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Established 1988
Commodity Week is a weekly wrap-up of the CME Group grain markets with analysis and guest interviews. The program is generally recorded Thursday afternoons and posted online by 7:00 p.m. central. It airs on WILL AM580 during the 2:00 p.m. hour each Friday. Commodity Week is a production of University of Illinois Extension and Illinois Public Media. Like the daily Closing Market Report, it is hosted by University of Illinois Extension Farm Broadcaster Todd Gleason.
website: willag.org
twitter: @commodityweek
This is the February 5 edition of Commodity Week.
Greg Johnson:Todd services are made available to WILL by University of Illinois Extension.
Todd Gleason:Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Matt Bennett. He is with agmarket.net. Greg Johnson is with TGM at Total Grain Marketing.
Todd Gleason:And Sherman Newlin is with us from Risk Management Commodities, a division of Zaner Ag Hedge. Commodity Week, of course, is a production of Illinois Public Media. It's public radio for
Todd Gleason:the farming world online on demand anytime you'd like to listen to us at w I l l a g dot o r g, where today you may purchase your tickets for the All Dag Outlook. That's coming up on Tuesday, March 3 at the Beef House in Covington, Indiana. We have a fantastic day for you. I know you've been under a lot of financial pressure, some stress. We're going to take up just the basics.
Todd Gleason:We'll have a commodity panel on soybeans, one on corn. The analysts you hear from WILL regularly will be with us. The PharmDoc team will be there to take up competition from South America. We'll also have on hand Gary Schnicki to talk about the crop insurance decisions that you still can make at that point or change even. There have been a lot of changes with crop insurance.
Todd Gleason:Those came in the One Big Beautiful Bill Act last year, and we'll have on hand to talk about weeds Aaron Hager, crop scientist from the University of Illinois. Aaron will, discuss some of the issues you clearly will be facing in the field this year. The basics at the All DAG outlook this year on Tuesday, March 3 at the Beep House. The cost, again, only $40. Just $40 includes your Beep House cinnamon roll and coffee in the morning and that lunch at the noon hour.
Todd Gleason:Check out the details online. Register today at willag.org. Now let's get some information from each of you about the things we should take up for the day. Sherman Newlin, let's start with you. We've had a couple of days that were up in the marketplace, but what do you really wanna talk about today?
Sherman Newlin:I mean, I I think you have to talk about the the days we've had up and the reasons being, you know, the talk yesterday of Trump, you know, talking to Xi about, you know, importing more soybeans. And I think today you had to carry over through with some more news of maybe a change in China's ag policy for this coming year, and I think that's been a big driver. I mean, I don't know. I think producers are, you know, looking at ways to cut costs. That may be something to talk about here as well.
Todd Gleason:Greg Johnson from TGM Total Grain Marketing. What's on your list?
Greg Johnson:Well, in addition to what Sherwin talked about, I think we want to remember that we do have a monthly supply and demand report from the USDA next week. I know traders aren't expecting any big changes, but I still think that's something that probably needs to be revisited.
Todd Gleason:And then Matt Bennett from agmarket.net.
Matt Bennett:Yeah, think they've covered pretty much what we wanna talk about as far as what's going on this week. Of course, producers are trying to figure out what to do with old crop corn and beans, as well as, you know, maybe leg into some stuff on new crop and, phones have been ringing. I'm sure for these guys just like they have with me the last couple three days. So, kinda wanna go over maybe producers ought to be thinking about.
Todd Gleason:So, Greg Johnson, let's start with you and the World Ag Supply and Demand Estimates that are due out on Tuesday of next week at 11AM Central Time. February is generally speaking, not one of the months that we worry too much about. There are no crop production numbers of value for corn soybeans that come out usually because they don't get changed. Though I did see some think about possibilities of changes in USDA's, exports for soybeans. I'm I guess I suppose USDA doesn't change it until we have written agreement.
Todd Gleason:I can't imagine that'll be the case. That would have to do with some of the moves this week. What are you thinking about next week's WASDE?
Greg Johnson:Exactly. I think that's the number to look at is the soybean export number. Last month, as you remember, they increased carry or they increased the carryout from 2.9 to $3.5 because they lowered the exports from $1.63 to $1.57 They probably would have lowered the exports again at some point in time here in the future because that probably still was an optimistic number until the Chinese rumors started a couple of days ago. So probably they'll keep that number unchanged at this point, like you said, until there's something definitive that they have to go off of to change it. But, I think we still wanna keep in mind the big picture that, we still have a three fifty million bushel carryout unless you really believe that China's gonna buy all the beans that president Trump tweeted.
Greg Johnson:And again, if you read the tweet, it says that they're considering. He asked them to buy more beans and they said they would consider it. Well, is considering it and actually buying, is that the same thing? I guess we'll find out. It certainly introduces another level of uncertainty because if they really would buy another 8,000,000 metric tons, that's almost 400,000,000 bushels and our carryout's only three fifty.
Greg Johnson:So obviously we would have to go into ration mode. So could we go to $12 Yes, if the Chinese follow through was as optimistically as what Trump is saying. But if not, you to keep in mind that South American beans are probably $0.80 to a dollar a bushel cheaper than what The US beans are. So from a strictly economic point of view, China really would shouldn't or would need to buy US beans, but maybe they'll do that for some other reason, like a political reason.
Todd Gleason:Sherman, I oftentimes will consider buying a different pickup truck, but I never do. So I am wondering, Sherman, whether you think, there will be enough in the outside part of negotiations with the Trump administration that they would really look into purchasing extra 8,000,000 metric tons in this marketing year.
Sherman Newlin:Yeah. I mean, right. You you don't know. I mean, I think we're gonna have to see some actual sales eventually hit the books and get shipped out for the market to continue sharply higher. I mean, I don't know if everybody saw it, but today the Stonex put out in their newsletter something that China released called number one document for 2026 and it outlines their ag program or their programs for this coming year.
Sherman Newlin:And there's been a change in policy to where it's a big policy shift. They're wanting to import more ag products and then it goes on to say especially from The United States. Now that doesn't mean it's going to necessarily be soybeans because, you know, like everybody says, it maybe doesn't make sense for them to import beans, but maybe that means some corn, maybe that means some wheat. And I think that was some of the reason you saw the push today because that kind of information is new and it's a change in a government policy and I learned a long time ago whether it's our government or their government, when there's a policy shift in the government, better take notice because that could really change the dynamics of things, especially if we start to see some sort of weather problem here in the woods or something like that. So I mean we'll have to wait and see, but funds are short corn, funds are short wheat.
Sherman Newlin:It may change that positioning to where they want to, maybe not be quite as short as they have been or thought they may need to be going into the future.
Todd Gleason:Okay, so Matt Bennett, when you take all of this into consideration, you wanted to discuss some possibilities that producers might have related to the couple of days, that we've had in the up move. And, of course, most people will hear this probably on Friday afternoon after the close of the marketplace. Those numbers are not into the discussion you and I are having at this point. Is there an opportunity for producers for corn and or soybean?
Matt Bennett:Yeah. Whenever you look at beans over the course of the last couple days, you know, you've seen prices that, you know, we haven't seen in quite some time. I mean, you know, you just look for instance at, you know, at March beans. I mean, the last time we saw a price like this was, you know, December, I believe, around December, somewhere in there. And so with that being the case, you know, obviously, someone who's been sitting on cash beans, might consider rewarding the market, you know, with a with a few bushels.
Matt Bennett:Greg said, this thing could, get really interesting if they do go ahead and buy some of these beans. Now we gotta remember, though, that the fundamental outlook, from a global standpoint, doesn't change really at all, you know, just because they're buying some beans off of us instead of someone else. Now it tightens up our balance sheet. It gives us an opportunity to probably have the funds maybe reestablish some of their long positions, but I wouldn't get bullish after a really strong rally. I think that's a trap we fall into a lot of times in the case of beans.
Matt Bennett:You look at new crop beans, of course. You know, you're pushing up on $11. First time we've seen that here. You know, in a while, we actually got over $11, on new crop beans there yesterday, basis aboard. And so, you know, again, I mean, the last time you saw prices like that would have been earlier in December.
Matt Bennett:And so I at least wanna respect that. And then in the case of corn, you know, we've kinda come along for the ride, if you will. You you got December corn back over $4.60. I mean, it seems like it's a yeoman's task just to move 10¢ or so, but we can't forget, you know, after that January report, we dipped down to that $4.45 level, and, you know, it's, you know, 15¢ means a lot to a grower. So, cash corn, you know, same type of thing.
Matt Bennett:You'd my personal opinion, Greg, is in the cash green business. But, you know, clearly, whenever you rally this time of year, it's pretty hard to hold on to, all of that, because basis is typically gonna widen out a little bit. I know that we've, heard there's a lot of cash green movement, a lot of hedging going on with some of the elevators. The JSA side works with, yesterday and today. You know, if I was sitting on cash bushels and had to move them, you know, I've gotta consider what the producer might do heading into March, contract expiring.
Matt Bennett:You know, I'm not sure that everyone's gonna wanna play the role game again. It didn't work out that great last year, so, I'm not so sure that we're gonna see a lot of bushels count. If you look at that commitment of traders report, you know, commercial has not bought a lot of, corn here yet, the so producer is sitting on all corn.
Todd Gleason:Greg, I'll step into this because the basis and the cash side of this marketplace is your expertise. What are you watching, and what should producer be thinking?
Greg Johnson:Matt hit it right on the head. We have seen an increase in farmer selling of both old crop corn and soybeans, probably a little bit heavier in the soybeans since that's where we've had the 50¢ move whereas corn has had like a nickel some hoo. But there's a ton of, I think farmers are still under sold compared to historicals. So they're using this rally as an opportunity to make some catch up sales. And I think that's exactly what they should be doing on soybeans.
Greg Johnson:And the one thing we haven't talked about yet, but farmers say, well, 11, that's an okay price. Well, number one, it's better than what we've seen for quite some time. And number two, dollars 11 from the marketplace plus $0.44 from the bridge payment, plus maybe $0.60 from the ARC County payment, even though that doesn't come until October, November, that all adds up to a dollar, and so you can turn $11 cash sales into $12 beans pretty easily. And, I think, again, if you unless you really think China's gonna come in and buy those beans from us, and and as Matt said, even if they do buy some from us, that just means some other country that was gonna buy from us may turn around and buy them from Brazil. So does it really affect the overall supply and demand?
Greg Johnson:I I think $11 is a is something that needs to be needs to be sold.
Todd Gleason:Okay. So, Sherman, that brings us back to the move this week, and I'm wondering, given the 50¢ move, and the idea that, you know, even if China were to turn its attention to The United States, potentially buy higher priced beans from us than other places because the it it's quite likely that our beans will be higher priced, particularly, at this time of year as opposed to, in the fall for us. How much how much differential do you because it would be hard to calculate, but how much differential do you think there is in the marketplace? Or put another way, have we rallied enough? And if they actually start to buy, how much do you think we rally?
Sherman Newlin:Yeah. That's a good question, Todd. I mean, when we thought they were going to buy 12,000,000 metric tons, I mean, we rallied this market up to eleven sixty. Now there is the potential again, think we need to see some sales to come through that hasn't happened yet, obviously. But I mean, if they would buy, say, the 8,000,000 metric tons, you can look at some different scenarios where our carryout gets really tight.
Sherman Newlin:It's not overly burdensome now at this point. But overall, I think we could go higher if you do see some buying coming in, do we go I think you could go back up to that $11.6 mark. I mean, seems like a technical obvious spot for the market to gravitate to and then kind of maybe see what happens. I do expect the market to sell off some because like Greg and Matt said, I think there's been some farmers selling and rightfully so to take advantage of this. So I think it's just kind of a wait and see game.
Sherman Newlin:Again, I think that if they follow through with this change of policy, that's going to be interesting. I mean, I think we'll just that could move the needle enough to get the market to cover more shorts, like I said earlier, to get the market going a little bit more yet. But I don't know, time will tell. Mean, recently we've seen a huge sell off in the metals. We've seen a big sell off in the equities market.
Sherman Newlin:Is it time for money flow to start coming back into some of these Ag commodities? I mean, funds are already long beans. Could they get more length? It's definitely possible, but it's just something we're just going to have to watch on an everyday basis. I know cash flow is needed.
Sherman Newlin:Guys are making sales, so maybe some re ownership strategies wouldn't be the worst thing in the world to look at if you do make some sales up through here.
Todd Gleason:Matt, what is Brian Split, your technician, telling you about what he sees in the charts at this point? I think there are some interesting things, at least in the weekly chart, as it's related to, potential outside up weeks, old and new crop corn and soybeans both, if I'm reading that correctly. We have Friday's, trade to go. But what's what is Brian telling you?
Matt Bennett:Yeah. I mean, you definitely see an outside up week. There's no question that from a technical standpoint, you know, you look at beans. Not only do you see that, but, I mean, you've established yourself. You opened and closed above all median averages here today, you know, in your front month March, which is is certainly notable.
Matt Bennett:You you look, over at corn, and really, whether you're talking old or new corn, you really have a nice uptrend, you know, that has established itself. You know, granted, we just absolute that bar on the day that we poured as an ugly bar. You know, it'd be nice if we could just remove that thing, but, unfortunately, we can't. So, you know, you're just trying to claw back, but, I mean, you're still on corn. You know, you're below, all everything but the five and ten day.
Matt Bennett:And so, you know, you're you're trying to get back up into that level up around 04:40. You know, if you can get up there and establish yourself above it, there's no doubt that there you could see some volume on surface. I mean, when I look over at corn, little different story, you know, than what it is with soybeans. I mean, obviously, from a world standpoint, this huge Brazilian crop's kinda hanging over our head. A lot of people have already called for a huge Brazilian crop on corn, but, I mean, shoot.
Matt Bennett:It hadn't even got planted yet. So, you know, you look at world stocks and supply and demand, and you're actually not building world stocks. And that's after just absolute, massive US corn crop this year. So I have to think, you know, that if Sherman's right, maybe some money flow would would come in. I think part of the reason money flow hasn't come into ags yet is they really haven't had a story to buy.
Matt Bennett:But I'll tell you what, if you would start to disrupt world production anywhere given the fact that, again, we're not building world stocks with huge crops, I've gotta think that that'd be place that they might wanna park some money and just kinda wait and see, throw some weather premium in this market and see if we can get this market to rally a little bit, and I'm talking more new crop than old because there's no doubt whenever you have record world and US demand for corn, it necessitates you to have huge production. So I do think that's gonna be watched pretty closely.
Todd Gleason:Okay. Sherman, I'd like you to turn your attention to South America, weather that has been happening there. It's been dry, actually, in Argentina, although if you look out there may be some weather rainfall on the horizon. Has it been dry enough to damage the crop do you suppose?
Sherman Newlin:I think it has, you know, in Argentina. I think I saw somebody say maybe a million metric tons for corn or beans, either one, but I think the size of the Brazilian crop that's coming. I mean, we've got some folks down there now on a little tour and they were in a field and they said the field was averaging 90, I think 92 bushel acres, that's really good yield. So I think whatever Argentina might lose, unless these forecasts don't come forth and bring the rain that Argentina needs, I think the size of the Brazilian crop will more than make up for whatever Argentina might lose. I mean, but it doesn't, you know, whatever they lose is definitely not helping the balance sheet, especially if it's in corn.
Todd Gleason:I do have to ask Greg, how much hedge pressure do you see in the marketplace when soybeans start to move and be harvested in Brazil? How much of a delay, and I think there is one, from harvest time to the time it really starts to arrive at port and the hedge pressure begins.
Greg Johnson:It depends on really whether we, just have our normal 5 to 8,000,000 bushel weekly export sales or if we can do something, excuse me, something in the double digits. But yes, Brazil does take away our market starting basically around the March 1 is when we see exports drop. You know, we still have demand here. We still have domestic demand. So I don't know that we'll see, you know, a big basis drop.
Greg Johnson:We typically don't see a big drop, maybe a slight drop historically. I think really what's going on now is we're, you know, just because of the run up in the futures price, farmers are taking advantage of this. We're seeing the basis weaken anywhere from $05 to $0.10 this week, just because of the farmer movement. That's not really attributed to the South American crop yet. And again, like I say, when we get to the South American crop harvest in March and they start replacing some of our export sales, we could see that our basis historically dropped by $05 or so, but I don't think that's a big move.
Greg Johnson:I think that's just part of it. The bigger move, obviously, is the future side of it.
Todd Gleason:Okay, Matt, the one thing we have not talked about just yet, and there are many ways for grain to move domestically, from our part of the world, it oftentimes is, through the river system, the Illinois and the Mississippi, of course. The Upper Mississippi should be closed by now, I would think. The Lower Mississippi actually is really low as well. How much of an issue are one or either of those things during the winter months?
Matt Bennett:Yeah. I mean, the problem, of course, with the Mississippi is that barge freight is gonna have to increase somewhat. It's just gonna be tough, you know, with the kind of draft levels we've got right now to be able to float full barges all the way down the river. So you can't load a barge, in totality, like you'd like to. You know?
Matt Bennett:And so, you know, this snowfall that we had through the region here over the last couple weeks, you would think it would help a little bit. It helped a little initially, but, of course, you know, it's not like we've got a whole lot of water moving by any means. It's been cold enough that we haven't seen much melt. You know? And quite frankly, you know, it just doesn't amount to enough to really get that river system replenished.
Matt Bennett:And so it's gonna be a problem. I think, you look at the Midwest. I mean, you've got a pretty significant amount of issues whenever it comes to moisture. I mean, we got some massive deficits. And so, you know, I I think that, not only the river that I'm worried about, but just simply, you know, if you go into, you know, a growing season without subsoil moisture, you know, obviously, we'd like to have a dry spring to able to get the crop in the ground up and going, But at the same time, we need some moisture, and we we need it here over the next few weeks because as dry as it is, Todd, I'm assuming there'll be a fair amount of beans planted, you know, in our part of the world in the month of March if, if it warms up a little bit.
Matt Bennett:Obviously, it's too frozen right now to even consider it, but, if you're able to, thaw out, you know, without any more moisture than what, we currently have, there'll be guys rolling, within six, seven weeks. So, you know, with that being the case, I think, we're gonna have to get some moisture here pretty quick.
Todd Gleason:Mister Sherman, you're, a bit south, I think, of where where, Matt is located and, of course, to the east. You had a rough year last year, really wet to begin with. How dry are you in your area?
Sherman Newlin:We're really dry. I mean the drought monitor map came out again today. Mean there's still nothing's really changed. Mean there's a big red spot you know just north of us. But yeah, we've got some topsoil moisture, but our subsoil we've been taking out some trees before the weather got bad and the ground froze, but underneath those trees it was completely dry.
Sherman Newlin:Matt's right. I mean we need we'll need some rain. Hopefully we don't get as wet as we were last spring because some guys got pushed back to late June before they got anything planted. So we don't want to see that kind of moisture come as we get towards planting time, but we're going to need some as the year progresses. It's not going to take much for the drought to rear its head again as we get on into the summer if we don't.
Todd Gleason:Man, when he says north, that's us, Greg. Yes. Johnson here. You you can comment on that if you want. I'd also like to know after that comment what you think about '45 z and the changes, well, the the announcements that came this week.
Greg Johnson:Yeah. Yeah. As far as the weather is concerned, Champaign is the bullseye of the of the drought. Last year, we had 25 inches, the Illinois State Water Survey reported in Champaign. Normally we get 41.
Greg Johnson:So we finished the year 16 inches below normal, and the only two years in Champaign that were drier than last year was 1892 and 1895. So this was the driest year in one hundred and thirty years. So we, the point is, how did we have such a good crop? Well, because we got 10 of those inches during the growing season, and so with the good soils and just timely rains, we were able to pull a rabbit out of our hat. But my point is, we are going into this coming year with no subsoil moisture.
Greg Johnson:Last year we went in with some subsoil moisture so we could miss a rain here or there. I'm not sure we can miss a whole lot of rains this coming year with very little subsoil moisture. And again, that's Champaign, I mean, we are the worst. The northern third of Illinois is in good shape, the West Of The Mississippi River is in pretty good shape. So not everyone's in this boat, but it's certainly something to keep an eye on.
Greg Johnson:As far as 45Z is concerned, I've always said the devil is in the details. I mean, we don't know all the details yet. It certainly is, on the surface, it's somewhat friendly. I don't know that I would call it bullish. It just feels like the administration continues to want to walk that tightrope between pleasing big ag and pleasing big oil, and they end up pleasing either one.
Greg Johnson:And so I don't think we want to expect a silver bullet to come out of this. It's, like I say, I think it's a little friendly at this point, maybe longer term once we get some more details, maybe it helps. But in the short run, I wouldn't base my marketing program off of the 45Z program.
Todd Gleason:Let's get a final word now from each of you. I'll start with Sherman Newland. He's at Risk Management Commodities, a division of Zaner Ag Hedge in Hudsonville, Illinois. Sherman, what's your final word today?
Sherman Newlin:You know, we talked about basis a little bit. Basis in our area has continued to improve on corn since the report in January, so that's not bad. I think if you can get some rallies like we've talked about in this old crop corn and soybeans, I think you need to take advantage of it. Guys need you know, push this grain out the door to meet cash flow needs. Again, think, know, maybe reown some things with calls.
Sherman Newlin:It may be warranted going forward. And then as far as new crop, you know, we got to see what the acreage mix is going to be. I'm not overly excited about making cash sales where we are right now. I mean, you give me a $4.8 December price and maybe an $11.5 November bean price, I might get a little bit more interested. And I think that could happen.
Sherman Newlin:So I'm kind of on the sidelines and standing pat as far as new crop sales go.
Todd Gleason:Matt Bennett from agmarket.net in Windsor, Illinois. Your final word?
Matt Bennett:Yeah, I just want to be cautious as to ignore a rally. I appreciate some of, what Sherman said there as well. I think a lot of growers, especially holding on to significant chunks of old crop, need to understand how much better position we're in than we were just three days ago. I think on new crop, anything I do, I wanna have some flexibility in it. I do think that, you know, there could be some fireworks finally this year, you know, just given the demand situation.
Matt Bennett:But at the same time, you know, I don't think it's a bad idea to stair step into making some incremental sales if we can get to a level that the grower knows they can make money, you know, at, you know, at reasonable yields. The same type of yields are given to their brinker for cash flow. So by all means, I wanna stay flexible, but I I wanna respect this rally.
Todd Gleason:And finally, Greg Johnson from TGM. That's Total Grain Marketing in Champaign, Illinois.
Greg Johnson:I think this 50¢ bean rally has given farmers an opportunity to get some sales made at profitable levels, especially when you throw in the government money on top of that. Corn, I could very well see corn going sideways for the next two months until we get to the March 31 acreage report. So you have to ask yourself, how long do you want to hold on to old crop corn? Especially if you're paying DP or storage charges, and especially if you're paying interest, you know, that makes a difference. For new crop corn, you're not paying DP or storage charges yet, and there's no interest charge, so I think you can afford to be patient on new crop corn and wait for a smaller acreage number, maybe we'll talk about some dry weather problems and get to that $4.75 level on December corn.
Greg Johnson:So a little bit different between old and new. It's it's pretty easy to be patient, I think, in on new crop corn sales. Old crop, it just depends how long you wanna hold on and and wait for a potential rally.
Todd Gleason:Commodity week, of course, is a production of Illinois. Public media may listen to the whole of the program anytime you'd like. Our thanks go to Matt Bennett at agmarket dot net, Greg Johnson from TGM and Sherman Newlin at Risk Management Commodities. Commodity Week can be found at willag.org. I'm Illinois Extension's Todd Gleason.