Todd Gleason: This is the February 26 edition of Commodity Week. Todd services are made available to WILL by University of Illinois Extension. Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day include Kurt Kimmel from agmarket.net and Dave Chatterton of Strategic Farm Marketing.

Commodity Week, of course, is a production of Illinois Public Media. It is public radio for Farming World online on demand at willag.org, willag.org, where you can still purchase your tickets for the all day outlook. That's coming up Tuesday of next week at the Beef House in Covington, Indiana. The cost is just $40 through Friday, so make sure you get your tickets picked up by then at willag.org. Of course, we'll have Kurt Kimmel on the stage with us.

Thank you, Kurt, for being with us. He's at agmarket.net. And Dave Chatterton will not be there, but we will be talking about crop insurance with Gary Schnitke on that day. And Dave's gonna talk a little bit about that at the moment. Dave, I wanna start with that, and then we'll get the list after we're done having a quick discussion about crop insurance of the things that we should talk about as it's related to the marketplace.

So let's begin with crop insurance decisions that producers should make. The short version of what Gary Schnitke would say is lower your RP, take ECO, and if you want to, take SEO. When you talk to producers, what kinds of things are they asking about, and what are you telling them?

Dave Chatterton: Yeah. Todd, it's a great question. And, of course, it's the time of year. And, you know, right now, those spring crop insurance prices, we got another day to go sitting basically right at the the $4.60 level in corn and just over $11, $11.00 7 or $11.00 8 in beans. And so very similar to what we've seen in the last three years, a little bit of change there, but not enough to to really do.

What we have seen change are the changes that were included in the one big beautiful bill that changed the subsidies and the title one programs for crop insurance. And keep in mind, the two of those are going to work together. So your ARC and PLC and your FSA programs, your title ones, there's been some significant changes there. There's also a delayed sign up this year where you don't have to sign up by March 15, but, you know, that's one side of the equation. Other side to your point is crop insurance.

And what we are seeing, I mean, when I sit down with guys one on one or when we've been doing our group meetings, one of the first things that always comes up is the drought, how dry it is, particularly in our area here in Central Illinois. And if you're listening in parts of Indiana or maybe Southern Illinois, I mean, maybe not quite as dry there. But certainly, when you look at the strout map, it encompasses a big portion of Indiana, Illinois, Eastern Iowa, Missouri, Nebraska, some very important states. So what we are seeing is exactly what you mentioned of guys either, you know, last year, I think guys were dropping our RP rates to maybe from 85 to 80 or lower and picking up the full ECO component, which takes you from 86 to 95. This year, because of the changes in SEO being very affordable, we're finding really, people aren't gapping those policies in a way that they used to, but they're sticking primarily with an 80 or 85% product within picking up, you know, the SEO and the ECO will take you to a 96% level on a county basis.

But some of the offset products that go alongside and bolt along the ECO or the SEO coverage up to those higher levels also offer you individual optional unit coverage. And when we put all those together and price them, we're not really much above what we would have been paying last year for, you know, just the ECO products. So a lot of uptake on that. Guys are worried about drought in their own yields, and they're looking to get into those higher price guarantees.

Todd Gleason: You know, so to talk about the subsidy levels that came along in the big beautiful bill act, ECOSEO now subsidized at an 80% level. I don't recall what exactly the change in the RP products were, but I think that subsidy was upped as well. As you're thinking about this, running up to that 95% coverage level. That's a lot of coverage, but it's also that from from whatever your RP coverage up is really cheap. Well, it's a

Dave Chatterton: county based product. As you said, those subsidies on both ECO and SEO went from 65% to 80%. And really what that means is the government is paying 80% of what that premium should be on an actuarial basis. And so it becomes very compelling. If you look at the premium to to to liability ratios of SEO, it's probably 20 to 25 to one in in Central Illinois for corn and beans.

If you look at it on ECO, it's running around, you know, eight to 10 to 11 to one. So, certainly, they're attractive products to to do that. I think one thing we need to to make mention of is that keep in mind that you see on SEO or county products. So if you're you know, make sure that you correlate with the county. Doesn't mean you have to out yield the county.

Doesn't mean you have to be right on top of the county average, but what we wanna see is a historical precedent of where if your yields go up, the county goes up. And or if your yields go down, the county goes down. Because you don't wanna get caught in a situation where you're the farm that didn't have the rains and the county performed well and you're you're holding the bag so to speak. The individual offset products can help with that. I think what's changed there, Todd, is that a year ago, there was really only one AIP or insurance provider in that game in providing that product.

And so it was priced accordingly. This year, we have seven. And so the prices have gotten much more competitive. They change a lot county to county. It's important to look at, the options that you have based on your own farm and where you farm.

But it's a you know, there's there's a lot there to look at either fortunately or unfortunately.

Todd Gleason: What you're saying is that if you have a farm that does not perform as well as the county, generally, it always lags. Maybe it is a farm that in our area might be H E L or highly erodible land, something along those lines. You want to take the RP product first there and then maybe or maybe not add the ECO because that is on that really is the RP is on your yields, that farm, and the ECO and SEO are on what the county averages are?

Dave Chatterton: I think yes and no, Todd. I mean, I think you wanna be careful dropping your RP in that situation. But if you feel like, you know, and historically, we have tools in our in our shop that we can go back and look at your historical 10 averages and say, does it match up to the county? And, again, what we're looking for is correlation. You can yield below the county, but what I wanna see is that correlation of the years where you do good, the county does good, and the yields where you do not as good, the county doesn't do as good so that we know you've got some coverage there.

Adding that individual offset product in on top of that SEO and ECO or alongside, I should say, is a way to kinda blunt that that that issue and get yourself, you know, the earliest claim at the 95% level on an individual optional unit basis. Now with all these county products, the downside is the cash flow. Right? You don't get paid in the fall. You have to wait till June when the RMA issues the yields, and that's when you collect your check for the previous year's crop.

So it's it's very similar to this year where we're looking at, you know, maybe SDRP payments followed by the farmer bridge assistance program, followed by another round of STRP, and maybe a second, you know, aid program followed by ECO payments, followed by ARC and PLC payments in the fall, all for last year's crops. But, you know, we're not collecting that last, you know, you know, we're not collecting that at last fall or this spring. We're collecting that later this spring and summer. And so it's a it's a cash flow issue from a p and l perspective.

Todd Gleason: Two things. If you have not signed up for the bridge assistance payment, the farmer bridge assistance, you can do so. That's easily enough done. You can do it the old fashioned way through your FSA office, talk to them, call in. They can send you the paperwork, or you can go online to farmers.gov.

That's farmerswithans.gov. And you can sign up through there, but you'll also need a login from the government as well. Takes a bit to get through that, but it's not too bad, and it's pretty quick and simple and easy to do. Now given that, I do want to transition now to talking about the marketplace, but I wanna stay with you for just a second as it's related to what you're hearing from producers on their acreage and how they expect to put that in the ground this year, not planting that is, but how many planted acres for corn and soybeans. And if it varies very much in your perspective from what you're hearing across the Midwest from what USDA put out in the ag form, which was, you know, 94,000,000 acres of corn and 85,000,000 acres of soybeans?

Dave Chatterton: Yeah, Todd. Great question. I mean, I think a lot of people looking at, you know, what should my acreage mix be for 2026, and especially based on the situation around China and the potential for them to, you know, maybe buy more beans or a further trade deal with this April meeting between Trump and and and, Chinese president Xi. So in our area, we're finding guys sticking to rotation. So Central Illinois, Central Indiana, more or less sticking to that sixty forty rotation that that is historically common.

I think when we spread out from that, there's a little bit more variation. And because of, you know, even based on the farm doc documents and kinda looking through the U of I looking through those numbers in in a p and l perspective, guys are still leaning a little bit heavier into corn than maybe I think the government indicated. Now I don't think 94 is is undoable or impossible, but I think that number could creep higher to, you know, a little bit closer to 95 or maybe slightly above that just as we find a few more corn acres. Now, certainly, we're going to rotate out of that higher number for corn last year, and I think the USDA has the trend right. I think the tweak isn't exactly kind of where we go.

The other end of the spectrum, I have a few farmers who are talking about going all beans, you know, just because it's a bet on China, and they're going to buy these beans from The US for political reasons, and we're gonna have a very tight balance sheet. Domestic crush has been very strong, and we could get that carry out to a point where, you know, price rationing is or rationing is required via price. So two, I guess, very opposite ends of the spectrum there. And, you know, a few farmers wanted to lay down that bed. I don't know that I'm in that camp.

But

Todd Gleason: We're talking, of course, here on commodity week with Dave Chatterton. He is with strategic farm marketing, and we'll be doing crop insurance business on Tuesday next week when we're at the AllDAG Outlook at the Beef House. Thank you much for taking some time with us today, and good luck on Tuesday next week. Also with us today is Kurt Kimmel. He is with agmarket.net.

He'll be on stage talking about the corn market next week. So let's pick up with this acreage discussion. Agmarket.net has offices across the whole of the Midwest. I know you've been collecting some thoughts from everybody as it's related to what acreage looks like. What are you hearing?

Curt Kimmel: Yeah. Pretty well in agreement with what Dave mentioned there. I I think we're going to see the rotation here in the East for sure. I think probably the corn number is a little low. It's gonna come up in the beans, of course but when you look at the bigger picture in the West is mainly where you're probably going to see more corn or stick to corn from the standpoint a year ago basis on beans was $1.4 $1.5 under plus two you're getting that Upper Northwest forty-fifty bushel beans.

That's not good enough to kind of cut deal cash flow so they've been kind of happy with the corn. I think corn yields up in that Northwest was a little better than anticipated so they're comfortable going with corn. We'll see what the March 31 intentions report shows but definitely a few less corn acres and a few more bean acres. And back to Dave's point on the crop insurance, it's a great program. It's gonna get everybody signed up, but two, don't use as your sole marketing tool.

Crop insurance and grain marketing goes hand in hand. Plus two there's hopefully going to be some additional bushels there's not covered you need to market. Then two as we go through the growing season the challenge has always been try to do a little

Todd Gleason: bit better on marketing than the spring price. Well let's follow-up on on the marketing. So many people will think to themselves hey If I'm covered now with my RP, my SEO, and ECO, what else do I need to do? You really do need to make some sales at some point or at least do that whether it's cash or on paper. Yeah I think you got to use some price strength.

Curt Kimmel: I believe we're going to have some giddy up here during the growing season. I think you got to use that price up increase to kind of get some bushels price to move. You're still going to need cash flow and you need to make some timely decisions when you need that cash flow to meet some financial needs.

Todd Gleason: Okay. So now that we've kind of set the table, we look forward into this year. We're going to talk about what that weather really means. I'm going to stay with you for just a second. What's your favorite weather source saying about the growing season?

Well it's it's great and and my favorite weather source probably gonna

Curt Kimmel: be Eric's Nontrask coming up here from the standpoint. If you look at that drought monitor, it's not dry. It's dry dry. We're we're one shade of red from extreme drought. So therefore, we're gonna need some timely rains, throughout the entire, growing season.

As you move forward in through here, they're gonna get the biggest play in through here. The guys in Western Iowa, in the North South Dakota, they're pretty comfortable. There's not a whole lot of drought concerns there, and they think they're in pretty good shape. But it's the Eastern Belt. You gotta watch real close going clear down to Texas.

It's just not, isolated here. It's just gonna come down to getting that forecast every six hours.

Todd Gleason: Well, I will say that Eric Snodgrass will also join us at the Beef House on Tuesday. You can too. Willag.org. The cost, $40 through, the twenty seventh. Make sure you get your tickets and join us.

That includes your Beef House noon hour meal cinnamon rolls in the morning too. All the details and the agenda are online. I wanna hear from you as well about what producers are have been telling strategic farm marketing about conditions on the ground for them And if that makes much of a difference to how they've are thinking about their marketing plans. I suppose if it's dry, usually, they stop thinking about marketing plans.

Dave Chatterton: Yeah. That's true, Todd. And so it's, you know, it's it's the same process. But I talked to a producer in Central Illinois here today, actually, in in in Champaign and Pike County who had doing a tile project dug down nine feet and couldn't find any moisture. And so almost unheard of in our part of the world.

So to Kurt's point, you know, this is very different than 2012. If you look at the drought map for, you know, mid February in 2012, there wasn't one, so to speak, at least in our areas. It it it it was a good spring. I think if the, know, coming out of that planting season, folks thought, hey. I've got a really good crop in the ground.

And then come June, the the faucet turned off and it didn't rain again. This year is a little bit different situation where you get a lot of crop in the ground early and and quickly if it stays dry. Now the maps aren't necessarily leading to that, but I think everybody, like, to as I mentioned earlier, a little bit concerned about it because when you're having a crop insurance discussion, it's one of those things that comes up. How do I cover myself if it's 2012? And what will happen?

Or what do my claims look like if I get that type of a of a yield reduction? So it's on farmers' minds, and I think it makes them a little bit more hesitant to market. The other side of that is we're just getting to getting that crop insurance, put, if you will, underneath the crop. And keep in mind, one of the one of the changes made in that in that one big beautiful bill was to the title one program where if you take SCO, you're no longer required to take, PLC. You can take ARC County with that.

And we're seeing producers, you know, that'll effectively can give you a double up at that 86% on a county level, down to, you know, down to a certain level. And so, you know, you have to to market in a way that, you know, when the market's rallying, you have to be aware where your breakeven and kind of where your coverage levels are in terms of what that means of my ARC payment or PLC payment going away, my potential crop insurance indemnity going away, and when do I need to pull that trigger? Okay? And then on the downside, you do have a little bit more cushion maybe than you've had in the past. But, again, no falling asleep at the wheel here.

That crop has to be sold at some point, and whatever you sell it for is what your revenue is going to be, you know, times times your yield, of course. But

Todd Gleason: Yeah. So the bankers for producers usually will say, please take crop insurance. That gives us peace of mind because we know that if things go poorly for the growing season, then we'll still and you will still be made whole. That should give producers some peace of mind with their marketing as well. That's usually how everybody puts it forward.

Curt Kimmel: Yeah. There's products out there now, both on insurance and marketing to give you that peace of mind to hopefully let you sleep at night, to get through this, low, price scenario. So, you know, as we move forward here through the growing season, what we're looking at is we mentioned dry weather concerns and so forth. We've come in as far as old crop goes, get it moved, get your money, but do some type of replacement strategy. So if the market does take off, you're on board.

If not, you're out a few cents. As far as new crop goes, we've been laying a few hedges in, doing some put strategies. But two, these August short dated call options for 10¢, that gets you through, July 1 part of pollination. So if you're uneasy about some type of weather concern, going into pollination, that's where your bang for your buck is, we feel, as we go into the spring, early summer.

Todd Gleason: Let's talk about soybeans and the chart at the moment where you think things might be. Most in the business will say, you know, soybeans don't stay in the $11 range for very long. They either go back into the tens or they go up to twelves. Does it feel this time like twelve's a better opportunity to you?

Curt Kimmel: Giddy up. I tell you what, these beans have been climbing the wall of warrior ever since last fall. Everybody's been bearish beans, but they've done nothing but hang in there. Beans were sold last fall, so I'm my owner of the opinion. We've got some price strength in here.

Near term I would watch the November new crop around this $11.47 area. That's kind of a chart gap it left a while back that sticks out like a sore thumb. But these beans, yeah you look at, don't get the acres and have a little weather and if China comes in as a surprise buyer we can have some up in through here. So watch the commodity funds, they're long for a reason. Short term in here there is a little bit of a double top in the charts but if we go through that, $12.

Todd Gleason: One of the other things that might be driving soybeans and the FarmDoc team wrote about this on the website today as it relates to the RFS and RVOs, 45Z as well, particularly you have probably seen it in the price of bean oil over the last several months, is that it appears there will be a push for renewable diesel, biomass based diesel of advanced fuels of some sort could be driven by all kinds of vegetable oils, corn oil from ethanol plants. Of course, soybean oil, YUCO probably will be in that or cooking oil used cooking oil may be imported. It will depend on the RINs a little bit. And canola oil according to Scott Irwin after I talked to him a bit, this week. How does that play into your thoughts as it's related to soybeans going forward?

Dave Chatterton: Yeah. It's a big part of what's going on, Todd. And, I mean, if you look historically, you've got the bean balance sheet, you have two big drivers demand. You have crush and you have exports. Right?

Those used to be you know, it used to be exports for the big dog, then it was even crushes now sixty, sixty two, 64% of overall demand for US soybeans. It's the big dog, and it's been performing. We've had record month after record month after record month of crushing The United States, And it's, you know, it's feeding and it's building, and we got news today that the Trump administration was going to try and reallocate at least a minimum of 50% of of any SRE or small refinery exemptions that were included in the new biofuel guidance, which a number that have been talked about, but to see it in print, I think, really, you know, liven up the market a little bit, being oil making a new high and dragging soybeans to, you know, to a new high with it and, you know, before the the the the China news came out. So, certainly, it's something that's being watched, and it's we have a two period system here. And to your quest you know, back to the point of, are we gonna go to 12 or 14, or are we gonna drop down to nine?

It's gonna be one of the two. I think China, if they come in here and buy an additional 8,000,000 metric tons, that's 295,000,000 bushels. The for old crop right now has a 350,000,000 bushel carryout on paper. We can argue that, but the math doesn't work. You take 300 off three fifty, and we're well below pipeline, and we're into that rationing situation that's 12 or $14 beans.

The opposite of that, let's say, April, Trump and and and she meet, it goes goes sideways, goes bad. They say, keep the beans that we haven't shipped on the first 12,000,000 metric tons. We're not taking the other 8,000,000 metric tons, and all of sudden, our balance sheet jumps from $3.50 to 500, five fifty, 600, and you're back in that sub 10 category. It's a really tough situation. But underlying all that, we do have a demand base in soybeans, and it's domestic.

And, hopefully, it's getting better with you know, once we have the guidance, released.

Todd Gleason: Okay. There's a lot of moving parts in that, so I think you have some thoughts as to what producers should do.

Curt Kimmel: Well, we've got these new plants coming on, so they're gonna crush. They're gonna gather some beans, but bean oil stocks, 1,900,000,000.0. Yeah. It it's up there pretty lofty, but on the other side too, you talk canola. Canola oil stocks are fairly low, so we're gonna probably use these, bean oil stocks up.

But as far as producers go, I think you just gotta be flexible and put yourself in a position to protect your downside but leave your upside open and take advantage in case this thing does giddy up. Right.

Todd Gleason: Now turn your attention to the corn market. Interesting because there are years where we talk about corn all the time. There are years where we talk about soybeans all of the time. Soybeans tend to be the during the Trump years, actually, honestly, because of the tariffs in China, I suppose. Corn, less so, but we do have a second crop corn, that's being planted in Brazil even as we speak.

A little behind because their harvest is behind at this point. It should be a big one, though. I'm wondering what you're thinking about that second crop and its impact on the marketplace.

Curt Kimmel: Yeah. It's it's there. It's gonna depend on weather. We'll see how how that comes out. You gotta remember though, they've talked about the discount in South America.

We've always had a discount in South America. It's not gonna go away. So our objective here is to capture some demand. But here in The US it's a whole different ball game. One is feed usage.

True feed usage is strong. We're feeding to heavier weights. When you feed to heavier weights you've to have more feed because conversion gets a little skinnier as the weight goes up. Ethanol demand just won't go away. It it it's still there.

We're needing ethanol. And above all exports. This export to Mexico, some of the commercial guys feels that's front loaded. I don't think so. I think this Mexican corn demand is gonna stay strong.

Feedlot demand, they've built processing plants in Mexico now. They're shipping across carcasses, so they're not gonna shut those down. So exports to Mexico is gonna remain strong. And plus two, Cambodia and some of these other countries continue to come in here and buy some small, lot, mounts. So this corn demand is strong.

I don't think it's strong to go to $56 right away until we get into some bright weather.

Dave Chatterton: Yeah. To your point on safrinha, I mean, the crop, you know, is going in a little bit later than normal. But keep in mind, that portion of the Brazilian crop, about 60% of their overall production, but it's almost the entirety of their exports. So it's very important to where we're at. And the the downside of the crop going in a little bit late is that it could drag out and and get into the dry season with pollination and greenfield.

The upside is it's gonna have a lot of moisture to get started because harvest is behind because it's been raining in Northern Brazil and particularly in in in Mato Grosso. So it's a you know, we'll have to watch that develop along the way. But in the meantime, Argentine corn is currently $15.20, 25¢ below US values offered today. So we have some competition coming down the road on exports for corn. How much that's gonna slow down our demand?

Probably not a lot, but the chances for the USDA to overperform on exports or demand in corn in general right now, USDA has demand in in the balance sheet right now at a record level by 8%. Okay? Which a case of a record large crop, more acres, and more yield added in in January and record large demand, but, unfortunately, demand growth is exceeding, excuse me, the supply growth is exceeding the demand growth at least for this year. So, you know, upside in corn has been sneaky. We've made back a lot of those gains that we lost, you know, after the after the January report.

But having said that, the upside here, I think, is tied probably to soybeans and how high they can drag the complex and drag maybe corn along with it. So it's been a, you know, kind of a as you mentioned, I mean, unfortunately, the spotlight has been China, China, China, beans, beans, beans. But a lot going on in the corn side that that's not getting talked about, I guess.

Todd Gleason: Are you worried that wheat, which apparently USDA feels like is going to be a drag on the marketplace, will be the leader as opposed to soybeans?

Dave Chatterton: We've we've seen a move here in wheat of late. I think, you if you look at the fund positions, they've been short wheat for the better part of three years. And I think the uncertainty in the marketplace, whether it's, you know, what's going on with China, whether it's the geopolitical angst of what's happening in The Mideast and Iran and Venezuela and all these things that Trump is having. We've got trouble with Cuba now. All those have kinda added into a situation where there's some risk that's come off the table, and I think wheat's been a beneficiary of that.

But we had word or confirmation today. There's two Argentine cargoes coming into The US Southeast. So we are not competitive in the export market. In fact, it's so cheap. In Argentina, it can be imported here.

So it's very difficult for me to get bullish wheat in that scenario where we don't have that export export component. Wheat, you know, priced itself in as a feed grain. It's all fine. You know, it's competing for the feed ration, but it's very tough for me to see wheat over performing from a demand perspective and sustaining a rally.

Todd Gleason: Does it hold down the price of corn in that case?

Curt Kimmel: Well, they'll move somewhat and tantam tantam a lot of, spread activity. If you gotta remember, you trade wheat, you'll sleep in the streets, so it's a different breed of cat. It's a a tough commodity. But one thing that Dave mentioned is when wheat, we gotta watch the quality of wheat so it doesn't go into feed feed wheat and be competitive with some of these other, grains. For the most part, we'll see how the wheat, greens up, but it's extremely dry in some of these wheat growing regions in the West.

Todd Gleason: Let's wrap up our conversation. We'll get a final thought from both of you. We'll start with you, Dave Chatterton from Strategic Farm Marketing.

Dave Chatterton: Yeah, Todd. It's gonna be I think this is a this last year, this last twelve months, and maybe the the couple of months coming up, been a proving ground for the way that your p and l on the farm is going to operate in the future. And it's going to be a combination and increasingly an important combination of how you structure and and and set up your crop insurance, your agronomy and how you grow the crop and what you yield, how you market, and how well you participate in government programs. And you gotta be able to stack all of those pieces together to get the best potential outcome. And this year, we're looking at, you know, maybe ARC or PLC payments in Champaign County that are $50.70 dollars an acre on corn.

We're looking at bridge payments. We're looking at all these things. You have to be in position to make sure you're keeping up with the latest acronyms, educate yourself on the programs that are out there and structure your crop insurance that you're you're maximizing some of those government programs as well and just have an education, know what's available, and make sure you're stacking that in a way that gives you, to Kurt's point, that sleep quotient through the summer.

Todd Gleason: And Kurt Kimmel from agmarket.net, your final word.

Curt Kimmel: Yeah. Option volatility has been fairly low, but it's starting to creep up. So if you're an option buyer, I think you need to get that job done here, before we go in the field this, spring. But you look at all these other markets, particularly metals and particularly silver, you know, anything can happen at any time. So all years to have some replacements in place or upside, I think this is the year to do it.

There's enough moving parts in the world. You just don't know what's gonna happen. And one final thought, full moon is on March 3. Commodity week, of course,

Todd Gleason: is a production of Illinois public media. It is public radio for the farming world. You may find and listen to the whole of the program anytime you'd like on our website at willag.org, willag.org, or in your favorite podcast applications on the University of Illinois Extension's Todd Gleason. Our thanks go to our panelists today, including Kurt Kimmel at agmarket.net and Dave Chatterton at Strategic Farm Marketing.