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 and Soybean Ratings are Below Average, Prices are Below Production Cost
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🌽 Corn & Crops — US corn crop conditions held steady at 67% good-to-excellent, while soybeans dipped slightly to 65%. Spring wheat improved week-over-week, but winter wheat hit its lowest rating since records began in 1986.
📈 Futures Markets — Corn and wheat futures saw modest rebounds on bargain buying after recent losses, with KC wheat leading gains up 9 cents. Soybeans fell for a seventh straight session, pressured by favorable weather and weak Chinese demand.
🌧️ Weather — Parts of the Corn Belt received over 4 inches of rain in a short window, with active radar again this morning. Forecasts call for above-normal rainfall across corn areas in both the 1-7-day and 8-14-day outlooks.
💊 Fertilizer Prices — New Orleans urea has dropped 36% from its mid-April peak to $453.50/ton, now at pre-war levels as US-Iran peace talks ease supply fears. Seasonal demand weakness and ample domestic supply are adding further downward pressure.
🌍 Brazil vs. US Competition — Brazil's farming model is under strain as heavy reliance on imported fertilizer leaves growers far more exposed to the Iran-driven price shock. Many Brazilian farmers are now operating at a loss, potentially narrowing their long-standing cost advantage over US producers.
🚢 Export Inspections & Flash Sales — Corn export inspections came in strong at 1.9 MMT, up 11% year-over-year, while soybeans and wheat lagged at the lower end of expectations. USDA also reported flash sales of 264,000 MT of soybeans to unknown destinations and 103,000 MT of corn to Japan.
Crop Conditions
SPEAKER_00Good morning guys. It's Tuesday, June 9th, 524 a.m. Central Time. Grain markets are mixed to higher this morning. December corn futures up two and a half cents at 448 and a half. November soybeans up one and three quarters at 1137. July Chicago wheat up two and three quarters at 586. July Kansas City wheat up a half cent at 630 and a quarter. September spring wheat up one at 646. USDA released weekly crop ratings yesterday. Why don't we start off there?
SPEAKER_01The U.S. corn crop was rated 67% good to excellent nationally as of Sunday. Steady with the prior week, but below 72% on average. The soybean crop was rated 65% good to excellent compared to 66% the previous week and 66% on average. The spring wheat crop was rated 52% good to excellent, up significantly from last week's 47%, but still below 55% on average. And then finally, uh the winter wheat crop was rated 25% good to excellent nationally, down from 26% the prior week, and the lowest rating for the week since records began all the way back in 1986. Corn and soybean planting is nearly complete, while winter wheat harvest is underway with 11% of the crop harvested.
SPEAKER_00Let's go into some details here. The corn crop nationally rated 67% good to excellent. That's below the 69% average. And the trade traders, poll of analysts, had expected 69% going into this. So ratings were a little bit below expectations. The corn market's up a penny or two this morning. Not much of a reaction. You've got kind of a mixed bag with regard to state by state ratings. Let's first run through the states that I would consider to be well below average. Texas is 42% good to excellent versus 62 on average. Colorado is 59% good to excellent versus 72 on average. Nebraska, only 58% good to excellent corn versus 73 on average. Indiana, 57% good to excellent versus 68 on average. Ohio, only 45% good to excellent in Ohio corn versus 67 on average in North Carolina, 50% good to excellent versus 73 on average. We'll go to the states that are well above average. Minnesota, 79% good to excellent versus 68% on average. Iowa, the nation's largest corn producer, 84% good to excellent, ahead of the 75% average. And Pennsylvania, actually in really good shape, 90% good to excellent versus 75 on average. So we had ratings that are a mixed bag, certainly, but they're not bad. We're close to average, and we've got some good looking weather in front of us. And uh that's what we'll look at here in a second. So I've been ratings kind of similarly. We are um average or slightly, we're slightly below average at 65% good to excellent. The average will be 66. But again, it's not enough to really get the trade excited. Spring wheat, there was some weird stuff going on. Like they had, I think last week they had Montana rated 1% good to excellent, and they jumped to 10% this week. But uh everybody else seems to be in okay shape. And we know that the HRW wheat crop in the Southern Plains is is it's a really bad crop, and it's it's old news by now. Um, harvest has started and is moving its way north. So not not a whole lot that
Price Action and Charts
SPEAKER_00the market's really interested in here. It's kind of status quo. Um corn soil ratings could have been a little bit better, and maybe that's partially why the markets are just slightly higher here this morning.
SPEAKER_01Corn and wheat futures found some limited, limited buying interest on Monday. The December 26th corn contract ended the session unchanged at 446 per bushel. The July Chicago wheat futures contract gained roughly three cents to close near 583 per bushel, while the July Kansas City wheat contract rose nine cents to settle at roughly 630 per bushel. After several sessions of losses, prices rebounded on bargain buying and short covering. Meanwhile, soybean futures declined for the seventh consecutive session, with the November 26th contract falling two cents to settle around 1136 per bushel. Futures were pressured by favorable weather forecasts and a lack of export demand from China.
SPEAKER_00So some very, very minimal buying interest emerged here. In the December corn contract, we saw what I'd call a stop run below the January low. You ran below that January low, probably had some panic selling and some stop orders hit. And then we bounced back and we're up to 446, 447 this morning. Still uh awfully cheap compared to where we were just a couple of weeks ago. Farmer selling of uh, I should have said that was a uh I guess farmer selling old new crop, but I should have said new crop bushels. Um, I think farmer selling of old crop bushels, yeah, that's gonna continue. These guys are on the clock. New crop bushels, um, farmer selling is gonna shut off almost completely. There's no profits to be had anywhere. Cash corn for new crop delivery in a lot of areas, especially the Western Corn belt, sub-4. Um, it's just it ain't you're not gonna see a whole lot of farmer selling interest here. And maybe that's what stops this big sell-off. The funds, depending on which estimate you look at, they're either about flat or they're maybe still long, 50 or 60,000 contracts in net. So I don't know exactly what the story is there, but a lot of the maj the majority of the liquidation event um is over. So I think that all this impaired with the stuff I talked about yesterday, the the drastically improved crop insurance safety nets, your ARCs, your PLCs, your top-ups, farmer selling of new crop corn bushels is gonna stop here. Soybeans, uh, next support is 1118. We haven't really found the buying interest there. The funds are still long, about 100,000 contracts. Uh, that's our estimate. And if uh the liquidation event continues, you could very easily go down and test that 1118 low from March. China, still a big question mark. I find it uh at this point in time, and my thoughts change every day. I think it's it's hugely unlikely that China buys any additional old crop U.S. soybeans. I'm working with the idea that China will step in and buy new crop U.S. soybeans, as the White House has implied, but that's far from a guarantee. U.S. crush margins remain very strong. HRW Wheat, we uh got pretty close to filling that gap, which I've been watching for a while, 609
US Weather
SPEAKER_00and three quarters on the July Kansas City chart. We did see some buyers finally uh emerge yesterday. So things don't look good this morning. They just look uh less bad, I guess.
SPEAKER_01Some areas of the U.S. corn belt received substantial rainfall over the past few days, with parts of Illinois, Indiana, Iowa, and Missouri seeing more than four inches in a short period. These amounts were exceptional. However, most areas saw more modest totals. The U.S. radar is active again this morning, with systems sitting over parts of Kansas, Missouri, Kentucky, Indiana, and Michigan. The forecast offers chances of above-normal rainfall for U.S. corn areas during both the one to seven and eight to fourteen day periods.
SPEAKER_00I saw some very uh ugly pictures of flooded out fields from uh parts of central Illinois and uh would be like north or I'm sorry, central Indiana, a little bit of eastern Iowa. That's the exception, though, and not the rule. But there's some some of those places Mackenzie mentioned that saw four, five, six inches of rain in like a two-day period. That's not necessarily helpful. The radar is active, it's kind of scattered. There's a few different clusters uh over the country this morning. The forecast is still wet, and this is why the market is unable to rally and has been under pressure. It's just a wet forecast on June 9th, and now we're looking out seven days. Some people are looking out a little bit further than that. There's just enough rain in enough places. There will be some areas that miss the rains, there'll be some areas that catch too much. That's that's always the case. There's no such thing as a perfect year, but there's just on a national scale, we don't have a uh weather concern right now. To quantify this a little bit, I told you guys we're gonna do these maps every day, and that's what we're gonna do. Our friends at Crop Profit estimate based on Euromodel data that U.S. corn areas will see 111% of normal rainfall over the next seven days. Of course, there are some have and have nots. Um, during the eight to 14 day period, 127% of normal rainfall for U.S. corn areas. Temperature is gonna stay above normal for another couple of days, and then we back off. Uh, much
Fertilizer Prices Drop
SPEAKER_00cooler temperatures being advertised for the 8 to 14 day period. Uh, corn areas expected to be 2.7 degrees below normal. So there is no U.S. weather threat here whatsoever.
SPEAKER_01U.S. fertilizer prices have fallen to pre-war levels. New Orleans urea prices have declined to 453.50 per short ton, their lowest level since February 6th, down 36% from their mid-April peak. Prices surged at the start of the war when the closure of the Strait of Hormuz disrupted supply, with roughly half of global urea exports coming uh from affected regions. That risk premium is now somewhat unwinding as U.S. Iran peace talks continue. Seasonal demand weakness is adding pressure as U.S. farmers have largely completed spring fertilizer applications, while ample supply is reinforcing the decline. U.S. prices have uh excuse me, U.S. prices are now discounted relative to global markets which could uh support exports.
SPEAKER_00There is some nuance here. So uh urea prices in particular have dropped, but that's at the Gulf. So if you want to drive to the Gulf and buy uh urea off of a barge, yeah, you can buy it a lot cheaper than it used to be. Um I made a better version of that chart because that's how we roll here. Um we are now below the same period in 2022 in terms of urea prices at the Gulf. The retail price, however, as it relates to you guys, and this is what matters more, is still very much elevated. DTN does these uh fertilizer price surveys every week. And as of May 29th, we were still $823 per ton on average retail. It's down from a peak of $866 in late April, early May, but still up sharply from 662 the same week a year ago. So there is there are some seasonals and seasonal tendencies in fertilizer prices. You can kind of see it on this chart. Like maybe there's a seasonal spike or higher levels that occur in like March, April, May, and then we kind of back off into the summer. And then I think you see your fall demand uh start to accelerate in like July or August. But um, in any case, yeah, the stuff has come down a little bit. And if if the golf prices stay uh relatively cheap for a longer period of time, you'll see it reflected in retail. And maybe you're starting to see it, but still awfully, awfully expensive.
SPEAKER_01If 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_00Pete Meyer was on yesterday. We did a rundown of everything grain market related. We talked about talked about weather premium. Pete thinks there's negative weather premium in the market, meaning like the market has a really big crop priced in already given recent price action. I didn't necessarily agree with that, but uh that's what makes the show is some disagreements sometimes. Uh, we talked about the corn market, the funds. Pete uh in his former career was an analyst at SP and he worked with the people that we call the funds. So his insight into their movement and activity is always very interesting. Ryan Moe was on with me, and we talked about HTA's uh basis, uh, some of the corn structured products that are out there, accumulators, and the knockouts that are going on. Um, we talked about a grain marketing horror story on Thursday last week. I covered my corn hedges and I'm sick to my stomach. This is a story about a gentleman, a subscriber of ours, who got out, exited his corn hedges. He was hedged in dece corn uh at very good levels and got out uh way long before before this big sell-off, and he's sick to his stomach because now he's got nothing sold. And I I I kind of turned this into um a story and kind of a lesson, I think, in why making too many decisions per bushel of corn, soybeans, wheat with regard to your marketing is a recipe for disaster. 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. There's no other fee, no other obligation, nobody will try to sell you anything else. If you watch the YouTube show every day or you listen on the podcast, um, you are not hearing the stuff that you need to make decisions. This is a news show. We talk about kind of the flavor of the week, what's in the headlines. But if you're looking for information to actually help you make decisions on the farm, whether it's grain
Brazil/US/Fertilizer
SPEAKER_00marketing, crop insurance, uh, taxes, policy, um, all of that stuff, this is what you need to sign up for and watch. Give that deal a shot this morning, guys.
SPEAKER_01The global fertilizer shock may be narrowing the long-standing competitive gap between Brazil and the U.S. For decades, Brazilian farmers expanded rapidly thanks to cheap land and low input costs, but that model is now under pressure as fertilizer prices have surged due to the conflict over in the Middle East. Brazil relies heavily on imported fertilizer, leaving its farmers much more exposed than U.S. farmers who benefit from the majority of supply being produced domestically. Additionally, many Brazilian farms rely on continuous fertilizer use due to degraded soils, while U.S. farmers can often scale back applications with less impact on yields, even if the conflict ends tomorrow. The damage is already showing as many Brazilian farmers are operating at a loss and taking on rising levels of debt.
SPEAKER_00Yeah, the situation on the farm in Brazil is not very good. And I think you're gonna see perhaps slightly more limited expansion in soybean acreage. You're gonna see consolidation, uh, just like we've seen in the United States over the decades. A lot of smaller farmers are gonna go away, the bigger ones are gonna get bigger. But uh, I don't know that you're gonna see any, I don't know that you're gonna see a drastic impact on production. Um, these are USDA's corn production numbers for uh uh the last 20 years, basically. And Brazil is supposed to be based on USDA estimates for uh current crop, they're gonna be off what a million metric tons, and then maybe we bounce back up to to 139 next year. It's not a big, not a big cut that's being expected. There were some private groups out with some smaller estimates, and maybe maybe they end up being correct. Soybeans, uh, USDA is expecting that next year they increase uh harvested acres by about 4 million or a little bit less than that. So it still seems like it's trending in the direction of like, hey, kind of strong to flattish corn production and and bigger soybean production in Brazil. But we've been told by a lot of different smart people that, you know, this fertilizer
Export Inspections
SPEAKER_00thing is is going to be more of a problem for people overseas. And uh we'll see how that plays out in Brazil. I'm not I'm not seeing it reflected in the production estimates yet, but maybe that's coming.
SPEAKER_01U.S. corn shipments were strong last week, exceeding pre-report expectations. USDA reported that 75 million bushels of corn were inspected for export during the weekending June 4th. The print was up 9.2% compared to the prior week and up 11% versus the same week last year. Soybean shipments were near the lower end of expectations at 15 million bushels. The print was down 21% compared to the previous week and down 29% versus the same week last year. Week shipments for the new marketing year were also near the lower end of expectations at 12 million bushels. The print was down 21% from the previous week and down 1.4% versus the same week last year.
SPEAKER_00That's an excellent uh corn shipment print for the week, almost a record for the week. And uh seasonally, we are nearing the tail end of primetime U.S. corn shipping season. And uh, you typically back off a little bit through uh the last half of June into July and August. We'll see if that's the case again this year. Um, soybean shipments are just kind of declining seasonally as they typically do. We will see a big pickup and increase uh post-U.S. harvest. China has yet to come in and buy any new crop U.S. soybeans, and I think that they will. They just haven't yet.
SPEAKER_01USDA reported multiple flash sales yesterday. US exporters sold 10 million bushels of soybeans to unknown destinations for delivery during the next marketing year. Exporters also sold 4 million bushels of corn to Japan. Um, of that total, 2 million bushels is for delivery during the current marketing year, and the other two million bushels is for delivery during the next marketing year.
SPEAKER_00Good to see the new crop soybean business. We're gonna need it. And I don't know if unknown destinations is China or not. But um, in any case, if if for some reason China doesn't buy the new crop U.S. soybeans, you're gonna see a lot of non-Chinese buyers uh come in and scoop up U.S. soybeans, kind of the way we saw this last year. What did cattle do yesterday?
SPEAKER_01Uh cattle futures opened higher yesterday, but quickly reversed lower after three additional new world screwworm cases were announced. Um, those three cases, one was in a calf and another in a goat down in Texas. And then a third was confirmed in a dog from a New Mexico uh town near the Texas border. But, anyways, I I believe those uh headlines caused futures to back off yesterday. Live cattle were 265 to 493 lower. Feeders saw losses ranging from 237 down to 352.
SPEAKER_00It feels to me, and I'm not a cattle market person, but it feels to me like maybe the news, like the media is making a bigger deal out of this than maybe it is, because the market doesn't seem to be reacting in the way that the headlines would suggest. Does that make sense?
SPEAKER_01Yes, that definitely makes sense. And I mean, after the positive reaction that we saw to the New World Screwworm headlines last week, now we have a negative reaction. So is this a bullish or bearish factor?
SPEAKER_00I don't know. Maybe it's a non factor and they're looking at other things.
SPEAKER_01Yeah, hopefully that'd be great.
SPEAKER_00SP's up 30 points this morning. Uh crude oil is down almost $2 in the July WTI at $89.35. Supposedly, we've got peace talks underway again for the 99th time. We'll see what happens. Uh, have a great day, guys. We'll be back on Wednesday.