Drought Impacts US Winter Wheat and Cotton Crops

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🌾 Crop Markets Update | Wheat Ratings Sink, Cotton Surges & Iran Tensions Rattle Markets
Winter wheat is struggling — rated just 35% good-to-excellent, the lowest since 2023 and well below the 5-year average. 🌧️ Rainfall is on the way for parts of the Plains, but the west remains dry. USDA projects US wheat acreage to hit its lowest level since 1919. 📉

🌿 Brazil's soy harvest is 82% done, but dryness is threatening the second corn crop. Rain in the forecast this week could help.
🇺🇸 Cotton futures surged to their highest since December as drought grips 88% of US cotton areas—even as the USDA projects a jump in intended plantings.

⚠️ Geopolitical risk is front and center — Trump's Iran ultimatum deadline hits tonight at 8pm EST. Markets are watching closely.

📦 On the export front, corn shipments came in strong at 79M bushels — up 24% year-over-year. Soybeans beat expectations too.

Transcript

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SPEAKER_01 0:08

Morning guys. It's Tuesday, April 7th, 523 a.m. Central Time. Grain markets are mostly lower this morning. May corn futures down three and a half cents at 450 and a half. May soybeans down one and a quarter at 11.65 and a half. May Chicago wheat down four and a half at 590 and three quarters. May Kansas City wheat down six and three quarters at 601 and a half. May Spring Wheat down six at 638 and a half. Welcome back to Grain Markets and Other Stuff. My name is Joe. Mackenzie Johnston is my co-host. McKenzie, say good morning to the people.

SPEAKER_00 0:38

Good morning, everybody.

Crop Progress and Conditions

SPEAKER_01 0:40

We hit 34,000 subscribers on YouTube uh last week, I believe. So thank you guys. If you are not subscribed to the channel, make sure you hit subscribe, hit the like button, help us out. Uh incredibly exciting news. USDA had its uh first crop progress report of the year out yesterday. Why don't we start there?

SPEAKER_00 0:55

So the US went U.S. winter wheat crop was rated 35% good to excellent through Sunday, the lowest rating for the week since 2023 and the fourth lowest rating in the last 10 years. Conditions were rated below the five-year average of 43% and were down from 48% at the end of November. Corn planting through Sunday was 3% complete compared to 2% last year and 2% on average. And then the spring wheat crop was 2% planted versus 3% last year and 3% on average.

Wheat Selloff and Rains

SPEAKER_01 1:26

All right, let's look at the corn planting statistics. There are only two states that have uh double-digit planting progress. Texas is 59% done, Tennessee is 18% done. Everybody else either hasn't started or is below 10%. The uh winter wheat ratings are of interest here, certainly. Not a great rating to start. And we knew that this was going to be the case because a lot of the states uh put out individual state crop ratings prior to this early April rating. So when you go state by state, your big HRW areas are of concern to me. Kansas is only 38% good to excellent, Oklahoma, only 12% good to excellent in winter wheat. Texas, 17% good to excellent, Colorado, 12% good to excellent, Nebraska, 19% good to excellent. So you've got a pretty ugly start to um the winter wheat wheat ratings, especially in HRW areas. The SRW ratings are a lot better by comparison and they help to drag the average up. Uh that's a good segue to our next store, which is yesterday's little wheat sell-off.

SPEAKER_00 2:25

Yep. Wheat futures tumbled yesterday as forecasts are calling for rain across the U.S. plains. The May 26 Chicago wheat contract fell three cents to settle near 595 per bushel, while the May Kansas City wheat contract dropped roughly eight cents to close near 608 per bushel. Although dry conditions are expected to persist across the plains over the next few days, rainfall is forecast to reach the southern and eastern portion of the region by the end of the week. However, precipitation in western areas is less likely. Meanwhile, corn and soybean futures closed higher yesterday.

Trump Iran Deadline

SPEAKER_01 2:59

Yeah, so the wheat market is not trading the ratings because the ratings are old news. The wheat market is trading the new news, which is that rain is coming this week to parts of Kansas, Oklahoma, Texas, Nebraska. And the Euro model and the GFS, they look a little bit different, but both models would uh suggest that rains return Wednesday or Thursday is kind of when the accumulation will begin. And you'll see additional rain in the extended forecast. You notice that the GFS is a little bit more stingy with rains in the western parts of uh Kansas and areas further west of that. So it will be curious to see how this plays out. To look at uh a week chart, we've drifted a little bit lower. Uh price action overall is still good. This chart's kind of sloppy, it's kind of tricky to figure out what's what, but I would call that area from 606 up to about 615, some kind of support under this July Kansas City weak contract. Hopefully we can hold that. Uh to look at corn and soybeans real quick. Dee's corn has not acted really well the last uh few sessions. I know we've consolidated this week, generally speaking. You'd like to see that 476 kind of spike low hold, I think. November soybeans look uh very constructive. This looks like a contract that could very easily go up and test that high at 1174. I think there are traders and analysts doing some balance sheet work with soybeans and U.S. soybeans in particular. And, you know, given given the fake acreage number that USDA gave us and given uh normal demand projections, you could paint yourself a friendly picture with regard to uh the U.S. soybean situation, at least. It's a little bit harder to do with the global soybean situation.

SPEAKER_00 4:33

On Monday, President Trump reiterated his threat to launch attacks on Iran's critical infrastructure if Tehran fails to reach a peace deal by 8 p.m. Eastern time here this evening. The deal must include the reopening of the Strait of Hormuz. Trump described the potential operation as a four-hour attack targeting bridges and power plants and warned it would send Iran back to the Stone Age, a statement he has made in the past. Iran, of course, has vowed to respond with decisive retaliation if attacked. Experts warn that uh such an attack could violate international law and constitute a war crime. Concerns Trump has completely dismissed. Peace deal negotiations remain ongoing, though progress is unclear.

Brazil Second Corn Crop

SPEAKER_01 5:16

I know they say uh Trump always chickens out, right? But he has not backed off of this threat yet as of early this morning, at least could be different by the time you guys see this. I know he he talks a lot and he changes his ideas and game plan uh quite a bit. But this could turn into big time escalation uh this evening, or it could turn into nothing, and Iran could uh wave the white flag and say, hey, you know, we're ready to make some sort of deal. I don't know, but uh this is probably something Mackenzie will be talking about tomorrow morning uh in some way, shape, or form.

SPEAKER_00 5:45

The Brazilian soybean harvest is progressing, according to well-followed private group Ag Rural. As of last Thursday, 82% of the crop had been harvested compared to 87% at the same time last year. Recent dry conditions have helped harvest move along quickly. However, a lack of moisture has raised concerns about the second corn crop in southern Brazil. Forecasts are calling for potential precipitation across the region this week, which could help improve crop conditions.

SPEAKER_01 6:12

Okay, so the soybean crop in Brazil is old news. The uh fresh news that we are interested in is the country's second corn crop. Planting of the safrina corn crop is complete, and we're not looking at weather. Over the last 30 days, Brazil's second corn areas. Uh, this is data from our friends at Crop Profit, they saw 96% of their normal rainfall. So there are some areas and some pockets that have been dry, but overall the rainfall has been sufficient. Looking at the 14-day forecast, this is the Euro for the next uh 14 days, uh, above normal rainfall, 111% of rainfall expected for Brazil's second corn areas. So I don't really see much of a problem or a threat here. I know agriel mentioned it, but uh the data would not suggest to me that this is something we should be overly concerned about. And if the market was overly concerned, you would see it show up in corn price action. And uh it has not.

SPEAKER_00 7:00

If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of our recent premium videos?

Joe is Not a Cotton Expert

SPEAKER_01 7:07

Uh yesterday, Dave Whitcomb was on and did an absolutely fantastic seasonal review with regard to grain marketing and seasonal tendencies and especially what happens the next three or four months. Um, if you're attempting to market grain without an understanding of seasonal tendencies and how this has all played out statistically over the last whatever time frame you want to use, 10 years, 15 years, 30 years, uh, I think you're kind of missing out. I think you're kind of uh you're making decisions without all of the information that is necessary to make the decisions. This was a uh we had tons of positive feedback on this, uh, really great stuff. I did a video on rolling uh May Corn HTAs um last week, some super specific, like got into full carry calculations and stuff that you should be looking for. In today's video, our friend and regular contributor, Lewis Stearns, who's an agronomist, is gonna be on and we're gonna talk about biologicals. And uh I don't even I didn't even know what that is, but apparently there's some controversy regarding biologicals. Do they work? Do they not work? Should you pay for them? Should you not pay for them? Uh Lewis ran through all the details and has a full presentation on the whole thing. If you guys want to see the premium stuff, go to standardgrain.com. You can sign up this morning. This is a$50 per month subscription. You can cancel at any time. No other fee, no other obligation, nobody will try to sell you anything else, just a ton of uh info direct from us every single business day, guys. We send out two emails per day. The 5 a.m. email is jam-packed full of information. The midday email at 10 a.m. Central Time includes that day's premium video. If you are the decision maker on your farm, if you do the marketing, if you buy the crop insurance, if uh you do the agronomy, if you do the financing, uh you should absolutely check this deal out this morning.

SPEAKER_00 8:40

Cotton futures surged yesterday with New York futures climbing to their highest level since December 2024. In its recent prospective plantings report, the USDA forecasted a larger than expected increase in intended U.S. cotton acres. However, traders are taking into account widespread drought conditions across much of the southern U.S. that could potentially impact this season's crop. Additional support came from tightening global supplies as production is expected to decline in Brazil, China, and Australia.

US Grain Shipments

SPEAKER_01 9:10

I'm going to pretend to be a cotton person today. And no, don't get your hopes up. This is not the start of us talking about cotton every day. Um, I don't know anything about cotton because my formative years as it relates to markets were in Chicago, and cotton is a New York market. It just wasn't something we dealt with. So the December cotton contract posted some fresh highs yesterday, up to 75.68 this morning. This thing was in the upper 60s for a long time throughout uh the late part of 2025 into the early part of 2026. Uh that looks like a nice rally, but you pull this thing back, and cotton is still very, very cheap. Uh spot futures below 72 bucks. I believe, and I'm sure somebody will correct me, uh, production cost is probably closer to 80 this year. So even with new crop futures at uh 76, you're still below production cost. It's kind of like the rally we've seen at soybeans. Hey, we rallied sharply, but guess what? We're still below production cost. It sucks, right? Looking at uh some cotton fundamentals, US uh stocks to use ratio is not tight or not projected to be tight for the current marketing year. Global stocks to use ratio is a little bit tighter by comparison, or not by comparison, but by comparison to previous years, although 64% is never really gonna be considered a tight uh stocks to use ratio. The story here is drought, as McKenzie mentioned. 88% of U.S. cotton areas experiencing drought. And I think that um that's probably the reason for the buying here that paired with maybe some global concerns. So uh it's been a hell of a rally, but you're gonna need to see a little bit more to get the uh U.S. cotton producer uh back in the black, I believe.

SPEAKER_00 10:41

U.S. corn shipments exceeded prereport expectations last week. USDA reported that 79 million bushels of corn were inspected for export during the week ending April 2nd. The print was up 6.5% compared to the prior week and up 24% versus the same week last year. Soybean shipments also surpassed expectations at 29 million bushels. The print was up 12% compared to the previous week, but down 4.6% versus the same week last year. China accounted for roughly 64% of the week's inspections. Week shipments were near the lower end of expectations at 12 million bushels. The print was down 14% from the previous week and down slightly uh from the same week last year.

SPEAKER_01 11:21

Everything about US corn exports is very, very good. We're on pace for a record season accumulated shipments up 36%, sales up 29%. That pink line on this chart, if you guys are watching, that was the 2021 marketing year. We were shipping uh even more corn. And I think we were shipping a little bit to China or quite a bit to China uh during that time frame. Soybeans, um, shipments, not good, but in line with normal seasonal pace. We're shipping soybeans to China. Several cargoes uh went out of the PNW, had some stuff go out of the uh Gulf also. So, yes, we are shipping the soybeans that we sold uh to China. They're not being canceled or anything like that. What did cattle do yesterday?

SPEAKER_00 11:57

Cattle futures were mostly higher. Live cattle were 40 cents to a buck eighty-two higher, feeders were 87 cents lower to a buck 17 higher, box beef prices were higher, choice was up 26 cents at 388.04, and select was up 218 at 388.37.

SPEAKER_01 12:11

I'll say markets eerily quiet this morning, I'll say, given the forthcoming uh deadline, and maybe maybe the markets are waiting on this Trump deadline to see what happens. But the stock market is just fractionally lower. Uh, treasuries are flat, US dollars about flat, crude oil's up a dollar twenty four at one thirteen. That's a that's a quiet day of this day and age. So uh we'll see what happens later tonight. Everybody have a great day. We'll be back on Wednesday.