Grain Markets and Other Stuff
Joe Vaclavik and Mackenzie Johnston discuss the grain markets, the business of farming, news related to agriculture, and a variety of other topics.
Grain Markets and Other Stuff
Corn Collapse Continues + China Soybean Purchase Tracker
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Joe's Premium Subscription: www.standardgrain.com
Grain Markets and Other Stuff Links —
Apple Podcasts
Spotify
TikTok
YouTube
Futures and options trading involves risk of loss and is not suitable for everyone.
🌽 Grain futures extended losses Wednesday, with Dec26 corn falling ~7 cents to $4.60/bu and Nov26 soybeans declining ~11 cents to $11.67/bu — both hitting multi-month lows. Wheat also sold off sharply, with Chicago July26 dropping ~16 cents to $5.87/bu as favorable Corn Belt growing conditions weighed on the complex.
🫘 Deputy Ag Secretary Stephen Vaden expressed confidence that China will follow through on its commitment to purchase 25mmt of US soybeans annually for three years. However, China has officially purchased zero bushels of US soybeans for 26/27 delivery so far.
📈 Treasury Secretary Scott Bessent called the recent rise in inflation transitory, attributing it to higher energy prices tied to the Iran war. April CPI came in at 3.8% — the highest since 2023 — while most economists expect the federal deficit to widen above 6% this year.
⛽ The Iran war has driven diesel prices to nearly double last year's levels in some regions, compounding elevated fertilizer and chemical costs for farmers. Rabobank estimates food prices could rise 4–6% over the next 12–18 months as input costs work their way through the supply chain.
🏭 US ethanol production hit a seasonal high last week at 1.1 million barrels per day, up 4.9% vs. the same week last year. Ethanol margins across the Corn Belt remain positive at 20–55 cents based on spot prices of corn, DDGs, and other inputs.
🐄 The USDA confirmed a New World screwworm case in a calf near La Pryor, Texas — the first detection in the US cattle herd. The USDA has implemented quarantines and a 12-mile surveillance zone, though questions remain about containment capacity heading into summer.
🚢 USDA reported a flash sale of 136,000mt (5 million bushels) of corn sold to South Korea for 2026/27 delivery. The sale offers a modest bright spot amid an otherwise bearish week for grain markets.
Corn Selloff
SPEAKER_01Good morning, everybody. It's Thursday, June 4th, 524 a.m. Central Time. Grain markets are lower this morning. December corn futures down three and three quarters at 456. November soybeans down four cents at 11.63 and a quarter. July Chicago wheat down a quarter cent at 587. July Kansas City wheat down half cent at 623 and a half. September spring wheat up three quarters of a cent at 651 and three quarters. The grain markets have been weak, sold off yesterday. Let's start there.
SPEAKER_00So the December 26th corn contract lost roughly seven cents to close near 460 per bushel yesterday, marking its lowest level since mid-February. Soybeans followed suit with the November contract declining about 11 cents to settle around 1167 per bushel, its lowest level since late April. The sell-off was driven by favorable growing conditions across the U.S. Corn Belt. Meanwhile, wheat futures were sharply lower, with the July Chicago wheat contract falling nearly 16 cents to settle near 587 per bushel, and the July Kansas City wheat contract dropping roughly 11 cents to close at 624 per bushel.
SPEAKER_01Mackenzie, somebody commented in the uh YouTube comments yesterday, why would I tune into this show every day to listen to bad news?
SPEAKER_00I saw that.
SPEAKER_01And understandable response, but the fact of the matter is we can do this show two different ways. We can tell you what you want to hear, or we can tell you what you need to hear. And we choose the latter. We choose to tell you what you need to hear, even if it's not fun. Let's start off with a December corn chart. This has turned ugly quickly. Is the U.S. weather bearish? Yeah, it's it's too early to say that the crop is made, of course. Uh, we'll do some weather stuff here in a second, but the weather patterns are definitely negative with regard to prices. The Middle East crude fertilizer story is now stale. Perhaps the crude market has been kind of sputtering in the mid-90s here. There's still a lot of issues. There's still conflict going on, um, but the market seems to be over that at least. Um, test of the January low at 445 and a quarter. Yeah, it looks a little bit more probable. We're only 10 cents away this morning. I showed you guys a weekly chart yesterday, and I'll show it to you again this morning. It looks as if we had a little bit of a trend line that's been busted. And spot month corn futures, which is what this tracks, are the lowest that they've been since either January or February. So all of the gains that had been associated, I guess, with the Middle East conflict and with the fertilizers story, all of those have been erased. It's pretty ugly stuff. To go back to the Deese corn chart, when corn what when D's corn futures were up at you know $5 thereabouts, that was a price level that was associated with profitability for a lot of U.S. corn growers. Not all U.S. corn growers, but a lot. Those guys in, say, the central and eastern corn belt where basis has been pretty good, and even new crop basis bids are pretty good. There was profitability uh when we were at those sort of levels or uh probable prop profitability, assuming you know, decent yields and that the basis holds together. Those of you guys in the West, uh, basis, even new crop basis bids were poor and they're still poor. Um, as of yesterday, I was looking at uh some basis bids, like new crop corn cash bids in the in some areas of the Western Corn Belt, they're like in the 380s. It's pretty ugly. Whereas in the Eastern Corn belt, there's some stuff in like the four and a half dollar neighborhood still. So there's there's a lot going on here in terms of on-farm profitability or lack thereof. No soybeans break broke out below some trend support yesterday. I think a test of that march low at 1118 is possible. It looks like a long ways away, but that's like a two or three-day move in this sort of market where you're seeing uh very clearly some fund liquidation. Kansas City wheat, there's this gap at 609 and three-quarters. And I think that a gap fill looks uh probable here. Maybe that's incoming. That's an it's just an area that everybody watches. U.S. wheat was probably too expensive relative to global competition. It it certainly was, I think. And uh that's part of the reason for the south. The southern plains drought story just appears to be old news. Um, looking at some weather, and and perhaps the reason for this, it's it's not complicated. Look at the state of Iowa. Iowa is our largest corn producer. There's a bunch of rain in the forecast. And same goes for uh Missouri, for Illinois, for Wisconsin, for northern Indiana. We're gonna be a little bit drier in some of the places where we really need to be dry. Like Ohio is gonna catch some rain in the northern part of the state, but it looks like about half the state's gonna be drier over the next seven days. Same thing with Indiana. They need to dry out a little bit. So the forecast is just um it's not bullish. And you know, we're now looking out toward mid-June and what weather's gonna look like in that time frame, and we're just not seeing a threat. Here's some stuff from our friends at Crop Profit. Based on Euro model data, over the next seven days, U.S. corn areas will see 142% of their normal rainfall and eight to 14 day period, 91% of normal rainfall. So lack of rainfall, not an issue. Uh, temperatures are gonna run above normal, a little bit of a heat wave here. Corn area is going to be 5.9 degrees above normal over the next seven days on average, and possibly 2.9 degrees above normal during the 8 to 14 day period. Uh, I don't know that anybody's
China Soybean Tracker
SPEAKER_01concerned about uh heat or problems with regard to that. It's just it's not that complicated. There's rain where we need it and a little bit of lack of rain where uh we need that as well.
SPEAKER_00Deputy Ag Secretary Stephen Vaden expects China to follow through on its commitment to purchase U.S. soybeans. Last fall, as we can all remember, China agreed to buy 25 million metric tons of U.S. beans annually for three years. According to Vaden, China has already begun placing orders for soybeans currently being planted, although no new crop purchases have been confirmed. China did meet its previous commitment purchasing 12 million metric tons of beans by late January. Soybean futures have come under pressure in recent weeks due to weaker crude oil prices and favorable growing conditions.
SPEAKER_01Okay, let's go to our soybean purchase tracker. Um, I'm redoing these and we're gonna start a new one for new crop. So, with regard to the 12 million metric tons of U.S. soybean purchases for old crop, uh, 99% of that target has been hit. China did, in fact, come in and buy almost all of the 12 million metric tons of U.S. soybeans, to which they supposedly committed, according to the White House. Uh, new crop purchases, different story. 0% of the 25 million metric tons of U.S. soybeans for new crop delivery have been purchased. Uh, Vaden seems to think that they've already started. There have been some sales to unknown destinations. If they've started, it's pretty small, but we have nothing official to hang our hats on. And if China is gonna buy 25 million metric tons of U.S. soybeans for new crop delivery, I think they're gonna have to start pretty soon. Um, typically, if you're gonna see that sort of number, they usually start in the in the spring, in the
Bessent Inflation Comments
SPEAKER_01prior spring, and they'll kind of continue to buy through the summer. And it's June 4th, and they haven't bought a thing. So they need to step in and uh start pretty soon if they're gonna hit that target.
SPEAKER_00On Wednesday, Treasury Secretary Scott Bessant said that the recent rise in inflation will likely be transitory, driven largely by higher energy prices tied to uh the conflict over in the Middle East. He expects oil and gas prices to fall below pre-conflict pre-conflict levels once tensions ease, which will also bring inflation back down. The latest CPI data showed inflation rose to 3.8% in April, the highest level since 2023. Besson's comments mirror language used by former Treasury Secretary Janet Yellen back in 2021 when she described post-COVID inflation as transitor transitory, a claim that later proved inaccurate. Besson also reiterated the administration's goal of reducing the federal budget deficit to below 4%. However, most economists expect the deficit to widen above 6% this year, driven in part by higher defense spending and rising interest costs.
SPEAKER_01Scott Besson is a retired soybean farmer, and it's really a shame that he retired. He farmed in North Dakota and just I hear stories from subscribers who knew the guy and they said, you know, at the coffee shop, the guy is just an absolute riot. He's telling stories, you know, cracking jokes. It's just, it's really a shame that he retired and moved back to DC. In any case, um, so Besson thinks inflation is going to be transitory, and he's made several such comments over the last few weeks. He said, except for inflation, which I believe is going to be a short-term blip, the economic data is very strong. That's what he said this week, uh, last month. Besson said in a um uh he said a global increase in bond yields reflected a short-term blip in inflation that I believe is is transient, transient, and he said, I believe prices are transitory. So he thinks this is nothing more than just a short-term supply shock. The problem here is this. So we've got 3.8% annualized inflation, like versus the same month last year, right? Things are 3.8% more expensive. The problem is that even if he's right, and you know, we go back to a sub 3% print, your actual basket of goods and services is gonna stay permanently higher at those elevated levels. So when they say, like, oh, well, we're gonna go from 3.8 back to you know two and a half or whatever, let's assume that he's right on that. The cost of everything that you buy is still gonna stay up here at the highest levels that it's ever been at. So like once it goes up, it the the the basket, the price of the basket of goods and services doesn't come back down. And that's that's the problem with this. That like I I know that he realizes that. I understand he's trying to make like he's trying to play politics here, but um, you know, even if we stay at 3.8% or 4% for you know another five, six months, it does permanent damage to to CPI and permanent damage to your purchasing power. Uh, the US dollar has lost 22 and a half percent of its purchasing power since February of 2020 based on government data. And I'm using February of 2020 because it's your last like pre-COVID month. Uh, that that number is not right in my view as a consumer. Um, inflation since inflation, general, general consumer inflation since February of 2020 is every bit of 35 to 40 percent, in my view. But uh, this is how the government handles those numbers.
SPEAKER_00If 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_01Matt Bennett was on yesterday, had a bunch of fantastic grain marketing questions from our premium subscribers. Uh, one of them, which was very interesting, should I roll my new crop HTAs now? There's some substantial carry in the new crop corn market, and we talked about that in detail. And I made some previous uh videos available that actually kind of quantify the information in terms of like percentages of full carry, how to figure out the cost of carry on your own farm, that sort of thing. A lot of questions about old crop clean up. There is uh unfortunately still a lot of unpriced old crop corn bushels out there, and I say unfortunately because of what's happened in prices here the last uh week or two. Josh Glennville joined me on Wednesday, or on Tuesday rather, to discuss fertilizer, the urea price situation. And uh there's actually, I thought, some positive things here. Um the stuff with Dave Whitcomb on Monday was absolutely fantastic. And if you haven't seen it, you're out of the loop, you have no idea what you're doing, and uh you need to sign up so you can watch that video. Uh, when you sign up, uh you'll get a copy. I'll forward you a copy of this morning's email, and it it includes links to the six most recent premium videos. So you'll see the video with Dave, you'll see the video with Josh, you'll see the video with Matt, as well as some of the stuff from last week. Uh go to standardgrain.com, sign up this morning. It's a $50
Diesel Prices Hurt Farmers
SPEAKER_01per month subscription. You can cancel it any time, no other fee, no other obligation, nobody's trying to sell you anything else. Just a ton of content direct from us every single business day, guys. Give that deal a shot.
SPEAKER_00The Iran war has driven a sharp increase in diesel prices, further eroding farm profitability. In some regions, farm diesel costs are nearly double what they were at this time last year. The surge in fuel prices comes as farmers also face elevated chemical and fertilizer costs tied to the Iran war. Even if geopolitical tensions ease, elevated fuel prices are likely to persist due to infrastructure damage over in the Middle East caused by the conflict and the time it's going to take to restore supply chains. U.S. consumers are likely to eventually bear the burden of increased farm input costs. Rabobank estimates that food prices could rise by roughly 4% to 6% over the next 12 to 18 months.
SPEAKER_01There's some statistics out there that'll tell you that'll tell you like, hey, um, you know, corn equals X percent of this actual food price that you buy at the grocery store. And it's a very small percentage. Like the the actual raw commodities don't play a big role in what food prices cost at the grocery store. And to go back to the fuel thing, fuel is um, of course, a line item expense for farm operations. For a lot of farm operations, it's a relatively small line item expense. For larger operations that span across more acres, larger geography, it can be a very
Ethanol
SPEAKER_01large line item expense. We did have some questions from our premium subscribers about locking up fuel needs uh yesterday with Matt, and uh we gave our best answers to those.
SPEAKER_00U.S. ethanol production rose to a seasonal high last week. Weekly output was reported at 1.1 million barrels per day, up 1.7% compared to the prior week, and up 4.9% versus the same week last year. Ethanol stocks declined to 24.61 million barrels. The print was down 1.4% compared to the previous week, but up 1.3 1.3% versus the same week last year. According to Reuters data, U.S. ethanol margins range from 20 cents to 55 cents positive across the cord belt.
SPEAKER_01This is all very good. We're seeing a seasonal decline in ethanol production, but that's still the best weekly print of the last 10 years. Um, somebody needs to show this chart to the funds so they stop selling corn. Um, oh, that's that's product. I'm sorry, that was stocks. Stocks are
Flash Sales
SPEAKER_01drawing down. Production, I'm all backwards today. Uh, production is uh also very strong, but it's not a it's not a seasonal decline. Um, let's go to flash sales.
SPEAKER_00So we had a flash sale yesterday. Um, USDA reported uh flash sale of corn. U.S. U.S. exporters sold five million bushels of corn to South
Screwworm in the US
SPEAKER_00Korea for delivery during the next marketing year.
SPEAKER_01Very good. U.S. corn is still competitive. We'd love to see China buy some. There's been some chatter, but um no evidence yet.
SPEAKER_00On Wednesday, the USDA reported that a calf at a ranch in southern Texas tested positive for new world, new world screwworm. The announcement came after the markets closed, so it's unclear about the extent of its bearish impact. The USDA has implemented quarantines, movement controls, and surveillance in the 12-mile area where the case is was found. Uh, however, questions remain about the agency's ability to control the outbreak, particularly as summer is just beginning and sterile fly production has yet to fully ramp up. Public awareness of this issue has been limited due to a lack of media coverage. Uh, consumer reaction going forward will largely depend on the extent of coverage and how the media decides to portray the situation. It's important to remember that New World Screwworm poses no food safety issues and the risk to humans is low.
SPEAKER_01So that's it. Cattle rally is over, it's going to zero.
SPEAKER_00Uh, I don't know if it's going to zero, but I'm a little nervous about how things are going to play out today. And then, as everyone is aware, CME increased their daily trading limits for cattle futures on Monday. So, I mean, golly, things wonderful timing. Such good timing. So things could get ugly fast.
SPEAKER_01Yeah. Um, outside markets, the stock market is off and was off yesterday as well. There have been some less than stellar earnings. I think there's also some concern about the Middle East situation, which really hasn't de-escalated a whole lot. There's still fighting and all sorts of stuff going on as of last night. Uh, crude oil's down 88 cents this morning in the July WTI at 95.13, which is um shocking to a lot of people given the lack of de-escalation. And I see stuff all over the place. I get newsletters about crude oil stocks and they're declining, and there's all these problems. Yet crude's just stuck here. And I know 95 is elevated, but I think a lot of people had believed that we should be or or could have been a hell of a lot higher than this. Maybe we will be eventually. Um, everybody have a great day today, back on Friday.