DRY Corn Belt Forecast - No Rain for 2 Weeks?? Do Traders Care??

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Futures and options trading involves risk of loss and is not suitable for everyone.

🛢️ Oil prices tumbled Monday as Trump teased a US-Iran deal to reopen the Strait of Hormuz — but Iranian officials quickly pumped the brakes on the optimism. Hours later, US and Israeli jets struck Iranian vessels in the strait, yet crude stayed lower while equities pushed higher.

🌽 Grain futures dipped overnight on the oil selloff but clawed back some gains, with the Dec26 corn contract notably holding key trend support. Keep an eye on the central Corn Belt — extended models show it staying bone dry well into the 15-16 day forecast period.

📊 The latest CFTC Commitment of Traders report showed funds were net sellers of corn and beans last week, offloading 2k and 10k contracts, respectively. Funds did flip to buyers in SRW wheat, picking up 15k contracts on the week.

🚜 Some farmers are calling for more financial aid as fuel and fertilizer costssurge,e tied to the Middle East conflict—though the real pain may not hit until fall input-buying season for 2027. Year-round E15 legislation is also back on the table as producers look for any relief they can get.

📦 USDA flashed some bullish export news Friday, with nearly 20 million bushels of corn sold to Mexico and 4 million more to unknown destinations. Soybean meal also moved, with 252,000mt sold split across the current and next marketing year.

🐄 Friday's Cattle on Feed report leaned bearish, with May 1 inventories up 2% year-over-year and April placements coming in 6% above last year. Drought across the Plains is forcing early cattle sales, even as the domestic cowherd sits at its lowest level in 75 years.

Transcript

Iran/Crude/Grains

SPEAKER_01 0:08

Good morning, everybody. It's Tuesday, May 26th, 5 23 a.m. Central Time. Grain markets are mostly lower this morning. December corn futures down two and a half cents at 484. November soybeans down five and a half at 11.82 and a quarter. July Chicago wheat down six and three quarters at 639 and a half. July Kansas City wheat down three and three quarters at 678 and a quarter. September spring wheat down three and three quarters at 706.5. Let's start off with the never-ending story US and Iran.

SPEAKER_00 0:38

So oil prices plunged yesterday amid renewed optimism over a potential US-Iran peace deal with WTI crude futures trading below $90 per barrel before rebounding. The sell-off followed weekend remarks from President Trump indicating that a deal to reopen the Strait of Hormuz was nearing completion. However, Iranian officials were much less optimistic, noting that while talks have progressed, Tehran is not necessarily close to signing an agreement. Investors remain cautious about the potential deal given the repeated false starts in previous negotiations. Even if a deal is reached, it could take months for normal, normal tanker traffic through the strait to resume.

SPEAKER_01 1:17

This is a hell of a deal we've got going on here. U.S. and Israeli jets struck Iranian vessels in the Strait of Hormuz just hours after President Trump implied that talks with Tehran were moving forward. Still, we've got crude oil futures down sharply this morning. The July WTI contract is down $4.26, trading just above 92. It was as low as $89.41 was the low tick. So even though you've still got some conflict and some military activity, the trade appears to be, the trade appears to be optimistic that something is on the horizon in terms of a deal. And that I believe is why the grain markets are a little bit lower this morning. We followed crude oil very closely last week, and it appears as if we're moving in that direction again this week. So crude sitting at, you know, 93 bucks in WTI futures this morning. You're near the middle to the lower end of what I'd call the post-Iran trading range, you know, the the range that we've seen after the initial attack. So we're still just kind of back and forth with headlines here on almost a daily basis, uh, the way that it would appear. As I mentioned, the grain markets opened lower last night, but um I think it was a good sign that the corn market was able to hold some trend support. If you look at this D-26 contract, you've got that trend line that comes from the January low up through the April low. And we traded below it very briefly on the open last night, but then bounced back. You'd like to see D's corn avoid a close or any sort of movement really below 481 today. We do have a dry forecast for the U.S. corn belt. We're going to get to that in a second. I think global fertilizer issues, still an underlying friendly factor. Uh no beans holding above trend support. This chart still looks great. No new Chinese demand for U.S. soybeans, although I think people believe it's coming, especially for new crop. Uh domestic demand, uh crush activity is fantastic. Best margins we've ever seen for the most part. HRW wheat, um, this chart still looks okay to me. The U.S. HRW crop is toast, right? Is that already discounted? It would appear that way. The market hasn't made new highs in a couple of weeks now. The funds, interestingly enough, are short SRW futures. They are not

Corn Belt to Turn Dry

SPEAKER_01 3:21

long HRW futures, but you're not seeing the fund interest there that perhaps uh maybe you think you'd see given the weather situation. Uh with that, let's go to weekend weather.

SPEAKER_00 3:30

Much of the U.S. Corn Belt was dry over the weekend. Weekend rains were confined to the southeastern part of the country, in addition to parts of southern Michigan, Ohio, and the East Coast. While some southern and eastern parts of the corn belt are slated to see rainfall over the next seven days, the majority of the central corn belt will remain dry. Even the extended Euro and GFS models are dry for many central areas through the 15 and 16 day time frames.

SPEAKER_01 3:56

Okay, let's look at some weather here because um we're past Memorial Day weekend. We are into official U.S. weather market season. Um, as McKenzie mentioned, a good chunk of the central corn belt is gonna be dry over the next week. It doesn't matter if you look at the Euro, you look at the GFS, you've got large portions of Illinois, Iowa, uh northern Indiana, northern Ohio, up into a lot of southern Minnesota is gonna see just trace amounts, South Dakota, eastern Nebraska. It's gonna be pretty dry. The Euro and the GFS pretty much in agreement on that idea. Even the extended uh period is dry for a lot of those same areas. There are some differences, of course, between the Euro and the GFS in that, say, like 7 to 15 or 7 to 16 day period. But the general trend here is that we're gonna be much drier than normal across the corn belt during the next two weeks. Our friends at Crop Profit put some numbers on this. They estimate based on Euromodel data that uh U.S. corn areas will see only 52% of their normal rainfall over the next seven days. And then during the eight to 14 day period, it's not much better. 62% of normal rainfall expected during that period, again, based on Euromodel data. The uh the one thing to note is that there is no or very little cornbelt drought to speak of right now. Yet you have drought surrounding the vast majority of the cornbelt. You've got drought in the central plains, you've got drought in the southeast. The uh one thing to note is that the drought in the southeast is being busted in real time. There was a ton of rain here over the weekend and over the last seven days in the southeast part of the country, also in southern and like eastern parts of the cornbelt. You look at Missouri, you'll get southern Indiana, Kentucky, Tennessee, um, into Ohio, very wet. Um, we've heard the 2012 comparisons. Joe, the cornbelt's wrapped in drought and it's gonna leak into the corn belt. I'm not on that page yet. It could happen if this dryness persists. One thing to note um about 2012 is that the drought rally in that year, it did not start really until June 19th. That's the date that I put on that uh based on this chart. So if you're like uh hoping, I don't know if you're hoping for a drop, you guys are hoping for higher prices. If you're if you're if you want the market to react to this, history would say that it happens later. But um, you know, this is a different day and age. We've got more algorithms and black boxes and and AI uh bots trading the market. So it it could be a little bit different. And that's not what I'm predicting at all. I'm just telling you, hey, the next

The Funds are Stilly Heavy Long

SPEAKER_01 6:24

two weeks are going to be dry. The next two weeks aren't a make or break, but it's like the two to three weeks after that where I think it starts to really matter.

SPEAKER_00 6:31

The CFTC released its weekly commitment of traders report on Friday. For the weekending May, uh for the weekending Tuesday, May 19th, large money managers were net sellers of 2,000 corn contracts and 10,000 soybean contracts. In contrast, the funds were net buyers of 15,000 SRW wheat contracts on the week.

SPEAKER_01 6:49

Premium subs, you guys have full versions of the fund tracker charts in your email this morning. You also have our daily fund tracker tool that is available. The funds are sticking with a large net long position in the corn market and also in the soybean market, a little bit less than it was, but still uh pretty hefty. When you combine corn soybeans and SRW wheat as of May 19th, still net long 488,000 contracts, which is pretty lofty. So uh large money managers, they've been they've been offloading some stuff here during the last couple of weeks. And uh it's of course tricky to figure out what's going on in real time. But the markets have been, you know, you look at the corn market, soybean market, we have been kind of range-bound, and uh they're just kind of sitting here ahead of the growing season with this big net long position in the row crop markets, which is certainly interesting.

SPEAKER_00 7:31

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 last week's premium videos?

SPEAKER_01 7:37

We did a transition planning mailbag with Chris Barron on Friday, and the series of transition planning videos that we've done with Chris, they're probably some of the most valuable things that we've ever put out because this is an issue that it's every farm in the country is dealing with transition planning. Either you're dealing with it head on and you're and you're um being proactive, or you're just waiting around for something to happen. You know, there's a lot of resistance from the uh Chris calls them, I think the I forget what he calls the older generation, like the mature generation, like the the you know, the boomers. They don't want to give up control, right? But you're the younger guy, you're you're in your 40s, and you're trying to take over some control, right? There's a right and wrong wrong way to do this. And Chris, Chris probably knows more about transition planning than anybody. Um, he basically works with farmers on transition planning. I think that's like 95% of his work these days. And um, we answered a bunch of questions on Friday that came in from our premium subs, and we included also the four or five previous transition planning videos and premium subs. If you guys are listening this morning, fee I know I tell you guys not to forward our stuff. Forward this stuff to whoever it is that you farm with that uh you need to work with on transition planning. Sometimes it just takes listening to a third party sitting there together and listening to it to uh to understand and maybe make some steps in your operation. Paul Nefer was on Thursday. We did a cool uh corn market seasonal update, and there are some nuances to the seasonals that we got into. It's it's not super black and white, but we got some really positive feedback on that. Paul also did an ARK and PLC update. Uh Pete Meyer's gonna be on today. We're gonna discuss everything that's going on in the markets from weather to geopolitics to uh the funds to everything else. If you guys want to see the premium stuff, go to standardgrain.com. You could sign up this morning. This is a $50

More Farm Aid Needed?

SPEAKER_01 9:24

per month subscription. You can cancel it anytime. There's no other fee, no other obligation, nobody will try to sell you anything else. Takes about 30 seconds to sign up on your phone. Give that deal a shot this morning, guys.

SPEAKER_00 9:32

Some farmers are calling for more financial aid. According to Minnesota farmer uh Nathan Serbus, additional farmer bridge assistance payments are needed to offset surging input costs tied to the conflict over in the Middle East. Fuel and fertilizer prices have risen sharply since the conflict began, although much of the impact has yet to be fully realized, as many farmers prepaid for this season's input inputs last year. Uh, if prices remain elevated into the fall, producers will be faced with difficult planting decisions for the 2027 crop year service. Also emphasized the importance of passing legislation to allow year-round nationwide sales of E15.

SPEAKER_01 10:11

We had a few representatives chirping about aid again late last week, I believe, also from various states. Um, the need, and I put the word need in quotation marks in our email this morning, the need for aid at this point appears to be highly variable. I think that as McKenzie mentioned, a lot of the need in the near term revolves around whether or not growers pre-bought fertilizer ahead of the Siran thing. Because if you did not, you're in serious trouble. And if you did, you're probably okay for now until we get into fall applications and what do prices look like then. It could get kind of nasty. Uh, we've talked at length in past videos about the good things and the bad things, probably more so about the bad things as it relates to direct payment to farmers. A lot of it's just a flow through back to the banks, back to the seed dealers, the fertilizer dealers, the equipment dealers. It results in additional input inflation, which nobody likes, but has been running rampant the last five or six years, especially in your post-COVID environment. So I

Flash Sales

SPEAKER_01 11:12

don't know, it's it's a very complicated issue. And there's definitely like a case of some haves and have nots as it relates to this fertilizer thing uh over the near term.

SPEAKER_00 11:20

USDA reported multiple flash sales on Friday. U.S. exporters sold 19 million bushels of corn to Mexico, 9 million bushels of that sale is for delivery during the current marketing year, and 11 million bushels is for the next marketing year. U.S. exporters sold 4 million bushels of corn to unknown destinations, with half of that sale for uh delivery during the current marketing year, and the other half during uh for delivery during the next marketing year. And then finally, exporters sold 252,000 metric tons of soybean cake and meal to unknown destinations of the total. 117,000 metric tons is for delivery during the current marketing year, and 135,000 metric tons is for delivery during the next marketing year.

SPEAKER_01 12:01

Uh demand for U.S. corn remains fantastic. We've got old crop business, new crop business, all sorts of business. Uh, notably lacking is any sort of Chinese business. People have been talking about uh Chinese purchases of U.S. corn, but we haven't seen any yet. And I don't believe that any of this is China. I could be wrong about that. Um, we'd love to see, I think we need to see China come in and start buying some new crop U.S. soybeans

Cattle on Feed

SPEAKER_01 12:22

if they're gonna get anywhere close to that 25 million metric tons that the White House has discussed. Uh, we had a Catalon feed report Friday.

SPEAKER_00 12:29

We sure did. As of May 1st, Catalon feed totaled 11.58 million head, up 2% from a year ago and steady with pre-report expectations. April placements were reported at 1.7 million head, 6% above last year and higher than expected. And then April marketings came in at 1.64 million head, down 10% from last year and largely in line with expectations. The report was bearish all the way around with higher year-over-year cattle on feed and placement numbers, along with relatively light marketings. Traders will likely focus on the elevated placement figure, which reflects ongoing drought conditions across the plains that are forcing forcing some producers to sell early due to a lack of pasture availability.

SPEAKER_01 13:11

Cattle futures got beat up last week. Is that right?

SPEAKER_00 13:14

Yep. The traders were expecting this report to come in bearish, and they were right.

SPEAKER_01 13:18

Okay. I did throw in some cattle charts this morning just for context. I like to look at the long-term stuff because I'm not a cattle person, and this just gives me kind of some context. I would argue the feeder cattle market, yeah, last week was nasty. You're still in the midst of a multi-year bull trend. Uh, the problem, maybe not the problem, but yeah, the problem is that you could trade this thing all the way down in spot month futures, certainly below 300, down into like the 290 neighborhood, and probably still be in a long-term bull trend, but that would be a nasty correction for those of you guys involved. Uh live cattle, I think the the uptrend is even more organized and pronounced, and you could probably dip from you know 249 spot futures down to like a 220-ish type neighborhood and and still be in bull market territory long term. So the charts uh long term, big picture to me, still look good. Outside markets this morning, the stock market is higher. Uh the S P 500 is up about eight tenths of a percentage point. Treasuries are sharply higher. Crude oil again is now lower, down four dollars and seventy two cents in the July WTI at 91.92. Have a great week, guys. We'll be back on Wednesday.