Todd Gleason: This is the February 12 edition of Commodity Week.

announce: Todd Gleason services are made available to WILL by University of Illinois Extension.

Todd Gleason: Well, welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Ellen Dearden, Harlan Suderman, and Mike Zuzlow. Commodity Week, of course, is a production of Illinois Public Media. It's public radio for the farming world online on demand at willag.org.

That's willag.org. Or right now today, you can register for the All Day Ag Outlook. It's coming up the third day of March. That's a Tuesday. We have a fantastic lineup for you, including many of the panelists that you hear on our radio station regularly, like Mike Suzlow and Ellen Dearden, as well as the PharmDoc team.

Gary Schnicki will definitely be there in the afternoon to talk about your crop insurance decisions, and we'll take a look at land values as well as all kinds of other things you wanna join us on the March at the Beef House in Covington, Indiana for the thirty sixth annual all day outlook. The $40 registration fee includes your lunch at the noon hour and the Beef House roll and coffee in the morning. The full agenda online at willag.org. Register today. Now let's get some information from our panelists and the kinds of things we should cover for this program.

Ellen Dearden from AgriView out of Morton, Illinois. What's been on your mind this week?

Ellen Dearden: Well, the magnitude of the soybean side is of, importance to me, but I think we need to talk about next week. Monday is a holiday. Tuesday is beginning of the Lunar New Year for China. And at the end of the week we've got the Ag Forum so we're going to get a full complement of information out, during the week next week all jammed into four days.

Mike Zuzolo: Yeah. I'm glad Ellen brought that up. I'd also add to that the idea, Todd, of of what you talked about with the ag outlook. You know, that's gonna come right after the base prices are figured for corn and beans, and I can't remember a more important year when it comes to profitability, maybe going back to 2008, 2009 time period, maybe 2015, 2017 time period. But this is one of those once in a decade time periods that you've got to get to that Outlook meeting and spend some time on your marketing.

And then, yes, the whole day is worth it because it's where you can organize your thoughts. Because I am of a very strong opinion I would love to hear what Ellen and Arlen have to say about this as well but I'm of a very strong opinion that this bean market is like a Heinz commercial from the 1980s. It's anticipation, whereas the corn has been doing the yeoman's work of really filling the demand numbers. And I think we've seen that again and again here between the weekly export sales and the WASDE report this week.

Todd Gleason: By the way, if you want to join that Ag Outlook Forum, you can do that easily enough. It's free. You can search it out online, USDA, comma, Ag form, and it will pop up, and there will be directions from that point. Arlen Suderman, what's on your list for the day as well?

Arlan Suderman: So I I think China. Decisions are made for political reasons, not necessarily economic reasons, and there's a lot happening inside of China now. That could, depending how they play out, provide some opportunities for farmers. But, when decisions are made politically rather than economically, that's tough to predict.

Todd Gleason: Helen Deirdre, let's get start with you on the topics. I'd 'd like to begin with the magnitude of the soybean upside. Do you think there really is much more to go?

Ellen Dearden: I'm not sure. You know, we rebounded on the nearby months back up to where we were this fall and haven't been very convincing toward the high side of things that we're going to blast through those old highs. So we are seeing bull spreading. That's certainly a positive sign. But I think that this would be a good place to be making sales, maybe cleaning up old crop sales, and maybe putting a toe in the water on new crop.

Todd Gleason: Mike, would you agree with that?

Mike Zuzolo: Yeah, think so, Todd. I mean, depending on where you're at and the location, the basis is all over the place from what I can tell around the country. But I think to to dovetail on what Ellen just said, the the new move up in the soybeans can directly be tracked with the soybean oil, making a new twenty twenty six high as well. And it's really only just roughly 1 to 3¢ away from taking out the twenty twenty five high, and it's very close to getting back up to 60 in lead month oil. That would get you back to levels not seen since October 2023.

So we see this contrast, this huge contrast between soybean world ending stocks, 125,500,000 metric tons, another jump, what, four or 5% more than last year to another new record high. Brazil harvesting what looks to be a very sizable crop with maybe some quality issues in some areas. But by the same token, you've got this market just unstoppable in terms of upside, and now it's finally catching the wheat and the corn market as of Thursday's close. But I think this really does go back to the market is betting on the come in terms of the baseline projections for bean oil and the 45 z. And I also feel like that the market is maybe not thinking too much about what Ellen is when it comes to what are those acreage numbers going to be, because cutting it very quickly here, the idea that I found out from USDA in Washington on report day, on WASDE report day, is they're not probably going to back off that 98,800,000 acres in corn from this past year.

Those need to rotate back into soybeans, in my opinion, and realize that's about 5,000,000 more acres of corn than what they gave us in their agricultural outlook about a year ago in February 2025. So I see a lot more downside potential if USDA doesn't feed the bull next week like Ellen's

Todd Gleason: kind of

Mike Zuzolo: talking about with this big meeting.

Todd Gleason: Okay, Mike. I want to stay with you for just a second, then Ellen, I'll come to you about the the acreage figures that will come out from USDA and the Ag Forum. On the 45z, if we have, what, an 83,000,000 acre soybean number next week or it stays in that range. Does that change very much the outlook as it's related to soybeans given crush capacity in The United States?

Mike Zuzolo: Yeah, that's a huge point. I added about 4% to the crush for my twenty five-twenty six. I'm up above 85,000,000 on the soybeans at this point, Todd, and that's because of this rotation back. And I could swing that back down to 83.5 pretty easily, depending on what USD does. But at the end of the day, to answer your question, to me, it's very hard to get below a $3.50 carryover next year, even with increased demand on the bean oil side of the equation.

I'll put it to you this way very bluntly, and I don't mean to be political, but this has been received by my clients and and and subscribers very well in terms of what exactly do you mean, Mike. And what I mean is I can trust president Trump and what he does with his policy. I cannot trust that China is gonna keep buying what president Trump says they're going to buy because of the economic fundamentals and the supply demand fundamentals and the price down in South America right now. And so I am more concerned about a 2018 type market where China disappoints for my clients now that we're above $11 November bean futures than I am, oh, China's gonna buy. Don't worry about it.

I I think that's the extreme we have right now.

Todd Gleason: So, Ellen, before we get into the acreage side, I want to stay with the idea that China may be in the market for more soybeans, USDA, and the World Ag Supply and Demand estimate report earlier in the week, put a note there that, quote, China is reported to be considered buying more US soybeans. Global soybean import demand is nearly unchanged from last month, so therefore if China bought more from The United States, global soybean exports will likely be shifted with more US shipments to China and less to other markets. How do you put that into your thoughts as you look at soybeans?

Ellen Dearden: We really always need to be looking at the world numbers. I mean, it's just one big pot of soybeans if you look at it that way. And sure The US would like to have a bigger share of the pot that's going to China. Now if China imports a 112,000,000 metric tons of beans as USDA suggests they will, how many of those will come from The US? I think it's very price dependent because China has always been price sensitive.

I think the the thing that we need to keep in mind is that, there will be times that US beans are very competitive with South America, and there will be times when we will totally be out of this market. But I believe that, we will see that world pot of beans traded rather briskly over the next year's time and that spells, I think, good news for all soybean producers.

Todd Gleason: Now let's turn your attention Ellen to that acreage figure. When I'm thinking about the corn soybean mix, I usually just say about a 180,000,000 acres total. Where do you think it will come in next week from USDA?

Ellen Dearden: Well, we'll probably come in just shy of that 180,000,000 acres of corn and beans, but I think on the bean side of things, the most recent rally will not probably be reflected in the world, numbers, that come out of Ag Forum. So I think they'll probably stick around 83 and a half, 84,000,000 bean acres. The market would like to see more acres than that and, probably replace some cotton acres, some rice acres, and maybe some corn acres as well.

Todd Gleason: How many acres do you think the market wants?

Ellen Dearden: I think they want at least 85,000,000, bean acres.

Todd Gleason: And then Mike, I wanna come back to you. So you dropped a number, but I want you to put those in in kind of context as it relates to the marketplace. So what what again are you thinking about as it's related to the 26 soybean acres?

Mike Zuzolo: Yeah. But I need to correct, USDA was at 85 even on their, December update or their last baseline update, I should say, and I'm at 87.5 on soybeans and 93.5 or 93 even on the corn for 26. And so my mindset you know, the USDA and almost every agricultural outlook forum update, commodity outlook they do, they reference the new crop beans against the new crop corn. And I looked back again on the February '25 update on the commodity outlook for soybeans and grains. They did it then too.

And so I do think it has meaning to it. But, you know, like I said, in Washington when I talked and worked with them on the WASDE report day about the harvested acres, planted acres yield issue, I don't think they're going to come off the 98,800,000 planted acres of corn from this year. And so somehow we're going to have to justify two twenty five million acres of corn, beans, and wheat like we had this past year, but it was just severely low on beans and severely high on corn. Both U of I and Iowa State are projecting breakevens at between $4.33 and $4.66 for corn this year and $10.96 and $10.99 for soybeans. With those base prices getting where they're at right now, you're really starting to look at the beans, I think, a lot more at this stage.

Not breaking rotation, but again, going back to what do you do with those extra 4,800,000 acres of corn that USDA gave us versus February? So that's what I just want to get ahead of, because I can defend $11 soybeans all day long. I can't defend 9.5 soybeans all day long, and that's what I think the stakes are this year.

Todd Gleason: Right. So a quick question for both of you. $11 in that range for soybeans. I think the last time well, last week and, previous time we were up at the $11 level. Most said, you know, we don't stay in the elevens for very long.

And then the question is, really, do we move to 12, or do we just drop back out of the $11 to to the tens again? Ellen, do you do you think that we have that opportunity really to move through the $11 range?

Ellen Dearden: No.

Todd Gleason: And Mike? I think it goes back

Mike Zuzolo: to what the biofuel people said a few months ago. It's been many months ago, guess probably now, Todd. But when we were talking about all of this new demand coming on, we were talking $13.14 dollars $15 beans, and that was predicated upon, you know, soybean oil prices being $75 $80.85 dollars that's what it's going to have to take. And so that's where I'm okay with doing that. I'm fine with doing that, but I think we're at a point now where you've got to defend the rally that we've seen so far to be able to extend that rally.

And I would also say that what I saw Thursday on the close with the wheat coming around and the corn coming around is beans are back at a point where they need corn and they need wheat and and again these big resistance levels we're back up against right now and you just don't want to you just don't want to lose sight of where you're at because we're back to four thirty five area corn, we're back to eleven thirty five area beans, we're back to five thirty five area soft red wheat. These are major resistance levels. I went back and looked at soft red wheat. We haven't seen a close, a monthly close, above five forty on lead month soft red wheat since January, so we're really at some pretty important levels. It kind of goes back to the Ag Forum and goes back to our meeting in early March.

You just got to keep your head up with marketing this next thirty days.

Todd Gleason: Ellen, how do you think about defending soybeans? And maybe corn too, but soybeans, at this point, are you making cash sales and thinking through what crop insurance should look like or are there paper ways to do it? What what kinds of things are you discussing with producers?

Ellen Dearden: I think I think you do wanna use the board and can't get too excited about the new crop basis on beans. Primarily, it's in the 40 to 50¢ under November bean futures for fall delivery and guys in Central Illinois at least like to move beans right out of the field if they can. So we're well under that break even price at 10.95 ish for most guys, on the beans. But I do think you could sell the board. I can't buy a put in the July.

You're buying too much time. I've been buying some $11.5 July bean puts figuring that I can roll them into November at a later time, but those are still trading just shy of 40¢.

Todd Gleason: Mike, how are you defending them?

Mike Zuzolo: Yeah, 90% sold on the old crop beans. I would not be surprised if I'd be at a 100% by a week from this commodity week program just because of the Agricultural Outlook Forum coming up, Todd, and hitting some technical levels. And if we don't go through those in a meaningful way, thinking that might be a topping area. As far as new crop, what I recommended to clients and subscribers at the beginning of the month was to work on some new crop short dated puts to protect crop insurance, split it between new crop options, new crop short dated options, and May options or spreads. I won't get any more detail than that just because of compliance because you have got to know your risks when you doing this kind of stuff.

But I think that is the best way to start right now if you haven't done anything broad brush, generally speaking. I've always felt as though the basis is your best drought monitor or your best drought risk management tool that you have out there. Like winter wheat producers out in this part of the country, I'm recommending exploring hedge to arrives, locking in futures, leaving your basis open like Ellen, because if we do have a localized drought, that would, I would think, help you to have your basis left open heading into midsummer.

Todd Gleason: And, Ellen, one last, topic that you wanted to take up was the holiday. It's President's Day. On Monday, the markets are closed, and the Chinese New Year is next week, which is usually a holiday for them. What are the things you've been thinking about?

Ellen Dearden: Well, the Chinese New Year holiday is not a one day affair. It's a week, ten day long deal. And typically speaking, they haven't done much buying in that timeframe so the people who are looking for a lot of new crop sales coming into this market, I'm not talking about new November type bean but just new buying in the bean market may be disappointed in that timeframe. I think we need to continue to look at meal futures because even though everybody's thought that the beans are all about the 45Z and the bean oil, this week hasn't proved that to be the case with the meal being up another nearly $5 on Thursday and up over $300 a ton. So don't give up on the bean meal either.

Todd Gleason: Arlen Suderman has again joined us. He has been traveling so disappeared for a bit. But thank you, Arlen, for sticking with us for the day. By the way, you were in Iowa, I think, and you're on your way now to Hays, Kansas. Is that right?

Arlan Suderman: That's right. Going from one meeting to the next. So meeting with farmers and something I really enjoy.

Todd Gleason: Yeah. I and you've probably been doing that all winter long. What have they been telling you about their acreage prospects for the coming year?

Arlan Suderman: Well, corn is king, obviously. And I go back to what a professor said over forty years ago that every farmer wants to grow corn. The only ones who don't are the ones who can't because of weather or soil. So they love growing corn. But when you look at input costs and you look at the potential for a biofuel program, which we should have before, hopefully before planting, they're intrigued by the opportunities for soybeans and particularly in the outskirts, outside of the Midwest, in in the plains in the South, I think is where we'll see the biggest shift.

Todd Gleason: Okay. So we have talked already that you did not hear quite a bit about the potential for 45z. I did have some questions. I'd like you to go through some answers for me as well that we've covered to some extent. Do you think that 45z will increase demand for soybeans this year?

Does bean meal actually show that at the moment? I know bean oil does, but does bean meal do that? We've made note of that once already in our program. Ellen Ellen Dearden talked about it. And then, how quickly will it be done?

And and I'll have a capacity issue as well. So first, do you think that 45 z will have an impact for this year?

Arlan Suderman: Well, 45Z has already had an impact from the standpoint of dropping the indirect land use charge. That's worth $0.30 a gallon for soy oil made into fuel, dollars $0.03 0 a fuel gallon for soy oil. So that's helped soy oil right there in the equation. There's a lot we don't know. There's a lot we do know already, because that was set out by Congress.

And so now EPA is just putting the final touches on it. So we know a great deal. But it's probably not the biggest piece of the equation. When you look at what we're waiting for from the EPA, there's still about five different scenarios that can play out. But when you study what this administration has done to date in the second, you know, Trump two point zero.

They've really tried to use the biofuel program as their way of supporting agriculture. So we're cautiously optimistic that we're going to get some very favorable regulations that if it plays out the way we think, we're basically going to be using up every available bit of feedstock in the in the biomass diesel production. And, unfortunately, probably going to take an act of congress to really change things dramatically for corn with supporting e 15.

Todd Gleason: What is capacity like for CRUSH, and and what's utilization like at the moment? So how much space do we have?

Arlan Suderman: Yeah. Crush, we believe right now, we estimate at right about 3,000,000,000 bushels. So obviously, we're not there yet. We have some more upside. In fact, my crush estimate for the current year is about 70,000,000 bushels above USDA.

Currently, you look at crush through the first four months of the soybean marketing year, which is what we have data for so far, Year to date crushes exceeds the seasonal pace needed to hit USDA's target by 31,000,000 bushels. And I think we're gonna continue to see that gap grow. And if we get a favorable let's keep in mind that we've missed the first quarter of the year essentially without the EPA guidelines. And so biofuel per biomass diesel producers have been really curtailing their production. But once we get that, they're gonna have to play catch up, and it's gonna take about two months for them to really get going, and then they're gonna have to go full steam.

And so I think that even my crush estimate has upside potential to it yet. We generally go about we can go about 95% of capacity to allow downtime. So there's still quite a bit of upside potential on the crush with the capacity we we already have.

Todd Gleason: Okay. So I wanna go back to something that you said that on the corn side that it probably would take an act of congress. In the same breath, you tell me that the president is supporting biofuels. However, on e 15, he said he punted that ball to congress, and I'm wondering whether you can put those two thing two sides together. The the I'm the support of biofuels, the lack of e 15 are punting it to congress, which probably won't get anything done with that, and how that plays out for soybeans Yeah.

And oil. The Yeah.

Arlan Suderman: I hear what you're saying. Congress has trouble agreeing on a bill that the sun will come up in the East over the coming year. So, that's a real problem, and that's a real frustration to farmers. I do think there is momentum building for bipartisan support for e 15. Do I have a great deal of confidence to get it through?

No. I lack confidence because of Congress's track record. As I talk to people in the industry, they've all been saying, well, biomass, diesel, yeah, EP can really help us there. But for e 15, we'll probably need congressional support because of the way the rigs are built. I'm not enough of a legal expert to understand why that would be different.

It does give Trump some cover with the oil people. But on the other hand, he did say he put it on my desk and I will sign it. So that's a positive sign right there. But I think it's gonna take but let's look at the positive here. We're already up to e 11 because of the way we are now offering it in in some stations and getting waivers.

We could we could go a lot further if we had this codified, but at least we're making that progress toward it.

Todd Gleason: Now turn your attention to China. You discussed that. You wanna talk about China as it's related to their internal politics and how that might reflect into the soybean market, maybe corn too, I suppose.

Arlan Suderman: Yeah. And corn's really not on the radar of the market right now going to China. I'm not predicting it, but I'm saying it's a possibility. When you look what's happening inside of China and we go all the way back to October, that's when China had its fourth plenum meeting. It was the fifteenth fourth plenum meeting.

That's when the Communist Party China, the 220 highest leaders within the party meet every five years to assess, are we going the direction we wanna go? What leaders need to be replaced to help make it happen? What policies need to change to help make it happen? And we felt at that time that, president Xi would be secure because a lifelong family friend was number two in the military, but we felt like it would be a good measuring stick for how solid is his support within the party. He came out of that eager to seek a a trade deal to quiet the international waters.

He conduct started conducting a purging of the military, including five of the top six generals leading the army on the Central Military Commission. He has passed the point of no return with this purge going even to the lifelong family friends. So he is in trouble. I'm not predicting that he is going down, but I am saying that he has to shore up his support base and gain control of the support of the communist party of China to get an additional term in office. So while his long term objectives are still the same, he's willing to play the short game with Trump, who he knows Trump needs him as well to try to hang on to congress in the midterms.

So I think that's favorable for commodity trade. I think that means that China makes decisions on buying US commodities not based on economics, but what will help it get a deal from Trump to get access, more favorable access to our consumer market, which is much bigger than the commodity market, and to get access to microchips that it needs for its developing AI program.

Todd Gleason: On that note, we'll turn our attention to the final word from each of you. Ellen Dearden from AgriView out of Morton, Illinois. What is your final word for the day?

Ellen Dearden: I'm gonna tell you I was pretty excited about the wheat market today, and I don't get excited about wheat very often. But I thought that the fact that the nearby Chicago wheat was up 15¢ on Thursday certainly spilled into the corn market. And in relation to China, I continue to say watch what they do, not watch what they say.

Todd Gleason: Mike Suzlow at globalcommresearch.com, your final thoughts?

Mike Zuzolo: One of the most exciting things I'm looking forward to talking about at the Beef House meeting, than seeing you and Ellen and all the rest of the group there, is the idea that we can trade the supply demand numbers, hedge the supply demand numbers, but we still want to keep our eyes on those outside markets. And President Trump continues, in my opinion, to pursue a weak dollar policy, both through the tariffs and through his FEDPIC, and that's, I think, ultimately the key in all of this as far as sales that need to be defended, inflation that's still around in six months without weather problems. These are the keys because the Chinese currency just made a new thirty three month high this week, and I think that has a lot to do with why the funds in the market are starting to get a little bit more revved up. It's just not all about supply demand, but that's really what matters to me, and excited to explain that.

Todd Gleason: And finally, Arlen Suderman of Stonax out of Kansas City, Missouri. Your final word.

Arlan Suderman: Yeah. Be nimble, be flexible because we do see some opportunities for upside if we get the favorable EPA ruling, if we get the trade deal with China by the April. But if those things would fall through, there is downside risk. So I'm cautiously optimistic. Be flexible, but protect your equity in your farm.

Todd Gleason: Commodity Week is production of Illinois Public Media. You may find and listen to the whole of the program online right now if you'd like at willag.org, willag.org, where you can also purchase your tickets for the All Day Ag Outlook. That's coming up on the March at the Beef House in Covington, Indiana. The Farm Doc team will be there. Eric Snodgrass will kick us off with a weather forecast, and we'll also have the analysts that you listen to and enjoy right here on Illinois Public Media.

Again, that's a willagg.org. The cost is $40 Don't wait. Sign up right now. Our thanks go to our panelists this week for our commodity week program, including Arlen Suderman of Stonex, Mike Zuzlow at globalcommresearch.com, and from AgReview, Ellen Dearden. I'm University of Illinois Extension's Todd Gleeson.