October 16, 2025 • 37 mins
Panelists
- Aaron Curtis, MID-CO.com
- Arlan Suderman, StoneX.com
- John Zanker, RMCommodities.com
Mark as Played
Transcript
Episode Transcript
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announce (00:00):
Todd Gleason services are made available to WILL by
University of IllinoisExtension. This is the October
16 edition of Commodity
Todd Gleason (00:08):
Week. I'm Illinois Extension's Todd Gleason. Thank
you for being with us today.Panelists include Aaron Curtis
of Midco.
He is in Bloomington, Normal,Illinois. Arlen Suderman joins
us from Stonax in Kansas City,Missouri. And John Zanker is
here from Risk ManagementCommodities. It's a division of
Zaner Ag Hedge. He's out ofLafayette, Indiana.
(00:29):
Commodity week, of course, aproduction of Illinois public
media. You can find and listento the whole of the program
anytime you'd like atwillag.0rg. And there now,
you'll find a way to registerfor the farm assets and the
Illinois Farm Economic Summitconferences. Both are listed
there. They are December 12 forthe Farm Assets Conference in
(00:51):
Bloomington at the AGRA Center.
You'll find all kinds of detailsabout that event. It's day long.
And then the Illinois FarmEconomic Summit's with the ag
economist, and they'll be at theFarm Assets Conference too, but
a shorter version on theIllinois Farm Economic Summit's
half day events that will takeplace the following week on the
fifteenth, the sixteenth, andseventeenth in DeKalb, Peoria,
(01:14):
and Mount Vernon. And you areallowed to come and ask
questions of the ag economist atthe U of I either event. All the
details for both are online atwillag.org.
Get yourself registered today.The Anchor Center is smaller
venue, so there is a limitednumber of seats. So get yourself
registered, and we'll see you onthe December 12 or the following
(01:38):
week. And one of those,actually, I think you probably
should go to both. Now let'sturn our attention to the
marketplace and our paneliststoday, and we'll get a list of
items that maybe we shoulddiscuss.
Aaron Curtis, what's been onyour mind this week?
Aaron Curtis (01:51):
Well, we had a nice, little three day bounce
here on corn. We've been inlargely a twenty cent range in
corn for the last six weeks. SoI guess the question is, you
know, every time we kinda getback up in this mid to high
twenties on Dees corn, we kindarun out of steam. Can we, do
anything with it this timearound or not?
Todd Gleason (02:09):
That is a good question, Arlen Suderman. I
don't want you to answer thatyet, but if you could give me a
list of items that maybe you'dlike to talk about today too.
Arlan Suderman (02:18):
Rare earth minerals and magnets, something
a lot of people don'tunderstand, but they are
changing the dynamics of thenegotiations now that have
implications for soybeans.
Todd Gleason (02:27):
And John Zanker at RMC, your list.
John Zanker (02:31):
Well I'll stick on that China thing but point out
that here we are into the secondweek in October no Chinese sales
on the books. Probably not goingto be many Chinese sales on the
books for several weeks AndOctober being October, November,
those two big months, we need tosee something happen or the show
(02:53):
is gonna be over here prettysoon.
Todd Gleason (02:54):
Well, this show is going to go on for a little bit,
so let's continue. I want topick up, Arlen, with the
question that Aaron Curtis hadafter a three day bounce and
pushing above moving averages,particularly the hundred day in
the December corn on Thursday.Can it continue to make inroads
(03:15):
to the higher side? And if so,why would that be the case?
Arlan Suderman (03:18):
Well, we presume that we're getting into the
second half of harvest now. Andtypically, we oftentimes will
put in the harvest, not aharvest load necessarily. I
think we may have already putthat in back in August, but we
tend to put in a low rightaround the midpoint as we find
storage places for the crop.We're able to put it away and
(03:40):
farmers don't like the price. Sothey hold on, particularly with
the promise of money coming fromthe administration and maybe a
second payment coming fromCongress tend to hang on.
What I'm watching has been thenational average cash price this
year. It is run almost identicalto a year ago. It's been
following the same pattern eversince the September 1. And so as
(04:03):
we look at it, this was the timea year ago when it started to
slowly climb higher. Thatdoesn't mean I'm bullish about
corn prices by any means, butdemand is strong, and it takes
several 100,000,000 bushels perweek to keep that pipeline
flowing.
And just that draw on a weeklybasis can start to firm prices
(04:24):
up and start to pull us higher.And I think that possibility
exists here for corn because ofstrong demand. And even when you
look on a global side, ourglobal stocks to use ratio has
been trending lower for the lastdecade and continuing to do so.
And I think that works in ourfavor as well.
Todd Gleason (04:43):
Aaron Curtis, do you have an answer for your own
question?
Aaron Curtis (04:46):
Yeah. I think, I agree with Arlen that typically
when we get past that 50, Imean, you know, we're probably
60% done here in CentralIllinois. So obviously kind of
over that halfway point.Question, I guess probably is we
know that quite a bit of spacewas used this year for beans
just because of the basissituation and yields on beans
(05:08):
held in there relatively wellconsidering expectations, being
that it was extremely dry hereat the end of the summer in a
lot of parts of the Midwest. So,do we have a little bit of a
bean space that's capitalizedcorn space as we get a little
further into harvest?
We're gonna know that here inthe next week to ten days, a
little bit of a weather eventcoming in this weekend, but
(05:28):
after that, it looks prettyclear again. So it looks like
we're gonna see quite a bit ofharvest done on corn here in the
next ten days. So we'll find outif we need to move some more
corn and or put it into someother space, be it the ground or
as you say, but I think we alsocontinue to watch this $4 cash
(05:48):
mark on corn. So we'reapproaching that area or if not
exceeded in some parts of theMidwest. So we know the farmer
went into harvest extremelyundersold.
So we've been seeing that $4cash mark let loose us a bushels
from the producer standpoint aswell. So we'll see, we're able
(06:08):
to trade above the one hundredday moving average or right at
it today. We got the two hundredday moving average setting up
there around $4.38. We've gotthis little gap area from the
summer back there around $4.32and three quarters. So, we get
up into that $4.30 mark from atechnical standpoint, we've got
some junk to kind of get throughin order to get this thing
(06:29):
going.
But I agree with Arlen. The thedemand base, for corn is strong,
and I think, corn's got a prettydecent floor underneath it.
Todd Gleason (06:35):
John Zanker, do you have a dissenting view at
all?
John Zanker (06:38):
Not at all. Agree with both Arlen and Aaron on
that. I think we can move thishigher due to demand and that
the biggest question maybe wehave is what's Iowa going to do
with their corn yield? We justcontinue to hear all kinds of
yields. And, you know, I'mpersonally as confused right now
(06:59):
about the state of Iowa as I'vebeen on about any state in the
last forty four years.
So, you know, as soon as we geta little better direction on
what's going on there, we'llhave a little bit better idea on
how high we can take this. Butwith the acreage increase, we
can take the national yield downto 172 and it's still the
(07:21):
largest production in history.So, we have a lot of corn and
we're not going to 172, but wecan certainly go to 180, 181,
182. While that might soundbullish, we need to remember we
picked up $195,000,000 on thestocks report and the USDA is
probably at least $300,000,000high on feed. So, we we will
(07:43):
need to use these rallies toget, some additional sales on, I
believe in the coming weeks.
Todd Gleason (07:49):
Well, that brings me back to you, Aaron, and I had
a couple of questions about somethings that you mentioned. So
the idea that storage, might betight, I think, is what you're
telling me for the second half.What impact does that have on
basis? And then for those whoare delivering across the LL
across the grain scale andhaving to make a decision within
(08:09):
a few days, to as to whetherthey need to whether they want
to sell it or to store it, howdo they make that decision? What
should they be thinking about asit's related to the in charge,
and the price that they'relooking at on your spot bids?
Aaron Curtis (08:28):
Yeah. So the question is, you know, what does
it cost you to get to January orMarch or whatever that period of
time is? You know, what's yourstorage cost? You know, and what
is your expectation? I thinksome of it in the the pricing
that we've seen, Todd, is justthe expectation is maybe there's
not a lot of upside in thismarket, especially if the trade
(08:49):
war continues.
So that's been influencing alittle bit of sales. I think
it's probably no secret, right?That there are some aspects of
the farm economy that aregetting tight, obviously, right?
So farmers need some money insome instances, margins are
tight. So that's influencedsales.
And like I said, we went in with5% to 10% of the corn crop and
(09:12):
soybean crop bought. So just toget up to average levels, for
say 30%, 40 average across thescale, that's tend to going to
show a bigger percentage maybeof normal being sold across the
sale. So $10 cash beans whenwe've seen those in some
instances, mostly early on inbean harvest and $4 cash corn
(09:34):
have been magic numbers, to buysome grain. So the combination
of beating some money and justthe anticipation that maybe this
market doesn't have a lot ofupside to it, have increased
some farmer selling across thescale.
Todd Gleason (09:48):
Arlen Suderman, I'd like you to follow-up on
these thoughts, and to put intosome perspective, Frank Olson,
agricultural economist, NorthDakota State University, and I
have had conversations in thepast thinking about what does
the the the in charge mean?What's that cost? What's the
carrying charge at home in thebin? And he says that everybody
(10:10):
that's in the industry does areally good job of of figuring
out what the interest of thecarrying charge might be to get
from month to month to month.And to be honest, from his
perspective, it costs the sameat home in the bin too nearly or
probably does.
So how do you and most producerswon't think of it that way, but
it really is that kind of cost,I think. So how do you put it
(10:32):
into perspective for them?
Arlan Suderman (10:34):
Yeah. It really is. And, you know, we've been
hearing about some free DP, butwith drop charges as well, and
that's just another way of theelevator capturing the carry
that it's gonna gonna put atrisk in order to do so. So when
you look at the carry that's inthe market, what opportunities
there may be, you look at thebasis improvement, Stororage
(10:58):
costs and d particularly today'shigher interest rate.
Multiplying that out times thevalue of that grain versus what
you could get.
Nobody wants to accept weekbasis. Because you can't ever
recapture that. But if you canget some decent basis, once you
look at that storage cost andyou look at the carrying charges
(11:18):
that are there, you might beable to do just as well get
unloading it and being able tobuy a call option or something
and re owning it in that way orsome type of derivative strategy
for re ownership and then nothaving to worry about the
downside risk quite the same andbe able to move that grain if
(11:38):
you're having storage problemsor something like that. The main
problem right now is but many ofthem are still weaker than what
(11:58):
the farmer would rather have.
Todd Gleason (12:00):
John Zanker, I want you to follow-up, but
Aaron, I'm going put you on thespot and make sure I'm correct.
You did tell me that you werelooking forward to the second
half and that basis could comeunder pressure from just the
amount of storage that has beentaken up by soybeans in places.
Aaron Curtis (12:16):
Yeah, I think that's still the question,
right? It's more of a question.Are we going to see some spots,
right, that have a littlechallenge putting the crop away,
right? So far, know, corn basishas been relatively steady here
over the last few days. We'veseen some improvement in soybean
basis now that that harvest isrelatively wrapped up, but I
(12:37):
think it's more of a question,Todd, are we going to see some
continued, we could see somecontinued weakness on corn basis
depending how challenging thislast, 30% of the corn harvest,
is to put away.
Todd Gleason (12:51):
So, John, what are you telling producers that are
calling and asking you what todo?
John Zanker (12:55):
Well, I just had a call from a, one of my North
Carolina customers and, youknow, what do we need to do with
the rest of this corn? He has apretty decent corn basis out
there and, you know, we've, hey,let's, I'm okay rolling it. I do
expect a little bit more push inthis board. But we have to be
really careful if we go back to,the year before this one last
(13:18):
year, you know, we, we, we had anightmare at the end of the
summer And we're in the middleof the summer into the end of
summer. Having role basis in abig carry market, DP was just a
nightmare.
So we need to be careful withall those things. And you know,
at some point, but let's put themoney in the bank. We can do
(13:43):
some forward pricing, pick upthe carry. And, you know, if
you're coming off the farm here,you know, I I'm okay with the
short term basis just with theidea that, you know, this market
might have some pop in andbeans. I'd be very, very, very
careful there.
And, you know, there could be abetter strategy just looking at,
(14:06):
taking the price. If you want toreown in in the options market,
there'll be some opportunitiesthere.
Todd Gleason (14:11):
I wanna stay with corn for just a moment, Arlen.
What are you hearing on theintelligence from what from Iowa
as to the impact that SouthernRust has had. And I know there
are places clearly that thereare issues. The question is, is
that wide enough spread toreally make a difference or not?
And then here in Illinois, Ithink maybe the corn is slightly
(14:35):
better than they expected.
Certainly the soybeans were.
Arlan Suderman (14:38):
Yeah, I definitely agree with you on
soybeans and to some extent cornas well. A tremendous amount of
variability. We get daily yieldreports in here and I was just
looking over those yieldresults. And what I see the
number of times a farmer willreport, okay, I had these fields
across the road from each otherplanted at the same time. I
sprayed the one, I didn't spraythe other, or maybe I sprayed
(15:01):
the one twice and I only sprayedthe other one once.
And it's between twenty andseventy bushel per acre
difference in yield. A lot ofvariability in that, but 70
bushel I've seen several timesin the yield difference when no
treatment versus one or twotreatments. So I had a big
(15:21):
impact on yield. So what doesthat do to state average yield
with that kind of variability?You would think that it probably
proves a drag to it.
And I I do think that that'sprobabably true, particularly
for I Iowow. We'll see some dragin that yield. But let's keep in
mind, they're seeing recordyields in the Dakotas and parts
in Nebraska as well. And even onsoybeans or one farmer there
(15:45):
indicated that his soybean yieldis gonna be 20 bushels over his
previous farm record.
Todd Gleason (15:51):
Just to lay some kudos out to the land grant
plant pathologist in early Julywhen this first came in, they
said this is a problem. It is ahuge issue late in the year, and
you are likely that you're goingto need to spray. They had that
listed. They said it over andover and again. We had it on the
(16:12):
air many times, but I don't knowhow widespread.
It's hard to spend that muchmoney, I suppose, when when the
price of porn was so low, tryingto get there. And, really, it
was about scouting and whetherit was in the field or not as
much as anything else. Okay. SoI do wanna take up some other
things. John Zanker, let's startwith China and begin on the
(16:35):
soybean side.
No sales at this time. PresidentTrump and president Xi having a
spat in the last week oversomething that seemed to be in
place already, of course, TheUnited States. And we'll get to
the rare earths in just aminute. But in The United
States, there there was alreadya push on to do port charges.
(16:59):
The Chinese said, you know what?
We're gonna do port charges too.Things spiraled out of control
for a moment. How concerned areyou, I suppose, about trade
deals in general? And I don'tknow. Maybe we everybody can go
with a yes or a no on this tobegin with.
Will we sell soybeans in thiscalendar year to China still or
(17:21):
to any great amount? Andeverybody says, yeah. No. There
were no answers. So we're gonnago we're gonna go with no no to
great any great amount on thatone.
Okay. So, now, John, what whatwhat is it that you has you
concerned, and how concerned areyou as it's related to trade?
John Zanker (17:41):
Off the charts concerned, to be honest. You
know, Arlen, you've been talkingabout this since February, and,
I've been talking to mycustomers about it since
February, and we've, you know,we've we've been hedging since
February. And not just from atrade perspective, but in
(18:02):
February, we knew we were goingto have a huge South American
crop, and it turned out thatway. And then as the trade war
drug on, we saw China buying ahuge amount of beans over and
above normal in May, June, July,August, even September. I
believe Stone has, they'reestimating, Chinese stocks
(18:26):
reserves at 18,000,000 tonsabove what we've seen on average
here in the last few years.
They started building thosestocks even a year ago. So
they've been preparing for thismoment. And, if you look back at
last year, I believe October,November, seven fourteen
million, seven fifteen millionbushels, we exported 62% of
(18:48):
those went to China. That's fourforty three million bushels, 24%
of the yearly total. Therearen't going to be any being
shipped to China in October.
Can something get done at theend of the month to, get some
boats moving in November? Idon't that's a real tight
schedule. So I think the best wecan hope for is maybe some kind
(19:09):
of deal that might, let Chinastart looking at rebuilding the
reserves that they're going touse up or they're going to use,
not use up certainly, but use inOctober, November. And the
Chinese government can come inand buy US bushels without any
tariffs. So I think that therecould be some beans moved to
(19:31):
China in December and January.
But again, the two big months,October, November. A year ago,
starting on this date, thiscoming week, this week, I
believe we went to 97, 95, like87, 85, 75. I mean, those are
(19:55):
the kind of numbers we saw totalbean shipments. This year, we
had 36 here this last week. Ithink 40,000,040 to 45,000,000
tops without China.
So you're going to be talkingabout 30,000,000, 40,000,000,
50,000,000 bushel deficits eachweek. And we just got decided we
(20:16):
got excited about a crush reportthat came in 11,000,000 bushels
over expectations. So we have aproblem. It needs to be fixed,
or, we're in we're in for somerough times this summer if we
don't see it or, excuse me, thiswinter, if we don't see a
problem, with the crop in SouthAmerica.
Todd Gleason (20:34):
Aaron Curtis, you agree? Rough times this winter?
Aaron Curtis (20:38):
Yeah. I think definitely along the river. I've
obviously, we've seen someimprovement in, basis levels
from the processor side. Johnmentioned the NOPA crush numbers
yesterday. You know, this year,expected the North and South
Dakota to crush almost 40% oftheir bean production.
So that's a little brighter spotthan it was say in 2018 when it
(20:59):
was mostly an export market,obviously not much business
going off the PNW. So thosebeans are having to find
alternative homes. But from hereEast, Illinois East, we've seen
basis levels on beans slowlystarting to continue to improve
as the crusher reaches out forsome more soybean supply. But I
agree with John that thatwindow, that these Jan window is
(21:22):
really a limited opportunityright now for China to
participate. We've seen a lot ofbeans obviously from Brazil,
Argentina's export change filledin a lot of the gaps that China
still had for November.
So that window continues toshrink and Brazil's off to a
halfway decent start on plantingand they're going to have some
(21:43):
beans at least harvested inJanuary. Most of those are
likely goes domestically, butwe're talking limited window
past last half Feb into Marchthe way it looks today. So, I'm
still optimistic that we getsomething done. Todd, it just
doesn't sound like it's gonna bea large volume. The bright spot
though, is if you look atsoybean sales to other
(22:05):
destinations outside of China, Ithink we're up 67%.
So there have been other marketsthat we've been utilizing,
obviously, it doesn't make upfor China, but it does help
soften the blow a little bit.
Todd Gleason (22:18):
Arlen, when the two presidents meet at the Asian
Economic Conference, that is inPacific Economic Conference that
will take place, Will they havetime to talk about soybeans at
all or will they simply talkabout rare earth minerals? And
what does that really mean?
Arlan Suderman (22:38):
I do think that president Trump will stick the
word soybeans in there somewhereso he can say he did. That we
still haven't got confirmationfrom president Xi whether he'll
be willing to talk to presidentTrump. But hopefully, there will
be conversation because talkingis always better than not
talking. But the primary topicis going to be rare earth
(22:58):
minerals and magnets. This issomething that China has been
building to toward for thirtyyears.
We can track back the pattern ofthirty years ago when they
started the strategy and theystarted to, take over
businessesses around the worldthat kind of, mind and or and
processed to rare earth mineralsand magnets and then move that
(23:21):
to China. The mining andprocessing of this of these
products is very expensive andit's environmentally dirty. And
China, of course, has cheaplabor and they can subsidize the
industry that do the theprocessing. So they undercut
companies around the world. Andso most of the world, including
(23:42):
us, we're happy to let them doit.
China had the foresight to knowthat in the future global
technology world that this wouldbe the corner stone feeddstock
for thehe high-tech elelectronicworldld that we've bebecome. And
so they have monopotilizedthatat market d down to 90%, but
it's not j just about t the cellphones and the F one fifty
(24:04):
trucks that arere dependent uponit. It's national defense. So
when China took its made itsmove last Thursday, wrote to our
clients that China had justchanged the dynamics
significantly. They they played.
I'm gonna call it the trumpcard. Here that they've been
preparing for thirty years. Thisis, I think, the one big card
(24:28):
that they had to play. And thisallows them to control and pick
winners and losers economicallyin the world, which countries
can grow their economy and whichcan't. But it also means which
countries can grow theirmilitary and produce defense
weapons and which cannot do so.
(24:49):
So this is a matter of survivaland national defense. They have
stated they wanna topple TheUnited States from being the
number one military in the worldand the number one economy in
the world, and this is whatallows him to do it. Why do this
now? Because last week,President Trump invested in at
(25:09):
least five minuteing and mineralcompanies in Greenland in The
United States and applied thewarp speed process that he used
to get vaccines approved duringCOVID in months rather than
years. And so the average timeit takes a mining company to get
approval for mining andprocessing where earth minerals,
(25:31):
United States is twenty fiveyears.
There's only one country thattakes longer. And so he's moving
that from years to months to beable to get our own supply of
rare earth minerals and magnets.And that meant that China had
this narrow window in which theycould play this card that
they've been building toward forthirty years. And that's why
(25:53):
they played it. But that is thenumber one thing.
It's still gonna take us time toget to that point of having
these products. But he's takensteps to move us forward in that
process. And so that is thenumber one thing. And with all
the military assets that we'regiving Ukraine, We're using up
(26:14):
assets that we can't replacewithout these rare earth
minerals and magnets. And Chinaknows that.
It's one reason I think that Gtook a trip to Moscow earlier
this year when Putin was lookingfor an off ramp out of the war.
And since that meeting, the warescalated. And, so that's taking
center stage above soybeans, andI think why it's gonna be more
(26:37):
difficult to get an agreement onsoybeans.
Todd Gleason (26:40):
How long do you think it will take to ramp up
rare earth minerals producedwithin The United States GRAS?
Is that a it it went from yearsto, you know, months maybe for
just the the the ramp up, butyou've got you've gotta be able
(27:01):
to get in and mind them. Is thatfive years out? How how long
before we really have somethingdo you think or have you heard
that might be usable?
Arlan Suderman (27:11):
Well, first of all, I expect some environmental
challenges in the courts here totry to stop it and prevent it. I
anticipate that. But wheneverI've listened to the interviews
of officials on well, how longwill it take? They always kind
of avoid the answering thequestion. So I'm not sure,
although the president of one ofthe mining companies when asked
(27:33):
said that we're going to breakground on a mine next week.
So breaking ground on a minedoesn't mean that you're
starting to pull product out ofthe ground in a week, but it
does mean that we're probablymonths away, so to speak. How
many months? You know, Ianticipate it's probably gonna
be more months than less. It'sprobably not gonna be next month
(27:55):
by any means, but it will takesome time. And it's a process
that's needed to at least getstarted, but that still leaves
us vulnerable, I would say, overthe coming year.
Todd Gleason (28:05):
That puts us back to the fundamentals of just the
marketplace where we are today.Trade's an issue. China has not
bought. Not likely to buy,actually, I don't think, even
into the to the New Year. Ifthey can get to January and
February, they will not buy.
Apparently, they're gonna haveto use their reserves because
(28:25):
soybeans out of Brazil have abit of a premium at this moment,
so they'll pull out otherreserves, certainly are willing
to do that. That means we end upwith the storage space at a use
usage space usage item for,soybeans. How much of a drag is
it on the marketplace? And Ithink I'll go through all of
(28:48):
you, but let's start with JohnZanker first on the answer to
that question.
John Zanker (28:52):
Well, I think that, we can go back to the production
issue here. Now if if, let'sjust say the USDA found a
million less acres of corn andleft a million more acres of
beans and we'd have gotten twoinches of rain, more inches of
rain in general across certainlythe Eastern Belt in August, we'd
(29:13):
be sitting here talking, can wehold the nine fifty level? I
don't think there's any doubtabout that. We probably had a
56, maybe even a 57 bushel beancrop on August 1. So we're
pulling yields down from that.
We're not pulling yields downfrom the 53. So from the
information I'm getting fromaround the belt and what I've
seen with my own customers, Ithink we might hold 53,000,000
(29:34):
And if you can keep exportswhere they are, you're at
$300,000,000 and you don't feeltoo bad about $10 holding up.
But, we literally could take$300,000,000 at least out of
this export number. So once weget confirmation of that, and
(29:56):
we're going to have a big dumpof export inspection data here
maybe in November at some point,maybe late November, the later
the worse it's going to be. And,so we just got to be very
careful here.
Any bounces in this bean marketneed to be looked at as a
selling opportunity, certainly ahedging opportunity. And this
(30:19):
could be a nightmare. And rightnow, for the first time in
several years, we don't have anyscares going on in South America
in October. So planting is goingalong there. They're increasing
the acres maybe up to 3.5% orso.
CONEB just estimated their cropat 178,000,000 tons. So I
believe that's another threethirty million bushels over this
(30:40):
year. We a nightmare scenariogoing on if we don't get this
thing straightened out. And evenif we do get it straightened
out, it's not going to save theship, and we need to be very
careful.
Aaron Curtis (30:51):
Yeah. So I think we're using another 150 ish
million off of the export salesnumber. So it's called that 1.5
to 1.5 exports. So not afriendly sign, I think like I
mentioned, I think we've gotsome other sources on the export
side that are helping make upfor China just a little bit,
(31:14):
crush number could go up just atick. And I still think yield
probably comes down, maybe ahalf bushel an acre.
So, still looking at three fiftyto 400,000,000 bushel ending
stocks, which not as friendly aswhat we would like, but probably
continues to hold beans in thisnine seventy five to ten fifty
(31:35):
area. I know it's kind of abroad range, but that's really
where we're stuck in, Both cornand soybeans sideways ranges, we
wait for a headline, we tradethat for a day or two, and then
we go back to nothing, right?So, I think it continues, to
stay that way. So, from aproducer standpoint, if that
upside is kind of too limitedfor you, I think you look at
(31:58):
moving, continue to move someownership on rallies and reown
it with some kind of call optionto kind of reduce your risk,
depending on what theseheadlines may continue to say
over the next few weeks.
Arlan Suderman (32:10):
China has about 10,000,000 metric tons of demand
that they haven't supplied yetfor December and January. They
need to fill ahead of the nextsupply coming from Brazil. So if
there is a deal, that's that'sthe possible possible purchases
they could make three sixtyseven million bushels roughly
there. If you look at years, ifyou look at non China buying the
(32:34):
highest that we've ever seen anon China buying was I believe
in 1819 at about 1,270,000,000bushels. This year I would
certainly expect it to be higherthan that of China doesn't buy
anything.
I would say the bottom numberthat I would look at would be
1,400,000,000.0. USDA iscurrently at 1.685. So that
(32:58):
means that's around two eightyfive million bushels below where
USDA is at right now. I'm closerto the 1.5 or 1.55 right now,
but that's working lower on aweekly basis. If in fact, they
would get some type of deal,which I don't expect.
But if they would get some adeal to get that 10,000,000
metric tons from us rather thanfrom the reserves, then I think
(33:21):
we could see exports go as highas 1.75 or so in there. And when
you put that together with ourdomestic demand, what we expect
out of the EPA once theyfinalize things, then I think
that really does put some sparkin the market and give some
opportunity. I would hate tobase a marketing plan on that
expectation because I thinkthere's more downside risk than
(33:43):
upside. Depending on whathappens with China. But I would
certainly have a reownershipplan in mind if we were to get
something like that.
Todd Gleason (33:55):
I thought you meant 1819 as in two hundred
years ago, and I was like, wait.That can't be right. Twenty
eighteen, twenty nineteen. We'llget a final note from each of
you in just a moment. I do wannaremind folks that they should
visit our website at willag.orgwhere they can sign up for the
December farm assets conferenceand the Illinois farm economic
summits.
Both of those are sponsored bythe PharmDoc team or the
(34:17):
University of Illinois agEconomist. We thank you for
coming to see us. Again, that'sDecember 12 for the Farm Assets
Conference, the fifteenth,sixteenth, and seventeenth for
the Illinois Farm EconomicSummits. John Zanker, let's
start with you. What's yourfinal word for the day?
John Zanker (34:33):
Well, from a marketing analyst, standpoint,
we we can go back to June 30 andthat acreage reported. And boy
boy, you had to start thinkingof making some adjustments at
that point with the increase incorn acres and the decrease in
bean acres. And then we got hitwith another one in August and a
little bit more of an adjustmentin September. So, you know, it's
(34:54):
kind of flipped things. It savedthis bean market, taking the
taking that amount of acres out,really saved the bean market,
but it dampened that bullishperspective for corn.
So we've had to ship some gearsand then you throw in the rust.
And it's going to becomplicated, but I think we have
(35:18):
to be realistic. We need to sellthe rallies, use the rallies as
hedging opportunities insoybeans especially, but also in
corn. We can take this corn cropdown quite a bit. A 10 bushel
reduction in Iowa and Illinoiseach is two thirty million
bushels, and we just picked up195,000,000 on the Indian
(35:38):
carryout.
So it's not going to be easy,and we just need to be, on our
toes and get ready to move onthe first, good opportunities.
Todd Gleason (35:46):
John Zanker is with Risk Management
Commodities. That's a divisionof Zaner Ag. Hedge Aaron Curtis
is with us as well. Your finalword from Midco, please.
Aaron Curtis (35:54):
I think corn's got a better base for it, at least
on the demand side and futureside than what beans do. Agree
with John, though, I don't thinkwe want to fall asleep on this
crop moving forward. I think ifwe remembered last year, we did
have a nice little bounce afterharvest, but, basis and spreads
obviously weakened up to whenthe farmer participated. So we
got to keep in mind, we stillgot a lot of grain to buy from
(36:16):
the farmer. So that's going tolimit the upside a little bit
that these corn in that 4.3 to4.35 range would be the next
target if we can get there toincrease some sales, but
definitely look for some reownership opportunities through
options in case this thing, youknow, the trade headlines do
start to lean more positive hereover the next few weeks.
Todd Gleason (36:38):
And finally, Arlen Suderman with Stonax.
Arlan Suderman (36:41):
Yeah. We've been working with a satellite based
company that's had a pretty goodtrack record, and they're
claiming that, harvested cornacreage is about 1,200,000 less
than what USDA is saying. Sowe're gonna watch that closely.
If that's true, that's another200,000,000 bushels, basically
off of the crop, not countingyield reductions that we
(37:02):
anticipate we may see from thispoint. That's not necessarily
that saying that we're gonna runout of corn, but it certainly
removes much of the surplus.
And we know that we've beentrailing down world corn and
supply stocks as a use over thelast decade to continue to trend
that level. So it does give us alittle more hope for corn.
(37:24):
Wheat's in a similar situationas well, and those two tend to
feed off of each other. Perhapsthe worst is behind us there in
those markets.
Todd Gleason (37:31):
Commodity week, of course, is a production of
Illinois Public Media. You mayfind and listen to the whole of
the program anytime you'd likeat willag.0rg. That's
willag.org. Our thanks go to ourpanelists, including Arlen
Suderman as well as John Zankerand Aaron Curtis on University
of Illinois Extension's ToddGleeson.
Todd Gleason services are made available to WILL by
University of IllinoisExtension. This is the October
16 edition of Commodity
Todd Gleason (00:08):
Week. I'm Illinois Extension's Todd Gleason. Thank
you for being with us today.Panelists include Aaron Curtis
of Midco.
He is in Bloomington, Normal,Illinois. Arlen Suderman joins
us from Stonax in Kansas City,Missouri. And John Zanker is
here from Risk ManagementCommodities. It's a division of
Zaner Ag Hedge. He's out ofLafayette, Indiana.
(00:29):
Commodity week, of course, aproduction of Illinois public
media. You can find and listento the whole of the program
anytime you'd like atwillag.0rg. And there now,
you'll find a way to registerfor the farm assets and the
Illinois Farm Economic Summitconferences. Both are listed
there. They are December 12 forthe Farm Assets Conference in
(00:51):
Bloomington at the AGRA Center.
You'll find all kinds of detailsabout that event. It's day long.
And then the Illinois FarmEconomic Summit's with the ag
economist, and they'll be at theFarm Assets Conference too, but
a shorter version on theIllinois Farm Economic Summit's
half day events that will takeplace the following week on the
fifteenth, the sixteenth, andseventeenth in DeKalb, Peoria,
(01:14):
and Mount Vernon. And you areallowed to come and ask
questions of the ag economist atthe U of I either event. All the
details for both are online atwillag.org.
Get yourself registered today.The Anchor Center is smaller
venue, so there is a limitednumber of seats. So get yourself
registered, and we'll see you onthe December 12 or the following
(01:38):
week. And one of those,actually, I think you probably
should go to both. Now let'sturn our attention to the
marketplace and our paneliststoday, and we'll get a list of
items that maybe we shoulddiscuss.
Aaron Curtis, what's been onyour mind this week?
Aaron Curtis (01:51):
Well, we had a nice, little three day bounce
here on corn. We've been inlargely a twenty cent range in
corn for the last six weeks. SoI guess the question is, you
know, every time we kinda getback up in this mid to high
twenties on Dees corn, we kindarun out of steam. Can we, do
anything with it this timearound or not?
Todd Gleason (02:09):
That is a good question, Arlen Suderman. I
don't want you to answer thatyet, but if you could give me a
list of items that maybe you'dlike to talk about today too.
Arlan Suderman (02:18):
Rare earth minerals and magnets, something
a lot of people don'tunderstand, but they are
changing the dynamics of thenegotiations now that have
implications for soybeans.
Todd Gleason (02:27):
And John Zanker at RMC, your list.
John Zanker (02:31):
Well I'll stick on that China thing but point out
that here we are into the secondweek in October no Chinese sales
on the books. Probably not goingto be many Chinese sales on the
books for several weeks AndOctober being October, November,
those two big months, we need tosee something happen or the show
(02:53):
is gonna be over here prettysoon.
Todd Gleason (02:54):
Well, this show is going to go on for a little bit,
so let's continue. I want topick up, Arlen, with the
question that Aaron Curtis hadafter a three day bounce and
pushing above moving averages,particularly the hundred day in
the December corn on Thursday.Can it continue to make inroads
(03:15):
to the higher side? And if so,why would that be the case?
Arlan Suderman (03:18):
Well, we presume that we're getting into the
second half of harvest now. Andtypically, we oftentimes will
put in the harvest, not aharvest load necessarily. I
think we may have already putthat in back in August, but we
tend to put in a low rightaround the midpoint as we find
storage places for the crop.We're able to put it away and
(03:40):
farmers don't like the price. Sothey hold on, particularly with
the promise of money coming fromthe administration and maybe a
second payment coming fromCongress tend to hang on.
What I'm watching has been thenational average cash price this
year. It is run almost identicalto a year ago. It's been
following the same pattern eversince the September 1. And so as
(04:03):
we look at it, this was the timea year ago when it started to
slowly climb higher. Thatdoesn't mean I'm bullish about
corn prices by any means, butdemand is strong, and it takes
several 100,000,000 bushels perweek to keep that pipeline
flowing.
And just that draw on a weeklybasis can start to firm prices
(04:24):
up and start to pull us higher.And I think that possibility
exists here for corn because ofstrong demand. And even when you
look on a global side, ourglobal stocks to use ratio has
been trending lower for the lastdecade and continuing to do so.
And I think that works in ourfavor as well.
Todd Gleason (04:43):
Aaron Curtis, do you have an answer for your own
question?
Aaron Curtis (04:46):
Yeah. I think, I agree with Arlen that typically
when we get past that 50, Imean, you know, we're probably
60% done here in CentralIllinois. So obviously kind of
over that halfway point.Question, I guess probably is we
know that quite a bit of spacewas used this year for beans
just because of the basissituation and yields on beans
(05:08):
held in there relatively wellconsidering expectations, being
that it was extremely dry hereat the end of the summer in a
lot of parts of the Midwest. So,do we have a little bit of a
bean space that's capitalizedcorn space as we get a little
further into harvest?
We're gonna know that here inthe next week to ten days, a
little bit of a weather eventcoming in this weekend, but
(05:28):
after that, it looks prettyclear again. So it looks like
we're gonna see quite a bit ofharvest done on corn here in the
next ten days. So we'll find outif we need to move some more
corn and or put it into someother space, be it the ground or
as you say, but I think we alsocontinue to watch this $4 cash
(05:48):
mark on corn. So we'reapproaching that area or if not
exceeded in some parts of theMidwest. So we know the farmer
went into harvest extremelyundersold.
So we've been seeing that $4cash mark let loose us a bushels
from the producer standpoint aswell. So we'll see, we're able
(06:08):
to trade above the one hundredday moving average or right at
it today. We got the two hundredday moving average setting up
there around $4.38. We've gotthis little gap area from the
summer back there around $4.32and three quarters. So, we get
up into that $4.30 mark from atechnical standpoint, we've got
some junk to kind of get throughin order to get this thing
(06:29):
going.
But I agree with Arlen. The thedemand base, for corn is strong,
and I think, corn's got a prettydecent floor underneath it.
Todd Gleason (06:35):
John Zanker, do you have a dissenting view at
all?
John Zanker (06:38):
Not at all. Agree with both Arlen and Aaron on
that. I think we can move thishigher due to demand and that
the biggest question maybe wehave is what's Iowa going to do
with their corn yield? We justcontinue to hear all kinds of
yields. And, you know, I'mpersonally as confused right now
(06:59):
about the state of Iowa as I'vebeen on about any state in the
last forty four years.
So, you know, as soon as we geta little better direction on
what's going on there, we'llhave a little bit better idea on
how high we can take this. Butwith the acreage increase, we
can take the national yield downto 172 and it's still the
(07:21):
largest production in history.So, we have a lot of corn and
we're not going to 172, but wecan certainly go to 180, 181,
182. While that might soundbullish, we need to remember we
picked up $195,000,000 on thestocks report and the USDA is
probably at least $300,000,000high on feed. So, we we will
(07:43):
need to use these rallies toget, some additional sales on, I
believe in the coming weeks.
Todd Gleason (07:49):
Well, that brings me back to you, Aaron, and I had
a couple of questions about somethings that you mentioned. So
the idea that storage, might betight, I think, is what you're
telling me for the second half.What impact does that have on
basis? And then for those whoare delivering across the LL
across the grain scale andhaving to make a decision within
(08:09):
a few days, to as to whetherthey need to whether they want
to sell it or to store it, howdo they make that decision? What
should they be thinking about asit's related to the in charge,
and the price that they'relooking at on your spot bids?
Aaron Curtis (08:28):
Yeah. So the question is, you know, what does
it cost you to get to January orMarch or whatever that period of
time is? You know, what's yourstorage cost? You know, and what
is your expectation? I thinksome of it in the the pricing
that we've seen, Todd, is justthe expectation is maybe there's
not a lot of upside in thismarket, especially if the trade
(08:49):
war continues.
So that's been influencing alittle bit of sales. I think
it's probably no secret, right?That there are some aspects of
the farm economy that aregetting tight, obviously, right?
So farmers need some money insome instances, margins are
tight. So that's influencedsales.
And like I said, we went in with5% to 10% of the corn crop and
(09:12):
soybean crop bought. So just toget up to average levels, for
say 30%, 40 average across thescale, that's tend to going to
show a bigger percentage maybeof normal being sold across the
sale. So $10 cash beans whenwe've seen those in some
instances, mostly early on inbean harvest and $4 cash corn
(09:34):
have been magic numbers, to buysome grain. So the combination
of beating some money and justthe anticipation that maybe this
market doesn't have a lot ofupside to it, have increased
some farmer selling across thescale.
Todd Gleason (09:48):
Arlen Suderman, I'd like you to follow-up on
these thoughts, and to put intosome perspective, Frank Olson,
agricultural economist, NorthDakota State University, and I
have had conversations in thepast thinking about what does
the the the in charge mean?What's that cost? What's the
carrying charge at home in thebin? And he says that everybody
(10:10):
that's in the industry does areally good job of of figuring
out what the interest of thecarrying charge might be to get
from month to month to month.And to be honest, from his
perspective, it costs the sameat home in the bin too nearly or
probably does.
So how do you and most producerswon't think of it that way, but
it really is that kind of cost,I think. So how do you put it
(10:32):
into perspective for them?
Arlan Suderman (10:34):
Yeah. It really is. And, you know, we've been
hearing about some free DP, butwith drop charges as well, and
that's just another way of theelevator capturing the carry
that it's gonna gonna put atrisk in order to do so. So when
you look at the carry that's inthe market, what opportunities
there may be, you look at thebasis improvement, Stororage
(10:58):
costs and d particularly today'shigher interest rate.
Multiplying that out times thevalue of that grain versus what
you could get.
Nobody wants to accept weekbasis. Because you can't ever
recapture that. But if you canget some decent basis, once you
look at that storage cost andyou look at the carrying charges
(11:18):
that are there, you might beable to do just as well get
unloading it and being able tobuy a call option or something
and re owning it in that way orsome type of derivative strategy
for re ownership and then nothaving to worry about the
downside risk quite the same andbe able to move that grain if
(11:38):
you're having storage problemsor something like that. The main
problem right now is but many ofthem are still weaker than what
(11:58):
the farmer would rather have.
Todd Gleason (12:00):
John Zanker, I want you to follow-up, but
Aaron, I'm going put you on thespot and make sure I'm correct.
You did tell me that you werelooking forward to the second
half and that basis could comeunder pressure from just the
amount of storage that has beentaken up by soybeans in places.
Aaron Curtis (12:16):
Yeah, I think that's still the question,
right? It's more of a question.Are we going to see some spots,
right, that have a littlechallenge putting the crop away,
right? So far, know, corn basishas been relatively steady here
over the last few days. We'veseen some improvement in soybean
basis now that that harvest isrelatively wrapped up, but I
(12:37):
think it's more of a question,Todd, are we going to see some
continued, we could see somecontinued weakness on corn basis
depending how challenging thislast, 30% of the corn harvest,
is to put away.
Todd Gleason (12:51):
So, John, what are you telling producers that are
calling and asking you what todo?
John Zanker (12:55):
Well, I just had a call from a, one of my North
Carolina customers and, youknow, what do we need to do with
the rest of this corn? He has apretty decent corn basis out
there and, you know, we've, hey,let's, I'm okay rolling it. I do
expect a little bit more push inthis board. But we have to be
really careful if we go back to,the year before this one last
(13:18):
year, you know, we, we, we had anightmare at the end of the
summer And we're in the middleof the summer into the end of
summer. Having role basis in abig carry market, DP was just a
nightmare.
So we need to be careful withall those things. And you know,
at some point, but let's put themoney in the bank. We can do
(13:43):
some forward pricing, pick upthe carry. And, you know, if
you're coming off the farm here,you know, I I'm okay with the
short term basis just with theidea that, you know, this market
might have some pop in andbeans. I'd be very, very, very
careful there.
And, you know, there could be abetter strategy just looking at,
(14:06):
taking the price. If you want toreown in in the options market,
there'll be some opportunitiesthere.
Todd Gleason (14:11):
I wanna stay with corn for just a moment, Arlen.
What are you hearing on theintelligence from what from Iowa
as to the impact that SouthernRust has had. And I know there
are places clearly that thereare issues. The question is, is
that wide enough spread toreally make a difference or not?
And then here in Illinois, Ithink maybe the corn is slightly
(14:35):
better than they expected.
Certainly the soybeans were.
Arlan Suderman (14:38):
Yeah, I definitely agree with you on
soybeans and to some extent cornas well. A tremendous amount of
variability. We get daily yieldreports in here and I was just
looking over those yieldresults. And what I see the
number of times a farmer willreport, okay, I had these fields
across the road from each otherplanted at the same time. I
sprayed the one, I didn't spraythe other, or maybe I sprayed
(15:01):
the one twice and I only sprayedthe other one once.
And it's between twenty andseventy bushel per acre
difference in yield. A lot ofvariability in that, but 70
bushel I've seen several timesin the yield difference when no
treatment versus one or twotreatments. So I had a big
(15:21):
impact on yield. So what doesthat do to state average yield
with that kind of variability?You would think that it probably
proves a drag to it.
And I I do think that that'sprobabably true, particularly
for I Iowow. We'll see some dragin that yield. But let's keep in
mind, they're seeing recordyields in the Dakotas and parts
in Nebraska as well. And even onsoybeans or one farmer there
(15:45):
indicated that his soybean yieldis gonna be 20 bushels over his
previous farm record.
Todd Gleason (15:51):
Just to lay some kudos out to the land grant
plant pathologist in early Julywhen this first came in, they
said this is a problem. It is ahuge issue late in the year, and
you are likely that you're goingto need to spray. They had that
listed. They said it over andover and again. We had it on the
(16:12):
air many times, but I don't knowhow widespread.
It's hard to spend that muchmoney, I suppose, when when the
price of porn was so low, tryingto get there. And, really, it
was about scouting and whetherit was in the field or not as
much as anything else. Okay. SoI do wanna take up some other
things. John Zanker, let's startwith China and begin on the
(16:35):
soybean side.
No sales at this time. PresidentTrump and president Xi having a
spat in the last week oversomething that seemed to be in
place already, of course, TheUnited States. And we'll get to
the rare earths in just aminute. But in The United
States, there there was alreadya push on to do port charges.
(16:59):
The Chinese said, you know what?
We're gonna do port charges too.Things spiraled out of control
for a moment. How concerned areyou, I suppose, about trade
deals in general? And I don'tknow. Maybe we everybody can go
with a yes or a no on this tobegin with.
Will we sell soybeans in thiscalendar year to China still or
(17:21):
to any great amount? Andeverybody says, yeah. No. There
were no answers. So we're gonnago we're gonna go with no no to
great any great amount on thatone.
Okay. So, now, John, what whatwhat is it that you has you
concerned, and how concerned areyou as it's related to trade?
John Zanker (17:41):
Off the charts concerned, to be honest. You
know, Arlen, you've been talkingabout this since February, and,
I've been talking to mycustomers about it since
February, and we've, you know,we've we've been hedging since
February. And not just from atrade perspective, but in
(18:02):
February, we knew we were goingto have a huge South American
crop, and it turned out thatway. And then as the trade war
drug on, we saw China buying ahuge amount of beans over and
above normal in May, June, July,August, even September. I
believe Stone has, they'reestimating, Chinese stocks
(18:26):
reserves at 18,000,000 tonsabove what we've seen on average
here in the last few years.
They started building thosestocks even a year ago. So
they've been preparing for thismoment. And, if you look back at
last year, I believe October,November, seven fourteen
million, seven fifteen millionbushels, we exported 62% of
(18:48):
those went to China. That's fourforty three million bushels, 24%
of the yearly total. Therearen't going to be any being
shipped to China in October.
Can something get done at theend of the month to, get some
boats moving in November? Idon't that's a real tight
schedule. So I think the best wecan hope for is maybe some kind
(19:09):
of deal that might, let Chinastart looking at rebuilding the
reserves that they're going touse up or they're going to use,
not use up certainly, but use inOctober, November. And the
Chinese government can come inand buy US bushels without any
tariffs. So I think that therecould be some beans moved to
(19:31):
China in December and January.
But again, the two big months,October, November. A year ago,
starting on this date, thiscoming week, this week, I
believe we went to 97, 95, like87, 85, 75. I mean, those are
(19:55):
the kind of numbers we saw totalbean shipments. This year, we
had 36 here this last week. Ithink 40,000,040 to 45,000,000
tops without China.
So you're going to be talkingabout 30,000,000, 40,000,000,
50,000,000 bushel deficits eachweek. And we just got decided we
(20:16):
got excited about a crush reportthat came in 11,000,000 bushels
over expectations. So we have aproblem. It needs to be fixed,
or, we're in we're in for somerough times this summer if we
don't see it or, excuse me, thiswinter, if we don't see a
problem, with the crop in SouthAmerica.
Todd Gleason (20:34):
Aaron Curtis, you agree? Rough times this winter?
Aaron Curtis (20:38):
Yeah. I think definitely along the river. I've
obviously, we've seen someimprovement in, basis levels
from the processor side. Johnmentioned the NOPA crush numbers
yesterday. You know, this year,expected the North and South
Dakota to crush almost 40% oftheir bean production.
So that's a little brighter spotthan it was say in 2018 when it
(20:59):
was mostly an export market,obviously not much business
going off the PNW. So thosebeans are having to find
alternative homes. But from hereEast, Illinois East, we've seen
basis levels on beans slowlystarting to continue to improve
as the crusher reaches out forsome more soybean supply. But I
agree with John that thatwindow, that these Jan window is
(21:22):
really a limited opportunityright now for China to
participate. We've seen a lot ofbeans obviously from Brazil,
Argentina's export change filledin a lot of the gaps that China
still had for November.
So that window continues toshrink and Brazil's off to a
halfway decent start on plantingand they're going to have some
(21:43):
beans at least harvested inJanuary. Most of those are
likely goes domestically, butwe're talking limited window
past last half Feb into Marchthe way it looks today. So, I'm
still optimistic that we getsomething done. Todd, it just
doesn't sound like it's gonna bea large volume. The bright spot
though, is if you look atsoybean sales to other
(22:05):
destinations outside of China, Ithink we're up 67%.
So there have been other marketsthat we've been utilizing,
obviously, it doesn't make upfor China, but it does help
soften the blow a little bit.
Todd Gleason (22:18):
Arlen, when the two presidents meet at the Asian
Economic Conference, that is inPacific Economic Conference that
will take place, Will they havetime to talk about soybeans at
all or will they simply talkabout rare earth minerals? And
what does that really mean?
Arlan Suderman (22:38):
I do think that president Trump will stick the
word soybeans in there somewhereso he can say he did. That we
still haven't got confirmationfrom president Xi whether he'll
be willing to talk to presidentTrump. But hopefully, there will
be conversation because talkingis always better than not
talking. But the primary topicis going to be rare earth
(22:58):
minerals and magnets. This issomething that China has been
building to toward for thirtyyears.
We can track back the pattern ofthirty years ago when they
started the strategy and theystarted to, take over
businessesses around the worldthat kind of, mind and or and
processed to rare earth mineralsand magnets and then move that
(23:21):
to China. The mining andprocessing of this of these
products is very expensive andit's environmentally dirty. And
China, of course, has cheaplabor and they can subsidize the
industry that do the theprocessing. So they undercut
companies around the world. Andso most of the world, including
(23:42):
us, we're happy to let them doit.
China had the foresight to knowthat in the future global
technology world that this wouldbe the corner stone feeddstock
for thehe high-tech elelectronicworldld that we've bebecome. And
so they have monopotilizedthatat market d down to 90%, but
it's not j just about t the cellphones and the F one fifty
(24:04):
trucks that arere dependent uponit. It's national defense. So
when China took its made itsmove last Thursday, wrote to our
clients that China had justchanged the dynamics
significantly. They they played.
I'm gonna call it the trumpcard. Here that they've been
preparing for thirty years. Thisis, I think, the one big card
(24:28):
that they had to play. And thisallows them to control and pick
winners and losers economicallyin the world, which countries
can grow their economy and whichcan't. But it also means which
countries can grow theirmilitary and produce defense
weapons and which cannot do so.
(24:49):
So this is a matter of survivaland national defense. They have
stated they wanna topple TheUnited States from being the
number one military in the worldand the number one economy in
the world, and this is whatallows him to do it. Why do this
now? Because last week,President Trump invested in at
(25:09):
least five minuteing and mineralcompanies in Greenland in The
United States and applied thewarp speed process that he used
to get vaccines approved duringCOVID in months rather than
years. And so the average timeit takes a mining company to get
approval for mining andprocessing where earth minerals,
(25:31):
United States is twenty fiveyears.
There's only one country thattakes longer. And so he's moving
that from years to months to beable to get our own supply of
rare earth minerals and magnets.And that meant that China had
this narrow window in which theycould play this card that
they've been building toward forthirty years. And that's why
(25:53):
they played it. But that is thenumber one thing.
It's still gonna take us time toget to that point of having
these products. But he's takensteps to move us forward in that
process. And so that is thenumber one thing. And with all
the military assets that we'regiving Ukraine, We're using up
(26:14):
assets that we can't replacewithout these rare earth
minerals and magnets. And Chinaknows that.
It's one reason I think that Gtook a trip to Moscow earlier
this year when Putin was lookingfor an off ramp out of the war.
And since that meeting, the warescalated. And, so that's taking
center stage above soybeans, andI think why it's gonna be more
(26:37):
difficult to get an agreement onsoybeans.
Todd Gleason (26:40):
How long do you think it will take to ramp up
rare earth minerals producedwithin The United States GRAS?
Is that a it it went from yearsto, you know, months maybe for
just the the the ramp up, butyou've got you've gotta be able
(27:01):
to get in and mind them. Is thatfive years out? How how long
before we really have somethingdo you think or have you heard
that might be usable?
Arlan Suderman (27:11):
Well, first of all, I expect some environmental
challenges in the courts here totry to stop it and prevent it. I
anticipate that. But wheneverI've listened to the interviews
of officials on well, how longwill it take? They always kind
of avoid the answering thequestion. So I'm not sure,
although the president of one ofthe mining companies when asked
(27:33):
said that we're going to breakground on a mine next week.
So breaking ground on a minedoesn't mean that you're
starting to pull product out ofthe ground in a week, but it
does mean that we're probablymonths away, so to speak. How
many months? You know, Ianticipate it's probably gonna
be more months than less. It'sprobably not gonna be next month
(27:55):
by any means, but it will takesome time. And it's a process
that's needed to at least getstarted, but that still leaves
us vulnerable, I would say, overthe coming year.
Todd Gleason (28:05):
That puts us back to the fundamentals of just the
marketplace where we are today.Trade's an issue. China has not
bought. Not likely to buy,actually, I don't think, even
into the to the New Year. Ifthey can get to January and
February, they will not buy.
Apparently, they're gonna haveto use their reserves because
(28:25):
soybeans out of Brazil have abit of a premium at this moment,
so they'll pull out otherreserves, certainly are willing
to do that. That means we end upwith the storage space at a use
usage space usage item for,soybeans. How much of a drag is
it on the marketplace? And Ithink I'll go through all of
(28:48):
you, but let's start with JohnZanker first on the answer to
that question.
John Zanker (28:52):
Well, I think that, we can go back to the production
issue here. Now if if, let'sjust say the USDA found a
million less acres of corn andleft a million more acres of
beans and we'd have gotten twoinches of rain, more inches of
rain in general across certainlythe Eastern Belt in August, we'd
(29:13):
be sitting here talking, can wehold the nine fifty level? I
don't think there's any doubtabout that. We probably had a
56, maybe even a 57 bushel beancrop on August 1. So we're
pulling yields down from that.
We're not pulling yields downfrom the 53. So from the
information I'm getting fromaround the belt and what I've
seen with my own customers, Ithink we might hold 53,000,000
(29:34):
And if you can keep exportswhere they are, you're at
$300,000,000 and you don't feeltoo bad about $10 holding up.
But, we literally could take$300,000,000 at least out of
this export number. So once weget confirmation of that, and
(29:56):
we're going to have a big dumpof export inspection data here
maybe in November at some point,maybe late November, the later
the worse it's going to be. And,so we just got to be very
careful here.
Any bounces in this bean marketneed to be looked at as a
selling opportunity, certainly ahedging opportunity. And this
(30:19):
could be a nightmare. And rightnow, for the first time in
several years, we don't have anyscares going on in South America
in October. So planting is goingalong there. They're increasing
the acres maybe up to 3.5% orso.
CONEB just estimated their cropat 178,000,000 tons. So I
believe that's another threethirty million bushels over this
(30:40):
year. We a nightmare scenariogoing on if we don't get this
thing straightened out. And evenif we do get it straightened
out, it's not going to save theship, and we need to be very
careful.
Aaron Curtis (30:51):
Yeah. So I think we're using another 150 ish
million off of the export salesnumber. So it's called that 1.5
to 1.5 exports. So not afriendly sign, I think like I
mentioned, I think we've gotsome other sources on the export
side that are helping make upfor China just a little bit,
(31:14):
crush number could go up just atick. And I still think yield
probably comes down, maybe ahalf bushel an acre.
So, still looking at three fiftyto 400,000,000 bushel ending
stocks, which not as friendly aswhat we would like, but probably
continues to hold beans in thisnine seventy five to ten fifty
(31:35):
area. I know it's kind of abroad range, but that's really
where we're stuck in, Both cornand soybeans sideways ranges, we
wait for a headline, we tradethat for a day or two, and then
we go back to nothing, right?So, I think it continues, to
stay that way. So, from aproducer standpoint, if that
upside is kind of too limitedfor you, I think you look at
(31:58):
moving, continue to move someownership on rallies and reown
it with some kind of call optionto kind of reduce your risk,
depending on what theseheadlines may continue to say
over the next few weeks.
Arlan Suderman (32:10):
China has about 10,000,000 metric tons of demand
that they haven't supplied yetfor December and January. They
need to fill ahead of the nextsupply coming from Brazil. So if
there is a deal, that's that'sthe possible possible purchases
they could make three sixtyseven million bushels roughly
there. If you look at years, ifyou look at non China buying the
(32:34):
highest that we've ever seen anon China buying was I believe
in 1819 at about 1,270,000,000bushels. This year I would
certainly expect it to be higherthan that of China doesn't buy
anything.
I would say the bottom numberthat I would look at would be
1,400,000,000.0. USDA iscurrently at 1.685. So that
(32:58):
means that's around two eightyfive million bushels below where
USDA is at right now. I'm closerto the 1.5 or 1.55 right now,
but that's working lower on aweekly basis. If in fact, they
would get some type of deal,which I don't expect.
But if they would get some adeal to get that 10,000,000
metric tons from us rather thanfrom the reserves, then I think
(33:21):
we could see exports go as highas 1.75 or so in there. And when
you put that together with ourdomestic demand, what we expect
out of the EPA once theyfinalize things, then I think
that really does put some sparkin the market and give some
opportunity. I would hate tobase a marketing plan on that
expectation because I thinkthere's more downside risk than
(33:43):
upside. Depending on whathappens with China. But I would
certainly have a reownershipplan in mind if we were to get
something like that.
Todd Gleason (33:55):
I thought you meant 1819 as in two hundred
years ago, and I was like, wait.That can't be right. Twenty
eighteen, twenty nineteen. We'llget a final note from each of
you in just a moment. I do wannaremind folks that they should
visit our website at willag.orgwhere they can sign up for the
December farm assets conferenceand the Illinois farm economic
summits.
Both of those are sponsored bythe PharmDoc team or the
(34:17):
University of Illinois agEconomist. We thank you for
coming to see us. Again, that'sDecember 12 for the Farm Assets
Conference, the fifteenth,sixteenth, and seventeenth for
the Illinois Farm EconomicSummits. John Zanker, let's
start with you. What's yourfinal word for the day?
John Zanker (34:33):
Well, from a marketing analyst, standpoint,
we we can go back to June 30 andthat acreage reported. And boy
boy, you had to start thinkingof making some adjustments at
that point with the increase incorn acres and the decrease in
bean acres. And then we got hitwith another one in August and a
little bit more of an adjustmentin September. So, you know, it's
(34:54):
kind of flipped things. It savedthis bean market, taking the
taking that amount of acres out,really saved the bean market,
but it dampened that bullishperspective for corn.
So we've had to ship some gearsand then you throw in the rust.
And it's going to becomplicated, but I think we have
(35:18):
to be realistic. We need to sellthe rallies, use the rallies as
hedging opportunities insoybeans especially, but also in
corn. We can take this corn cropdown quite a bit. A 10 bushel
reduction in Iowa and Illinoiseach is two thirty million
bushels, and we just picked up195,000,000 on the Indian
(35:38):
carryout.
So it's not going to be easy,and we just need to be, on our
toes and get ready to move onthe first, good opportunities.
Todd Gleason (35:46):
John Zanker is with Risk Management
Commodities. That's a divisionof Zaner Ag. Hedge Aaron Curtis
is with us as well. Your finalword from Midco, please.
Aaron Curtis (35:54):
I think corn's got a better base for it, at least
on the demand side and futureside than what beans do. Agree
with John, though, I don't thinkwe want to fall asleep on this
crop moving forward. I think ifwe remembered last year, we did
have a nice little bounce afterharvest, but, basis and spreads
obviously weakened up to whenthe farmer participated. So we
got to keep in mind, we stillgot a lot of grain to buy from
(36:16):
the farmer. So that's going tolimit the upside a little bit
that these corn in that 4.3 to4.35 range would be the next
target if we can get there toincrease some sales, but
definitely look for some reownership opportunities through
options in case this thing, youknow, the trade headlines do
start to lean more positive hereover the next few weeks.
Todd Gleason (36:38):
And finally, Arlen Suderman with Stonax.
Arlan Suderman (36:41):
Yeah. We've been working with a satellite based
company that's had a pretty goodtrack record, and they're
claiming that, harvested cornacreage is about 1,200,000 less
than what USDA is saying. Sowe're gonna watch that closely.
If that's true, that's another200,000,000 bushels, basically
off of the crop, not countingyield reductions that we
(37:02):
anticipate we may see from thispoint. That's not necessarily
that saying that we're gonna runout of corn, but it certainly
removes much of the surplus.
And we know that we've beentrailing down world corn and
supply stocks as a use over thelast decade to continue to trend
that level. So it does give us alittle more hope for corn.
(37:24):
Wheat's in a similar situationas well, and those two tend to
feed off of each other. Perhapsthe worst is behind us there in
those markets.
Todd Gleason (37:31):
Commodity week, of course, is a production of
Illinois Public Media. You mayfind and listen to the whole of
the program anytime you'd likeat willag.0rg. That's
willag.org. Our thanks go to ourpanelists, including Arlen
Suderman as well as John Zankerand Aaron Curtis on University
of Illinois Extension's ToddGleeson.
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