May 01 | Closing Market Report

Todd Gleason: 00:00

From the Land Grant University in Urbana Champaign, Illinois, this is the closing market report. It is the May 2025. I'm extension's Todd Gleason. Coming up, we'll talk about the commodity markets with Matt Bennett of .net. I'll ask you to make this phone call, (217) 244-9455.

Todd Gleason: 00:18

That's 217 Or go to willag.org and hit the donate button at the top of the page to pledge your support to Illinois Public Media. It's public radio for the farming world. About 40% of our budget comes from you. I like the hundred and $20 level. Less is fine.

Todd Gleason: 00:34

More is great. Also today, we'll talk about the weather forecast. We'll do that with Mike Tenure from T Storm Weather, and we'll hear from Gerald Mashangi. He is an ag economist at the University of Illinois. He takes a look at expense ratios and particularly the high price of inputs and what that doing to budgets on the farm.

Todd Gleason: 00:55

All of that happens during this Thursday edition of the closing market report from Illinois public media. Dial that phone (217) 244-9455.

announcer: 01:07

services are made available to WILL by University of Illinois Extension.

Todd Gleason: 01:11

May corn for the day settled at $4.64 and a quarter, three lower. July at $4.72 at a quarter, down three and a quarter, and December contract up a penny. It settled at $4.47 at a quarter for the corn soybeans in the main contract at $10.40 and a quarter up five and a half July up five and three quarters settlement price at $10.50 and a quarter new crop November soybeans $10.24 a bushel up five and three quarters bean meal down $3.50 the bean oil 78¢ higher wheat futures in the July soft red at $5.31 up a quarter the hard red July at $5.27 and a half down 2¢ for the day live cattle futures were a dollar 25 higher on the day the feeder cattle 57 and a half cents lower and the lean hogs in the July contract down a dime for a hundred pounds Matt Bennett from AgMarket.net now joins us to take a look at this marketplace. Hi Matt, thanks for being with us. A few producers are finishing up but you're far enough to the south in Illinois about an hour south of Champaign Urbana.

Todd Gleason: 02:19

I'm wondering whether you're still in the field and well, actually out of the field at the moment.

Matt Bennett: 02:24

Yeah. I mean, we've had over half inch rain this week in small amounts. In all honesty, it's less than what they were forecasting, so we're happy about that. But we just can't get anything going. There's a few people in here where we're at that oh, I don't know.

Matt Bennett: 02:41

Maybe they're half done. We all know it doesn't take any time to get things done, so I'm not super concerned about it. It looks like we're gonna have a couple of weeks of good running, a little bit of a chance for rain over the weekend. But, by all intents and purposes, I expect that, when we talk next Thursday, I'm gonna be, you know hammered down.

Todd Gleason: 02:59

Well let's talk about the marketplace. The only thing that was hammered down was oats yesterday and they didn't open today. That's the May contract off '25 didn't open to the best of my knowledge. However the rest of the trade has been fairly quiet. Soybeans finished probably a bit higher for the day, corn down a little bit.

Todd Gleason: 03:17

What'd you think of the trade?

Matt Bennett: 03:18

Yeah. I mean, it's interesting to see. You know, we had positive export sales again this week on corn over a million tons, but our front months, we saw bear spreading. So two days ago, big time bear spreading. Yesterday, bull spreading.

Matt Bennett: 03:33

Come back in with bear spreading today. It's very interesting to see that, especially as most of us are looking at the balance sheet, assuming they're gonna have to tighten things up again on old crop. We know that new crop balance sheet's gonna look burdensome to say the least. But, you know, you would think that a lot of these people that are looking at this spread thinking, man, this thing could really get hopped up this year, probably scratching their head on a day like today. I do think overall the corn market's gonna struggle to rally whenever you've got this big window opening up.

Matt Bennett: 04:05

Most people understand we're gonna get this crop planted probably in the next two weeks. And so that's probably holding this corn market back just a little bit. While the soybean market, yeah, rallied today. I mean, you look down at soybean oil and you're up seventy, eighty cents on the close. I mean, very strong day for soybean oil.

Matt Bennett: 04:23

There's some enthusiasm that a trade deal is gonna be struck with India, which is supposed to have a fair amount of oh, I don't know whether it's guarantees, but trade deals that would be beneficial towards soybean oil exports out of The US to India. And clearly, we're still looking to find more clarity with the RVO. But overall, yeah, soybeans had a pretty darn good day, especially relative to corn.

Todd Gleason: 04:49

Well, let's talk a little bit about what you're thinking producers should do as it relates to marketing. When you look forward into the month of May and June, do you want to market corn and soybeans, and how much, relatively speaking speaking? And do you have some price levels that you're thinking about? Most will be under that on thinking in those terms, I believe, and I suppose you are too.

Matt Bennett: 05:14

Yeah. I mean, when you look at corn, for instance, old crop corn, I still think most people are down to gambling bushels. I have no desire to do anything there. I know that some posted bids in our part of the world, eight to 10 over, heard that there were some pushes paid yesterday at 20 over. And, clearly, that's got a lot to do with the fact that, you know, these prices on the board have been nothing to get excited about, whereas producers don't have a lot of corn left.

Matt Bennett: 05:42

So I think old corn's good property. As far as new corn goes, you know, the studies that we've done show that when you come out of February, if the crop insurance average is above what the print is, you know, to start the month of March, over the last twenty years, we've we've, every year, seen the market go back to that average price. That average price is $4.70 here this year. So I just don't get too excited right now. I think there's still a lot of question marks.

Matt Bennett: 06:11

No doubt next week, you're gonna have a very burdensome balance sheet, like I said, as far as new crop goes. But at the same time, you know, the Western Corn Belt's gonna have to see a little bit of a change of fortunes as far as their weather's concerned because they're bone dry in a lot of places and very concerned about what the prospects might be for moisture. So right now, you know, I'm being a little more hesitant. Beans, I think you just kinda follow along. I mean, with beans, you've seen bases narrowing as well.

Matt Bennett: 06:37

Not very many beans out there. So if I've got old beans, I'm probably gonna wait around. And then on new crop beans, you know, I guess if you're expecting to see some sort of a rally, beans have the same history. When you come out of February, that price this year is $10.54, you know, and we're here at $10.23. So I've gotta think that we'll see this bean market catch some sort of life in here.

Matt Bennett: 06:58

And if you get a weather market to unfold, you should have some price targets in there. My price targets, Todd, would be a new high for corn at $4.80 because we've got corn sold already. You know, and then our our targets for beans because we've got beans sold already as well would probably be something in excess of $10.54. And a lot of that has to do with their individual grower because a lot of folks can't make ten fifty beans work very well on their farm and it's still early in the year.

Todd Gleason: 07:23

Anything else we should be watching as we go into the month of May? The WASDE's are due out of course on the twelfth.

Matt Bennett: 07:29

Yeah. The WASDE is a big one. I think whenever you look at the May and June WASDE, you're probably going to have a tightening of old crop, but then you can't take your eyes off of that June planted acreage report. There's a chance if we've got enough fertilizer that acres could even go higher. So I would like to do a lot of marketing before June 30 in a flexible fashion, especially if the weather stays inclement out west.

Matt Bennett: 07:54

But by all means, I think ignoring what could happen June 30 with a bigger acreage number might not be the smartest idea.

Todd Gleason: 08:01

Thank you much.

Matt Bennett: 08:02

Absolutely. Thank you.

Todd Gleason: 08:03

Matt Bennett is with agmarket.net. The theme music for the closing market report is written, performed, produced in courtesy of Logan County, Illinois Farmer Tim Gleason, much like all of the rest of the information, volunteering all of the product that comes to you from Illinois public media on ag programming. Each and every volunteer, including Matt Bennett, who you heard just a few minutes ago, our analyst today, as well as tomorrow's analyst, and all of the analysts that you hear in the ag programming volunteer their time. I hope they make a difference to you and your marketing plans. I bet they do.

Todd Gleason: 08:52

And if they do, we're hoping that you will dial in with your financial support right now. Don't wait. Do it at (217) 244-9455. That's 217 will or go to willag.org and hit the donate button at the top of the page. I like the hundred and $20 level.

Todd Gleason: 09:10

That's just $10 a month. More is fantastic. Less is fine too. But do give. Do give please at (217) 244-9455.

Todd Gleason: 09:21

We know our listeners really count on the information it have for a very long time. In fact, this program, the closing market report, is celebrating the completion of its fortieth year. We've had more than 10,000 episodes of the closing market report done, more than 30,000 interviews. A lot of history here, and it goes much farther back than 1985. It goes all the way back to 1922.

Todd Gleason: 09:47

The very first broadcast from this broadcast station was an extension agent talking about dairy. It has more than a hundred years of commitment to agriculture in the state of Illinois. Please take time right now to dial in that support at (217) 244-9455 or go online at willgive.0rg. Make sure you put in the comments section or tell the person that you're talking to you're pledging in support of agriculture. I'm now joined by Gerald Michonge.

Todd Gleason: 10:21

He's in the Department of Agriculture and Consumer economics on campus at the U of I, an agricultural economist, and has penned an article for the Farm Doc Daily website, a series in fact with Brad's willing about the financial efficiency of Illinois grain farms. Thank you for taking some time with us. I need a definition from you first, Gerald, because much of this revolves around the operating expense ratio. What is it?

Gerald Mashange: 10:53

So it is a measure of financial efficiency, and what it does is that it just represents the share of a foreign's returns that are used to cover day to day operating expenses. And when we're looking at expenses on the operation, we don't wanna include finance effects, so we exclude interest along with depreciation. And a simple way of calculating it is we just divide total operating expenses as three of those interest and depreciation expenses by the total gross foreign returns.

Todd Gleason: 11:23

So you took a couple of decades worth of, data and then pulled some trends out of them. What did your analysis show?

Gerald Mashange: 11:33

So what we've been noticing is just starting off with the individual components. What we've seen is that when it comes to operating expenses, they don't vary as much compared to gross bond returns. Right? But overall, from these multi decades, the two past decades, what we've seen is a steady increase in those expenses and in gross returns. However, what we're seeing, especially in more recent years, is that there's been a little sharper increase in, operating expenses.

Gerald Mashange: 12:03

And also that coincides with the recent decline in gross bond returns. And the net effect, obviously, if you consider the ratio, is that we're seeing a lower a higher ratio. So the idea is when you look at the ratio itself, the financial scorecard that we use, it's a great tool just to pretty much quickly give an indication of the quality of that ratio. So in terms of measuring it, if you have an op an operating expense ratio that is less than 60%, what that means is that that's a good indicator. This just means you just have more of your income to use for other uses.

Gerald Mashange: 12:46

But if you find your ratio between 6080%, that is a cautionary or satisfactory figure and a ratio above 80%, that's considered a vulnerable category. And what we saw is that in 2022, just looking across all of Illinois grain farms at the median, again, we don't wanna have that effect from large farms. What we're seeing is that in 2022, that ratio was in the strong range. Right? So that was a good indicator.

Gerald Mashange: 13:20

But playing from 2022 to 2023, it shot up into the vulnerable range at the median.

Todd Gleason: 13:28

Were there some trends in cost on operated acres that you can run through?

Gerald Mashange: 13:33

We actually break that down. We speak to this operating expense ratio across different farm sizes, so small, medium, and large. And the way we define the farm sizes are we consider a small farm as having gross farm returns that are less than $350,000, and median is between 350,000 to $999.09 $99,999, and large farms were considering those greater than 999,999. So just looking at four of the larger components of operating expenses, what we did see in the data is that the a significant driver has been the rise in fertilizer costs, and that's one of the reasons pushing up operating expenses.

Todd Gleason: 14:24

And what things have not gone up as much?

Gerald Mashange: 14:27

So looking at labor costs, they they haven't gone up as much, but still, this is a significant component of operating expenses. We've also seen that, with seed costs as well, they've gone up too, but, again, relative to fertilizer, not as much. And we also do show, pesticide costs, you know, relative to fertilizer costs. The big driver is just fertilizer.

Todd Gleason: 14:50

Any final takeaways from the articles?

Gerald Mashange: 14:53

I think, you know, 2025, is gonna really be a tough year, again, focusing on fertilizer costs. We're seeing the trade tensions that are going on between the Trump administration and China. And, obviously, one method of retaliation from China is to use export controls when it pertains to fertilizer. So we just hope that there's gonna be a resolution when it comes to that. Again, just looking at the data, it looks as if there's a sensitive component, on operating costs.

Gerald Mashange: 15:26

And, again, going tying back to this operating expense ratio, we just need to be mindful, of this ongoing situation.

Todd Gleason: 15:33

Thank you very much, Gerald.

Gerald Mashange: 15:34

Appreciate it, Todd.

Todd Gleason: 15:35

Gerald Michonghi is an agricultural economist on the Urbana Champaign campus at the University of Illinois. You can read the article, the whole series actually, that he and Brad Zwilling have penned for the Farm Doc Daily website. The last one is titled The Financial Efficiency of Illinois Examining the Operating Expense Ratio. Mike Tenure is now here. He is with t storm weather where he serves as the president and CEO and has a very complex weather forecast coming up for the Corn Belt.

Todd Gleason: 16:21

I believe. Mike, can you tell me what's happening across America?

Mike Tannura: 16:26

Well, absolutely. This is one of the more complex patterns that you can see. The reason that is difficult to explain and to understand is because we essentially have two big systems in The US that are going to form over the next week. One is going to end up in the Western US and into the plains, and one is going to end up in the Eastern Corn Belt. Now this weather pattern is very complex because both of them are going to be disconnected from the jet stream.

Mike Tannura: 16:54

And the jet stream is where the strongest winds in the atmosphere are, and the strong winds that blow from west to east most of the time take these types of systems and then blow them from west to east. But when they're disconnected, they just kind of float and bubble around and they don't really have a lot of direction. And this wreaks havoc on computer models because the physics behind these models are basically dependent on having a typical west to east flow. And when they don't, then these little tiny errors that all models have become real big real fast and that leads to ever changing weather forecasts. It's going to be a challenging period ahead in that regard.

Todd Gleason: 17:33

Well, let's start in the Eastern Corn Belt and tell me what you're able to discern at this point about the next five to ten days, I suppose.

Mike Tannura: 17:42

Well, the first five days are pretty clear. There's going to be scattered showers and thunderstorms across the Southeast Half of the Corn Belt. This will include most of Illinois, Indiana, Ohio, as well as Missouri and Michigan. It also will extend into parts of the Mid South. It's primarily because the first upper level system is approaching us today and it'll drift into Illinois and Indiana this weekend, and then it basically stalls overhead.

Mike Tannura: 18:07

So just kind of a showery period is developing and that's going to linger for basically five days. We don't think these showers will come to a complete end until sometime Sunday, Monday, and Tuesday next week.

Todd Gleason: 18:20

And then for the second five days or in the Western Corn Belt, whichever way you want to go at this point?

Mike Tannura: 18:26

Sure. Well, the second five days, it'll start to dry out initially as that system moves away. But then the next system approaches from the West. And that's a real tricky one because while it's pretty apparent that that system is going to move across the Southern US, it's not clear how far south it's going to end up. If it ends up in southern areas of Illinois, Indiana, Ohio, and then over into Southern Missouri too, that's going to be a problem because any rain there with wet conditions that already exist in the forecast that we talked about into next week, that's just going to leave conditions wet for a while.

Mike Tannura: 19:01

So that system is going to become an important one because we need it to pass to the South for things to dry out. But as we noted, it's not going to be a situation where we wake up tomorrow and all of a sudden the rain chance is gone. This is going to be a complex situation for many days because computer models don't perform well in this setup, That's going to leave it pretty unclear until that event is right in front of us, which really won't be until about a week from now.

Todd Gleason: 19:27

So tell me about this second part of the system and what you're watching.

Mike Tannura: 19:31

Well, it's a completely independent system, and that one is essentially going to move across California this weekend, and that's going to drift into the plains once we get into early next week. There's going to be a major rain event for from this event across the hard red winter wheat region of Kansas, Nebraska, Oklahoma, Texas, and even Colorado. And Colorado is an important one because that's where we still have a drought in place. We think this whole drought is going to be wiped out next week by that system that should bring one to three inches, which is almost a month's worth of rain for most of this region. And for some areas, it's even more than that.

Mike Tannura: 20:06

That's going to happen over just a two or three day period. So the drought will end there. The problem, though, with that system for corn and soybeans is that eventually it's going to move east. And that's where it gets tricky because if it moves again far enough south, then that'll leave a lot of these corn and soybean areas dry later next week and next weekend, and maybe this wetness story goes away. But the more likely scenario is that it will at least move across the Mid South.

Mike Tannura: 20:33

It'll probably clip parts of the Corn Belt. That's what's going to keep this wetness story going for a while longer.

Todd Gleason: 20:39

Then after that, I know things get much more unclear, but what do you think the last third or two thirds, I suppose, of May might look like?

Mike Tannura: 20:49

Well, you're asking a question that is just extremely difficult to answer. I mean, from a probability standpoint, if you look at the type of La Nina that we've been in and the neutral setup that we have now with water temperatures close to normal in the middle of the Pacific Ocean, all the springs that we've had with that setup were wetter than normal across the seven state Corn Belt. So what we're seeing and what we've been seeing is pretty common of that type of setup. And we're defining springtime as April and May, which coincides with planting season. A couple of weeks from now is only May 15, and so you just would have to think that similar weather is going to continue beyond then, at least in that southern and eastern area.

Mike Tannura: 21:30

One thing we haven't talked too much about to this point, Todd, is areas to the Northwest. It's going be pretty dry in Iowa and Minnesota and the Dakotas going forward, So they're gonna be on the other side of this whole setup. That's going to be a pretty great window for planting for them with nice warm temperatures in the seventies and eighties and very little rain all the way, through Maytowns.

Todd Gleason: 21:50

Hey. Thanks much. We'll talk with you again next week.

Mike Tannura: 21:53

Sounds great, Ted. Great being here.

Todd Gleason: 21:54

That's Mike Tanura. He is with T Storm Weather. That's TStorm.net online. Mike is just one of five, no, six different meteorologists and climatologists that we talk to each and every week here on Illinois Public Media's ag programming if their weather forecasts make a difference to you and your marketing plans, particularly as we cover not only the state of Illinois and the Midwest, but all of the growing regions across the planet, particularly in South America during the winter months here, then please take some time right now and dial this number at (217) 244-9455. I hope it makes a difference to you, enough of a difference to you to go to willgive.0rg if not dialing that number and make pledge of financial support for the ag programming that comes to you from Illinois Public Media.

Todd Gleason: 22:47

Either way, tell the person you're talking to on the phone in support of agriculture or put that in the comments section if you're online so that the management here knows that you're making a financial pledge in support of agriculture. And thank you. Thank you so much for doing that. You have a great afternoon. I'm University of Illinois Extension's Todd Gleason.