Global Fertilizer Prices Dip - Why Is US Retail Still Sky-High??

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🌾 India is ramping up urea imports ahead of peak planting season, but despite buying at nearly double pre-conflict prices, the country still faces a significant supply shortfall. Surprisingly, the tender announcement failed to rally global urea markets, as traders are more focused on potential Chinese export resumption and hopes for a Strait of Hormuz peace deal.

☮️ The US and Iran are struggling to finalize a peace deal, with Trump expressing dissatisfaction over current terms and warning that strikes could resume. Despite cautious optimism pushing WTI crude down to the high $80s earlier this week, overnight tensions have pushed spot prices back into the $90–91/bbl range.

🌽 Corn futures hit their lowest level in over a month, dropping nearly 5 cents to close around $4.78/bu as crude oil's sharp selloff weighed heavily on the market. Wheat posted its fifth straight day of losses despite poor US winter wheat conditions, with Chicago and KC contracts both settling lower.
🇧🇷 Brazilian farm bankruptcies have surged tenfold since 2021, prompting banks to tighten lending terms and seize assets even during bankruptcy proceedings. Consolidation appears to be the likely outcome, with larger operations absorbing smaller farms squeezed by low commodity prices, high rates, and rising input costs.

⛽ The year-round E15 bill faces an uphill battle in the Senate, as it's widely considered unlikely to pass as standalone legislation. The inclusion of a Small Refinery Exemptions restructure has complicated its path, though it could still advance if attached to the farm bill, defense authorization, or an appropriations bill.

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SPEAKER_01 0:08

Morning guys, it's Thursday, May 28th, 5 23 a.m. Central Time. Got a little bit of a rebound in the row crop markets at East this morning. December corn futures up four and a quarter at 481 and three quarters. November soybeans up seven and a quarter at 1188 and three quarters. July Chicago wheat up two and three quarters at 625 and a quarter. July Kansas City wheat down three quarters of a cent at 669. September spring wheat down three quarters of a cent at 704 and a half. Welcome back to Grain Markets and Other Stuff. My name is Joe. I'm the host Mackenzie Johnston is my co-host. McKenzie, say good morning to the people.

SPEAKER_00 0:42

Good morning, everybody.

SPEAKER_01 0:43

Hey guys, a lot of you who watch on YouTube are not subscribed to the channel. The YouTube uh statistics tell me that it's like half of people

Fertilizer, India, Retail

SPEAKER_01 0:51

who watch are subscribed. So if you haven't hit the subscribe button on YouTube, do us a favor, hit subscribe. It helps us out. Okay, uh, we've got some fertilizer news to start off this morning.

SPEAKER_00 1:00

India is ramping up its fertilizer imports as the nation is looking to import 1.7 million metric tons of urea before peak planting begins for crops like rice, corn, and soybeans. Urea production in India depends heavily on natural gas from the Middle East, but the ongoing conflict has disrupted supplies and forced some South Asian fertilizer plants to shut down, which has reduced output. Global urea prices have surged since the conflict began, with India recently paying nearly double pre-conflict levels for a 2.5 million metric ton purchase. Despite these imports, the country still faces a supply shortfall with inventories well below seasonal demand.

SPEAKER_01 1:40

This is typically a pretty big deal when India puts these tenders out. India and Brazil, generally speaking, are the world's two largest urea importers. So when they put these tenders out, and what this is, is India saying, hey, we want some urea, give us your best price. And whichever global exporter can can hit it, then that's the one that they go with. Um I asked our friend Josh Linville about this because he is a fertilizer expert, and I am not listened very closely to what he wrote in an email to me yesterday. Normally, the announcement of an India urea purchase tender is massively bullish news. And with everything going on in the global markets, you would be safe to think that that trend continues. Not only did it not strengthen the global urea market, New Orleans urea uh third quarter futures dropped to 460 per ton, which is below uh the price it was at before the start of the straight closure. It appears that the market is more concerned with Chinese exports returning and a rising possibility that peace will be found, which will open the straight. Those, combined with the fact that the market is moving into its traditional quiet demand period, likely have Indian offers wondering if they miss this sale. Where will they go with their tons? There is very little reason to get bold, bullish news on values for now. That's very interesting. I'm not going to say it's a bearish take on fertilizer, but it's a little bit contrary to what you might be seeing in the headlines. And Josh is correct. If you look at the CME urea contract, and this is for August delivery, it's off $120 per ton and down 20% from its April peak. You've got a big discount in deferred contracts versus spot. It's an inverted market, which is what you typically see in a tight supply or bull market. Um, spot urea futures at the Gulf are off $1.51, or I'm sorry, $151 per ton or off 21% from their April peak. Yet U.S. retail prices have not dropped at all. This is a graphic that DTN had out last week. It's very good. Retail prices across the Corn Belt or Midwest, I think is what this gauge is. Still sitting probably just above $8.50 and haven't really budged at all. So what is the reason for that? It's like global prices maybe slipping a little bit, but your retail stuff is as high as ever. Retailers pre-bought inventory at high prices, and they're not going to sell below cost until they run through all that stock that they paid higher prices for. There's a pipeline lag. It takes weeks, sometimes months for these like futures prices to actually work their way through uh to the farm sector. And there's already some demand destruction. Um, a lot of people saying that they were struggling to afford all the fertilizer that they needed, that they've reduced applications. We don't really know how we can quantify that, but it definitely happened. So as we move forward here, if you sustain this drop in futures, if you hold, you know, 460 a ton for third quarter urea prices, you'd probably expect retail to start softening by late summer. And that would be very positive because then you're talking fall applications in the United States. Um, but you've still got a lot of uncertainty in the straight of four moves and um with the conflict in the Middle East,

Iran Update

SPEAKER_01 4:54

and it's all it's all still very much a fluid situation, but maybe some light at the end of the tunnel here, but it's all contingent on did they get this damn straight reopened or not.

SPEAKER_00 5:02

The U.S. and Iran are struggling to finalize a peace deal. On Wednesday, President Trump said he is not satisfied with the current terms of a potential deal and warned that the U.S. could resume strikes if an agreement is not reached. Trump has suggested that Iran is eager to make a deal, but Tehran has pushed back, saying a final agreement is not close. Key issues include Iran's nuclear program, sanctions relief, and control of the Strait of Hormuz. Optimism around a potential deal pushed oil prices lower yesterday, with WTI crude falling about 5.6% to 8868 per barrel. However, tensions remain high after the U.S. carried out new strikes targeting a military site in Iran last night that officials said threatened American forces and shipping through the Strait of Hormuz.

SPEAKER_01 5:49

All right. So crude oil is higher this morning. The July WTI contract's up $1.60 at $90.27. Because crude oil is higher, the grain markets are higher. And that's been the way that this has all gone for the last week or so. It's, it's, it's very predictable. Crude's higher, okay. Corn and soybeans are going to be higher. Crude's lower. Okay, they're probably going to be lower. That's that's the way that it's gone. Um, people have lots of very strong opinions on the direction of crude oil prices. There appears to be a very large contingent of the general public who seems to believe that crude should be at crude should be at $150. Okay, by the board. I mean, I'm no, I'm no stranger to seeing big bold predictions about commodity prices. I've seen it my entire career as it relates to the grain markets and other markets. So for like this this noise and this chirping about crude needs to be $150, okay, bro. Like I've heard people say soybeans need to be at $30, and it never happened. I mean, people can say you can say whatever you want, but you know, if you really want to participate, put your money where your mouth is. And the response to that will be the market's manipulated. It's funny

Grain Price Action

SPEAKER_01 6:58

how the market's manipulated when you're wrong. That's that's how it always works. Oh, I'm you were wrong about prices. Well, it must be manipulation, damn it.

unknown 7:05

Whatever.

SPEAKER_00 7:06

All righty. So corn futures tumbled yesterday, pressured by falling crude oil prices. Uh, the December 26th corn contract lost nearly five cents to close around 478 per bushel, marking its lowest level in more than a month. Meanwhile, soybean futures were narrowly mixed. Wheat futures were sharply lower, notching uh the fifth consecutive day of losses despite poor U.S. winter wheat conditions. The July 26 Chicago wheat contract fell 13 cents to settle near 623 per bushel, while the July 26 Kansas City wheat contract declined about seven cents to close near 670 per bushel.

SPEAKER_01 7:40

Yeah, so we backed off yesterday because oil was down, and now we're back higher because oil is up. It's not complicated. Uh, we did, as we discussed yesterday, corn market broke out below trend support yesterday, and we found some additional selling pressure, at least momentarily, but now crude's back higher, so corn is back higher. Um, if we want to regain that trend line, you'd like to see D's corn close above 482 today, and that would be very easy to do, especially if they tacked another couple bucks on crude. So, I mean, the charts do matter, and I there's there's some other stuff in the charts going on that we'll get to here in a second, but uh it seems like crude is still the bigger price driver. I don't know, but that that little trend line, it was support. Now maybe it's resistance. So if you can close this thing above 482, that would look good today. Uh no beans held trend support almost perfectly yesterday and I don't know how higher. So this looks uh very good. The uptrend remains intact. Wheat kind of on shaky footing here. There's an open gap on the July Kansas City wheat chart at 609 and three quarters. And if you break out below the 664 support area, maybe you trust test the trend line at 636, and then maybe you go down and fill that gap. It feels like it's a long ways away, but it's certainly possible. I wanted to hit on weather for a second. Not much new and exciting here in the forecast this morning. There's a lot of rain um in the western corn belt expected and in the central plains, northern plains, even some in the southern plains, which is very much welcome in your neighborhood, McKenzie, I would imagine. And like places like Ohio are gonna be very dry, and that's very good because they were wet, things have been uh late. So I think this is actually not a bad setup, generally speaking. You got rain all over the place in the extended period, with the exception of like a small pocket of central Illinois, a little bit of Indiana, a little bit of Ohio, but I'd say the forecast is I'm not gonna call it bearish, but I'd I'd say it's I'd say it's it's positive for crop production. I don't think this is like a bullish forecast. And it's hard to say it's bullish or bearish on May 28th, you know. Um just a different view. Here's some maps from our friends at Crop Profit, very good stuff as always. Over the next seven days, based on Euromodel data, U.S. corn areas will see 82% of normal rainfall. And during the 8 to 14 day period, 96% of normal rainfall. So uh doesn't look like doesn't look to me like uh drought 26 is starting now. I think drought 26 may be hopefully behind us in the uh southern and central plains, and hopefully we're moving out of it.

SPEAKER_00 9:57

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?

SPEAKER_01 10:03

Uh Brian was on yesterday and the chart analysis that he did was absolutely fantastic. This video alone is worth five times what we charge for a monthly subscription because his analysis of the grain markets is so absolutely fantastic. I mean, you guys think you know what's going on because you watch this show for free every day. You don't have any damn idea what's going on if you didn't watch this video. Uh Brian did cotton yesterday, which I thought was super interesting. Every once in a while we get people emailed and say, Joe, you got to cover cotton, you got to cover oats, you got to cover canola. There's only so many hours in the day, you know. But if you're a if you're a cotton grower, uh this will probably pay for itself a couple times over. Uh Pete was on earlier this week, talked about grain marketing, E15, what's going on in DC weather fertilizer. Uh, Chris was on. We've done a ton of transition planning stuff the last few months, and we made it all available to our premium subs. Today I'm gonna do some uh very topical seasonal analysis on the soybean market, which the people have begged for. I did some corn market stuff with seasonals uh either last week or two weeks ago, and the people requested soybeans. So that's what I'm gonna do today. If you want to see the premium stuff, go to

Brazil Farms in Trouble

SPEAKER_01 11:05

standardgrain.com. You could sign up this morning. This is a $50 per month subscription. You can cancel it anytime. No other fee, no other obligation. Nobody will try to sell you anything else. Give that deal a shot this morning, guys.

SPEAKER_00 11:13

Brazilian banks are tightening lending requirements as agricultural uh bankruptcies surge. Farm bankruptcies have increased tenfold since 2021, rising to roughly 2,000 filings last year. The sharp increase comes as farmers turn to the courts to protect their assets from bank seizure in response. Banks are adopting stricter lending terms that allow them to seize assets even during bankruptcy, which has reduced bar, which has reduced uh borrower flexibility. Many farmers overextended themselves during the post-COVID commodity boom, investing heavily in land equipment and inputs. They are now being squeezed by several challenges, including lower commodity prices, high interest rates, and rapidly rising input costs tied uh to the Iran war.

SPEAKER_01 11:58

Brazilian farmers are in uh in kind of a tough way right now. They're dealing with all the inflation and uh fertilizer stuff that you guys are dealing with, but also they've got phenomenally high interest rates. Um, like I think the average operating note is somewhere in the 10 to 20% range. Like a lot of them are 14%. So they're they're double what you guys are paying in terms of interest. You're not gonna see any acreage reduction in Brazil.

E15 Bill Update

SPEAKER_01 12:23

What you're gonna see is consolidation. The big farmers are gonna get bigger, the small farmers are gonna go out of business. You know, you guys have seen that story before, and that's what's going on in South America.

SPEAKER_00 12:32

The year-round E-15 bill is likely to face obstacles in the Senate. According to Iowa Ag Secretary Mike Nag, the measure would support ethanol demand, rural jobs, and the broader farm economy. He emphasized that the legislation is not a mandate, but rather allows fuel retailers to offer E-15 year-round nationwide, giving consumers more choice. Nag pointed to Iowa as proof of strong demand, noting drivers saved about $60 million last year by choosing E-15 over E-10. According to U.S. Senator Chuck Grassley, the bill has various avenues for passage in the Senate, such as being included in the farm bill, the defense authorization bill, or an appropriations bill, but it must be attached to another piece of legislation as it is unlikely to pass on its own.

SPEAKER_01 13:17

Um, there's been a, I think that the the people pushing four-year round E15, which is a lot of you guys, I think that some of the messaging has been very poor. There are a lot of people outside of the biofuel or corn space in media who are talking about this as if it's a mandate, like smart people posting headlines, like indicating that this is some sort of mandate, which it is not. This is a choice. The the retailer gets to choose whether or not they sell E15, the consumer gets to choose whether or not they buy it. It's just they want to make it available year-round. And I don't think that they've made that point clear enough. In fact, it's some of the uh studies and some of the numbers that they've thrown out would almost indicate that it's a mandate, which it is obviously and very clearly not. Um, there's a lot of problems with this, and I've been told there's zero chance it passes the Senate in its current bill. It's not just an E15 bill, and this is the problem. Bundled into this legislation are significant uh changes to the small refinery exemptions. And because of those, which I'm not gonna get into today, we talked a lot about with them, uh about those with Pete earlier this week. It's gonna be really, really tough. I I don't know if this thing gets through or not. I think they're gonna have to adjust it or change it or include it in something else in its current forum. I think it's gonna really struggle. Uh cattle were up yesterday.

SPEAKER_00 14:34

Yep. Live cattle were a buck 70 to 327 higher. Feeder saw gains ranging from 380 up to 502. Box beef prices were mixed. Choice was up 182 at 394.72, while select was down 101 at 389.29.

SPEAKER_01 14:46

Stock markets off a little bit. The SP is down two tenths of a percentage point. Treasury's about flat US dollars up just a little bit. Crude oil is now up $1.85 at 90 53 in the July WTI. Have a great day, guys. Back on Friday.