Podcast Summary
Illinois Agriculture, Flexible Rules for Farmers: Illinois farmers had a successful planting season and are advocating for more flexible rules from the Department of the Treasury regarding 45-Z models to follow practices that make sense for them while meeting carbon intensity thresholds
The agricultural industry in Central Illinois had a successful planting season this year, with good conditions since then. Chris Gould from Maple Park, Illinois, shared his experience, mentioning few rain delays and excellent growing conditions since May 1st. Additionally, Gould recently visited Washington D.C. with the Illinois Corn Growers Association for corn Congress and meetings with legislators and their staff, focusing on building rapport and making the case for their asks. Regarding 45-Z models, Gould believes that current rules need to be more flexible for farmers to follow practices that make sense for them while meeting the requirements of the Treasury. He hopes for a more flexible approach, such as meeting a carbon intensity threshold, rather than strict regulations from the Department of the Treasury.
Commodity markets volatility: Commodity markets, specifically corn and soybeans, are experiencing significant volatility due to factors like equities markets, geopolitical tensions, weather concerns, low prices, uncertain yields, and low liquidity. Farmers are hoping for price increases or decreases to offset losses, while tariffs may also impact the markets.
The current commodity markets, particularly corn and soybeans, are experiencing significant volatility due to various factors including equities markets, geopolitical tensions, and weather concerns. Farmers, like Chris Gould from Illinois, are facing challenging conditions with low prices and uncertain yields, and are hoping for either a price increase or further decreases to offset their losses. The markets are also impacted by low liquidity and the absence of many traders during the summer months. Regarding tariffs, Trump has been critical of Biden's electric vehicle push and has mentioned the possibility of reinstating tariffs on China if elected. However, it's important to note that this information is based on campaign statements and not confirmed sources. Overall, the commodity markets are facing a complex and uncertain environment, with both farmers and traders navigating various risks and uncertainties.
Acreage reductions and carryout impact: The agricultural market is closely monitoring potential acreage reductions and their impact on carryout levels for beans and corn, but current high carryout levels are keeping the market calm. Cattle feeders are hoping for price stability, but uncertainty remains due to the lengthy gestation period and current feed prices.
The agricultural market, specifically beans and corn, is closely watching historical data and current events to predict potential acreage reductions and their impact on carryout. The market is currently focusing on the 2022 data, where significant cuts in corn and bean acreage occurred after the FSA data was released in September. Despite the potential for acreage reductions, the market is not showing significant concern, as carryout levels are still relatively high. Cattle feeders, on the other hand, are eagerly waiting for price fluctuations to stop, but the lengthy gestation period of cattle and current feed prices make it uncertain when that will happen. The market analyst also mentioned that some cattle prices at auctions are below the cost of production, but corn and bean prices are still relatively low, adding to the uncertainty in the market.
Market pressure on farmers: Farmers face pressure to sell old crops due to low production costs and weak demand. Focus on staying liquid, watch upcoming WASD report for potential market shifts, and be prepared for bank conversations.
Farmers are facing pressure to sell their old crops due to market conditions, as the cost of production remains low and demand is not as strong, particularly in the cattle and hog markets. Peter Meyer from Muddy Agonback Roads of Illinois advised farmers to stay liquid and pay attention to the upcoming WASD report, specifically the acreage number, which could impact crop production and market prices. The market has already priced in expected yield increases for corn and soybeans, leaving acres as a key factor to watch. Additionally, Meyer expressed surprise at the high reported yields some farmers have seen this season, but emphasized that it may not matter much in the grand scheme of things. Overall, farmers should focus on staying liquid and prepared for upcoming conversations with their banks, while keeping a close eye on the WASD report for potential market shifts.
USDA Report Surprises: The USDA report could bring unexpected changes in corn and soybean acres, and the market reaction will depend on whether the negatives have already been priced in.
The upcoming USDA report could bring some surprises, particularly regarding corn and soybean acres. While some acres have been accounted for in the June report, about four million acres are still unaccounted for from the March intentions. There's a possibility that acres could go up, but harvested acres might stay the same, which could absorb flooded acres in certain regions. Supply is expected to be high, and the demand side of the equation will be crucial for USDA adjustments. The market is anticipating heavy numbers, and the reaction will depend on whether the market has already priced in the negatives. Private crop tours can provide a snapshot of the crop situation but are not the end-all-be-all in terms of estimates. The market is currently figuring out big numbers, so the impact of this year's crop tours might be limited unless it's to the upside.
Cattle market concerns: The current economic situation is causing concerns for the cattle market, particularly the potential impact on demand for live cattle products like beef in a weak economy. The market is expected to remain volatile, with several factors including outside markets, grain markets, and the upcoming harvest and crop report that could impact the market.
The current economic situation is causing concerns for the ag sector, particularly the cattle market. The market saw a sharp sell-off earlier in the week due to risk-off trading, leaving the charts technically broken. The biggest concern is the potential impact on demand for live cattle products, such as beef, in a weak economy. Retail values have slid down but are still holding fairly well. The cash market for cattle is starting to come together this week, with trade offers coming in lower than last week, but still some good demand for cattle supplies. However, volatility is not gone, and there are several factors that could impact the market in the coming weeks, including outside markets, grain markets, and the upcoming harvest and crop report. The biggest worry is the pricing of old crop supplies for September corn, which needs to be addressed in the next couple of weeks. Overall, the market is expected to remain volatile, and the impact of economic conditions on demand for livestock products will continue to be a significant concern.
Commodity market trends: John from Total Farm Marketing anticipates a cautious trend for corn, soybean, and wheat futures with potential downward trajectory, but remains open to exploring different strategies after September. Lifestyle market showed positive movement with cattle futures, feed cattle, and lean hogs finishing up, while crude oil saw a small increase.
John, from Total Farm Marketing, is currently maintaining a cautious stance in the commodity market, specifically for corn, soybean, and wheat futures. He anticipates a possible continuation of the current trend of a few steps forward, a few steps back, with a potential downward trajectory. However, he remains open to exploring different strategies after September or fall if market conditions change significantly. In contrast, the lifestyle market showed some positive movement, with cattle futures, feed cattle, and lean hogs all finishing up. Crude oil also saw a small increase. The Dow Jones finished down. Listeners can catch the full discussion on Back Roads of Illinois' YouTube channel or podcast.