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The Closing Market Report airs weekdays at 2:06pm central on WILL AM580, Urbana. University of Illinois Extension Farm Broadcaster Todd Gleason hosts the program. Each day he asks commodity analysts about the trade in Chicago, delves deep into the global growing regions weather, and talks with ag economists, entomologists, agronomists, and others involved in agriculture at the farm and industry level.
website: willag.org
twitter: @commodityweek
Todd Gleason 0:00
From the Land Grant University in Urbana, Champaign, Illinois. This is the Closing Market Report. It is the eighth day of July 2020 for I am Extension's Todd Gleason. Coming up in this half hour, we'll talk about the commodity markets with Curt Kimmel of AgMarket.net. Frayen Olson from NDSU, North Dakota State University Extension, will join us to take a broader look at this upcoming Friday's USDA World Agricultural Supply and Demand Estimates report. And then as we close out our time together, we'll take up the weather forecast too, with Mark Russo of EverStream Analytics on this Monday edition of the Closing Market Report from Illinois Public Media.
Todd Gleason Services are made available to Will by University of Illinois Extension.
Curt Kimmel 2:11
Well, I hope Mike on Friday has a much better week. We start now here. Hopefully we get the disaster out of the way. But no, it's a brutal top front center. Is the remnants of what's left over from the hurricane moving in the upper Midwest. This visit, some guys, gals, you know, southeast of us and they're talking about maybe some flood watch is taking place. So whenever you get a big rain event during the month of July is really hard to be bullish. And that was kind of the catalyst to roll things over. And we held decent in the overnight early morning trading. But when trade resumed at 830, the market went down, some cell stops and we saw some fairly aggressive selling going into mid day commodity sells. Fund sold about 12,400 corn 8700 contract soybeans, 5900 contracts of wheat product sold, 5100 contracts being oil, 6500 contracts of soybean meal. So no real spread activity. It's just get me out and we've turned the market sharply lower and just did not even have a bounce throughout the midday session at all export inspections. They were kind of fair. We shipped out 40 million bushels of corn. We shipped out 10 million bushels of beans and 12 million bushels of wheat. Did see a sale that no which is Asia, of course, 135,000 tons over 50 was old crop and 84 was new crop. So kind of surprising. Still see a little bit old crop being put on the books for sales. The interest to see if that gets shipped out or not if not to be rolled into the new crop. But the other part was we're just not seeing China step forward and be aggressive buyer of new crop beans just yet. And when they do, if they do, hopefully it's one, two, three, four, 5 million metric tons and try to give the market a little bit of confidence and give it reason to recover here.
Todd Gleason 4:27
TIME Is it important that the new crop in November and December actually had the larger of the losses? Certainly in the November soybeans did December corn just a penny off of the loss for the September in the corn. But those those numbers were bigger than the nearby. And July, of course, or other contracts. Does that make a difference as you look forward into the marketplace?
Curt Kimmel 4:53
Well, you know, if you're a producer and still have a crop to sell for your producer, kind of behind on on on new crop sales, it's just brutal. Either you weigh on it before spread activity goes into July, just no volume there. So, yes, you got to look at the September record and August beans, kind of typically bull spread from the standpoint that the demand's still out there. There's still pretty good basis levels to shake small crop loose, whereas new crop is just kind of be in a freefall. And we're seeing a situation where there's no reason urgency, that is to book new crop. If you're a buyer now, if you're a livestock guy, you might want to take a look at because this is kind of a situation where when you push the pencil on the livestock input side, it is fairly attractive to keep an eye on that. But big new crop coming at us, it's going to be hard for that new crop drill, a gain on old crop here as we start to close our old crop here, as we move into August.
Todd Gleason 6:04
Their expectations this afternoon for the USDA crop progress report to show damage, more damage than has been the case since we've had a couple of weeks now since those big rainfalls and floods in the northwestern part of the Corn Belt.
Curt Kimmel 6:18
Well, you know, unless you're up high, going over a bridge or have a drone, it's kind of hard to see the bad spots. Is that that that's around for the most part. So we covered up the conditions
for little to what they might improve. There's deterioration, but the trades dialed in and changed conditions this afternoon. CORN As a nation, 67%. Good. Excellent. The range of 64 to 69 beans, 67%. Good, excellent. Same type of range. Well, year ago we're in the low fifties probably was the thing to watch would be the northern Iowa, Minnesota area and Dakotas and see how how those conditions come along for the most part. But yeah, it's going to be kind of hard to get real bullish here if if the conditions remain in the upper sixties, at least for right now.
Todd Gleason 7:18
Hey, thank you much.
Curt Kimmel 7:19
Very good. Take care.
Todd Gleason 7:21
You too. That's Kurt Kimmel. He is with AgMarket.net.
I'm University of Illinois Extension'ss Tod Gleason. Frayne Olson now joins us from NDUS, North Dakota State University in Fargo, where he's an agricultural economist with Extension and the university. Hi, Frayne, Thanks for being with us today.
Frayne Olson 7:51
Well, it's always a pleasure to visit.
Todd Gleason 7:53
Let's visit about the upcoming World Agricultural supply and demand estimates. The interesting thing about July is that there is information from the end of June, both the acreage report changes in event and the grain stocks which are incorporated. The acreage figure is fairly easy because USDA's World Agricultural Outlook Board just plugs it into place. Can you give me a preview of what that number could look like? Because the grain stocks number is far more subject of.
Frayne Olson 8:24
Yeah. Okay. So the the you know, just to go through the math really quick, you know, just to understand the grain stocks, inventories for the old crop inventories then feed back into the beginning stocks for the new crop. And so we have this linkage between what's going on and old crop, what's happening in new crop. Okay, So we're obviously there's going to be adjustments in the old crop inventories because we got the inventory report. And just for clarity, that's a combination of a survey of on farm inventories that farmers report as well as the reports from from commercial storage or commercial inventories as well. So is there margin for error in the inventories numbers? Yes. You know, we we see those is usually used as a benchmark to say how quickly we were burning through our inventories, especially for corn, because it's very hard to get a good read on the amount of whole corn that goes into livestock sector because it oftentimes doesn't necessarily go across a scale and can counted very well. Okay. So all crop inventories from last year get brought forward in the new crop inventories for this year. So when we look at the 2024 25 ending stocks numbers for corn and beans as well as for wheat, there's going to be two adjustments. As you said, the inventories from last year are from the old crop, from the June report and adjustments in the planted acreage. So planted acreage then gets transferred into harvest of acreage. So there's a conversion factor. Now, typically, this time of the year, USDA doesn't make a lot of changes in that conversion factor. They kind of assume the long term average and that really most of that reflects the amount of corn silage that's harvested. So just because corn has been planted doesn't mean that it's going to be harvested for green. And on the larger pork, we're counting bushels of grain, not necessarily just corn. The corn silage numbers are taken out because that's that's calculated separately. Okay. So the other possible adjustment then, I don't think they'll adjust that ratio, the relationship between planted and harvested acres, that's unusual at this time of year. It's also unusual that they're going to make any adjustments in the yield projections. Now that sometimes happens, but it's it's typically, again, very, very small. So I don't anticipate any yield adjustments. Okay. So now we've got, you know, several adjustments going on on the production side. Well, with the increased production, we also have lower prices, which means we'll likely get a slight bump in some of the usage numbers as well. So there's a lot of moving parts now in this June or the July report. They're going to be, in my opinion, small adjustments, you know, a little bit here, a little bit there, and all of a sudden things start to add up. And that bottom line number for ending ending stocks are forecasted in the stocks for a new crop can can bounce around quite a bit. Now again, my expectation I have not seen the pre report industry estimates yet kind of that survey information that the industry collects. But I'm I am expecting the number for corn in particular to go up simply because we did have an increase in ending stocks from the inventories from the June report from last year. We know that we're going to have an increase in planted acreage because as you mentioned, the World Board will use the NASS numbers for planted acreage. Some of the adjustments on the consumption numbers will be really interesting to watch. Typically when we see an increase in production, we also see an increase in feed and wastage. So there's a feed and wastage number that comes in that tends to be our our biggest shock absorber when we end up with more grain. I, I it will also be interesting to me. Are they going to try and bump or just the exports numbers because that's the other one that we can see some tweaking on for consumption, especially as as prices go down or seen. I just there's the World Board estimates that they think that the United States will be competitive with some of the grain coming out of the in particular Brazil. So the expectation is for higher numbers. Obviously, we don't know what those numbers will be, but there's going to be a lot of little moving parts as we go through this process.
Todd Gleason 12:49
How are you to producers need to be of this particular report?
Frayne Olson 12:53
So it will be interesting to watch. I do think a lot of the information has already been booked in the marketplace. I mean, that people are, if anything, I think are being a bit overly pessimistic on price. We'll see. We'll wait to see, obviously,
because the I think there's a lot of the traders right now have not only incorporated the higher planted acreage numbers, but I think they're also looking at average or trend line or slightly above trend line yields, because in reality, when you look at crop condition ratings across the nation, yes, there's areas where we have in pockets where we have some troubles, but we have that every year. But when you look at in general crop condition ratings, I think there's a bias right now in the marketplace. So we're going to have a very good corn year. So right now, I think any additional news that comes in the marketplace, it gives us a bigger bottom line than we expect are obviously going to be priced negative. So I do think there's some reason farmers should be a bit cautious. I think there's some some reasons to be concerned. But at the end of the day, I you know, I'm I'm a little I guess my my my gut is telling me we may have overdone this a little bit. We still have a lot of growing season left. I'm not I'm not trying to put false hope into people's minds. I'm not trying to give them too much optimism because it looks like we're going to have a tremendous corn crop, but it's still relatively early in the season and a lot can happen between now and harvest.
Todd Gleason 14:31
The interactions with wheat and soybeans make much of a difference at this point.
Frayne Olson 14:35
Yes, probably There's tends to be a bit a bit more of a stronger correlation or relationship between pricing in the wheat markets and in corn than necessarily soybeans and corn just because of the domestic and global, you know, conditions in soybeans. Yes, there's a linkage there. But we got a lot of other things going on, in particular out of out of South America. And again, watching what's going on in China with Chinese soybean purchases. So there is some linkage there. There's some spillover effects between the two of them because of the volumes that we trade for corn and the number of traders in the marketplace for corn. What happens from a psychological standpoint in the corn market usually spills over into soybeans as well. So, again, if we have a downward movement in in corn, we'll likely have some follow through on the soybean and wheat side.
Todd Gleason 15:30
Any good news?
Frayne Olson 15:33
That's a great question. Right now. So the other thing the other part and this is something, you know, I did want to visit about a little bit is when we have conditions like now where the kind of the the news within agriculture is relatively quiet. You know, there's there's a lot of things happening, but none of it has tremendous shock value in the marketplace. What happens is short term, the traders tend to start looking at what's going on outside of the agricultural markets to get some direction on, Well, what are some of the things happening that might have some some additional impacts on AG and in, you know, the energy markets being one of those we've had, you know, a bit of a recovery and now a drop off in some of the energy markets, in particular crude oil with with some global politics that's going on. So even in the you know, even in the global side, there just isn't a lot of of there's a lot is going on in politics, obviously. But when it comes to the markets and what's happening in global trade, it's relatively quiet right now. It's which is kind of you you know, it's nice from my perspective, but it's a little bit of something that we're not accustomed to because it's been relatively quiet. And then the tendency is, you know, if things are quiet and everything's looking good, there tends to be kind of a negative bias. So is there anything interesting or new coming up? You know, the thing that the only thing that really strikes a chord right now is that we are going to for the extended forecast looks like we are going to get pretty hot into the Corn belt. We're going to have above average temperatures. Now, I don't know that there's a lot of crop stress up here in the northern plains. We actually need a little bit of warmer weather. We've had kind of a cool spring and summer so far. So for the corn up here in the northern Plains, I think a lot of guys are looking at it would be nice to get some heat units to be able to push some of the corn and soybeans along. We got plenty of soil moisture stored up.
It's just there isn't there isn't a lot of of of positive in the news right now. So the question is how how when do we set the bottom? Are we going to test the lows that we saw coming out of the the the planting or the acreage report, you know, couple of weeks ago? So those in my mind will be the questions we have to answer.
Todd Gleason 18:00
We'll talk with you again in a month and see if they've been answered yet.
Frayne Olson 18:04
All right. Only time will tell.
Todd Gleason 18:07
That is true. Only time will tell. Frayne Olson is an agricultural economist. He's at North Dakota State University and with the extension there in Fargo,
Let's check in on the weather forecast now with Mark Russo. He is with EverStream Analytics. Hi, Mark. Thanks for being with us again this week. Let's start today with the Northern Plains area of the northwestern Corn Belt, parts of the Dakotas, Minnesota, maybe Wisconsin, as we were discussing with Frein Olson from North Dakota State University Extension. And just a few moments ago, they're in need after so much rainfall of drying out some. But really it's been cooler and wet there and are in need of some heat units. Will they be getting them all altered?
Mark Russo 19:11
Looking ahead here for that particular area, still some cooler weather for the remainder of this week, but it does look like warmer temperatures will work their way in for next week. So some, you know, multiple days of warmer than normal temperatures, although nothing extreme is expected in that northwestern part of the Corn Belt, kind of starting late this upcoming weekend, continuing through next week. Also of note, rainfall prospects look pretty limited across much of the northwestern belt. That doesn't look totally dry, but the rain activity looks infrequent and obviously not as wet is what occurred back several weeks ago with the extreme wetness here resulting in in some of the flooding there across those areas. Now, overall, the most significant heat and distinct drier than normal pattern that is going to be a bit further to the west north. So the western Dakotas up into Canada. So the heart of the U.S. spring wheat belt, also the Canadian Perry spring wheat and canola areas, that's where the most significant heat and dryness will be as we move into the second half of July.
Todd Gleason 20:28
There's that heat moving clockwise out of California into those areas.
Mark Russo 20:32
It is we're seeing raging high pressure right now lined across the western U.S. and that ridge will begin to build northward and begin to circulate heat, then into areas up north, including the northern plains and Canadian prairies.
Todd Gleason 20:50
There's it keeping the effects of barrel out of that area. And maybe it's too soon that that's later than than what I'm thinking. And what happens with barrel and all of the rainfall that we're seeing in parts of Texas at this point and how it might impact if or if not, are parts of the Corn Belt.
Mark Russo 21:10
Yeah, well, barrel is moving northward here. Obviously, it made landfall earlier today in Texas and moved a bit further north up to the Gulf Coast as a result of this weakness in the jet stream. And so with the ridge out across the western U.S., a little bit of reading on the East Coast, in between, there's been this weakness and that has helped the storm track now into Texas. And it will then start to recurve into areas of the far northern delta and actually the eastern Corn Belt coming up over the next few days. So there will be some rain activity, in fact, for much of the eastern Corn Belt kind of near normal Rainfall is expected as a result of the remnants moving through. But again, those rains do not look to work their way into the Western corn belt or for that matter, into the northern Plains or Canada.
Todd Gleason 22:01
Southeast benefits as well. And it sounds like that will take care of some of the issues that we have had in the eastern Corn Belt, maybe into the southeast as it relates to lack of rainfall.
Mark Russo 22:11
Well, certainly the eastern Corn Belt is going to fare the best here with the remnants and also with the lack of heat coming up this week and on into next week, the southeast, mid-Atlantic, mid-Atlantic areas will be seeing some needed rainfall here coming up. But the question is how much will it either stabilize or improve versus the extremely hot and dry conditions that have prevailed over the past month or so, which has resulted in well below normal crop conditions and those areas.
Todd Gleason 22:46
Will revert to rain. Olsson's final words from us in his interview. Time will tell.
Mark Russo 22:51
I guess that is for sure here this weekend and next week as well.
Todd Gleason 22:56
Thank you, Mark. We'll talk with you again on Monday of next week.
Mark Russo 22:59
Sounds good. Thank you.
Todd Gleason 23:01
That's Mark Russ. He's with EverStream Analytics and joined us here on the closing market report for this Monday afternoon. It came to you from Illinois Public Media.