Ithink we're going to go see
$3.75 on December futures. Butif the crop looks like it's
getting smaller, then yeah,we've got every reason for that
(19:09):
Dec corn price to rally highernorth of 4.5 as the months
progress.
Todd Gleason (19:15):
All farmers are from the Show Me State,
Missouri, and they want to knowwhat the next month will look
like. You wanted to talk aboutthe price of grains over the
next month. What do you thinkwill happen, Naomi?
Noami Blohm (19:26):
So looking at the price of grains, I'm I'm
guessing kind of quiet marketshere for a little bit. Now next
week, we got some pretty bigheat coming into the forecast.
But ultimately I feel like thesemoving averages and technicals
and day trading are going torule us until we have a legit
weather threat that makes thefunds either exit their short
(19:49):
positions and start to buy themback. But if the funds catch
wind that this crop is as big assome of the industry are
suggesting, they're short200,000 contracts. Historically,
if they wanna beat us up andsell this thing off more, they
can take it to where they'reshort 300,000 contracts or
potentially 350,000 contracts.
(20:11):
So the next week to two weeksare critical. Again, I I feel
like we'll see just quiet tradefor a little bit until we know
for sure what that Augustweather is gonna be looking
like.
Todd Gleason (20:20):
Jim, your stable mate there in Barrington, Brian
Split, is a good technician. Isuspect that you have been
talking to him about some ofthese chart gaps and where the
market might be headed. What'she telling you?
Jim McCormick (20:34):
Well, I think the points we've talked about are
very, very common points to fillthe gap right around that, you
know, that week gap lower comingout of the holiday weekend, four
thirty two and a quarter. Yourfifty day moving average is
right there at four thirty five.I believe you got a head and
shoulder pattern on the Deescorn. That neckline's also right
around that four thirty twolevel. So I think that's gonna
be a first major resistance.
(20:55):
You take it out the downturnline off the head and shoulder
pattern crosses around fourforty. If you look at the
ultimate long term chart, Todd,like we're going multiple years
back to two years back, thatinteresting enough crosses
around $4.70, which would be theupper most end, which is
interesting because that's thelevel everyone kept thinking
we'd work to $4.70 was obviouslythe insurance price. There's
(21:17):
been historical bias that wetest that $4.70 price during the
summer or sometime during theyear. So that would be the
ultimate long term price. Idon't see that happening anytime
soon unless for some reason thiscrop is not here or we get one
heck of a trade agreement fromChina per se.
But I would say just logically,just until we get a better
handle of the crop, a dead capbounce back up toward toward the
(21:37):
$4.35 is where I'd be looking tomake up those catch up sales,
especially those bushels thatyou are feel comfortable with
marketing knowing that you donot have room to store on farm.
Todd Gleason (21:46):
Mike, let's talk a little bit about soybeans. I
want you to turn your attentionto China. I know you look at
macroeconomics often. What's thecondition of their economy at
this point, and what does ittell you about its ability to
hold off buying US commodities,particularly soybeans during its
(22:08):
normal season from about theJuly all the way through
January.
Mike Zuzolo (22:14):
Yeah. I think the best way to say it with them
coming out with a five point 2%second quarter GDP this week,
Todd, is that they benefitedfrom the flurry of the trade
tariffs and then the pause. Andso they are hanging in there.
They're doing a lot ofnegotiating on their Belt and
Road initiative. High speed railports continue to be negotiated
(22:39):
very aggressively with ASEANcountries, the the countries
that like Indonesia, we just gota trade deal with.
Vietnam, we just got a tradedeal with. And so president Xi
and president Trump are workingthe phones very aggressively on
bilateral trade deals againstone another as they negotiate
their own trade deal with oneanother. That's kinda how I see
(23:03):
it. I I think I'm glad youbrought the beans into it
because what we've seen thisweek is kind of a pickup in the
pork and bean spread or pork andbean trade where both hogs and
beans have have found somesupport. And I think that is in
part due to president Trumpeasing the NVIDIA chip sales to
China as kind of an olivebranch.
Asian newspapers, US newspapersare suggesting that a meeting
(23:25):
between the two could be veryclose within within weeks. I
think Marco Rubio, Secretary ofState said not too long ago. If
that would happen, that would, Ithink, frame up what we're
talking about here on thisprogram about giving the market
a reason to go higher and maybeeven break above the gaps from
the from the post July 4holiday. Having said that, if we
(23:46):
don't get a Chinese trade deal,I still think beans are the most
susceptible to the biggestdownward move, and that's where
I continue to be very undersoldon new crop corn next to no
sales at this point, and veryaggressively sold at times on
beans, because of thegeopolitics. Whether The US and
China will ever get together orwhether president Trump really
(24:08):
wants to bring manufacturingback here in The United States.
And if he does, it's gonna comeat the expense of China.
Todd Gleason (24:13):
Naomi Bloom, when you look at the soybean market,
what are the things that you'rewatching most closely?
Noami Blohm (24:18):
Continuing, it's it's threefold. It's it's
watching the potential for USyield, keeping an eye on our
domestic demand. We know that wehave solid demand here for our
soy products. The USDA made anaggressive shift on the twenty
five-twenty six balance sheetwhen they lowered bean oil
(24:39):
exports a billion pounds. Butdomestic use for biofuel surged
£1,600,000,000 to a record 15.5.
So the demand for the biofuelsis fantastic and that's
supportive for soybeansdomestically. But then that
third part continues to be thequestion mark surrounding the
(25:01):
exports. So I'm watching that$10 price area on the November
beans. I'm watching politics,I'm watching weather, watching
just NOPA crush reports thatcome out. We had good numbers on
the most recent NOPA crushreport.
So it's a three headed monsterin my opinion right now on
(25:24):
soybeans. Right now they're allpretty well balanced, but at any
one point, one of the monstersof the three could really rear
its head and become the leadingindicator for the market, either
bullish or bearish. So you gottawatch all three pretty equally.
Todd Gleason (25:39):
Jim, if farmers are going to run a grain across
the scale, during the harvestseason, and they have a choice,
they will push soybeans,generally speaking, across the
scale. How should they considerthe marketing options at this
time?
Jim McCormick (25:53):
I'm like, Naomi, I'm looking at that $10 level. I
think that's something you needto keep an eye on technically.
You take that out, it will lookkinda ugly. I would do the same
situation I I'd recommend rightnow. If you have bushels and you
know your crops look good,although it's for you know,
we're not there in Augustcritically yet.
I'd sell them. Otherwise, I'duse same situation consider
using an options. I mean, we'rehearing reports that we were
(26:16):
selling beans out of the golftoday for August, you know, for
August. So we are hearing some,you know, at least, you know,
people kicking around the tiresof maybe buying some beans.
We'll see.
Like I said, there's all sortsof rumors that China and The US
are getting close to a tradedeal. I'm not quite as
optimistic about it, ToddBerthley. The last go around, it
(26:36):
took two years, something liketwelve separate meetings before
a deal was done. So I'm a littlebit pessimistic about it, but
you never know where we're atwith how aggressive president
Trump wants to be in cutting adeal. So but, you know, if we
can't get a trade deal done andwe have good August weather, I
would guess the beans have somemore downward pressure to go.
So use an option same as a cornis the way to defend that until
(26:58):
we get a little clearer pictureof yield as well as demand.
Todd Gleason (27:01):
Before we get a final word from each of you,
Naomi did, ask about the cattleand the cattle and feed reports
that are due out soon. I think,Naomi, I'll have you follow-up.
I don't wanna check with Mikebecause he's there in Atchison,
Kansas closer to some of thosefeedlots. Mike, what are you
hearing about the cattle marketand demand from it?
Mike Zuzolo (27:21):
We're surprised that the USDA raised the 26 beef
production by 540,000,000pounds, and now it's gonna be
only, like, a one and a halfpercent less than this year
given the screwworm issue andthe border shut between The US
and Mexico. So that's what we'rereally talking about out here
is, are we really going to havebigger feedlot placements this
fall, like USDA says we are intheir last report, to be able to
(27:45):
get that kind of productionnumber. But that was a real
question mark, and I think itreally slowed down the bowl on
this last go around.
Todd Gleason (27:51):
And Naomi, I know you've been watching this
closely. What are your thoughts?
Noami Blohm (27:54):
Yeah, balancing act between understanding where our
herd size is going to be. We'llget updates with that on next
Friday's report. Again, that'sthe cattle inventory report and
just the regular cattle and feedreport. But we're also keeping
an eye on tariffs with Brazil.Right now our imports are
already up 35% on the year.
(28:16):
So imports of beef from Brazil,New Zealand, Australia. And if
we're raising tariffs onimported beef from those
countries, it's going to make ita little bit trickier for the
consumer, I think, to keeppaying up for this higher price
value because eventually that isgoing to trickle to the consumer
as far as who has to pay theextra money. We're already in a
(28:38):
seasonal decline for boxed beefvalues and we saw that two days
this week. I think that's whatmade the market rally of just
pause here. Traders are going tobe watching not only domestic
demand, but our weekly exportsales this week were terrible,
really not good at all.
25% lower than the last week andabout 30% lower than the four
(28:59):
week average. The juggling actcontinues between watching the
domestic demand, watching exportdemand, understanding where the
herd is in our country, and thenkeeping an eye on imported
cattle coming across the borderfrom Mexico and then just
importing frozen product aswell. So a balancing act to
(29:22):
watch as we have these historichigh values continue.
Todd Gleason (29:26):
Let's get a final word now from each of you. Jim
McCormick from agmarket.net outof Barrington, Illinois. We'll
start with you this afternoon.Your final thoughts for the day.
Jim McCormick (29:35):
Well, I mean, we're gonna come to a very
critical kind of a weatherperiod over the next couple
weeks. We have the first realsecond round of heat coming in
over the next week, week and ahalf, the heat dome setting in.
We'll see how long that sticksaround. This seems to give us a
little of an opportunity. Ifyou're a producer out there, I'm
gonna encourage you as you know,consider at least risk managing
the bush, because you know youcan't store.
(29:56):
I think if you can store thegrain into the fall winter in
the next spring, you will berewarded. But, you know, trying
to protect the bushels you haveto sell, don't be afraid to do
it.
Todd Gleason (30:05):
Mike Zuzalo at globalcommresearch.com out of
Atchison, Kansas. Your finalthoughts?
Mike Zuzolo (30:10):
The one thing we didn't say, you know, that I
didn't talk about as much as thewheat, and and I think the wheat
and the crude oil, they're backto almost a 91% positive price
relationship right now on a fiveweek basis, Todd. So if we see a
corn and bean rally, and wethink it's a row crop rally, but
we also see crude and wheatrallying with those two, that
may give us some extra punch tothe upside because that would
lend me to think that the demandside is back in play, and the
(30:34):
investment funds may wanna coversome shorts.
Todd Gleason (30:36):
And finally, Naomi Blome at totalfarmmarketing.com
out of West Bend, Wisconsin.Your thoughts.
Noami Blohm (30:42):
I really feel that producers need to have a
balanced approach right now.We're at that point where things
could price wise get a littlebit worse before they get
better. But again, watching theweather forecast for August
could really change thingsaround. So just be ready for why
the market for corn might drop30 or 40 more cents lower or
suddenly could shift and we'restarting to trend into a higher
(31:04):
pattern. And again, it alldepends on perception of yield
and then what the fund tradersare gonna be doing.
So be ready for anything. Don'tget complacent and stay on your
toes watching markets everysingle day.
Todd Gleason (31:18):
Commodity week, of course, is a production of
Illinois Public Media. You mayfind and listen to the whole of
the program anytime you'd likeon our website at willag.org or
in your favorite podcastapplications. Just search out
commodity week. Our thanks go toour panelists this week
including Naomi Blohm, JimMcCormick, and Mike Zusolo. I'm
University of IllinoisExtension's Todd Gleeson.
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