October 2, 2025 • 32 mins
Panelists
- Jim McCormick, AgMarket.net
- Greg Johnson, TGM TotalGrainMarketing.com
- Chip Nellinger, BlueReef.ag
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the October 2 edition of Commodity
Week.
announce (00:08):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:13):
Welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Jim McCormick. He's
at agmarket.net out ofBarrington, Illinois. Greg
Johnson joins us from Champaign,Illinois at TGM Total Grain
Marketing.
And Chip Nellinger is here fromBlue Reef Agrimarketing that's
bluereaf.ag, bluereaf.ag online.He is in Morton Illinois.
(00:36):
Commodity Week of course is aproduction of Illinois Public
Media. It's public radio for thefarming world online on demand
anytime you'd like to listen tous at willag.org, willag.0rg. I
think we have quite a bit totalk about this week, but let's
get a list of items from each ofyou that we might want to
(00:57):
discuss.
Jim McCormick from agmarket.net,we'll start with you. What's on
your list?
Jim McCormick (01:03):
I'd probably the two big talking points that we
probably need to talk to youabout is the, you know, the
China deal of the PresidentTrump's tweet earlier in the
week about trying to meet withXi in four weeks and then Scott
Betts' comment earlier this weekabout maybe a soybean buyout a
soybean bailout for the soybeanproducers here announced next
week. And we also probably needto talk about the ramifications
(01:25):
of the quarterly grain stockreport that was released earlier
in the week.
Todd Gleason (01:28):
Greg Johnson from TGM Total Grain Marketing,
what's on your mind as you'retaking a lot of crop in, I
suppose, at the elevator?
Greg Johnson (01:36):
Yeah. And and I I think that the yields that we're
getting probably need to bediscussed a little bit. And is
that general across the Midwest?Or is that just kind of isolated
to certain areas? What ingeneral are we hearing?
And then not only on the supplyside, but then the demand side,
(01:59):
what will we see as far asdemand to offset these big crops
when it comes to ethanolexports, for example, and or
soybean trade deal with China.So, we've got both the supply
side and the demand side to talkabout.
Todd Gleason (02:15):
Nothing, by the way, until we get the government
back to work and probablydelayed until they until we see
the supply and demand tables.That is from the World Ag Supply
and Demand Estimates. We'll getback to that in just a bit. Chip
Nellinger from Blue ReefAgrimarketing. What's on your
list?
Chip Nellinger (02:32):
Yeah. I agree with everything that's been so
far. I I think something that'skinda hitting my my radar screen
here just recently, the last dayor two. Are we starting to see
some money flow changes from thefunds now that we're into a new
quarter? You've seen some bigmoves in the metals, some
pressure in the livestockmarkets, and some strength in
(02:54):
the grains.
So are we seeing a little bit ofmoney flow change compared to
what we've been used to over thelast, you know, three or four
quarters in here.
Todd Gleason (03:02):
Well, let's pick up there. Why don't you talk to
me a little bit about that?Where do you see the money
changing hands at mostly, and isit flowing into or out of the
commodity markets?
Chip Nellinger (03:13):
Well, that's the question, Todd, and I don't know
if it's outside marketinfluences. I'm I'm not sure if
it's the government shutdown.Obviously, the, you know, the
comments and the the tweets andand comments from president
Trump about supporting soybeanfarmers might be supporting the
grain markets, but I justnoticed today, especially, you
know, the the metals markets,you know, pushing up into new
(03:36):
all time highs here recently.They're under some heavy selling
pressure. The cattle marketobviously isn't a 2.5 bull
market.
Looks like maybe some shine isoff of that. You know, the the
strength there and they've beenaggressive sellers there and
you've had some nice buyingacross the entire grain sector
here. So, don't know if it's newmoney coming into the commodity
(03:57):
markets necessarily. I think itmay just be the start of some
some shifting maybe from youknow assets or commodities that
they have a lot of profits inand maybe coming out of some of
these, you know, short grainpositions that they've got
profits in as well. Maybethey're just taking some money
off the table with theuncertainty of the government
(04:19):
shutdown and some geopoliticalrisks out there.
Todd Gleason (04:23):
Well, they could be taking money off the table,
Jim McCormick, and that wouldpush the market higher as they
were changing their positions,or they could be pushing money
into a safe haven. Sometimes thecommodity markets are considered
that. That does turn myattention to the trade deals
that president Trump is tryingto negotiate, particularly in
(04:45):
agriculture as it's related toChina. What do you think about
the prospects four weeks fromnow as they turn their attention
really to soybeans? Suppose manyother things I would think as
well when they meet.
Jim McCormick (05:00):
Well, I I think it's definitely gonna be a
talking point. I I am, Todd, I'ma little bit suspicious
anything's actually really gonnaget done. I I do think president
Trump is feeling a lot of heat,from his the farm based plain
and simple, especially there wasa you know, that that very
famous picture, I guess, youcould now say that Brooke
Rollins had sent a text over toScott Bessett complaining about
(05:23):
how the potential deal to helpbail out Argentina, then
Argentina came in there and firecelled a bunch of beans up to 40
cargoes of beans to to China. II think it kinda painted
president Trump into a into acorner where he felt like he had
to say something to calm themarket down a little bit or the
base down a little bit. But thereality is when you look at
this, Todd, he's talking aboutdoing that at the apex summit.
(05:46):
It was at the very October. Butif I'm the Chinese, I gotta be
honest. Why would you cut a dealbefore that? Because we have the
big supreme court ruling or notruling, but essentially
essentially case that's gonna beargued on November 5 that these
tariffs that president Trump hasput on, if they're even legal
and if he can even do that. Soif you're the Chinese, I would
(06:08):
argue they're probably gonnawait and see how that tariff
case plays out before theyreally make any other kind of
concessions to president Trump.
And I think that could happen toall these all these Asian
countries. I mean, there's a lotof hope that as he goes to the
APEC summit, he can lock downsome of these deals, but, you
know, are these countries gonnabe a little bit hesitant just to
wait to see if he actually hasthe power to do the deal that
(06:31):
he's actually doing? So we'llsee.
Todd Gleason (06:33):
Greg Johnson, if you've been following this along
and and some of the things thatBessent has said about the
potential of, a tariff soybeanbailout, relatively speaking,
might come on Tuesday of nextweek. Sometimes it sounds from
the administration as if well, Ishould say take this back. I
(06:55):
don't think that any time fromthe administration that it has
sounded as if they're reallywilling to go down this road
that, the president has said,and generally, if he he says it,
it it is something that it getsdone, that tariffs will tariff
taxes will be used to paysoybean producers. We'll see
(07:16):
whether they can actually pullthat off or not, I suppose. Then
Besant always sounds a littlehesitant as to how much that
might come that might come toproducers, and I'm just
wondering from each of yourperspectives what you're
thinking about that, Greg, andmaybe you should start.
Greg Johnson (07:35):
Yeah. I I think we need to keep in in mind how this
all started. You know, presidentTrump imposed tariffs on China
because he was unhappy withtheir fentanyl production and
lack of willingness to curbthat. So he put, you know,
trillions of dollars worth oftariffs on Chinese I mean, not
(07:57):
trillions, but that's what,China ships to us. You know,
everything that's basically inWalmart comes from China.
So, you know, the quote is, youknow, while this is important to
US agriculture, we're talkingbillions of dollars with a b.
But when we're talking about allthe goods that China ships to
us, we're talking abouttrillions of dollars with a T.
(08:17):
So China does have reason tocome to an agreement, but
obviously they want thosetariffs taken off or at least
reduced to something manageable.So I think that is the big key
we have to remember. I thinkChina would have no problem
buying soybeans from us,agreeing to buy soybeans from us
(08:38):
if the tariffs on theirproducts, get reduced or
eliminated.
So, you know, that's the bigpicture. And, you know, Trump in
the meantime can, you know, handout some of that, tariff money
to soybean producers, you know,no problem. But, you know, the
big picture is, will China takeoff the tariffs on U. S.
Soybeans?
(08:59):
And the answer is, in myopinion, yes, but not until The
U. S. Takes tariffs off of theproducts that China ships to us.
So it's all back in that courtof when do we take the tariffs
off of or at least reduce thetariffs on the Chinese product.
Todd Gleason (09:13):
If the Chinese impose a 20% tariff on US
soybeans, a 15% tariff on anycorn that they might and they
have not, either actuallyimported from The United States
Chip Nellinger, and it's alltied up with Ukraine Russia war
and crude oil coming out ofRussia as well because there's a
(09:35):
set of tariffs that thepresident could bring India into
this, but that the president hasimposed and has been watching.
So all these things, on theglobal stage are working, into
this, and I'm I'm just feel likeit might take way longer than
November to come to anyagreement. This would be the
(09:56):
fifth round of talks if Iremember what, mister Besant had
to say about these the set oftrade deals. Do you think they
can get it done?
Chip Nellinger (10:06):
I think they can get something done, but I agree
with you Todd. I think that'sway out into the future. It's
not an inconsequential, issuefor the farm community and
producers out there, But in thebig picture, I agree that the
soybean situation, the entirecrop of soybeans is a drop of
the bucket when you talk aboutall these interrelated you know
(10:30):
issues and the amountsthroughout the world global
economy. The other thing thatscares me and has for quite some
time, you know, in Trump's firstterm, easy to get a a deal there
that included beans becausewe're in the second year of a
Brazil drought coming off arecord production there. It
looks like they're set to, youknow, plant a record amount of
(10:52):
acres again and very quickly,you know, if you push this into
January, you're on the doorstepof what looks like could be
another big Brazilian bean cropand they're going to get their
supplies from Brazil anyway.
So, you know, I think it's anuphill battle. I don't think
it's impossible to see a deal,but, will it be soon enough to,
(11:15):
keep this rally going? I'm notquite so sure about that, but
certainly the comments earlierin the week did, a lot to, you
know, put a floor underneaththese markets, especially the
bean market.
Todd Gleason (11:27):
And Jim McCormick, to stay with this topic for just
a bet, the farm doc team, theagricultural economist here on
the Urbana Champaign campus veryearly in, I think, this summer
suggested that if there wereever a bailout for, producers
like last time around, thatgiven prices and what the
(11:48):
expectations were over the longrun, that this would simply
serve to hold up the price ofinputs and might not be the best
of ideas in general across theboard, putting pressure on a
marketplace that might notreally unless there is something
different than an agreed toamount, that tariffs actually
(12:11):
come off and trade resumes insome other form, just might not
be the best option for farmersin America.
Jim McCormick (12:19):
Well, I think that is kind of the common
consensus. I mean, if money doesflow now, how the money is gonna
flow, Todd, I think how yougotta you know, we got a
government shutdown. There is nomoney right now to bail the
farmer out per se. You gottaremember the first go around,
they use the CCC corpse money toessentially fund, you know, that
first round of Trump Trump moneyin, you know, 2018 or so. That
(12:44):
has no money in it right now.
So this is what we need to bewatching as we renegotiate to
just get to the, especially theeconomy open or the government
open, and then maybe the longterm funding, that's gonna be a
key of what's out there becausethe Democrats are gonna have a
say on how much money does gointo the CCC. So how much money
does go in is still up fordebate. But I agree with the
(13:07):
economists that for the mostpart, this money is going to do
just like we had an injection ofmoney last year in the late
wintertime. Most of that moneywent right into the farmer's
bank and right from the bank andwent right back out to C dealers
and the lenders. And I'mguessing that's what's gonna
happen again when it's all saidand done.
And it's just in general, thecost inflation is right there.
(13:31):
And when you push money into thesystem, it's just like the
stimulus checks that we gavepeople during COVID. When you
just hand people money, you'reessentially encouraging
inflation instead of pullingmoney out of the system, which
is really what we need to doright now. The m two money
supply is at all time highs, andthat's part of the problem we're
seeing right now.
Todd Gleason (13:49):
These are all outside market influences. Let's
turn our attention to thefundamentals of the marketplace.
We'll start with the quarterlystocks report. And Jim, I'll
stay with you because this wason your list. Can you tell me
about that report and how youviewed it?
Jim McCormick (14:03):
Alright. Now, you know, when you looked at it, the
core number was a big they diddid that slight revision of last
year's crop, raised it by25,000,000. I think the big the
big thing I'm looking at rightnow was that revision on the
residual, the feed and residualnumber dropping it dramatically,
what, around 170, 180,000,000bushels. Because when you look
at that feed and residual forthe old crop, Todd, compared to
(14:25):
the current estimate of the newcrop, obviously, we haven't got
the new crop balance sheet. It'sabout a 600,000,000 bushel
increase from one year to thenext.
And in my mind, it's just it'simpossible that we're going to
feed 600,000,000 more bushels ofcorn to livestock this upcoming
year because there's lesslivestock to feed. And I've
(14:45):
always thought that feedingresidual number was too high.
Remember Todd, they cut thefeeding residual number back in
January of a year ago and nevertouched it for the next nine
months. Yet back in January, wedid not know that that border
was going be closed for ninemonths. So there's no way they
could have accounted for it.
So the adjustment they made, Ibelieve this week was right. But
what happens is they're going toput that bigger carrying forward
(15:08):
into the new crop. They're goingto have to adjust down the feed
number eventually. And I'm inthe camp with a lot of people.
This corn crop is probably goingto shrink back from the current
yield estimates.
But I fear that as they shrinkback the yield due to the
disease and dryness issues, it'sjust going to be offset with
lowering of the feed number,raising of the carry in, and
we're still going to be hangingaround a 2,000,000,000 carryout,
(15:30):
which just unfortunately is nota bullish number.
Todd Gleason (15:32):
Okay. Chip Nellinger, when you put those
numbers together, it really wasthe core number that was Barry's
number not so much. It was notthat different than most I think
had expected. Can you tell mehow you viewed it and what you
think that means going forward?
Chip Nellinger (15:46):
Yeah. I I think Jim's spot on. The the question
is how fast do they drop demandgoing forward? It's usually not
you know, a one off. Usually, ittakes some several reports to
get that done.
I thought it was a bit of adisservice in August anyway to
raise demand by six fifty somemillion and then another
(16:07):
100,000,000 in September justbecause of this fact that when
the crop shrinks, then, theyhave you know, the dial to dial
back demand and you know, kindof take away some potential
opportunities. So, I I agreewith Jim. I I I think at the end
of the day, it's it's going tobe hard to have a wildly bullish
(16:28):
number but yet, you know, ourexports are good. The the demand
side is is still holding inthere. It looks like and and I
think that people maybe themarket maybe a little in the end
result at maybe how low thesecorn yields can go.
I mean, this disease and and thedryness and and tar spot and
(16:50):
southern rust. It it decimated alot of yield this year and so,
you know, to me, it's just thethe combination of how fast they
drop yield versus how fast theydrop demand. Still think it
could mean we could at least seea period of time where the funds
get out of their shorts andcorn, maybe get flatter a little
bit net long but it probablydoesn't mean we're gonna see
(17:11):
$556 corn this year.
Todd Gleason (17:14):
So, Greg Johnson, because it is highly unlikely
that the USDA, even if congresswere to come back and the
federal government were to befunded, we'll be releasing its
monthly report on Thursday ofnext week. That's when it's
actually due for an update ofthe crop production and the
world ag supply and demandestimates. I'm going to ask you
(17:35):
to be our USDA day today. Youwanted to talk about yields and
demand both. Let's start withthe demand side, and then you
can build in the yields, please.
Greg Johnson (17:45):
The the plus side to the demand equation is that
the ethanol exports continue tobe very strong. So you could
make an argument that thatnumber will stay steady. But I
agree with everybody else. Thefeed and residual number needs
to come down. The only reason itwent up was so that they could
lower it later on when theyraise the yield, they raise the
(18:07):
demand so that they don't getthe carryout too wildly bearish.
But now that I assume yield isgoing to come down a couple of
bushels based on everything thatChip said, the disease pressure
in Iowa and some other statesthat got crops planted late and
were too wet early and too drylate. But still the bottom line
is you can lower the yield bytwo, three, four bushels. But if
(18:30):
you lower the demand side ofthat equation, you're still
looking at a 2,000,000,000bushel carryout. So the bottom
line is the upside potential islimited on the futures market.
Now if you've got bins, you canlock in that carry and you can
lock in a pretty good price forMarch, April, May, June, July.
But if you have to haul it tothe elevator and pay storage
(18:51):
charges,
Jim McCormick (18:53):
you're
Greg Johnson (18:53):
going to get most of that back. So there's really
not a good way to take advantageof it unless you have your own
bins. And I am been cautioningfarmers to be realistic. A
2,000,000,000 bushel carryout,we're probably going to plant
less corn next year, but with a2,000,000,000 bushel carryout,
we can get by with less corn.And the last thing is this new
(19:14):
world screwworm is moving closerand closer to The United States,
and it's affecting the Mexicancattle crop right now, which
reduces demand and what happensif it would happen to make it
into The U.
S. So more of a black swan typethinking ahead, but you know, we
we don't want to get too carriedaway. I mean, I do agree that
the yield is too high, but wecome down two or three bushels.
(19:37):
But, bottom line is the demandis going to come down a little
bit too, and and so the upsideis probably limited on price.
Todd Gleason (19:43):
Tim McCormick, are you getting enough objective
yield data that you can make agood guess, that we're off two
bushels from where we are? Thatwould still be a record yield,
by the way, but and and I don'tknow other producers, what
they're thinking about the sizeof this crop. So fundamentally
what are you hearing aboutyields across the Midwest and
(20:04):
where there are good yields andwhere there are substantially
better than what they expectedkind of yields places or, you
know, the kinds of yields maybethat they were expecting early
in the year, and where there aresome holes in, our yield maps.
Jim McCormick (20:20):
I mean, there's definitely coming off. I mean, I
talked to a client of mine justoutside of Indianapolis today
and he said, look, there wasareas up there that they thought
late July, early August thatcorn could do two forty to two
fifty. It's coming in two twentyto two thirty. Is he
disappointed? Yeah.
Because it wasn't two forty totwo fifty, but two twenty is
(20:41):
still a pretty solid crop. And Ithink that's kinda where if
you're my guess for a yield, Iwould say it's gonna be
somewhere right around oneeighty three, maybe one eighty
four. I'm not in the camp thatit's gonna be below one eighty,
Todd. It's just the statisticsof it all. If you take the
current yield that thegovernment's working with and
you lower the state of Iowa,Indiana, Illinois, Ohio,
(21:04):
Minnesota, South Dakota, NorthDakota, Nebraska, and Kansas, If
you lowered every one of thosestates current estimate by 10
bushels, your national yieldwould still only drop to 179.2
and we're not gonna drop allthose states 10 bushels.
Some are gonna go down, believe,but some are maybe drop a little
bit. So I'm in that right aroundthat 183 level. And
unfortunately at 183 is1,500,000,000 more bushels
(21:27):
bigger than a year ago. That isa lot of corn that we've got to
deal with. And on top of it, thebest estimate we have, Scott,
right now, now, Todd, is maybe15% of the corn crops been sold
and 15% of the bean crop hasbeen sold.
That's it. So there's a lot ofcorn, a lot of beans have got to
be harvested yet that's still upto be marketed.
Todd Gleason (21:47):
Okay, so for each of you, and Chip Nellinger, I'm
going to start with you. This isprobably not an easy question to
answer, but in the last time wehad a federal government
shutdown, it lasted thirty fivedays, I believe. Well, it should
have gone over two, WASDEreports. I think it went over
October and November, honestly,if I remember correctly. October
(22:10):
tends to be a bad month for thefinancial markets, so that might
be something you would want toconsider.
But, the marketplace was lost. Ido recall that and without
direction. So here's thequestion. Where do you think the
market is trading today, anddoes that float point going
(22:32):
through the month of October orthrough the next thirty days,
let's call it that, does thatoffer an opportunity or not for
producers to make cash sales ora sale of some sort for corn and
or soybeans given what you thinkeventually USDA, once we do have
(22:54):
a report, will show?
Chip Nellinger (22:56):
Yeah. That is a that there's a lot to unpack
with that question, Todd. I I Ido think it's a problem that we
don't get the October report.It's a real problem if we don't
get the November report becausethen the the next time they do
you know, objective yields isJanuary and so, I do think that
the market's trading right nowone eighty fiveish, maybe one
(23:21):
eighty six. I think in the endresult, I I've done the numbers.
I disagree a little bit withJim. I I I do think maybe that
we're in that one seventy nine,one eighty. Just maybe maybe not
even as good as a year ago orjust slightly better than a year
ago. Will they ever say that?And I'm not saying they would
(23:41):
have said that on the Octobercrop report either.
You know, but by January, Iwouldn't be surprised if we
don't get it down really closeor slightly under one eighty. I
I still think it's the rangethough. You know, regardless of
whether there's governmentshutdowns or crop reports, if
you do see rallies up to the topend of the range, you know, back
(24:03):
towards $4.30 or above inDecember corn, higher if you're
you know, have on farm storageand carry. I think you gotta be
a seller. Think in the samebreath, don't get you know, too
worked up if we get down towardsthe bottom end of the range
between 4 and $4.10.
I think there's good value downthere. Beans, same thing because
(24:23):
of all the uncertainty we talkedabout earlier with the you know,
the the China US trade deal willhappen, won't it happen? Does it
take too long to happen? Thatyou get pushes back north of of
$10.50 on November beans and andthen, you know, obviously better
than that with the carry in themarket. Yeah, you have to be a
willing seller and you know, I Ithink we're still in that range
(24:44):
and you're right withoutgovernment reports particularly
the October crop report is suchan important report every year
anyway and to not have it thisyear with all the uncertainty
and questions about yield isreally gonna leave the market,
you know, clamoring forinformation and in a big black
hole.
Todd Gleason (25:03):
Okay, Greg. I'll pick up with you. I have an
information blackout. Whatopportunities does does that
bring, and what issues does itbring? Same question that Chip
just answered.
Greg Johnson (25:16):
Well, the good news is lack of information
should translate to volatility.We should see higher highs, but
we could see lower lows as well.So if the perception is
negative, we could go lower thanwhat you might think otherwise.
On the flip side, as Chip said,maybe there's people out there
talking 179, 180. Let's let themtalk that up and if they can,
(25:39):
you know, translate that intobuying into the market, that's
going to give farmers anopportunity to get corn sold at
better prices than if thegovernment would be in operation
and come out and say, no, it's183, 184.
So I think there could be somevolatility here, but you know,
you have to, you know, pick yourpoints and to me, 2,000,000,000
bushel carryout limits theupside. You know, we're at 4 20
(26:03):
December corn, maybe we can getto $4.35 I don't think we need
to go much higher than that. Thecarry will do most of the work
beyond that. And in soybeanswe're at $10.25 Could we go to
$10.5 Yes, but I don't see $11beans in equation. So this
uncertainty, this governmentshutdown might give us a chance
(26:25):
to sell crops a little bitbetter than if the government
was open.
And I think we need to takeadvantage of that.
Jim McCormick (26:31):
I'm pretty much close to agreeing with Chip. I
mean, I was my accountantclients, hey, you got the long
term trend line off yourFebruary high and your April
high. That converges pretty muchright at the two hundred day
moving average around $4.39 Youget up near that level. These
corn up near $4.30, you know,$4.35, $4.39, sell it or sell
the carry definitely if you'regonna use your bins. I would
(26:53):
agree you get down near $4.
You probably don't get too toonervous about it. I think you
try to maybe use that as anopportunity to reown it. I do
wanna make one stat that justbugs me a little bit. I mean,
recent history is we bottomedthe market early just like we
did last year in August. Webottomed it in August this year.
Our our partners over at JSA dida study and they're looking at
(27:17):
it and they said, historically,when you produce more corn than
you consume the year beforewhere supply is up 103% or above
the previous year's demand, likeit looks like it could be this
year, 80% of the time, eight outof 10 years when that's
happened, you did not put thefall low in until late October
into the November timeframe. Sothere is a historical bias that
(27:40):
in these big crop years, wedon't hit that absolute fall low
late in the year. I hope thatdoesn't happen, but there is a
little history that says maybethat's what happens as we try to
find a home for the spinal chunkof grain.
Todd Gleason (27:52):
And I will turn my attention back to you, Greg
Johnson, in the elevator system.We have talked a lot about basis
coming into this fall and whatthe potential issues were given
the size of the crop that wethought was coming as late as
August, particularly in theWestern Corn Belt. I see that at
(28:18):
least at my grain elevator,basis has tightened up by 2¢ in
the last couple of days. What isbasis telling you about what's
happening out west?
Greg Johnson (28:30):
Basis is telling us that the farmers are being
stubborn and not moving thegrain into the marketplace. They
don't like the flat price and sothey're trying to sock away
everything that they can, whichin the short run is supportive
to the basis. But is itsupportive to the futures price?
No, that's a question of supplyand demand. So the fact that the
basis is getting better justtells me that farmers aren't
(28:53):
selling corn.
They don't like to sell at theseprices and they'd like more.
Maybe they'll get another $0.10$05 but that's probably about
it. And they probably shouldknow, reward the market if we do
go up another $10.15 cents fromthese levels.
Todd Gleason (29:09):
I know that, elevators have been hunting for
corn and calling. Right? So witha you're you're hauling in,
we'll we'll give you this muchabove. We'll give you a quick
shipment premium of some sort.And I don't know whether I wanna
call it a quick shipment, butit's because farm because
farmers simply aren't sellingtheir corn, and you're telling
(29:29):
me they should.
Greg Johnson (29:30):
They should here in another $00 $05 I mean, we've
rallied off the $3.9 D slow,we're up $0.35 off of that low.
It's still not a great price,but it's $0.35 better than where
we were on that August 12 cropreport. If we go up another
$0.15 that's $0.50 off theAugust low. At some point, you
(29:50):
have to ask yourself, how muchis enough? And, you know, at
that point, there's probablyjust as much, if not more,
downside potential than there isupside potential.
Todd Gleason (29:58):
Alright. Let's get a final word from each of you.
Jim McCormick at agmarket.net inBarrington, Illinois. What's
your final word for the day?
Jim McCormick (30:07):
My final word for the day is, you know, we're
gonna be flying blind a littlebit here until the government
reopens. It probably, as thegroup said, is gonna provide
some volatility. If we do getthat up for momentum,
potentially do not be afraid tolock it in. The reality is even
if this crop gets smaller, thedemand's probably gonna be
adjusted lower. A 2,000,000,000carryout does not argue bullish
corn prices back up to five.
(30:28):
You gotta be realistic. Samething with beans. Until we get a
China trade deal, beans aregonna struggle as well.
Todd Gleason (30:33):
Chip Nellinger from Blue Reef Agri Marketing at
bluereef.ag online in Morton,Illinois. Your final word.
Chip Nellinger (30:40):
Yeah. It seems like there's a lot of pessimism
out there. So, I just remindeverybody like Jim said, there's
going to be some volatilityhere. There's probably going to
be things you know, outsidemarket related that we can't
even think about right now thatadd some volatility. So, don't
take your focus off thesemarkets.
I know input costs are high, andit feels like prices are in the
in the tank right now, butthere's gonna be some
(31:00):
opportunities ahead. You gottahave a plan, be ready to sell
when you get the opportunities.It could happen quick, but,
certainly don't stick your headin the sand because there will
be opportunities over the nextninety and hundred and twenty
days.
Todd Gleason (31:12):
Then Greg Johnson from TGM Total Grain Marketing
at the elevator right here inChampaign County, Illinois.
Greg Johnson (31:18):
It's not too soon to look ahead to the 2026 crop.
November soybean futures are$10.7 on the board. We would
love to have $10.7 for thisyear's crop. If we get anywhere
close to $11 remember thatBrazil is expected to produce
6,500,000,000, with a B, billionbushels of beans this coming
(31:39):
year. The U.
S. For reference is at4,300,000,000, so another
2,000,000,000 bushels more thanwhat we produce is what Brazil
is expected to produce. So, keepan eye on the November 2026
bean, futures.
Todd Gleason (31:55):
Commodity Week, of course, is a production of
Illinois Public Media. You maylisten to the whole of the
program anytime you'd like. Youcan do that on our website at
willag.org. That's willag.0rg.Our thanks go to our panelists
this week including JimMcCormick, Greg Johnson, and
Chip Nellinger.
I'm University of IllinoisExtension's Todd Gleeson.
This is the October 2 edition of Commodity
Week.
announce (00:08):
Todd Gleason services are made available to WILL by
University of IllinoisExtension.
Todd Gleason (00:13):
Welcome to Commodity Week. I am Todd
Gleason. Our panelists for theday include Jim McCormick. He's
at agmarket.net out ofBarrington, Illinois. Greg
Johnson joins us from Champaign,Illinois at TGM Total Grain
Marketing.
And Chip Nellinger is here fromBlue Reef Agrimarketing that's
bluereaf.ag, bluereaf.ag online.He is in Morton Illinois.
(00:36):
Commodity Week of course is aproduction of Illinois Public
Media. It's public radio for thefarming world online on demand
anytime you'd like to listen tous at willag.org, willag.0rg. I
think we have quite a bit totalk about this week, but let's
get a list of items from each ofyou that we might want to
(00:57):
discuss.
Jim McCormick from agmarket.net,we'll start with you. What's on
your list?
Jim McCormick (01:03):
I'd probably the two big talking points that we
probably need to talk to youabout is the, you know, the
China deal of the PresidentTrump's tweet earlier in the
week about trying to meet withXi in four weeks and then Scott
Betts' comment earlier this weekabout maybe a soybean buyout a
soybean bailout for the soybeanproducers here announced next
week. And we also probably needto talk about the ramifications
(01:25):
of the quarterly grain stockreport that was released earlier
in the week.
Todd Gleason (01:28):
Greg Johnson from TGM Total Grain Marketing,
what's on your mind as you'retaking a lot of crop in, I
suppose, at the elevator?
Greg Johnson (01:36):
Yeah. And and I I think that the yields that we're
getting probably need to bediscussed a little bit. And is
that general across the Midwest?Or is that just kind of isolated
to certain areas? What ingeneral are we hearing?
And then not only on the supplyside, but then the demand side,
(01:59):
what will we see as far asdemand to offset these big crops
when it comes to ethanolexports, for example, and or
soybean trade deal with China.So, we've got both the supply
side and the demand side to talkabout.
Todd Gleason (02:15):
Nothing, by the way, until we get the government
back to work and probablydelayed until they until we see
the supply and demand tables.That is from the World Ag Supply
and Demand Estimates. We'll getback to that in just a bit. Chip
Nellinger from Blue ReefAgrimarketing. What's on your
list?
Chip Nellinger (02:32):
Yeah. I agree with everything that's been so
far. I I think something that'skinda hitting my my radar screen
here just recently, the last dayor two. Are we starting to see
some money flow changes from thefunds now that we're into a new
quarter? You've seen some bigmoves in the metals, some
pressure in the livestockmarkets, and some strength in
(02:54):
the grains.
So are we seeing a little bit ofmoney flow change compared to
what we've been used to over thelast, you know, three or four
quarters in here.
Todd Gleason (03:02):
Well, let's pick up there. Why don't you talk to
me a little bit about that?Where do you see the money
changing hands at mostly, and isit flowing into or out of the
commodity markets?
Chip Nellinger (03:13):
Well, that's the question, Todd, and I don't know
if it's outside marketinfluences. I'm I'm not sure if
it's the government shutdown.Obviously, the, you know, the
comments and the the tweets andand comments from president
Trump about supporting soybeanfarmers might be supporting the
grain markets, but I justnoticed today, especially, you
know, the the metals markets,you know, pushing up into new
(03:36):
all time highs here recently.They're under some heavy selling
pressure. The cattle marketobviously isn't a 2.5 bull
market.
Looks like maybe some shine isoff of that. You know, the the
strength there and they've beenaggressive sellers there and
you've had some nice buyingacross the entire grain sector
here. So, don't know if it's newmoney coming into the commodity
(03:57):
markets necessarily. I think itmay just be the start of some
some shifting maybe from youknow assets or commodities that
they have a lot of profits inand maybe coming out of some of
these, you know, short grainpositions that they've got
profits in as well. Maybethey're just taking some money
off the table with theuncertainty of the government
(04:19):
shutdown and some geopoliticalrisks out there.
Todd Gleason (04:23):
Well, they could be taking money off the table,
Jim McCormick, and that wouldpush the market higher as they
were changing their positions,or they could be pushing money
into a safe haven. Sometimes thecommodity markets are considered
that. That does turn myattention to the trade deals
that president Trump is tryingto negotiate, particularly in
(04:45):
agriculture as it's related toChina. What do you think about
the prospects four weeks fromnow as they turn their attention
really to soybeans? Suppose manyother things I would think as
well when they meet.
Jim McCormick (05:00):
Well, I I think it's definitely gonna be a
talking point. I I am, Todd, I'ma little bit suspicious
anything's actually really gonnaget done. I I do think president
Trump is feeling a lot of heat,from his the farm based plain
and simple, especially there wasa you know, that that very
famous picture, I guess, youcould now say that Brooke
Rollins had sent a text over toScott Bessett complaining about
(05:23):
how the potential deal to helpbail out Argentina, then
Argentina came in there and firecelled a bunch of beans up to 40
cargoes of beans to to China. II think it kinda painted
president Trump into a into acorner where he felt like he had
to say something to calm themarket down a little bit or the
base down a little bit. But thereality is when you look at
this, Todd, he's talking aboutdoing that at the apex summit.
(05:46):
It was at the very October. Butif I'm the Chinese, I gotta be
honest. Why would you cut a dealbefore that? Because we have the
big supreme court ruling or notruling, but essentially
essentially case that's gonna beargued on November 5 that these
tariffs that president Trump hasput on, if they're even legal
and if he can even do that. Soif you're the Chinese, I would
(06:08):
argue they're probably gonnawait and see how that tariff
case plays out before theyreally make any other kind of
concessions to president Trump.
And I think that could happen toall these all these Asian
countries. I mean, there's a lotof hope that as he goes to the
APEC summit, he can lock downsome of these deals, but, you
know, are these countries gonnabe a little bit hesitant just to
wait to see if he actually hasthe power to do the deal that
(06:31):
he's actually doing? So we'llsee.
Todd Gleason (06:33):
Greg Johnson, if you've been following this along
and and some of the things thatBessent has said about the
potential of, a tariff soybeanbailout, relatively speaking,
might come on Tuesday of nextweek. Sometimes it sounds from
the administration as if well, Ishould say take this back. I
(06:55):
don't think that any time fromthe administration that it has
sounded as if they're reallywilling to go down this road
that, the president has said,and generally, if he he says it,
it it is something that it getsdone, that tariffs will tariff
taxes will be used to paysoybean producers. We'll see
(07:16):
whether they can actually pullthat off or not, I suppose. Then
Besant always sounds a littlehesitant as to how much that
might come that might come toproducers, and I'm just
wondering from each of yourperspectives what you're
thinking about that, Greg, andmaybe you should start.
Greg Johnson (07:35):
Yeah. I I think we need to keep in in mind how this
all started. You know, presidentTrump imposed tariffs on China
because he was unhappy withtheir fentanyl production and
lack of willingness to curbthat. So he put, you know,
trillions of dollars worth oftariffs on Chinese I mean, not
(07:57):
trillions, but that's what,China ships to us. You know,
everything that's basically inWalmart comes from China.
So, you know, the quote is, youknow, while this is important to
US agriculture, we're talkingbillions of dollars with a b.
But when we're talking about allthe goods that China ships to
us, we're talking abouttrillions of dollars with a T.
(08:17):
So China does have reason tocome to an agreement, but
obviously they want thosetariffs taken off or at least
reduced to something manageable.So I think that is the big key
we have to remember. I thinkChina would have no problem
buying soybeans from us,agreeing to buy soybeans from us
(08:38):
if the tariffs on theirproducts, get reduced or
eliminated.
So, you know, that's the bigpicture. And, you know, Trump in
the meantime can, you know, handout some of that, tariff money
to soybean producers, you know,no problem. But, you know, the
big picture is, will China takeoff the tariffs on U. S.
Soybeans?
(08:59):
And the answer is, in myopinion, yes, but not until The
U. S. Takes tariffs off of theproducts that China ships to us.
So it's all back in that courtof when do we take the tariffs
off of or at least reduce thetariffs on the Chinese product.
Todd Gleason (09:13):
If the Chinese impose a 20% tariff on US
soybeans, a 15% tariff on anycorn that they might and they
have not, either actuallyimported from The United States
Chip Nellinger, and it's alltied up with Ukraine Russia war
and crude oil coming out ofRussia as well because there's a
(09:35):
set of tariffs that thepresident could bring India into
this, but that the president hasimposed and has been watching.
So all these things, on theglobal stage are working, into
this, and I'm I'm just feel likeit might take way longer than
November to come to anyagreement. This would be the
(09:56):
fifth round of talks if Iremember what, mister Besant had
to say about these the set oftrade deals. Do you think they
can get it done?
Chip Nellinger (10:06):
I think they can get something done, but I agree
with you Todd. I think that'sway out into the future. It's
not an inconsequential, issuefor the farm community and
producers out there, But in thebig picture, I agree that the
soybean situation, the entirecrop of soybeans is a drop of
the bucket when you talk aboutall these interrelated you know
(10:30):
issues and the amountsthroughout the world global
economy. The other thing thatscares me and has for quite some
time, you know, in Trump's firstterm, easy to get a a deal there
that included beans becausewe're in the second year of a
Brazil drought coming off arecord production there. It
looks like they're set to, youknow, plant a record amount of
(10:52):
acres again and very quickly,you know, if you push this into
January, you're on the doorstepof what looks like could be
another big Brazilian bean cropand they're going to get their
supplies from Brazil anyway.
So, you know, I think it's anuphill battle. I don't think
it's impossible to see a deal,but, will it be soon enough to,
(11:15):
keep this rally going? I'm notquite so sure about that, but
certainly the comments earlierin the week did, a lot to, you
know, put a floor underneaththese markets, especially the
bean market.
Todd Gleason (11:27):
And Jim McCormick, to stay with this topic for just
a bet, the farm doc team, theagricultural economist here on
the Urbana Champaign campus veryearly in, I think, this summer
suggested that if there wereever a bailout for, producers
like last time around, thatgiven prices and what the
(11:48):
expectations were over the longrun, that this would simply
serve to hold up the price ofinputs and might not be the best
of ideas in general across theboard, putting pressure on a
marketplace that might notreally unless there is something
different than an agreed toamount, that tariffs actually
(12:11):
come off and trade resumes insome other form, just might not
be the best option for farmersin America.
Jim McCormick (12:19):
Well, I think that is kind of the common
consensus. I mean, if money doesflow now, how the money is gonna
flow, Todd, I think how yougotta you know, we got a
government shutdown. There is nomoney right now to bail the
farmer out per se. You gottaremember the first go around,
they use the CCC corpse money toessentially fund, you know, that
first round of Trump Trump moneyin, you know, 2018 or so. That
(12:44):
has no money in it right now.
So this is what we need to bewatching as we renegotiate to
just get to the, especially theeconomy open or the government
open, and then maybe the longterm funding, that's gonna be a
key of what's out there becausethe Democrats are gonna have a
say on how much money does gointo the CCC. So how much money
does go in is still up fordebate. But I agree with the
(13:07):
economists that for the mostpart, this money is going to do
just like we had an injection ofmoney last year in the late
wintertime. Most of that moneywent right into the farmer's
bank and right from the bank andwent right back out to C dealers
and the lenders. And I'mguessing that's what's gonna
happen again when it's all saidand done.
And it's just in general, thecost inflation is right there.
(13:31):
And when you push money into thesystem, it's just like the
stimulus checks that we gavepeople during COVID. When you
just hand people money, you'reessentially encouraging
inflation instead of pullingmoney out of the system, which
is really what we need to doright now. The m two money
supply is at all time highs, andthat's part of the problem we're
seeing right now.
Todd Gleason (13:49):
These are all outside market influences. Let's
turn our attention to thefundamentals of the marketplace.
We'll start with the quarterlystocks report. And Jim, I'll
stay with you because this wason your list. Can you tell me
about that report and how youviewed it?
Jim McCormick (14:03):
Alright. Now, you know, when you looked at it, the
core number was a big they diddid that slight revision of last
year's crop, raised it by25,000,000. I think the big the
big thing I'm looking at rightnow was that revision on the
residual, the feed and residualnumber dropping it dramatically,
what, around 170, 180,000,000bushels. Because when you look
at that feed and residual forthe old crop, Todd, compared to
(14:25):
the current estimate of the newcrop, obviously, we haven't got
the new crop balance sheet. It'sabout a 600,000,000 bushel
increase from one year to thenext.
And in my mind, it's just it'simpossible that we're going to
feed 600,000,000 more bushels ofcorn to livestock this upcoming
year because there's lesslivestock to feed. And I've
(14:45):
always thought that feedingresidual number was too high.
Remember Todd, they cut thefeeding residual number back in
January of a year ago and nevertouched it for the next nine
months. Yet back in January, wedid not know that that border
was going be closed for ninemonths. So there's no way they
could have accounted for it.
So the adjustment they made, Ibelieve this week was right. But
what happens is they're going toput that bigger carrying forward
(15:08):
into the new crop. They're goingto have to adjust down the feed
number eventually. And I'm inthe camp with a lot of people.
This corn crop is probably goingto shrink back from the current
yield estimates.
But I fear that as they shrinkback the yield due to the
disease and dryness issues, it'sjust going to be offset with
lowering of the feed number,raising of the carry in, and
we're still going to be hangingaround a 2,000,000,000 carryout,
(15:30):
which just unfortunately is nota bullish number.
Todd Gleason (15:32):
Okay. Chip Nellinger, when you put those
numbers together, it really wasthe core number that was Barry's
number not so much. It was notthat different than most I think
had expected. Can you tell mehow you viewed it and what you
think that means going forward?
Chip Nellinger (15:46):
Yeah. I I think Jim's spot on. The the question
is how fast do they drop demandgoing forward? It's usually not
you know, a one off. Usually, ittakes some several reports to
get that done.
I thought it was a bit of adisservice in August anyway to
raise demand by six fifty somemillion and then another
(16:07):
100,000,000 in September justbecause of this fact that when
the crop shrinks, then, theyhave you know, the dial to dial
back demand and you know, kindof take away some potential
opportunities. So, I I agreewith Jim. I I I think at the end
of the day, it's it's going tobe hard to have a wildly bullish
(16:28):
number but yet, you know, ourexports are good. The the demand
side is is still holding inthere. It looks like and and I
think that people maybe themarket maybe a little in the end
result at maybe how low thesecorn yields can go.
I mean, this disease and and thedryness and and tar spot and
(16:50):
southern rust. It it decimated alot of yield this year and so,
you know, to me, it's just thethe combination of how fast they
drop yield versus how fast theydrop demand. Still think it
could mean we could at least seea period of time where the funds
get out of their shorts andcorn, maybe get flatter a little
bit net long but it probablydoesn't mean we're gonna see
(17:11):
$556 corn this year.
Todd Gleason (17:14):
So, Greg Johnson, because it is highly unlikely
that the USDA, even if congresswere to come back and the
federal government were to befunded, we'll be releasing its
monthly report on Thursday ofnext week. That's when it's
actually due for an update ofthe crop production and the
world ag supply and demandestimates. I'm going to ask you
(17:35):
to be our USDA day today. Youwanted to talk about yields and
demand both. Let's start withthe demand side, and then you
can build in the yields, please.
Greg Johnson (17:45):
The the plus side to the demand equation is that
the ethanol exports continue tobe very strong. So you could
make an argument that thatnumber will stay steady. But I
agree with everybody else. Thefeed and residual number needs
to come down. The only reason itwent up was so that they could
lower it later on when theyraise the yield, they raise the
(18:07):
demand so that they don't getthe carryout too wildly bearish.
But now that I assume yield isgoing to come down a couple of
bushels based on everything thatChip said, the disease pressure
in Iowa and some other statesthat got crops planted late and
were too wet early and too drylate. But still the bottom line
is you can lower the yield bytwo, three, four bushels. But if
(18:30):
you lower the demand side ofthat equation, you're still
looking at a 2,000,000,000bushel carryout. So the bottom
line is the upside potential islimited on the futures market.
Now if you've got bins, you canlock in that carry and you can
lock in a pretty good price forMarch, April, May, June, July.
But if you have to haul it tothe elevator and pay storage
(18:51):
charges,
Jim McCormick (18:53):
you're
Greg Johnson (18:53):
going to get most of that back. So there's really
not a good way to take advantageof it unless you have your own
bins. And I am been cautioningfarmers to be realistic. A
2,000,000,000 bushel carryout,we're probably going to plant
less corn next year, but with a2,000,000,000 bushel carryout,
we can get by with less corn.And the last thing is this new
(19:14):
world screwworm is moving closerand closer to The United States,
and it's affecting the Mexicancattle crop right now, which
reduces demand and what happensif it would happen to make it
into The U.
S. So more of a black swan typethinking ahead, but you know, we
we don't want to get too carriedaway. I mean, I do agree that
the yield is too high, but wecome down two or three bushels.
(19:37):
But, bottom line is the demandis going to come down a little
bit too, and and so the upsideis probably limited on price.
Todd Gleason (19:43):
Tim McCormick, are you getting enough objective
yield data that you can make agood guess, that we're off two
bushels from where we are? Thatwould still be a record yield,
by the way, but and and I don'tknow other producers, what
they're thinking about the sizeof this crop. So fundamentally
what are you hearing aboutyields across the Midwest and
(20:04):
where there are good yields andwhere there are substantially
better than what they expectedkind of yields places or, you
know, the kinds of yields maybethat they were expecting early
in the year, and where there aresome holes in, our yield maps.
Jim McCormick (20:20):
I mean, there's definitely coming off. I mean, I
talked to a client of mine justoutside of Indianapolis today
and he said, look, there wasareas up there that they thought
late July, early August thatcorn could do two forty to two
fifty. It's coming in two twentyto two thirty. Is he
disappointed? Yeah.
Because it wasn't two forty totwo fifty, but two twenty is
(20:41):
still a pretty solid crop. And Ithink that's kinda where if
you're my guess for a yield, Iwould say it's gonna be
somewhere right around oneeighty three, maybe one eighty
four. I'm not in the camp thatit's gonna be below one eighty,
Todd. It's just the statisticsof it all. If you take the
current yield that thegovernment's working with and
you lower the state of Iowa,Indiana, Illinois, Ohio,
(21:04):
Minnesota, South Dakota, NorthDakota, Nebraska, and Kansas, If
you lowered every one of thosestates current estimate by 10
bushels, your national yieldwould still only drop to 179.2
and we're not gonna drop allthose states 10 bushels.
Some are gonna go down, believe,but some are maybe drop a little
bit. So I'm in that right aroundthat 183 level. And
unfortunately at 183 is1,500,000,000 more bushels
(21:27):
bigger than a year ago. That isa lot of corn that we've got to
deal with. And on top of it, thebest estimate we have, Scott,
right now, now, Todd, is maybe15% of the corn crops been sold
and 15% of the bean crop hasbeen sold.
That's it. So there's a lot ofcorn, a lot of beans have got to
be harvested yet that's still upto be marketed.
Todd Gleason (21:47):
Okay, so for each of you, and Chip Nellinger, I'm
going to start with you. This isprobably not an easy question to
answer, but in the last time wehad a federal government
shutdown, it lasted thirty fivedays, I believe. Well, it should
have gone over two, WASDEreports. I think it went over
October and November, honestly,if I remember correctly. October
(22:10):
tends to be a bad month for thefinancial markets, so that might
be something you would want toconsider.
But, the marketplace was lost. Ido recall that and without
direction. So here's thequestion. Where do you think the
market is trading today, anddoes that float point going
(22:32):
through the month of October orthrough the next thirty days,
let's call it that, does thatoffer an opportunity or not for
producers to make cash sales ora sale of some sort for corn and
or soybeans given what you thinkeventually USDA, once we do have
(22:54):
a report, will show?
Chip Nellinger (22:56):
Yeah. That is a that there's a lot to unpack
with that question, Todd. I I Ido think it's a problem that we
don't get the October report.It's a real problem if we don't
get the November report becausethen the the next time they do
you know, objective yields isJanuary and so, I do think that
the market's trading right nowone eighty fiveish, maybe one
(23:21):
eighty six. I think in the endresult, I I've done the numbers.
I disagree a little bit withJim. I I I do think maybe that
we're in that one seventy nine,one eighty. Just maybe maybe not
even as good as a year ago orjust slightly better than a year
ago. Will they ever say that?And I'm not saying they would
(23:41):
have said that on the Octobercrop report either.
You know, but by January, Iwouldn't be surprised if we
don't get it down really closeor slightly under one eighty. I
I still think it's the rangethough. You know, regardless of
whether there's governmentshutdowns or crop reports, if
you do see rallies up to the topend of the range, you know, back
(24:03):
towards $4.30 or above inDecember corn, higher if you're
you know, have on farm storageand carry. I think you gotta be
a seller. Think in the samebreath, don't get you know, too
worked up if we get down towardsthe bottom end of the range
between 4 and $4.10.
I think there's good value downthere. Beans, same thing because
(24:23):
of all the uncertainty we talkedabout earlier with the you know,
the the China US trade deal willhappen, won't it happen? Does it
take too long to happen? Thatyou get pushes back north of of
$10.50 on November beans and andthen, you know, obviously better
than that with the carry in themarket. Yeah, you have to be a
willing seller and you know, I Ithink we're still in that range
(24:44):
and you're right withoutgovernment reports particularly
the October crop report is suchan important report every year
anyway and to not have it thisyear with all the uncertainty
and questions about yield isreally gonna leave the market,
you know, clamoring forinformation and in a big black
hole.
Todd Gleason (25:03):
Okay, Greg. I'll pick up with you. I have an
information blackout. Whatopportunities does does that
bring, and what issues does itbring? Same question that Chip
just answered.
Greg Johnson (25:16):
Well, the good news is lack of information
should translate to volatility.We should see higher highs, but
we could see lower lows as well.So if the perception is
negative, we could go lower thanwhat you might think otherwise.
On the flip side, as Chip said,maybe there's people out there
talking 179, 180. Let's let themtalk that up and if they can,
(25:39):
you know, translate that intobuying into the market, that's
going to give farmers anopportunity to get corn sold at
better prices than if thegovernment would be in operation
and come out and say, no, it's183, 184.
So I think there could be somevolatility here, but you know,
you have to, you know, pick yourpoints and to me, 2,000,000,000
bushel carryout limits theupside. You know, we're at 4 20
(26:03):
December corn, maybe we can getto $4.35 I don't think we need
to go much higher than that. Thecarry will do most of the work
beyond that. And in soybeanswe're at $10.25 Could we go to
$10.5 Yes, but I don't see $11beans in equation. So this
uncertainty, this governmentshutdown might give us a chance
(26:25):
to sell crops a little bitbetter than if the government
was open.
And I think we need to takeadvantage of that.
Jim McCormick (26:31):
I'm pretty much close to agreeing with Chip. I
mean, I was my accountantclients, hey, you got the long
term trend line off yourFebruary high and your April
high. That converges pretty muchright at the two hundred day
moving average around $4.39 Youget up near that level. These
corn up near $4.30, you know,$4.35, $4.39, sell it or sell
the carry definitely if you'regonna use your bins. I would
(26:53):
agree you get down near $4.
You probably don't get too toonervous about it. I think you
try to maybe use that as anopportunity to reown it. I do
wanna make one stat that justbugs me a little bit. I mean,
recent history is we bottomedthe market early just like we
did last year in August. Webottomed it in August this year.
Our our partners over at JSA dida study and they're looking at
(27:17):
it and they said, historically,when you produce more corn than
you consume the year beforewhere supply is up 103% or above
the previous year's demand, likeit looks like it could be this
year, 80% of the time, eight outof 10 years when that's
happened, you did not put thefall low in until late October
into the November timeframe. Sothere is a historical bias that
(27:40):
in these big crop years, wedon't hit that absolute fall low
late in the year. I hope thatdoesn't happen, but there is a
little history that says maybethat's what happens as we try to
find a home for the spinal chunkof grain.
Todd Gleason (27:52):
And I will turn my attention back to you, Greg
Johnson, in the elevator system.We have talked a lot about basis
coming into this fall and whatthe potential issues were given
the size of the crop that wethought was coming as late as
August, particularly in theWestern Corn Belt. I see that at
(28:18):
least at my grain elevator,basis has tightened up by 2¢ in
the last couple of days. What isbasis telling you about what's
happening out west?
Greg Johnson (28:30):
Basis is telling us that the farmers are being
stubborn and not moving thegrain into the marketplace. They
don't like the flat price and sothey're trying to sock away
everything that they can, whichin the short run is supportive
to the basis. But is itsupportive to the futures price?
No, that's a question of supplyand demand. So the fact that the
basis is getting better justtells me that farmers aren't
(28:53):
selling corn.
They don't like to sell at theseprices and they'd like more.
Maybe they'll get another $0.10$05 but that's probably about
it. And they probably shouldknow, reward the market if we do
go up another $10.15 cents fromthese levels.
Todd Gleason (29:09):
I know that, elevators have been hunting for
corn and calling. Right? So witha you're you're hauling in,
we'll we'll give you this muchabove. We'll give you a quick
shipment premium of some sort.And I don't know whether I wanna
call it a quick shipment, butit's because farm because
farmers simply aren't sellingtheir corn, and you're telling
(29:29):
me they should.
Greg Johnson (29:30):
They should here in another $00 $05 I mean, we've
rallied off the $3.9 D slow,we're up $0.35 off of that low.
It's still not a great price,but it's $0.35 better than where
we were on that August 12 cropreport. If we go up another
$0.15 that's $0.50 off theAugust low. At some point, you
(29:50):
have to ask yourself, how muchis enough? And, you know, at
that point, there's probablyjust as much, if not more,
downside potential than there isupside potential.
Todd Gleason (29:58):
Alright. Let's get a final word from each of you.
Jim McCormick at agmarket.net inBarrington, Illinois. What's
your final word for the day?
Jim McCormick (30:07):
My final word for the day is, you know, we're
gonna be flying blind a littlebit here until the government
reopens. It probably, as thegroup said, is gonna provide
some volatility. If we do getthat up for momentum,
potentially do not be afraid tolock it in. The reality is even
if this crop gets smaller, thedemand's probably gonna be
adjusted lower. A 2,000,000,000carryout does not argue bullish
corn prices back up to five.
(30:28):
You gotta be realistic. Samething with beans. Until we get a
China trade deal, beans aregonna struggle as well.
Todd Gleason (30:33):
Chip Nellinger from Blue Reef Agri Marketing at
bluereef.ag online in Morton,Illinois. Your final word.
Chip Nellinger (30:40):
Yeah. It seems like there's a lot of pessimism
out there. So, I just remindeverybody like Jim said, there's
going to be some volatilityhere. There's probably going to
be things you know, outsidemarket related that we can't
even think about right now thatadd some volatility. So, don't
take your focus off thesemarkets.
I know input costs are high, andit feels like prices are in the
in the tank right now, butthere's gonna be some
(31:00):
opportunities ahead. You gottahave a plan, be ready to sell
when you get the opportunities.It could happen quick, but,
certainly don't stick your headin the sand because there will
be opportunities over the nextninety and hundred and twenty
days.
Todd Gleason (31:12):
Then Greg Johnson from TGM Total Grain Marketing
at the elevator right here inChampaign County, Illinois.
Greg Johnson (31:18):
It's not too soon to look ahead to the 2026 crop.
November soybean futures are$10.7 on the board. We would
love to have $10.7 for thisyear's crop. If we get anywhere
close to $11 remember thatBrazil is expected to produce
6,500,000,000, with a B, billionbushels of beans this coming
(31:39):
year. The U.
S. For reference is at4,300,000,000, so another
2,000,000,000 bushels more thanwhat we produce is what Brazil
is expected to produce. So, keepan eye on the November 2026
bean, futures.
Todd Gleason (31:55):
Commodity Week, of course, is a production of
Illinois Public Media. You maylisten to the whole of the
program anytime you'd like. Youcan do that on our website at
willag.org. That's willag.0rg.Our thanks go to our panelists
this week including JimMcCormick, Greg Johnson, and
Chip Nellinger.
I'm University of IllinoisExtension's Todd Gleeson.
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