Todd Gleason 0:00
From the Land Grant University in Urbana, Champaign, Illinois. This is the Closing Market Report for the 28th day of January 2025. I'm extensions today Todd Gleason Coming up, we'll talk about the commodity markets with Naomi Blohm. She's at TotalFarmMarketing.com out of West Bend, Wisconsin. And then a bit later in the program, Dan O'Brien from Kansas State University will be here. Both will discuss what conditions are like for marketing the crop in the United States, corn and soybeans. And then along the way, we'll turn our attention to a couple of things. Yesterday, Nikki Budzinski 13th District representative from the state of Illinois, was on campus to learn more about the AI farms. And we'll also hear from Don Day. He's at Day Weather in Cheyenne, Wyoming, all on this Tuesday edition of the Closing Market Report from Illinois Public Media. Celebrating 40 years on the air, some 30,000 interviews and 10,000 episodes.
Todd Gleason Services are made available to Will by University of Illinois Extension
March corn for the day settled at $4.85 and a quarter up three and a quarter since the May futures at $4.96, three and three quarters higher in December. New crop and $4.61 a bushel up two and three quarters. March beans 1054 unchanged May 1059 and a half up $0.01 a new crop November soybeans at 1047 and a half, up four and a quarter. Bean mill at 301 60 $0.80 higher. The bean oil up $0.13 at 4513, soft red winter wheat at 545 at a quarter, up nine and three quarters in the march. The hard red at 561 seven and three quarters of a cent higher. Live cattle futures up $3.45, Feeder cattle $3 higher and lean hogs up a dollar and two and a half cents for the day. Naomi Bloom now joins us. She's from Tuttle Farm Market Income out of West Bend, Wisconsin. Hi, Naomi. Thank you for being with us again on a Tuesday.
Naomi Blohm 2:02
Yeah, thanks for having me.
Todd Gleason 2:04
Let's start with what you think the market looks like today. I hear that. And maybe I'll start with a question I have asked others. Are we marking time? Are we in a period where we're consolidating prior to February the first?
Naomi Blohm 2:19
Yeah, I do think that's what's happened. So grain prices, of course, had rallied after that surprise friendly January USDA report, and rightfully so. The fundamentals had shifted enough to where grain prices for corn and being specifically needed to work higher. That got the May contract and July corn contract up near the $5 area and the soybean market. So, you know, pushing higher up to the 1075 area with the July contract today. And we're in we're right up against resistance, the 200 day moving average there. So we are holding time now because we have reason to be trading at these values because of the fundamentals. But we don't have enough fresh, fundamental news to justify pushing through those levels higher. So we are waiting for that February 1st date where it is going to be the tariff news between Mexico, Canada, China. It's also China going into their golden Week holiday and the beginning of price discovery for crop insurance. So a lot of things are going to be coming as this week comes to a close. We'll be watching news organizations all weekend long to find out the latest on the global geopolitics VIX and then we'll start trading it right away.
Todd Gleason 3:30
Sunday night when farmers call. What are they asking you these days?
Naomi Blohm 3:34
Well, it's primarily, you know, should they be making more cash sales from here and that the conversations are turning to thoughtful risk management just because of the uncertainty and volatility that lies ahead. So we are at the cusp here where, you know, if there's friendly news friendly news, meaning no trade war drama, maybe bad weather happening in Brazil on the second crop corn, maybe we get good news on the biofuels front for mandates if those friendly sequence of events can occur. Well, because fundamentals are are supportive, because tighter ending stocks, we could see later this summer another price rally for the grain market. So people are mindful of that. But at the same time, if those series of friendly events don't happen, if we go into any full blown trade war issues, you know, this weekend, if the weather in South America is absolutely wonderful, well then we're at a position where we could see the grain markets retreat lower. So farmers are really thoughtful about how they want to handle the risk. Right now, they're thinking about protecting on price bushels. They're being mindful of what it would mean to do very ownership just in case things become friendlier this summer. So with with all of the volatility ahead and uncertainty, again, just very thoughtful conversations.
Todd Gleason 4:48
Do you see in the value in the option indexes, the or the volatility index in the options that the Trump administration has built into it? And is there more cost today than there was a year ago?
Naomi Blohm 5:05
Um, I would say things are fair priced. You know, when we had the kneejerk friendly response reaction after the friendly USDA report, there was a lot of volatility coming back in the options. Things had kind of eased up lately. But now I think heading into the weekend, again, we're going to see that volatility premium shoot back up as people position themselves under the weekend.
Todd Gleason 5:27
So interestingly enough, and I asked this question because we've been through one Trump administration, we know what the volatility is can be like day to day, but it really is long run for the producer, the buyer, either one of corn, soybeans, wheat, regular commodities is and they need to position themselves in some way. Margin calls can be big on hedge accounts less so if you're in options depending on what side you're on, of course. How do you help them manage thinking about risk?
Naomi Blohm 5:58
Well, we talked scenarios, so we're saying, okay, let's let's say that you put on a hedge like where you're either selling futures or you're buying puts, talking about what a limit up or a limit down move could do the position itself. So we're taking time to do math, talking about option Delta, talking about rate of returns and just making it tangible so that way they can just be ready for whatever unfolds ahead.
Todd Gleason 6:26
Do they have to have conversations with their bankers?
Naomi Blohm 6:28
Um, I would say, you know, a lot of farmers definitely are working with lenders with a hedge line of credit. Some have lenders who are really aware of options and option strategies and they're on board with things Some lenders still have a little bit of a learning curve in a sense, and so producers do need to sometimes speak to their lenders before putting a strategy on. And then there are producers who are just funding their own marketing strategies yet out of pocket. So everyone's budgets are different, everyone's risk tolerance are, are different. Um, cash flow of course, different as well. So, you know, there's no one size fits all strategy right now. So a lot of very personal and involved conversation.
Todd Gleason 7:16
On just the straight up fundamentals today if they did not change if nothing changed going forward, what direction do you lean.
Naomi Blohm 7:24
Sideways to lower because we need a bull market to have, you know, continuously fresh news from here. So if we don't get that continuous fresh news, we start to see the market. I think, you know, a little bit of profit taking start to limp a little bit lower. But again, because the underlying fundamentals are supportive, I don't feel like we can see a price sell off unless we go into a full blown trade war or we start to see just continuous wonderful weather unfold in South America.
Todd Gleason 7:53
Anything from the livestock market that we should be aware of today?
Naomi Blohm 7:56
Yeah, so nice. Strong markets there again with cash markets and futures markets working substantially higher here. Again, we are seeing now people being mindful of the big cattle inventory report coming up on Friday. People are recognizing just the extreme value that the livestock sector has. So we're seeing a lot of folks call in just looking at putting some puts underneath the market with the volatility that's there. It's a little bit scary to put on a more aggressive option strategy that could be marginal. So the popular strategy has just been puts underneath the market because once this cattle market tips over, if we get the news to justify that, if we start to see funds selling and technical selling, it's just going to wash out lower and you're not going to be able to jump in and time to catch it. So it's good to just have some of that price protection underneath heading into not only the cattle inventory report Friday, but to see how the borders might be affected with Mexican and Canadian trade and tariff news over the weekend.
Todd Gleason 9:05
Thank you much.
Naomi Blohm 9:06
Thanks for having me.
Todd Gleason 9:07
That's Naomi Blohm. She is a total farm marketing dot com.
Yesterday afternoon, Congresswoman Nikki Budzinski visited the University of Illinois AI Farm. She was in Turner Hall on the Ag campus and then in the greenhouses to see how this campus is working with artificial intelligence and machine learning to develop robots and other autonomous functions for the farm. She was asked during a press gaggle what she took away from the day.
Nikki Budzinski 9:41
Yeah, well, it's innovation, which I think in agriculture. This is a really interesting time to be serving on the House Agriculture Committee because things are changing, how farmers are farming, how they're using conservation practices. We just saw a tool created here at the farm that would help incentivize farmers to using conservation cover crops, in particular. You know, that's something we've been trying to encourage farmers to do is, you know, we have some of the best soil in the country. But to protect that, we need to encourage our farmers do conservation and through innovation and places like air farms, that's what they're encouraging, is using technology to innovate in agriculture.
Todd Gleason 10:22
This innovation, a bit like the movement away from horses to tractors, will also solve a lot.
Nikki Budzinski 10:29
Yeah, I mean, I you know, it was immigrant labor is used primarily to actually farm. I know I visited horseradish farms down in Collinsville and sometimes we have labor shortages. And so I think with labor shortages, with a changing economy, I think always making sure that we're innovating is important.
Todd Gleason 10:50
To be clear, Budzinski was looking at devices specifically being designed for horseradish farms in Illinois. It is the number one producer of horseradish in the United States and second on the planet. And then she was asked what she could take from the event held yesterday to Washington, D.C., and the ag committee.
Nikki Budzinski 11:11
That agricultural research and investing in it is critically important for our federal government. And when we're talking about getting a farm bill done, I think including incentivizing and increasing our amount of agricultural research supports not just the university of Illinois, but all of our farmers in central and southern Illinois.
Todd Gleason 11:29
On that note, the 13th District representative from the state of Illinois went on to talk about the possibility for a farm bill in 2012.
Nikki Budzinski 11:38
Well, to two things in particular, I think. One are the deep cuts that the House Republicans were trying to do in this last farm bill that came out of the House AG Committee. Those cuts were too deep for a Democratic caucus to be voting on. And I think they're continuing to discuss using those revenues to pay for other things. I fear tax cuts for some of the super richest people in our country. We can't be doing that on the backs of the poor and the backs of the working class in this country. So we're going to fight to protect those SNAP benefits that I know a lot of working families rely on. So that's going to be a continued ongoing debate. But the other thing that I really raised is the geographic inequity that I really felt was in the farm bill that got out of the House Agriculture Committee, I ended up voting against it largely for this reason. I think that it overly incentives ized and provided subsidies and support to Southern commodities. The Midwestern farmers like corn growers, soybean growers. You know, we deserve our fair share as well. We face a lot of the same uncertainty and challenges that our southern commodities face. But our crop insurance is in keeping up with, you know, the current inflation with current process and the economy right now. And so we need to see a more equitable farm bill that's geographically balanced and that's something that I'm looking for is just a fair share for corn and soybean growers.
Todd Gleason 13:00
And then finally, Representative Nikki Budzinski had something to say about artificial intelligence, a bit related to deep sea, which we've heard so much about in the last two and a half days, but mostly about the kind of work that is being done on the University of Illinois.
Nikki Budzinski 13:18
I well, look, I think with anything that's innovate in innovation, there need to be guardrails around it, Right. And AI is no different. That's something that I know they're thinking through here at AI Farms. We want to make sure that we're creating the space for innovation, but we want to make sure we're protecting people, certainly their privacy. So that's something that I will continue to monitor in Congress.
Todd Gleason 13:42
Congresswoman Nikki Budzinski was on the University of Illinois campus yesterday afternoon visiting the air farms. Let's check in now with Dan O'Brien. He's in the far western part of Kansas. Thanks, Dan. Usually you and I talk a lot about Energy's today. I want to talk about how things are going in Kansas because Europe, while you're located in the western part, you do a lot of the AG con across the state in the marketing updates. And I'm just wondering what the corn, soybean and wheat situation on the ground feels like for you today.
Dan O'Brien 14:18
Well, it's very interesting that that the the last grain stock report reported that basically indicated in Kansas about
22% of of total supplies were still in farmers hands and all the rest were in commercial lands. And really and that's consistent with what we've been hearing from farmers with regards to grain selling opportunities here of late. We've seen that corn futures moved to the higher side of, you know, for 85, for 90 in some instances, basis had had become weak last fall. It's continued out here in in January, heading off into February end. But but as the futures have run up farmers that at different in different venues where we meet them to some extent in meetings others elsewhere indicate that that is they've gone to sell sell corn in particular to feedlots, to ethanol plants. They're getting reports that, hey, they're booked up. They really don't have any openings to receive anything until that, in some cases well off into spring, if not into early summer. So when you saw apparently last fall, when we had in kind of a tortured manner, a volatile manner, we got up into 430 to 455, something like that for for these corn futures after after lows around four or whatever, in August, September, a lot of grain must have moved.
Todd Gleason 15:51
So were you surprised that 75 to 80% of the corn crop had been sold to me?
Dan O'Brien 15:56
I was, you know, the USDA information that that they come back and quote, when they look at the their when they calculate the season, average price numbers indicate that, yeah, 67 65% of of grains sold in the first five months. So so I'm not surprised that that we've sold quite a bit of it but but it just seems that that the low prices that we had this summer put put the onus the fear in a way I guess fear I don't know if I use that word, but but the concern in farmers might farmers thinking that, hey, I better move this stuff and buy it and at the 430 to 450 area and the futures, you know, we were so we got over $4 for some bids and and to me it seems that, gosh, it would have been nice to have waited for these higher prices. But but, you know, we're paying bills and financial issues at the end of the year and of last year to deal with. And it just caused people to move a lot of grain.
Todd Gleason 17:01
Did they move a lot of grain early? And did that mean that they got caught with a shorter corn crop or near areas and thus have more of it sold?
Dan O'Brien 17:11
I don't know about that. The shorter corn crop, I think we had a pretty decent, pretty decent corn crop. I, I just think I just think there was you had a risk driven our perceptions of future market risk. Risk driven financial choices tend to go ahead and sell so I'm not surprised that they've done what they've done. But what they find themselves now in this situation is that, hey, we've got some movement, the futures, which they're very, very positive about, but but they're hesitant to take these wide basis levels. And and so, again, there are marketing tools they can they can and strategies they can take to to take advantage of higher, higher crop futures, but then hopefully wait for something better on the.
Todd Gleason 17:57
Basis, you know, if they're not selling old crop now, I assume they're not selling no crop either.
Dan O'Brien 18:02
Probably not. And is this the time to really do it again, that that seasonality that affects that has affected us on the old crop side out into April and May? I you know, absent a major move to the high side, we're probably seasonally we would wait wait until that when quite often we'll wait until that farmers get in the field and get too busy to pay much attention. And then, yes, suddenly the bids come. But that Indian about historically, about eight out of ten years, 80, but 80% of the time, 75, 80% of the time for corn we have been having higher prices in the spring. And then when the fear of a short crop doesn't come about in, you know, three quarters of the time, then we move lower into harvests. So we tend to see some pretty good futures bids out out into that springtime mode. But if anything, probably for a variety of reasons, either algorithm trading or better information or whatever, we're we're tending to just have prices. Again, once the planning is done, we move out of May, we move into May and June. Quite often we're very vulnerable to the futures starting to move lower if if there are no crop concerns. So there's no there's not much new crop pricing going on yet. It's probably a wait and see situation to see what if we actually can get the crop planted and then and then move on from there. are the feedlots filling up out there? Are they are they both on animals and are they up to speed as well on their purchases of corn? I don't have exact number on the on the on the the placements. I don't see many empty feedlots and that's that's just an honest windshield observations I drive by them but but apparently part of the issue of lack of selling opportunity says has to do with them being pretty full up on on buying corn for feed so at least on the feeding side. Well and if if they weren't going to be feeding, they wouldn't have bought the corn. So the two go hand in hand. So they must be planning on that for 2025 did to to keep keep on feeding or they went to, brought the supplies in and locked them in. This they.
Todd Gleason 20:23
Have. Thank you much Dan Thanks Todd.
Dan O'Brien 20:26
Take care.
Todd Gleason 20:27
You too. Dan O'Brien is with Kansas State University Extension.
You're listening to the closing market report from Illinois Public Media. Our theme music is written, performed and produced by Logan County, Illinois, farmer Tim Gleason. Right now on our website, we have just posted today a way to register for the all day ag outlook. The tickets are just $40. That includes your beef house role in the morning and the lunch at the noon hour. We have a great lineup. All the details are online. Start at will AG dawg and hit that registration link for more information. Now up next, let's turn our attention to Don day. He's a day weather in Cheyenne, Wyoming. Hello, Don. Thank you for being with us. Tell me a little bit about the story as it's related to weather in the global growing regions. Start here in the United States.
Don Day 21:30
The story across North America will be a moderation in temperatures after what has been a very, very cold January so far. In fact, one of the coldest in the last 30 years. Temperatures are going to warm up as Pacific Air will kind of flood the zone moving across the nation here for the remainder of the week. So this is going to bring a warming trend from the northern Plains to the Corn Belt to the Great Lakes and to the cold southeast parts of the U.S. Now, there's going to be some moisture as well now due to the warmer temperatures, a lot of this is going to be in the form of rain across portions of Texas, Oklahoma, Arkansas, Missouri, into southern Illinois, Indiana, while on the northwest side of that moisture will be a little bit of snow for parts of northeast Kansas, parts of Iowa, northern Missouri, and maybe the northern parts of Illinois, Indiana and southern Michigan. But certainly warmer than it's been. That is a trend that will probably be good for the first few days of February as well. But beware the middle of February, we could very well go back to some very cold weather across the nation again in South America. Well, conditions continue to look good down there. Rainfall amounts are going to be near average across Brazil and Argentina with near average temperatures. It's a bit drier in some of the southwest provinces of Brazil and parts of Argentina. But overall precipitation amounts in the week ahead look to be adequate with near average temperatures.
Todd Gleason 22:59
Thank you much, Don. Don de is with day weather, joined us on this Tuesday edition of the closing market report that came to you from Illinois public media. I'm extension's todd gleason.