Podcast Summary
Central Illinois crop conditions: Central Illinois crops are generally healthy, but excess rain led to more disease in some areas. Warm and wet weather forecasted, potentially worsening conditions. USDA report lowered yield expectations, and John Deere announced more layoffs due to labor costs.
The crop conditions in Central Illinois are looking good overall despite the challenges faced during planting due to excessive rain. Brett Lauer, a crop advisor in Central Illinois, reported that the crop looks healthy, but areas that received the most rain early have seen more disease presence. The weather forecast for the weekend is warm and wet, with temperatures in the upper 90s for Monday and Tuesday, cooling down to the upper 70s to lower 80s by Friday, Saturday, and Sunday. The World Agricultural Supply and Demand Estimate Report from the Department of Agriculture was bearish for yields, with unchanged corn numbers at 180 bushels per acre and beans at 51.2 bushels per acre. John Deere announced more layoffs in Waterloo, Iowa, due to labor costs, and the company is considering leaving the country for Mexico.
Midwest farming challenges in 2023: Earlier-than-usual emergence of diseases like tar spot and SDS, along with difficulty controlling weeds, pose significant challenges to Midwest farmers in the 2023 growing season.
The 2023 Midwest farming season has faced unique challenges, particularly in the areas of corn and soybean health. Corn crops, like the one in Champaign, Illinois, planted on May 8th, have shown impressive growth with minimal disease presence. However, diseases like tar spot have emerged earlier than usual and could potentially impact later-planted corn. Soybeans, on the other hand, have been susceptible to SDS, which thrives in early, cool, wet conditions. Additionally, controlling weeds in soybean fields has proven more difficult this year. The potential for diseases, such as tar spot, gray leaf, common rust, and southern rust, is a concern for farmers in various regions. The impact of these diseases on the overall yield remains to be seen. Farmers are utilizing treatments like Saltrow and Alivo to combat SDS and are keeping a close eye on their crops as the growing season progresses.
Southern rest in Illinois crops: Agronomist Brett has not observed southern rest in certain Illinois regions, a positive sign for crop health. He focuses on protecting kernel flex hybrids, specifically 645-16 and 644-64, in central IL, with BT protection and different insect modes of action.
The speaker, an agricultural agronomist, has not yet seen southern rest in the crops in certain regions of Illinois, which is a positive sign for the crop's health. He is currently focusing on protecting kernel flex hybrids in the central part of the state, particularly the I-72 corridor and northern southern Illinois. Two specific hybrids, 645-16 and 644-64, have shown great potential and are performing well despite the challenges thrown at them by Mother Nature. Both hybrids come with BT protection and different modes of action for insects. AgarGold, the company the speaker works for, prioritizes customer satisfaction by offering a range of hybrid and trait choices and providing expert knowledge to farmers. The speaker, Brett, can be found on Twitter @BrettLear and Snapchat under the username Brett for timely agronomic information.
Corn and soybean prices: Historically low stocks, high demand, and political instability in Ukraine and China contribute to record-low corn and soybean prices, despite the upcoming wheat harvest and World Agricultural Supply and Demand Estimate report not justifying the price drop.
The current agricultural market, specifically corn and soybeans, is experiencing historically low stocks and high demand, leading to record-low prices. Mike Zazolo, from Global Commodities in Addison, Kansas, discussed this issue in relation to the World Agricultural Supply and Demand Estimate report, which did not justify the significant price drop seen in late-month corn and beans. Zazolo emphasized that the wheat market, which is rapidly approaching harvest, should be supporting or leading any potential upside trend in the market. Additionally, the ongoing issues with Ukraine's corn and oilseed belt, coupled with the potential for a tougher trade stance with China under a President Trump administration, add to the pressure on prices. Overall, the market is facing significant challenges, and the recent price drops represent a loss of key support lines for both corn and soybeans.
Soybean Stocks & US-China Relations: High global soybean stocks and US-China tensions could lead to lower soybean prices before the election, but tight world corn stocks may continue to support prices.
Despite ample supplies in the United States, the speaker is concerned about global soybean stocks being at a six-year high and near record highs for world ending stocks. The speaker believes that the relationship between the United States and China could negatively impact soybean prices before the election, leading to a potential deep dive in the market. The speaker also noted that USDA's estimates for Brazilian corn production and exports differ significantly from CONAB's, which could result in tight world and competitor stocks for corn and soybeans by September or October. The speaker recommends hedging and selling corn, and is eager to re-own and defend those sales. USDA's surprise reduction in old crop ending stocks for corn in the July report was a bullish surprise, but the speaker believes that world stocks will remain tight and potentially the tightest in five or six years.
Corn, Wheat Price Reaction: Despite a record net short position, corn prices didn't react favorably to supply concerns due to strong wheat yields and disease pressure in corn. Keep monitoring corn fundamentals, wheat supply, and competition from the Black Sea.
The corn market's price reaction to the supply situation was less favorable than expected, despite a record net short position held by managed money. The wheat harvest is wrapping up with strong yields, but the wheat-corn spread and disease pressure are potential concerns. The USDA's weekly update on wheat harvest progress is awaited, and the Russian wheat prices are hoped to have bottomed. In Northeast Kansas, corn tar spot has been detected in major counties, and the extra hot weather could help dry out the crops but potential humid conditions and heavy rain could pose a risk. Overall, it's crucial to keep an eye on corn fundamentals, wheat supply, and competition from the Black Sea.
Agricultural market challenges: New disease threatens Western Corn Belt yields, macroeconomic factors cause volatility, potential for further price decline, marketing strategies crucial, substantial risk in futures markets, Asian export market weak due to currency fluctuations, monitor yields, daily marketing priority
The agricultural market, particularly in the Western Corn Belt, is facing new challenges with the emergence of a newer disease, which could lead to yield loss and the need for increased fungicide usage. Additionally, the market is experiencing volatility due to various macroeconomic factors such as the US-China trade relationship, the election, and China's economic data. Using the 2014 market as an analogy, there is potential for further price decline, making it crucial for farmers to protect their prices with marketing strategies. Farmers are also reminded of the substantial risk involved in commodity futures and options markets. The export market, specifically in Asia, is experiencing weakness due to weaker Asian currencies against the US dollar, leading to a loss of demand. Despite strong beef demand during the 40th of July, the market is currently volatile and uncertain. Farmers are encouraged to keep marketing as a daily priority, monitor yields, and be prepared to buy back at opportune moments.
Beef Prices & Hedging with Soybeans: Consider hedging with soybeans due to lower prices compared to corn amid rising beef prices and consumer debt. Be cautious due to HPAI concerns and potential impact on consumer confidence.
The current market conditions are putting pressure on beef prices due to rising costs and consumer debt. Mike Zazolo, from Global Commodities, suggests taking advantage of the relatively lower prices for soybeans compared to corn for hedging purposes. Additionally, concerns over HPAI (High Path Avian Influenza) in both beef and poultry industries could impact consumer confidence and the beef market. Zazolo advises being cautious and considering locking in pricing for cattle and feed in the next few weeks. Soybean futures are currently near $10 a bushel for fall delivery, making them a more attractive option for hedging compared to corn. Despite current low prices, the potential for higher bean yields due to timely rains balances out revenue per acre. Overall, it's a critical time for farmers and livestock producers to closely monitor market trends and adapt to changing conditions.
Fed's interest rate vs mortgage rates: The Fed isn't matching the pace of mortgage rate decreases, contributing to a challenging housing market amidst inflation concerns and a decrease in job numbers
The Federal Reserve is not raising interest rates at the same pace as 30-year mortgage rates, which are currently decreasing. However, the housing market is experiencing a downturn, particularly since the start of the inflation situation. Despite a decrease in job numbers, inflation remains a concern. Fred Lar from AgriGold and Mike Zuslillo from Global Commodities discussed these topics on the latest episode of Backroads of Illinois. Listeners can tune in wherever they get their podcasts. The Federal Reserve's decision not to match the pace of mortgage rate decreases is contributing to a challenging housing market, even as other economic indicators, such as job numbers, show signs of struggle. The inflation situation continues to be a significant concern, despite some improvements in other areas. Overall, the economic landscape is complex, and these trends are important for anyone following the economy to understand. Tune in to Backroads of Illinois for more insights and analysis.