October 30, 2025 • 35 mins
Panelists
- Matt Bennett, AgMarket.net
- Dave Chatterton, SFarmMarketing.com
- Curt Kimmel, AgMarket.net
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Todd Gleason (00:00):
This is the October 30 edition of Commodity
(00:03):
Week. Todd Gleason's servicesare made available to WILL by
Welcome to Commodity Week. I amTodd Gleason. Our panelists for
the day include Dave Chatterton.He is with Strategic Farm
Marketing right here inChampaign County, Illinois.
(00:23):
We're also joined by the AgMarket team, including from
Normal, Illinois, Kurt Kimmel,as well as Matt Bennett from
Windsor, Illinois. CommodityWeek, of course, is a production
of Illinois Public Media. Youcan find us online at
willag.org, willag.org, whereyou can buy your tickets today
for the Farm Assets Conferencethat's coming up on the
(00:45):
December. It'll be inBloomington at the AGRA Center
this year. And the IPAS or theIllinois Farm Economic Summit
Series is the following week inDeKalb as well as Peoria and
Mount Vernon.
All the tickets are availableand more details at willag.org
willag.0rg. Let's get a list ofitems that we should talk about.
(01:09):
I know that on the list, DaveChatterton, will be the Thursday
agreement between The UnitedStates and China. What else have
you been watching?
Dave Chatterton (01:19):
Yeah, Todd. Obviously, of the list is
geopolitics here. I think alsowe need to talk about the South
American situation and in termsof they are planting and getting
ready to grow a crop in whatlooks to be a record crop.
Weather so far there has beenhighly favorable, I think, for
for their outcome. Still a longways to go, and certainly that's
a soybean conversation, notnecessarily a corn conversation
at this point.
(01:39):
And you move beyond that, and Ithink there's still a lot of old
crop in the hands of producershere, that's coming out of
harvest and looking for a planor looking for, an execution on
those bushels, whether it's youknow, do we hold? Do we do we do
we sell a carry now? Do we wait?All kinds of opportunities here,
all kinds of, I guess, ideas onhow that should be done.
Todd Gleason (02:00):
Kurt Kimmel from agmarket.net on your list.
Curt Kimmel (02:03):
Well, I'd agree with what Dave said there. You
could do a whole three dayseminar on all those topics
right there. But, yeah, just alot of questions to go through.
The volatility in themarketplace picked up. So
there's gonna be a lot
Todd Gleason (02:16):
of different things to watch here as we move
forward. And finally, MattBennett.
Matt Bennett (02:21):
Yeah. I mean, I would agree. I I think whenever
we look at for from a timelinessstandpoint, you look at, you
know, input cost fertilizer.Guys are putting, trying to
figure out what they're gonna dofor next year. And I do think
that seeing, Nova twenty sixpoke its head above $11 this
week, makes an interestingdiscussion, with a cash strap
grower.
Todd Gleason (02:39):
When you and I were talking on Thursday
afternoon during the closingmarket report, it appeared
certainly that secretary Rollinswas telling us that the deal in
China was 12,000,000 metric tonsby January and then 25,000,000
metric tons of soybeans to Chinain '26, '27, and '28. All looked
(03:04):
like calendar years, but it'sclearly not quite that simple.
It could be, but we don't knowwhether it's marketing year at
this point or calendar year.Does it make much of a
difference one versus the other?
Matt Bennett (03:18):
Yeah. It makes a lot of difference. If we're
gonna do marketing year, thenthat means if it's 12,000,000
tons, it's between now andSeptember, you know? And and do
we include the the beans thatthey purchased, you know,
earlier in the year? I mean,clearly, from a marketing
standpoint, they haven'tpurchased anything.
But, I mean, there's a wholedifferent set of reasons we
could look at this differently.But let's just say it is
(03:41):
calendar year. If it's calendaryear, then that means in the
next fourteen months, we'regonna see 37,000,000 metric tons
of soybeans exported to China.That'd be huge. And what it
would be, it'd be a stabilizingfactor.
It it would make you feel goodabout the fact that, you know,
the balance sheet isn't as outof whack as some of us were
(04:01):
afraid that it would be. I mean,whenever we looked at China, it
was just completely absent.Yeah. Export inspections haven't
been too bad without China, but,clearly, the USDA was gonna have
to drastically lower exports outof their balance sheet. Now
maybe they don't.
And so you're probably stilllooking at a snug balance sheet.
But, yeah, it absolutely doesmatter, Todd.
Todd Gleason (04:19):
And if it's the other way around and it's not
the calendar year and it's themarketing year?
Matt Bennett (04:26):
You know, if it's the marketing year, in all
honesty, I don't think that it'sbearish, so to speak, but it
certainly isn't as bullish. Imean, what it does is it keeps
the you know, some of theseexports in your balance sheet,
first of all. Second of all, ifthere's an assurance that is
signed that we see 25 for threestraight years, in my opinion,
(04:46):
what it does, especially aswe're ramping up domestic
consumption of soybeans, Itkeeps your balance sheet pretty
snug, and I think it calls formore soybean acres in the in the
coming years.
Todd Gleason (04:55):
The cynic d and me says there probably won't be a
signed document, but maybe I'mwrong about that. It is very
transactional. We'll find outwhether that's the case. Now I
do want to get the idea DaveChatterton from you about this
12,000,000 metric tons whetherit is calendar year or this
(05:16):
marketing year. Either way, itdoesn't really change that much.
I don't think what USDA has onits books in the September World
Ag supply and demand estimate.And has it really changed the
fundamentals of the marketplacevery much?
Dave Chatterton (05:34):
Yeah, Todd. I mean, a little bit to unpack
there. The first thing I wouldsay is that anytime it's a deal
with China and anytime it's anunsigned deal with China, you
know, we have to use a littlebit of caution here. China has a
strong historical record of notliving up to these agreements.
So I don't wanna be, you know,saying that what what happened
today was bearish because it'scertainly not.
We're in a much better positionnow than we were a month ago,
(05:56):
two months ago, or earlier inthe year. And so whatever China
buys is a bonus at this point.But if you break out that
12,000,000 and depending onwhether it's 12,000,000 for this
season, 12,000,000 for thiscalendar year, or 12,000,000 for
the marketing year, I thinkmakes a pretty big difference.
Because if you look at wherewe're at, China this calendar
year has bought almost 6,000,000metric tons of beans already.
(06:16):
Now those were old crop beans.
And we're now in the new cropseason where they bought three
cargoes or a 180,000 metrictons. Last year, China bought 22
and a half million metric tonstotal. So we have a long way to
go. So if it's this year,calendar year, and we've already
bought 6,000,000, we only have6,000,000 to go. And if it's
(06:37):
12,000,000, we're doubling thatinto next fall.
Very big difference there interms of what that carryout is
going to look like in 2526. Itcould be 250, 200,000,
200,000,000 on the low side. Itcould be 500 on the high side
depending on how that goes. Andthere's also been this mention
of 19,000,000 metric tons forthe other Southeast Asian
(06:58):
countries. When we go back andlook at the math, typically you
look at those countries20,000,000 a year about what
they buy.
So that's great, but there wasno time frame assigned to that.
And we don't know that that'sreally anything more than they
would normally buy. So I thinkthere's still a lot of
unanswered questions here. Andwe have to, I hate to say,
proceed with a little bit ofcaution. Does it is it bearish
(07:21):
the market from these levels?
I don't think so as as as Mattalluded to, but how bullish it
becomes, I think we have to workour way into that.
Todd Gleason (07:29):
Well, thanks for adding one more bit of
complexity to this by countingwhat we've already sold in this
calendar year into that numberand making the total 6,000,000
metric tons through January asopposed to 12. A lot easier to
ship, by the way, if we if wecan do that over the three
months period. One last thing onthis topic and then we can move
on. And I think this isimportant related to the 26, 27,
(07:54):
and 28, 25,000,000 metric tonexpected purchases by China.
What has been agreed to is a oneyear truce at this point.
That mostly excludes all of nextyear's and every crop thereafter
if something goes wrong or awry.And I'm wondering whether that
(08:19):
makes a difference to you atthis point or not, Kurt, or
whether it's just something tobe aware of.
Curt Kimmel (08:25):
When you look at long term, boy, I mean, next
week's long term, so we'll seewhat unfolds. But three years
out, you look at No26 beans,they were down on the day. So I
think the urgency is up fronthere versus down the road. But
one thing we've got to rememberis all the strength is up front,
the urgency is up front. Thisrally has put us most expensive
(08:48):
beans in the world.
So where's the rest of the tradegoing to go? To the Southern
Hemisphere. But from here on outwe'll see if they follow through
some of the interviews with theAsian traders where we are being
encouraged to look at buyingbeans from The U. S. So is it
mainly government's going tocome in and buy the beans to
(09:08):
replace their reserve or some ofthe private or other industries
in China crushers going to buythese beans?
So there's a lot in front of usto see. But as a producer, I
think we gotta manage some riskhere at
Todd Gleason (09:21):
this higher level in case this whole thing falls
apart because Trump did addressthe defense department to test
nuclear weapons. And one finalnote before we leave this. As we
look forward through the comingyear, you might watch Kafka as
the purchaser. It is the onlycompany in China that is owned
(09:41):
by the Communist Party, and Imake mention of that because
there remains a 35% tariff onsoybeans imported into China
from The United States. COFCOwould be the easiest one for
that tariff to be let go from bythe party itself.
Now let's turn our attention tothe fundamentals of the
marketplace. Where do we standtoday as it relates to sales
(10:07):
going across the scale and whatproducers should be doing? They
don't have much time probablyonly corn at this point that's
going to cross the scale. How dothey deal with that and whether
they want to pay the in chargeor to look at making a cash
sale?
Curt Kimmel (10:25):
Well for the most part I think the central part of
the Midwest is fairly wrappedup. They've already made a
decision on what to do with it.I think the top priority as a
producer you got to kind of sitdown, see where the market was
when you put in storage or soldit, see where the market is now
to see if it paid the in charge.My past experience, it's awful
(10:47):
hard to get a producer to movecash grade once they paid the in
charge or filled a bin. So justneed to push the pencil to kinda
see where you are.
The simplest thing to do is, ifyou wanna hang on, at least put
a price floor in here and letthe thing ride for a while.
Todd Gleason (11:03):
So corn and soybeans have rallied. Basis has
tightened up in our part of theworld for sure over time. What's
that telling you about themarketplace? Is it that farmers
are are done and they lock thebin door, or is it a smaller
crop combination of both?
Matt Bennett (11:21):
You know, I think that the assumption most people
make whenever you see basistighten up the way that it has
is that it's a smaller crop, butyou gotta be careful in making
that assumption. You know, I wasjust talking about this on a
podcast, just last week, and Isaid, there's been more bags
this year than ever before. Imean, yeah, I've been across
quite a bit of the Midwest, andI see bags everywhere I go. And
(11:42):
so people have bagged corn andsoybeans. They saw the carry in
the market.
They said, hey. I'm not gonnasell at this wide basis. I'm
gonna go ahead and sell thecarry. Hopefully, sell the
carry, but they saw the carry,and that's what put it in the
bag. I had a guy that actuallyemailed me the following day and
said that he tried to buy abagger in August and could not
find one in North America.
(12:03):
And so that tells me thatthere's been more stuff bagged
this year. Guys have put stuffon in an old shop that's got a
concrete floor, government bins,you name it. But we've got a lot
of corn that and soybeans thatpeople are holding on to. And so
I don't think that you can makethe assumption the crop's
smaller. Do I think the crop'ssmaller than USDA?
Yes. I do think that. But is itwildly smaller? I'm not sure
(12:26):
about that. I mean, we hear alot of, horror stories on
yields, and then you turn aroundand talk to someone that had 280
bushel corn.
So, there's been some awfullygood corn around. I think it'll
average out, you know, three,four bushel below USDA on corn,
currently would be where I'd I'dbe at, and maybe just a shade
under on soybeans. I don't thinkit's wildly lower on beans.
Todd Gleason (12:45):
Sage wisdom from Darrell Good that you and I both
learned in the class or for meover twenty or thirty years of
interviewing him every week wasif something made you make a
marketing change in your planssell that today or at least a
portion of that crop. If youwere bagging it sell it. So now
(13:05):
let's go with farmers who have acrop that they put away, that
they did not make that sale on.What's your follow-up advice for
them?
Dave Chatterton (13:16):
Yeah, Todd. I mean, would agree wholeheartedly
with what Matt said. We have acustomer who's a bagger dealer
sold out early in the year andjust, everywhere you go, you see
grain. And I think farmers, youknow, not that the USDA yields
don't have to come down a littlebit. I agree with Matt that they
do, but I think farmers got verycreative, in putting grain away,
corn and soybeans both in theMidwest because of where prices
(13:38):
were and because of where thecarrier was.
I think the commercials, as alarge part, came in empty and
thinking they were gonna buy alot at a very attractive basis
to from their perspective, andit didn't come, and they've
gotten caught. We've seenDecatur bean basis rally over
60¢, you know, from the harvestlow. So at this point with the
rally that we've seen, call it adollar flat price in soybeans,
(14:00):
call it, you know, 30¢, 20¢ incorn, you have to be able as a
farmer to look at that and say,hey, we're pricing in some risk.
We've made a rebound. There'scarry in this marketplace, and
that carry is your friend.
So we are still a proponent ofselling rallies into the
marketplace here and being, Iguess, proactive on risk
management. There's a time toplay offense in terms of
(14:21):
marketing. There's a time toplay defense. Unfortunately, I
think we're still on thedefensive side. Doesn't mean you
have to sell everything, but youknow that that grain is going to
have to move.
And even though Basis hasrallied here, the board has
rallied as well, and there is alot of bushels that are gonna be
looking for a home come lateDecember, January, March, and so
forth. So you're competing witha lot of storage bushels out
(14:42):
there, and I think you have tobe aware of that.
Todd Gleason (14:44):
So as Dave was telling us, there are two a
couple of different ways thatfarmers are gonna have to deal
with the crop, particularly ifit's in the bin or on the farm
or at the elevator. What kindsof things are you telling them
at this point? I know you wentthrough some of this, but, they
have to deal with itdifferently. And at this point,
they've got in charges. They'vegot interest rates to worry
(15:06):
about.
What kinds of advice do you havefor them?
Curt Kimmel (15:08):
Yeah. You just gotta push the pencil, see what
your options are is the mainthing. The the thing to look at
technically, when you look atthe long term chart, Brian split
our technical analyst. He's donea fantastic job of pointing out
several important key elementson the chart. The thing in the
bean is lead contract.
$11 is kind of a swing point inthrough here. Even though the
(15:30):
deferred's gone a little higherthan that, I think you gotta
watch out on a close or see ifwe follow through. As producer,
you can go ahead and move somebeans here. Then we've been
doing some simple bull callspreads, buying $11 call,
selling a $12 call to help payfor it. That way, we go above
$11, you're on board.
If not, you got your cash inyour hand. It caps out at 12,
(15:53):
but to go an extra dollar fromhere, you know, we'll see. Same
thing on the corn chart, whereforeman's kind of head and
shoulders bottom. We had thathammer low here just not too
long ago, so the corn's got somany here for a while. But if we
kinda see this head andshoulders bottom take place in
through here, we could have somemore legs under it.
So same situation. Buy a $4.50call, sell a $5 call. That way
(16:15):
you've got a little bit ofreownership, but it's just a
matter of individual pushing thepencil and see where they are.
Todd Gleason (16:21):
Let's stay with, Brian Split in agmarket.net and
talk a little bit more aboutsoybeans. They did post an
outside update on Thursday.However, there is a gap under
that on the lead or on theNovember chart. On the daily and
weekly nearby chart, there aretwo gaps, and I'm wondering how
(16:45):
much of a draw that will be forthe technicians to push this
market lower as opposed tohigher.
Matt Bennett (16:53):
Yeah. I mean, Brian and I were talking about
this actually today, and Ibelieve one m's in the ten sixty
level, ten sixty one, somewherein there. So, you know, one
thing that he said is that, youknow, he feels like anytime you
take beans above $11, if you canestablish yourself there,
typically, you're gonna make arun towards 12. And so if we do
(17:13):
get a pullback, you know, I knowthere's a lot of guys kinda
wanting to own some beans here,especially if you got rid of
your beans, this fall and yousold over $9.60 or 70. And I
know that, there's some folksaround there that did that, and
I may have been one of them, tobe honest with you, on some
beans that we couldn't store.
So, you know, if that's thecase, you get a pullback and you
wanna get some ownership, Ithink there's a lot you can do
(17:34):
with that. The thing is is thathistorically, if you do go back
11 oh, above 11 like that andyou establish yourself, chances
are you're going above 12, maybeeven at twelve fifty. So I hate
to get too bold up, but it'scertainly what historically the
bean market does.
Dave Chatterton (17:49):
Yeah, Todd. I mean, great point by Matt that
that and I think if you look atat the way things have changed
here and and nothing againstBrian or or, you know, the
traditional way of looking atfundamentals, The market to me,
you know, this day and agetrades momentum, and it trades
computers. And the old schooltechnicians, it's not that they
don't have the right approach,but I don't think gaps matter as
(18:11):
much as they used to if I wannaput it in those terms. And and
no offense to a technician.Having said that, think the
momentum is clearly to theupside, especially in soybeans.
As you mentioned, you look atthat outside day up, didn't
have, you know, quite thatmomentum today, but when we look
at where we're going, we didmake a new high here for the
move today. And in doing so,tomorrow is the end of the
month. And then we're gonna lookat those weekly and those
(18:33):
monthly charge having a a nicereversal pattern. And Momentum
wants to trade flow. And rightnow, the flow is on the buy
side, and it's to the upside.
Now the fundamental side of themarket may or may not support
that. The China deal orwhatever, you know, whatever
iteration of that is realized iscertainly not bearish the
market. So I think we're in asituation here, Todd, where the
(18:55):
the China deal kinda hit theover in terms of what the market
was expecting. We may still seea higher old crop US carryout,
in soybeans, which is is notnecessarily bullish. But I think
in the near term here, we'regonna have to give this market a
little bit of time to see howaggressive China is in buying US
soybeans.
And right now, I think there's aa level of patience there that
in the spec community that'swilling to wait and see if
(19:17):
they're coming to the table. Wedon't have USDA, you know,
export flash sales or weeklyexport reports, but we do have
the cash market, and we dospreads that we can watch. And
so those things are gonna beclosely monitored here in the
next few weeks.
Todd Gleason (19:28):
I do wanna ask each of you to go through in
your own minds how things havechanged over the years and
decades that you have traded asit's related because you
discussed gaps and technicaltechnical markets, the seasonals
potentially, what we would referto as the winter doldrums, which
(19:49):
might come up, those kinds ofthings. Are they still in play?
Have things changed enough withI'll just simply call it black
box trade that they don't matteras much? Clearly, you think the
technicals gaps in some of theold school sorts of things are
not in play. Do they choosemoving averages?
(20:11):
What is it they're working offof?
Dave Chatterton (20:12):
Yeah, Todd. I mean, they're looking at
momentum indicators, andtechnicals do matter, and they
matter a lot, especially tothese spec traders who actually
don't know a lot about thefundamentals of grain. When you
talk to them, you would honestlybe astonished at how little they
do know. But they have they havea signal from a chart or a
computer based and algorithmicbased model that says buy or
sell. And right now, thatmomentum is to the upside.
(20:33):
So we're, you know, we're movingthat. I think we're in a
situation now where it's notthat technicals don't matter
because they do, but they'reused, I think, in a different
way than they have been in thepast. I think the seasonals
somewhat and and some of thethose issues have taken a little
bit of a backseat to what I'llcall spinning this geopolitical
wheel. We have a tweet, a truthsocial post, a new headline
(20:56):
every day about which way we'regoing, and, you know, the
markets have been somewhatsensitive to that. And so right
now, that's that's leading theleading the the horse from
behind more than likely.
But fundamentals will have theirday, but I don't know that it's
necessarily in the in the shortterm here.
Todd Gleason (21:12):
Okay. So how things changed over your years
in the business?
Curt Kimmel (21:15):
Shoot. When I started, we had the clacker
board on the wall and thenewswire in the corner. Today,
you guys got these phones thatget more information before I
do. But, yeah, we're we'resubject to social media, what
can happen electronically, newswise in the middle of the night.
It's just a different breed ofcat.
But I do believe fundamentally,though, we still have that
(21:38):
seasonality to put a low inbefore harvest as everybody
dumps grain, if not two years ofgrain, and then reloads and have
the seasonal up in intoThanksgiving. I still think
that's probably in play thisyear. As far as the gaps and so
forth, there's something towatch for guys who wanna buy
lower and the market to go downis gonna go fill that gap for if
(21:59):
you're already long, know thisis a breakaway gap, and we get
giddy up going here. But thetrend used to be your friend.
That's somewhat still true, butI think the commodity fund might
be your friend.
They're long beans. They've beenthat way for some time. They've
added to that. They were supershort to meal, and they're
covering those short mealpositions. So it's a lot of
(22:21):
moving parts.
You just don't watch theweather. You watch the funds and
social media.
Matt Bennett (22:25):
Yeah. Absolutely. I think a a couple things that
these guys said that come tomind. For one thing, the
seasonals, I think, have changedsomewhat due to the fact that we
don't raise the largest soybeancrop in the world anymore. And
so seasonals might be more basedon Brazilian weather than what
they are ours.
I mean, there's no doubt there'sa Brazilian weather market that
we have to deal with. You know,safrinha crop is obviously a lot
(22:47):
smaller than what our corn cropis, but it's still important
because they export a fairamount of corn. And so, you
know, I think whenever wheneverI first started, you know, I
mean, it's completely differentthan what it is today. A lot of
phone calls. Yeah.
You watch the screen, but nowyou watch the screen, you click
a button, and you just made atrade. You can do it very
rapidly. You know, you don'thave to handle all the paper.
It's just been an incredibleadjustment that we've seen over
(23:10):
the course of time. But theavailability of information, you
know, one thing comes to mindwhenever you talk about social
media posts is, you know, Ithink you look at this cattle
market over the last week andclearly one social media post
just spooked the daylights outof the funds and the funds sold
precipitously.
You know, talking aboutArgentina bringing in four times
(23:33):
the amount of the quota, thatwas going to raise our imports
1%. And you're not going to tellme that that ruined the market.
What ruined the market is whenwe came out and said we're going
to lower beef prices. Andwhenever someone says that
that's running in The US, it'scertainly what it did for the
funds is they said, we're gonnahave to get out of this thing.
It's too volatile.
And so, yes, you have to watchsocial media. You gotta see
(23:53):
what's going on geopolitically.It all happens very fast, much
faster than it used to.
Todd Gleason (23:58):
On the seasonality shifting from North America to
South America, I'm wondering ifthat is an issue for this
soybean market at this point.While it has been dry in parts
of Brazil, particularly MatoGrosso or the Cinder West, it's
not expected to stay that way,and they have what, by all
(24:19):
accounts at this point, a amonster crop, a enormous crop
bigger than last year that iscoming on and will be harvested
in 2026.
Matt Bennett (24:32):
Yeah. I mean, that's the assumption that you
would have to make. I mean,clearly, these weather anomalies
have been, abundant, though,over the last year or two, and
so you don't know if they'regonna get dry in parts of
Brazil. I've said all along, ifyou get a trade deal and Brazil
weather, this bean market couldget super interesting. But at
this point, I mean, we know onething's for sure.
(24:52):
They plant more soybeans. It's ayearly tradition for them. They
plant more beans every year. Andso it what it does is that
weather issues don't affecttheir ability to produce near as
much as it did five years agobecause they're planting
significantly more beans thanwhat they did five years ago. So
there's no doubt right now.
You've got to make theassumption they're gonna have a
(25:12):
pretty darn big crop. But, youknow, the news that we got this
week gives us some assurance ifit's all gonna come to pass, you
know, that we're gonna belooking at good exports
regardless.
Todd Gleason (25:24):
Eventually, over time, do you suppose that
because the Brazilian size ofthe soybean crop is so large
that The United States willbecome the residual supplier of
soybeans? And what does thatmean for the marketplace? We
have wheat as an experience.
Dave Chatterton (25:42):
Well, I think in terms of soybeans, Todd,
we're there. I mean, we ourdomestic and our biofuel use use
has certainly gone up, and it's,you know, our our record crush
month after record crush month.And thank goodness we do have
that. And I think the deal thathopefully got cut here with
China and them honoring all orpart of the those volumes
certainly helps us bridge thegap while we build out the
(26:03):
remainder of that biofuelinfrastructure and domestic
usage. But, you know, if youlook at where we're at right now
and going back to this Chinadeal and, you know, Brazilian
beans right now, they had arecord crop essentially last
year that they're pullingforward, and their values on a
five basis are 95¢, a dollar, adollar 5 cheaper than US values
(26:24):
from December forward.
So they're extending that oldcrop export window and changing
the seasonality of the marketand changing the seasonality of
the export window for The US indoing so. And start harvesting
in mid Jan and have beans on thewater by probably early Feb at a
discount to US values. And onething that, you know, I think
we've learned about China isthat they are not they are a
(26:46):
price and a value buyer. They'renot going to buy a lot of beans
at a at a premium probably tohonor a deal. So I think again,
I think we have to be a littlebit cautious.
These framework type agreementsthat aren't enforceable,
typically, China in the past hashad an exclusionary clause in
there that says, if beans areavailable elsewhere in the world
cheaper, we don't have to honorthat commitment. So we have some
(27:06):
hurdles to overcome and and anddo that. But certainly,
especially being you know, wheatwas the first example, beans are
the current example of how thatthat world flow, I think, is
changing. And we are now I won'tsay we're, I guess, a residual
supplier is is maybe not thecorrect term. But, you know,
China this year to this pointbefore the trade deal got got
(27:27):
announced needed somewhere inneighborhood of 10 to 12,000,000
metric tons of beans to get toBrazilian new crop harvest.
So maybe they buy that from TheUS, but next year with higher
acres in Brazil, they're onlygonna need 5,000,000 or
4,000,000. And the year afterthat, they can get by without
any. Now it doesn't mean theywon't buy US beans. I'm not
trying to be the bear in theirin their in the closet here, but
(27:48):
I think we have to face realitythat that's the market we're
dealing with on the export sidefor soybeans.
Todd Gleason (27:54):
Turn your attention to corn. We have a
98,000,000 acre plus corn cropnow in the bin. It was a good
crop. The question is, how good?And I'm wondering how much
pressure will come on themarketplace simply because the
number of acres of corn that weharvested.
Curt Kimmel (28:13):
Well, listen to the commercial guys. They say
there's just a wall of graincoming after the first of the
year. We'll But this cornyield's still out to the jury
yet because when I visit withguys, you talk to them one day,
they're 20 bushel below lastyear. You talk to them, oh, you
know, a week later, that's 10bushel better than last year. So
I think here in the Midwest,central part at least, it's not
(28:35):
there.
There's portions of Iowa that Ithink is really struggling. So
even though we have more acres,I don't necessarily think the
yield's there. But corn demand'shuge. It's strong. I think
corn's got some legs under it,and I think, you know, ethanol
exports are good.
So when you look at the cornsupply demand balance sheet with
you lower that yield a littlebit, I I think it's gonna be a
(28:58):
little tighter than what we'veseen here last. But where are we
with the USDA on crop reports?Because they were not out in the
field taking surveys. So are wegonna rely on farmer surveys?
Todd Gleason (29:09):
That would come in December, and it seems like it
may be the only place that wehave to rely upon.
Matt Bennett (29:14):
Yeah. In December, you usually take that month off,
you know, so we may actuallyhave to work in December this
year. You know, last year, Imean, clearly, we it would have
been nice to know that lowercorn yield that was coming. They
they knew it before January. Youknow?
And that's something I've talkedto them about, you know, but
regardless, whenever I look atthe corn crop, in my opinion,
(29:34):
it's it's again lower than whatUSDA said. One thing I gotta be
cautious on is I do think USDA,little rich in their feed and
residual usage number. That'sgonna have to come down at some
point. And I think when you takeyield down, you're gonna bring
that down to an extent. But atthe same time, I think the
combination, you know, of alittle bit tighter balance sheet
than what some people have beentrading or thinking about along
(29:56):
with a cash strapped grower thatI alluded to at the start of the
program, you know, I don't knowwhat corn acres are gonna come
in at this year, especially ifyou establish no beans, 26 over
$11.
I mean, there's a lot ofconversations I think that are
gonna be had that won't be allthat comfortable, where a grower
is gonna come to the realizationthey have to plant beans on some
acres. And so I think your cornbeans beans to corn guys tell
(30:19):
you bean acres are really gonnacome up with 98,000,000 acres
planted in '25. But corn oncorn, just looking at the cash
flow, it looks rough. I mean, ifyou're gonna put on the
fertilizer it takes for corn oncorn for you to feel good about
producing the yield that youthink you need to produce, You
can't come up with black ink atall unless you're very
(30:40):
unrealistic as far as whatyou're spending or you're just
cutting fertilizer. So I thinkthat's gonna be a very
interesting thing moving forwardis what what kind of acres are
we gonna get, is it gonna beenough to satisfy demand?
Todd Gleason (30:50):
One final thing to talk about on the international
front is it's related to corn isColombia, the number three
importer of US corn. Free tradeagreement that was pinned under
the Obama administration in2013. There is a big row between
president Trump and thepresident of Colombia at this
point. I'm wondering if there isvery much concern that Colombia
(31:16):
could disappear from The USexport market for corn.
Dave Chatterton (31:20):
Yeah, Todd. It's a great question and
certainly something that needsto be watched. I think when we
look at that, Colombia is in alittle different situation than
a than a China or some of theseother competing countries and
that they probably do need TheUS a little bit more than than
than we need them. And and Ihate to say that. It sounds
crass.
But in that sense, you know,they they are third largest
buyer, but they're not the endall be all. And we need you
(31:43):
know, because of these you know,the USDA adding in an additional
three and a half million acres,you know, this summer and fall.
We need every bushel of demandthat we can get. Corn is a
situation of a record recordsupply via, you know, old crop
stocks and a record productionyear and record demand. And as,
you know, Matt alluded to, Ithink the feed demand number can
come down a little bit.
We need to keep that export linewhere it's at. And for corn to
(32:06):
rally, you know, we need anevent. We need a South American
weather event. We need somethingthat changes. And so, you know,
keeping that demand basetogether, I think, is key for
corn.
And, you know, you go into nextyear, the acre situation, I I
don't know where we're gonna be.There was talk today about, you
know, congress still working ona 12,000,000,000 bushel
$12,000,000,000, excuse me, aidpackage for US farmers. And if
(32:29):
we get the Trump deal and if weget those dollars and we get to
spring, I'm not sure what theacreage ends up being. But to
Matt's point, there I thinkthere's a natural rotation out
of high corn acres this year,there are going to be a certain
amount of producers who arefinancially pinched that may not
be able to to to to buy theinputs to plant the corn that
they wanna plant in terms ofacreage. So
Todd Gleason (32:50):
Let's get a final word from each of you, I think,
Kurt Kimmel. We'll start withyou from agmarket.net.
Curt Kimmel (32:56):
Wasn't that too long ago you saw on the media
and magazines, the Chinesepremier and Putin having drinks
and having a good time, so I'mnot quite for sure. Putin might
be asking what's going on there.So we'll we'll see. Putin said
he wanted peace, and there's nopeace. So, you know, deal's a
deal, but they're gonna followthrough or not.
(33:17):
So the jury's out. We'll seewhat happens. But even though
we're focused on this crop year,what to do with the bushels we
have, don't fall asleep on 26crop. Matt Bennett?
Matt Bennett (33:28):
Yeah. I would agree with Kurt. And I think,
you know, one thing that wegotta be really careful of is
our typical protocol is to getbullish when the market rallies.
And we just had one heck of asoybean rally. And I'm not
saying that you sell everything,but rewarding a rally isn't
necessarily such a bad idea.
And, yes, we need to take a lookat 26. I mean, I'm of the
opinion that on soybeans, I'dprobably be a little more
(33:49):
willing seller than what I wouldbe on corn. I do think corn's
gonna have to buy a few acres ifthis bean market stays as strong
as what it is. But by all means,doing nothing is not the right
thing to do at this stage.
Todd Gleason (34:00):
And Dave Chatterton.
Dave Chatterton (34:01):
Yeah. I mean, kudos to what these guys said. I
mean, you know, have to staydisciplined into your plan here,
and I think you have to rewardrallies. Geopolitics and
geopolitical turmoil, I guess,I'll say, are here to stay or at
least they're here to stay aslong as Trump, I think, is in
office. And there's a good sideto that and and certainly a bad
side to that.
But I think you have to bewilling to, to make some sales
(34:23):
when the market does rally andgive you the opportunity to
either break even in terms of ofone commodity or maybe make a
little bit money in terms of thecorn. So in doing so, you know,
keep your eye again on '26. Weare gonna see if we see a record
South American crop and we seebig, mean acres in The US, that
$11 number could certainly beyour friend. Options and and,
you know, things that you can doon the board are always
(34:46):
available to give you someupside and and and do so for a
known cost and a known riskdepending on how you structure
them. So just, you know, play alittle defense here.
We'll have our our offensivedays, but I think for the
foreseeable future, we have tobe a little bit cautious and and
be willing to take a kind of a asmall profit here and and keep
the operation going forward.
Todd Gleason (35:05):
Commodity Week is a production of Illinois Public
Media. You may find and listento the whole of the program
anytime you'd like atwillag.org, willag.0rg. Our
thanks go to our panelists thisweek, including Dave Chatterton
from Strategic Farm Marketingand from agmarket.net, Kurt
Kimmel and Matt Bennett, I'mUniversity of Illinois
Extinction's Todd Gleeson.
This is the October 30 edition of Commodity
(00:03):
Week. Todd Gleason's servicesare made available to WILL by
Welcome to Commodity Week. I amTodd Gleason. Our panelists for
the day include Dave Chatterton.He is with Strategic Farm
Marketing right here inChampaign County, Illinois.
(00:23):
We're also joined by the AgMarket team, including from
Normal, Illinois, Kurt Kimmel,as well as Matt Bennett from
Windsor, Illinois. CommodityWeek, of course, is a production
of Illinois Public Media. Youcan find us online at
willag.org, willag.org, whereyou can buy your tickets today
for the Farm Assets Conferencethat's coming up on the
(00:45):
December. It'll be inBloomington at the AGRA Center
this year. And the IPAS or theIllinois Farm Economic Summit
Series is the following week inDeKalb as well as Peoria and
Mount Vernon.
All the tickets are availableand more details at willag.org
willag.0rg. Let's get a list ofitems that we should talk about.
(01:09):
I know that on the list, DaveChatterton, will be the Thursday
agreement between The UnitedStates and China. What else have
you been watching?
Dave Chatterton (01:19):
Yeah, Todd. Obviously, of the list is
geopolitics here. I think alsowe need to talk about the South
American situation and in termsof they are planting and getting
ready to grow a crop in whatlooks to be a record crop.
Weather so far there has beenhighly favorable, I think, for
for their outcome. Still a longways to go, and certainly that's
a soybean conversation, notnecessarily a corn conversation
at this point.
(01:39):
And you move beyond that, and Ithink there's still a lot of old
crop in the hands of producershere, that's coming out of
harvest and looking for a planor looking for, an execution on
those bushels, whether it's youknow, do we hold? Do we do we do
we sell a carry now? Do we wait?All kinds of opportunities here,
all kinds of, I guess, ideas onhow that should be done.
Todd Gleason (02:00):
Kurt Kimmel from agmarket.net on your list.
Curt Kimmel (02:03):
Well, I'd agree with what Dave said there. You
could do a whole three dayseminar on all those topics
right there. But, yeah, just alot of questions to go through.
The volatility in themarketplace picked up. So
there's gonna be a lot
Todd Gleason (02:16):
of different things to watch here as we move
forward. And finally, MattBennett.
Matt Bennett (02:21):
Yeah. I mean, I would agree. I I think whenever
we look at for from a timelinessstandpoint, you look at, you
know, input cost fertilizer.Guys are putting, trying to
figure out what they're gonna dofor next year. And I do think
that seeing, Nova twenty sixpoke its head above $11 this
week, makes an interestingdiscussion, with a cash strap
grower.
Todd Gleason (02:39):
When you and I were talking on Thursday
afternoon during the closingmarket report, it appeared
certainly that secretary Rollinswas telling us that the deal in
China was 12,000,000 metric tonsby January and then 25,000,000
metric tons of soybeans to Chinain '26, '27, and '28. All looked
(03:04):
like calendar years, but it'sclearly not quite that simple.
It could be, but we don't knowwhether it's marketing year at
this point or calendar year.Does it make much of a
difference one versus the other?
Matt Bennett (03:18):
Yeah. It makes a lot of difference. If we're
gonna do marketing year, thenthat means if it's 12,000,000
tons, it's between now andSeptember, you know? And and do
we include the the beans thatthey purchased, you know,
earlier in the year? I mean,clearly, from a marketing
standpoint, they haven'tpurchased anything.
But, I mean, there's a wholedifferent set of reasons we
could look at this differently.But let's just say it is
(03:41):
calendar year. If it's calendaryear, then that means in the
next fourteen months, we'regonna see 37,000,000 metric tons
of soybeans exported to China.That'd be huge. And what it
would be, it'd be a stabilizingfactor.
It it would make you feel goodabout the fact that, you know,
the balance sheet isn't as outof whack as some of us were
(04:01):
afraid that it would be. I mean,whenever we looked at China, it
was just completely absent.Yeah. Export inspections haven't
been too bad without China, but,clearly, the USDA was gonna have
to drastically lower exports outof their balance sheet. Now
maybe they don't.
And so you're probably stilllooking at a snug balance sheet.
But, yeah, it absolutely doesmatter, Todd.
Todd Gleason (04:19):
And if it's the other way around and it's not
the calendar year and it's themarketing year?
Matt Bennett (04:26):
You know, if it's the marketing year, in all
honesty, I don't think that it'sbearish, so to speak, but it
certainly isn't as bullish. Imean, what it does is it keeps
the you know, some of theseexports in your balance sheet,
first of all. Second of all, ifthere's an assurance that is
signed that we see 25 for threestraight years, in my opinion,
(04:46):
what it does, especially aswe're ramping up domestic
consumption of soybeans, Itkeeps your balance sheet pretty
snug, and I think it calls formore soybean acres in the in the
coming years.
Todd Gleason (04:55):
The cynic d and me says there probably won't be a
signed document, but maybe I'mwrong about that. It is very
transactional. We'll find outwhether that's the case. Now I
do want to get the idea DaveChatterton from you about this
12,000,000 metric tons whetherit is calendar year or this
(05:16):
marketing year. Either way, itdoesn't really change that much.
I don't think what USDA has onits books in the September World
Ag supply and demand estimate.And has it really changed the
fundamentals of the marketplacevery much?
Dave Chatterton (05:34):
Yeah, Todd. I mean, a little bit to unpack
there. The first thing I wouldsay is that anytime it's a deal
with China and anytime it's anunsigned deal with China, you
know, we have to use a littlebit of caution here. China has a
strong historical record of notliving up to these agreements.
So I don't wanna be, you know,saying that what what happened
today was bearish because it'scertainly not.
We're in a much better positionnow than we were a month ago,
(05:56):
two months ago, or earlier inthe year. And so whatever China
buys is a bonus at this point.But if you break out that
12,000,000 and depending onwhether it's 12,000,000 for this
season, 12,000,000 for thiscalendar year, or 12,000,000 for
the marketing year, I thinkmakes a pretty big difference.
Because if you look at wherewe're at, China this calendar
year has bought almost 6,000,000metric tons of beans already.
(06:16):
Now those were old crop beans.
And we're now in the new cropseason where they bought three
cargoes or a 180,000 metrictons. Last year, China bought 22
and a half million metric tonstotal. So we have a long way to
go. So if it's this year,calendar year, and we've already
bought 6,000,000, we only have6,000,000 to go. And if it's
(06:37):
12,000,000, we're doubling thatinto next fall.
Very big difference there interms of what that carryout is
going to look like in 2526. Itcould be 250, 200,000,
200,000,000 on the low side. Itcould be 500 on the high side
depending on how that goes. Andthere's also been this mention
of 19,000,000 metric tons forthe other Southeast Asian
(06:58):
countries. When we go back andlook at the math, typically you
look at those countries20,000,000 a year about what
they buy.
So that's great, but there wasno time frame assigned to that.
And we don't know that that'sreally anything more than they
would normally buy. So I thinkthere's still a lot of
unanswered questions here. Andwe have to, I hate to say,
proceed with a little bit ofcaution. Does it is it bearish
(07:21):
the market from these levels?
I don't think so as as as Mattalluded to, but how bullish it
becomes, I think we have to workour way into that.
Todd Gleason (07:29):
Well, thanks for adding one more bit of
complexity to this by countingwhat we've already sold in this
calendar year into that numberand making the total 6,000,000
metric tons through January asopposed to 12. A lot easier to
ship, by the way, if we if wecan do that over the three
months period. One last thing onthis topic and then we can move
on. And I think this isimportant related to the 26, 27,
(07:54):
and 28, 25,000,000 metric tonexpected purchases by China.
What has been agreed to is a oneyear truce at this point.
That mostly excludes all of nextyear's and every crop thereafter
if something goes wrong or awry.And I'm wondering whether that
(08:19):
makes a difference to you atthis point or not, Kurt, or
whether it's just something tobe aware of.
Curt Kimmel (08:25):
When you look at long term, boy, I mean, next
week's long term, so we'll seewhat unfolds. But three years
out, you look at No26 beans,they were down on the day. So I
think the urgency is up fronthere versus down the road. But
one thing we've got to rememberis all the strength is up front,
the urgency is up front. Thisrally has put us most expensive
(08:48):
beans in the world.
So where's the rest of the tradegoing to go? To the Southern
Hemisphere. But from here on outwe'll see if they follow through
some of the interviews with theAsian traders where we are being
encouraged to look at buyingbeans from The U. S. So is it
mainly government's going tocome in and buy the beans to
(09:08):
replace their reserve or some ofthe private or other industries
in China crushers going to buythese beans?
So there's a lot in front of usto see. But as a producer, I
think we gotta manage some riskhere at
Todd Gleason (09:21):
this higher level in case this whole thing falls
apart because Trump did addressthe defense department to test
nuclear weapons. And one finalnote before we leave this. As we
look forward through the comingyear, you might watch Kafka as
the purchaser. It is the onlycompany in China that is owned
(09:41):
by the Communist Party, and Imake mention of that because
there remains a 35% tariff onsoybeans imported into China
from The United States. COFCOwould be the easiest one for
that tariff to be let go from bythe party itself.
Now let's turn our attention tothe fundamentals of the
marketplace. Where do we standtoday as it relates to sales
(10:07):
going across the scale and whatproducers should be doing? They
don't have much time probablyonly corn at this point that's
going to cross the scale. How dothey deal with that and whether
they want to pay the in chargeor to look at making a cash
sale?
Curt Kimmel (10:25):
Well for the most part I think the central part of
the Midwest is fairly wrappedup. They've already made a
decision on what to do with it.I think the top priority as a
producer you got to kind of sitdown, see where the market was
when you put in storage or soldit, see where the market is now
to see if it paid the in charge.My past experience, it's awful
(10:47):
hard to get a producer to movecash grade once they paid the in
charge or filled a bin. So justneed to push the pencil to kinda
see where you are.
The simplest thing to do is, ifyou wanna hang on, at least put
a price floor in here and letthe thing ride for a while.
Todd Gleason (11:03):
So corn and soybeans have rallied. Basis has
tightened up in our part of theworld for sure over time. What's
that telling you about themarketplace? Is it that farmers
are are done and they lock thebin door, or is it a smaller
crop combination of both?
Matt Bennett (11:21):
You know, I think that the assumption most people
make whenever you see basistighten up the way that it has
is that it's a smaller crop, butyou gotta be careful in making
that assumption. You know, I wasjust talking about this on a
podcast, just last week, and Isaid, there's been more bags
this year than ever before. Imean, yeah, I've been across
quite a bit of the Midwest, andI see bags everywhere I go. And
(11:42):
so people have bagged corn andsoybeans. They saw the carry in
the market.
They said, hey. I'm not gonnasell at this wide basis. I'm
gonna go ahead and sell thecarry. Hopefully, sell the
carry, but they saw the carry,and that's what put it in the
bag. I had a guy that actuallyemailed me the following day and
said that he tried to buy abagger in August and could not
find one in North America.
(12:03):
And so that tells me thatthere's been more stuff bagged
this year. Guys have put stuffon in an old shop that's got a
concrete floor, government bins,you name it. But we've got a lot
of corn that and soybeans thatpeople are holding on to. And so
I don't think that you can makethe assumption the crop's
smaller. Do I think the crop'ssmaller than USDA?
Yes. I do think that. But is itwildly smaller? I'm not sure
(12:26):
about that. I mean, we hear alot of, horror stories on
yields, and then you turn aroundand talk to someone that had 280
bushel corn.
So, there's been some awfullygood corn around. I think it'll
average out, you know, three,four bushel below USDA on corn,
currently would be where I'd I'dbe at, and maybe just a shade
under on soybeans. I don't thinkit's wildly lower on beans.
Todd Gleason (12:45):
Sage wisdom from Darrell Good that you and I both
learned in the class or for meover twenty or thirty years of
interviewing him every week wasif something made you make a
marketing change in your planssell that today or at least a
portion of that crop. If youwere bagging it sell it. So now
(13:05):
let's go with farmers who have acrop that they put away, that
they did not make that sale on.What's your follow-up advice for
them?
Dave Chatterton (13:16):
Yeah, Todd. I mean, would agree wholeheartedly
with what Matt said. We have acustomer who's a bagger dealer
sold out early in the year andjust, everywhere you go, you see
grain. And I think farmers, youknow, not that the USDA yields
don't have to come down a littlebit. I agree with Matt that they
do, but I think farmers got verycreative, in putting grain away,
corn and soybeans both in theMidwest because of where prices
(13:38):
were and because of where thecarrier was.
I think the commercials, as alarge part, came in empty and
thinking they were gonna buy alot at a very attractive basis
to from their perspective, andit didn't come, and they've
gotten caught. We've seenDecatur bean basis rally over
60¢, you know, from the harvestlow. So at this point with the
rally that we've seen, call it adollar flat price in soybeans,
(14:00):
call it, you know, 30¢, 20¢ incorn, you have to be able as a
farmer to look at that and say,hey, we're pricing in some risk.
We've made a rebound. There'scarry in this marketplace, and
that carry is your friend.
So we are still a proponent ofselling rallies into the
marketplace here and being, Iguess, proactive on risk
management. There's a time toplay offense in terms of
(14:21):
marketing. There's a time toplay defense. Unfortunately, I
think we're still on thedefensive side. Doesn't mean you
have to sell everything, but youknow that that grain is going to
have to move.
And even though Basis hasrallied here, the board has
rallied as well, and there is alot of bushels that are gonna be
looking for a home come lateDecember, January, March, and so
forth. So you're competing witha lot of storage bushels out
(14:42):
there, and I think you have tobe aware of that.
Todd Gleason (14:44):
So as Dave was telling us, there are two a
couple of different ways thatfarmers are gonna have to deal
with the crop, particularly ifit's in the bin or on the farm
or at the elevator. What kindsof things are you telling them
at this point? I know you wentthrough some of this, but, they
have to deal with itdifferently. And at this point,
they've got in charges. They'vegot interest rates to worry
(15:06):
about.
What kinds of advice do you havefor them?
Curt Kimmel (15:08):
Yeah. You just gotta push the pencil, see what
your options are is the mainthing. The the thing to look at
technically, when you look atthe long term chart, Brian split
our technical analyst. He's donea fantastic job of pointing out
several important key elementson the chart. The thing in the
bean is lead contract.
$11 is kind of a swing point inthrough here. Even though the
(15:30):
deferred's gone a little higherthan that, I think you gotta
watch out on a close or see ifwe follow through. As producer,
you can go ahead and move somebeans here. Then we've been
doing some simple bull callspreads, buying $11 call,
selling a $12 call to help payfor it. That way, we go above
$11, you're on board.
If not, you got your cash inyour hand. It caps out at 12,
(15:53):
but to go an extra dollar fromhere, you know, we'll see. Same
thing on the corn chart, whereforeman's kind of head and
shoulders bottom. We had thathammer low here just not too
long ago, so the corn's got somany here for a while. But if we
kinda see this head andshoulders bottom take place in
through here, we could have somemore legs under it.
So same situation. Buy a $4.50call, sell a $5 call. That way
(16:15):
you've got a little bit ofreownership, but it's just a
matter of individual pushing thepencil and see where they are.
Todd Gleason (16:21):
Let's stay with, Brian Split in agmarket.net and
talk a little bit more aboutsoybeans. They did post an
outside update on Thursday.However, there is a gap under
that on the lead or on theNovember chart. On the daily and
weekly nearby chart, there aretwo gaps, and I'm wondering how
(16:45):
much of a draw that will be forthe technicians to push this
market lower as opposed tohigher.
Matt Bennett (16:53):
Yeah. I mean, Brian and I were talking about
this actually today, and Ibelieve one m's in the ten sixty
level, ten sixty one, somewherein there. So, you know, one
thing that he said is that, youknow, he feels like anytime you
take beans above $11, if you canestablish yourself there,
typically, you're gonna make arun towards 12. And so if we do
(17:13):
get a pullback, you know, I knowthere's a lot of guys kinda
wanting to own some beans here,especially if you got rid of
your beans, this fall and yousold over $9.60 or 70. And I
know that, there's some folksaround there that did that, and
I may have been one of them, tobe honest with you, on some
beans that we couldn't store.
So, you know, if that's thecase, you get a pullback and you
wanna get some ownership, Ithink there's a lot you can do
(17:34):
with that. The thing is is thathistorically, if you do go back
11 oh, above 11 like that andyou establish yourself, chances
are you're going above 12, maybeeven at twelve fifty. So I hate
to get too bold up, but it'scertainly what historically the
bean market does.
Dave Chatterton (17:49):
Yeah, Todd. I mean, great point by Matt that
that and I think if you look atat the way things have changed
here and and nothing againstBrian or or, you know, the
traditional way of looking atfundamentals, The market to me,
you know, this day and agetrades momentum, and it trades
computers. And the old schooltechnicians, it's not that they
don't have the right approach,but I don't think gaps matter as
(18:11):
much as they used to if I wannaput it in those terms. And and
no offense to a technician.Having said that, think the
momentum is clearly to theupside, especially in soybeans.
As you mentioned, you look atthat outside day up, didn't
have, you know, quite thatmomentum today, but when we look
at where we're going, we didmake a new high here for the
move today. And in doing so,tomorrow is the end of the
month. And then we're gonna lookat those weekly and those
(18:33):
monthly charge having a a nicereversal pattern. And Momentum
wants to trade flow. And rightnow, the flow is on the buy
side, and it's to the upside.
Now the fundamental side of themarket may or may not support
that. The China deal orwhatever, you know, whatever
iteration of that is realized iscertainly not bearish the
market. So I think we're in asituation here, Todd, where the
(18:55):
the China deal kinda hit theover in terms of what the market
was expecting. We may still seea higher old crop US carryout,
in soybeans, which is is notnecessarily bullish. But I think
in the near term here, we'regonna have to give this market a
little bit of time to see howaggressive China is in buying US
soybeans.
And right now, I think there's aa level of patience there that
in the spec community that'swilling to wait and see if
(19:17):
they're coming to the table. Wedon't have USDA, you know,
export flash sales or weeklyexport reports, but we do have
the cash market, and we dospreads that we can watch. And
so those things are gonna beclosely monitored here in the
next few weeks.
Todd Gleason (19:28):
I do wanna ask each of you to go through in
your own minds how things havechanged over the years and
decades that you have traded asit's related because you
discussed gaps and technicaltechnical markets, the seasonals
potentially, what we would referto as the winter doldrums, which
(19:49):
might come up, those kinds ofthings. Are they still in play?
Have things changed enough withI'll just simply call it black
box trade that they don't matteras much? Clearly, you think the
technicals gaps in some of theold school sorts of things are
not in play. Do they choosemoving averages?
(20:11):
What is it they're working offof?
Dave Chatterton (20:12):
Yeah, Todd. I mean, they're looking at
momentum indicators, andtechnicals do matter, and they
matter a lot, especially tothese spec traders who actually
don't know a lot about thefundamentals of grain. When you
talk to them, you would honestlybe astonished at how little they
do know. But they have they havea signal from a chart or a
computer based and algorithmicbased model that says buy or
sell. And right now, thatmomentum is to the upside.
(20:33):
So we're, you know, we're movingthat. I think we're in a
situation now where it's notthat technicals don't matter
because they do, but they'reused, I think, in a different
way than they have been in thepast. I think the seasonals
somewhat and and some of thethose issues have taken a little
bit of a backseat to what I'llcall spinning this geopolitical
wheel. We have a tweet, a truthsocial post, a new headline
(20:56):
every day about which way we'regoing, and, you know, the
markets have been somewhatsensitive to that. And so right
now, that's that's leading theleading the the horse from
behind more than likely.
But fundamentals will have theirday, but I don't know that it's
necessarily in the in the shortterm here.
Todd Gleason (21:12):
Okay. So how things changed over your years
in the business?
Curt Kimmel (21:15):
Shoot. When I started, we had the clacker
board on the wall and thenewswire in the corner. Today,
you guys got these phones thatget more information before I
do. But, yeah, we're we'resubject to social media, what
can happen electronically, newswise in the middle of the night.
It's just a different breed ofcat.
But I do believe fundamentally,though, we still have that
(21:38):
seasonality to put a low inbefore harvest as everybody
dumps grain, if not two years ofgrain, and then reloads and have
the seasonal up in intoThanksgiving. I still think
that's probably in play thisyear. As far as the gaps and so
forth, there's something towatch for guys who wanna buy
lower and the market to go downis gonna go fill that gap for if
(21:59):
you're already long, know thisis a breakaway gap, and we get
giddy up going here. But thetrend used to be your friend.
That's somewhat still true, butI think the commodity fund might
be your friend.
They're long beans. They've beenthat way for some time. They've
added to that. They were supershort to meal, and they're
covering those short mealpositions. So it's a lot of
(22:21):
moving parts.
You just don't watch theweather. You watch the funds and
social media.
Matt Bennett (22:25):
Yeah. Absolutely. I think a a couple things that
these guys said that come tomind. For one thing, the
seasonals, I think, have changedsomewhat due to the fact that we
don't raise the largest soybeancrop in the world anymore. And
so seasonals might be more basedon Brazilian weather than what
they are ours.
I mean, there's no doubt there'sa Brazilian weather market that
we have to deal with. You know,safrinha crop is obviously a lot
(22:47):
smaller than what our corn cropis, but it's still important
because they export a fairamount of corn. And so, you
know, I think whenever wheneverI first started, you know, I
mean, it's completely differentthan what it is today. A lot of
phone calls. Yeah.
You watch the screen, but nowyou watch the screen, you click
a button, and you just made atrade. You can do it very
rapidly. You know, you don'thave to handle all the paper.
It's just been an incredibleadjustment that we've seen over
(23:10):
the course of time. But theavailability of information, you
know, one thing comes to mindwhenever you talk about social
media posts is, you know, Ithink you look at this cattle
market over the last week andclearly one social media post
just spooked the daylights outof the funds and the funds sold
precipitously.
You know, talking aboutArgentina bringing in four times
(23:33):
the amount of the quota, thatwas going to raise our imports
1%. And you're not going to tellme that that ruined the market.
What ruined the market is whenwe came out and said we're going
to lower beef prices. Andwhenever someone says that
that's running in The US, it'scertainly what it did for the
funds is they said, we're gonnahave to get out of this thing.
It's too volatile.
And so, yes, you have to watchsocial media. You gotta see
(23:53):
what's going on geopolitically.It all happens very fast, much
faster than it used to.
Todd Gleason (23:58):
On the seasonality shifting from North America to
South America, I'm wondering ifthat is an issue for this
soybean market at this point.While it has been dry in parts
of Brazil, particularly MatoGrosso or the Cinder West, it's
not expected to stay that way,and they have what, by all
(24:19):
accounts at this point, a amonster crop, a enormous crop
bigger than last year that iscoming on and will be harvested
in 2026.
Matt Bennett (24:32):
Yeah. I mean, that's the assumption that you
would have to make. I mean,clearly, these weather anomalies
have been, abundant, though,over the last year or two, and
so you don't know if they'regonna get dry in parts of
Brazil. I've said all along, ifyou get a trade deal and Brazil
weather, this bean market couldget super interesting. But at
this point, I mean, we know onething's for sure.
(24:52):
They plant more soybeans. It's ayearly tradition for them. They
plant more beans every year. Andso it what it does is that
weather issues don't affecttheir ability to produce near as
much as it did five years agobecause they're planting
significantly more beans thanwhat they did five years ago. So
there's no doubt right now.
You've got to make theassumption they're gonna have a
(25:12):
pretty darn big crop. But, youknow, the news that we got this
week gives us some assurance ifit's all gonna come to pass, you
know, that we're gonna belooking at good exports
regardless.
Todd Gleason (25:24):
Eventually, over time, do you suppose that
because the Brazilian size ofthe soybean crop is so large
that The United States willbecome the residual supplier of
soybeans? And what does thatmean for the marketplace? We
have wheat as an experience.
Dave Chatterton (25:42):
Well, I think in terms of soybeans, Todd,
we're there. I mean, we ourdomestic and our biofuel use use
has certainly gone up, and it's,you know, our our record crush
month after record crush month.And thank goodness we do have
that. And I think the deal thathopefully got cut here with
China and them honoring all orpart of the those volumes
certainly helps us bridge thegap while we build out the
(26:03):
remainder of that biofuelinfrastructure and domestic
usage. But, you know, if youlook at where we're at right now
and going back to this Chinadeal and, you know, Brazilian
beans right now, they had arecord crop essentially last
year that they're pullingforward, and their values on a
five basis are 95¢, a dollar, adollar 5 cheaper than US values
(26:24):
from December forward.
So they're extending that oldcrop export window and changing
the seasonality of the marketand changing the seasonality of
the export window for The US indoing so. And start harvesting
in mid Jan and have beans on thewater by probably early Feb at a
discount to US values. And onething that, you know, I think
we've learned about China isthat they are not they are a
(26:46):
price and a value buyer. They'renot going to buy a lot of beans
at a at a premium probably tohonor a deal. So I think again,
I think we have to be a littlebit cautious.
These framework type agreementsthat aren't enforceable,
typically, China in the past hashad an exclusionary clause in
there that says, if beans areavailable elsewhere in the world
cheaper, we don't have to honorthat commitment. So we have some
(27:06):
hurdles to overcome and and anddo that. But certainly,
especially being you know, wheatwas the first example, beans are
the current example of how thatthat world flow, I think, is
changing. And we are now I won'tsay we're, I guess, a residual
supplier is is maybe not thecorrect term. But, you know,
China this year to this pointbefore the trade deal got got
(27:27):
announced needed somewhere inneighborhood of 10 to 12,000,000
metric tons of beans to get toBrazilian new crop harvest.
So maybe they buy that from TheUS, but next year with higher
acres in Brazil, they're onlygonna need 5,000,000 or
4,000,000. And the year afterthat, they can get by without
any. Now it doesn't mean theywon't buy US beans. I'm not
trying to be the bear in theirin their in the closet here, but
(27:48):
I think we have to face realitythat that's the market we're
dealing with on the export sidefor soybeans.
Todd Gleason (27:54):
Turn your attention to corn. We have a
98,000,000 acre plus corn cropnow in the bin. It was a good
crop. The question is, how good?And I'm wondering how much
pressure will come on themarketplace simply because the
number of acres of corn that weharvested.
Curt Kimmel (28:13):
Well, listen to the commercial guys. They say
there's just a wall of graincoming after the first of the
year. We'll But this cornyield's still out to the jury
yet because when I visit withguys, you talk to them one day,
they're 20 bushel below lastyear. You talk to them, oh, you
know, a week later, that's 10bushel better than last year. So
I think here in the Midwest,central part at least, it's not
(28:35):
there.
There's portions of Iowa that Ithink is really struggling. So
even though we have more acres,I don't necessarily think the
yield's there. But corn demand'shuge. It's strong. I think
corn's got some legs under it,and I think, you know, ethanol
exports are good.
So when you look at the cornsupply demand balance sheet with
you lower that yield a littlebit, I I think it's gonna be a
(28:58):
little tighter than what we'veseen here last. But where are we
with the USDA on crop reports?Because they were not out in the
field taking surveys. So are wegonna rely on farmer surveys?
Todd Gleason (29:09):
That would come in December, and it seems like it
may be the only place that wehave to rely upon.
Matt Bennett (29:14):
Yeah. In December, you usually take that month off,
you know, so we may actuallyhave to work in December this
year. You know, last year, Imean, clearly, we it would have
been nice to know that lowercorn yield that was coming. They
they knew it before January. Youknow?
And that's something I've talkedto them about, you know, but
regardless, whenever I look atthe corn crop, in my opinion,
(29:34):
it's it's again lower than whatUSDA said. One thing I gotta be
cautious on is I do think USDA,little rich in their feed and
residual usage number. That'sgonna have to come down at some
point. And I think when you takeyield down, you're gonna bring
that down to an extent. But atthe same time, I think the
combination, you know, of alittle bit tighter balance sheet
than what some people have beentrading or thinking about along
(29:56):
with a cash strapped grower thatI alluded to at the start of the
program, you know, I don't knowwhat corn acres are gonna come
in at this year, especially ifyou establish no beans, 26 over
$11.
I mean, there's a lot ofconversations I think that are
gonna be had that won't be allthat comfortable, where a grower
is gonna come to the realizationthey have to plant beans on some
acres. And so I think your cornbeans beans to corn guys tell
(30:19):
you bean acres are really gonnacome up with 98,000,000 acres
planted in '25. But corn oncorn, just looking at the cash
flow, it looks rough. I mean, ifyou're gonna put on the
fertilizer it takes for corn oncorn for you to feel good about
producing the yield that youthink you need to produce, You
can't come up with black ink atall unless you're very
(30:40):
unrealistic as far as whatyou're spending or you're just
cutting fertilizer. So I thinkthat's gonna be a very
interesting thing moving forwardis what what kind of acres are
we gonna get, is it gonna beenough to satisfy demand?
Todd Gleason (30:50):
One final thing to talk about on the international
front is it's related to corn isColombia, the number three
importer of US corn. Free tradeagreement that was pinned under
the Obama administration in2013. There is a big row between
president Trump and thepresident of Colombia at this
point. I'm wondering if there isvery much concern that Colombia
(31:16):
could disappear from The USexport market for corn.
Dave Chatterton (31:20):
Yeah, Todd. It's a great question and
certainly something that needsto be watched. I think when we
look at that, Colombia is in alittle different situation than
a than a China or some of theseother competing countries and
that they probably do need TheUS a little bit more than than
than we need them. And and Ihate to say that. It sounds
crass.
But in that sense, you know,they they are third largest
buyer, but they're not the endall be all. And we need you
(31:43):
know, because of these you know,the USDA adding in an additional
three and a half million acres,you know, this summer and fall.
We need every bushel of demandthat we can get. Corn is a
situation of a record recordsupply via, you know, old crop
stocks and a record productionyear and record demand. And as,
you know, Matt alluded to, Ithink the feed demand number can
come down a little bit.
We need to keep that export linewhere it's at. And for corn to
(32:06):
rally, you know, we need anevent. We need a South American
weather event. We need somethingthat changes. And so, you know,
keeping that demand basetogether, I think, is key for
corn.
And, you know, you go into nextyear, the acre situation, I I
don't know where we're gonna be.There was talk today about, you
know, congress still working ona 12,000,000,000 bushel
$12,000,000,000, excuse me, aidpackage for US farmers. And if
(32:29):
we get the Trump deal and if weget those dollars and we get to
spring, I'm not sure what theacreage ends up being. But to
Matt's point, there I thinkthere's a natural rotation out
of high corn acres this year,there are going to be a certain
amount of producers who arefinancially pinched that may not
be able to to to to buy theinputs to plant the corn that
they wanna plant in terms ofacreage. So
Todd Gleason (32:50):
Let's get a final word from each of you, I think,
Kurt Kimmel. We'll start withyou from agmarket.net.
Curt Kimmel (32:56):
Wasn't that too long ago you saw on the media
and magazines, the Chinesepremier and Putin having drinks
and having a good time, so I'mnot quite for sure. Putin might
be asking what's going on there.So we'll we'll see. Putin said
he wanted peace, and there's nopeace. So, you know, deal's a
deal, but they're gonna followthrough or not.
(33:17):
So the jury's out. We'll seewhat happens. But even though
we're focused on this crop year,what to do with the bushels we
have, don't fall asleep on 26crop. Matt Bennett?
Matt Bennett (33:28):
Yeah. I would agree with Kurt. And I think,
you know, one thing that wegotta be really careful of is
our typical protocol is to getbullish when the market rallies.
And we just had one heck of asoybean rally. And I'm not
saying that you sell everything,but rewarding a rally isn't
necessarily such a bad idea.
And, yes, we need to take a lookat 26. I mean, I'm of the
opinion that on soybeans, I'dprobably be a little more
(33:49):
willing seller than what I wouldbe on corn. I do think corn's
gonna have to buy a few acres ifthis bean market stays as strong
as what it is. But by all means,doing nothing is not the right
thing to do at this stage.
Todd Gleason (34:00):
And Dave Chatterton.
Dave Chatterton (34:01):
Yeah. I mean, kudos to what these guys said. I
mean, you know, have to staydisciplined into your plan here,
and I think you have to rewardrallies. Geopolitics and
geopolitical turmoil, I guess,I'll say, are here to stay or at
least they're here to stay aslong as Trump, I think, is in
office. And there's a good sideto that and and certainly a bad
side to that.
But I think you have to bewilling to, to make some sales
(34:23):
when the market does rally andgive you the opportunity to
either break even in terms of ofone commodity or maybe make a
little bit money in terms of thecorn. So in doing so, you know,
keep your eye again on '26. Weare gonna see if we see a record
South American crop and we seebig, mean acres in The US, that
$11 number could certainly beyour friend. Options and and,
you know, things that you can doon the board are always
(34:46):
available to give you someupside and and and do so for a
known cost and a known riskdepending on how you structure
them. So just, you know, play alittle defense here.
We'll have our our offensivedays, but I think for the
foreseeable future, we have tobe a little bit cautious and and
be willing to take a kind of a asmall profit here and and keep
the operation going forward.
Todd Gleason (35:05):
Commodity Week is a production of Illinois Public
Media. You may find and listento the whole of the program
anytime you'd like atwillag.org, willag.0rg. Our
thanks go to our panelists thisweek, including Dave Chatterton
from Strategic Farm Marketingand from agmarket.net, Kurt
Kimmel and Matt Bennett, I'mUniversity of Illinois
Extinction's Todd Gleeson.
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