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
Rain Makes Grain... Or Does It? Corn Belt Slammed by Severe Weather
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⛈️ SEVERE WEATHER SLAMS THE PLAINS & CORN BELT 🌪️
Powerful storms are sweeping from North Dakota to northern Texas with damaging winds, hail, and tornado threats before pushing east through the Corn Belt! Flood watches are up across KS, MO, IL, IN, KY, and TN, while heat advisories stretch from Minnesota to Texas. 🥵
🌱 SOYBEANS SLIDE FOR 8TH STRAIGHT SESSION 📉
Nov26 beans dropped another 4 cents to $11.32, the lowest since mid-March, pressured by friendly weather, sinking crude, and zero Chinese demand! Soybean oil strength limited the bleeding, while corn finished narrowly mixed and wheat closed mostly higher. 📊
🛢️ OIL TUMBLES DESPITE MIDDLE EAST FIREWORKS 💥
WTI crude crashed 3.4% to $88.20 even after Iran reportedly shot down a US Apache helicopter near the Strait of Hormuz! Traders shrugged off the escalation, focusing instead on Trump's claim that a US-Iran deal is just days away—plus rising oil exports through the waterway! 🚢
🌽 USDA REPORT DAY IS COMING! 📋
The monthly crop production and WASDE report drops Thursday at 11am CST, with traders expecting few changes to US or global ending stocks! Watch for a possible bump in corn exports and keep an eye on soybean demand as China's absence frustrates the trade. 👀
🐛 SCREWWORM FIGHT INTENSIFIES AS CATTLE RALLY 🐂
The USDA unveiled a new fly strain set to DOUBLE sterile fly production, though full capacity won't arrive until next summer as five new cases were confirmed in Texas and New Mexico! Cattle futures didn't flinch—live cattle surged up to $2.89/cwt, and feeders jumped $3.25/cwt—even as Mexico moved to halt most live US animal imports after the close! 💪
Severe Weather
SPEAKER_00Morning, everybody. It's Wednesday, June 10th, 5 23 a.m. Central Time. Happy to report that the grain markets are higher across the board this morning. December corn futures up four and a quarter at 449 and a half. November soybeans up three and a half cents at 11.35 and a half. July Chicago wheat up 10 at 595 and a quarter. July Kansas City wheat up eight and a half cents at 639 and a quarter. September spring wheat up nine and three quarters at 653. We've got some severe weather across the corn belt this week. Why don't we start there?
SPEAKER_01So on Tuesday, the storms extended from North Dakota down to northern Texas, producing strong winds, hail, and tornadoes. The system is expected to move eastward across the corn belt through today and into tomorrow. In addition to severe storms, heavy rainfall is likely, with flood watches already in effect for parts of Kansas, Missouri, Illinois, Indiana, Kentucky, and Tennessee. Meanwhile, heat advisories have been issued from northern Minnesota down to northeast Texas.
SPEAKER_00Here's some stuff from Acuweather regarding forthcoming uh severe weather conditions. Uh severe thunderstorms, likely uh Wednesday afternoon and into this evening across a lot of the Midwest. And uh same for tomorrow, just moves a little bit east. And then you're gonna get kind of a secondary follow-up deal um Saturday and into Saturday night. So severe weather this time of year as it relates to U.S. corn and soybean production, is it bullish or bearish? I'd say it's bearish because it's gonna bring a whole bunch of rain and rain makes grain. I think the crops are not far enough along to be really damaged uh by any sort of severe wind at this point in time. The radar is active this morning, mainly across the state of Minnesota, where there's kind of a nasty band moving across. If you guys have some overnight rainfall totals, drop them in the YouTube comments. The forecast is still wet. Uh, more rain for the cornbelt expected over the next week. Minimal rain uh notably for the Dakotas and also Nebraska. Some of those areas have seen some rain recently, some have not. When you zoom in on the corn belt, yeah, it's a lot of rain in a lot of places. There are some dry pockets that uh could develop over the next seven days. You look at that um, say southwest portion of Minnesota, northwest Iowa, also parts of Ohio. I think they've had enough rain there. Parts of Michigan are going to be a little bit dry. But there is there is nothing bullish about this forecast here on June 10th. To quantify this a little bit, here's some uh stuff from our friends at Crop Profit. We've been doing this every day. U.S. corn areas will see 99% of normal rainfall over the next seven days based on Euromodel data. That's the forecast, eight to 14 day period above normal rainfall, 116% of normal rainfall expected. The reason we are so focused on the U.S. uh corn crop and production this year, of course, is because we are the largest corn producer on the planet, 31.4% of expected global production based on USDA's most recent estimate of this year's crop. And we have no idea what this year's crop is gonna be. We don't know what the acres are. We have no idea what the yield is gonna be. But USDA has got it penciled at uh just just shy of 16 billion bushels, which would actually be down from 17 and change last year. Temperatures over the next seven days, uh, we're gonna see a cool down. We've we've got heat for another few days, and then we're gonna see a cool down, and that uh kind of near normal type
Price Action
SPEAKER_00stuff uh is gonna be seen during the eight to 14 day period, just a couple degrees above normal on average. So I see uh no U.S. weather threat the way that it stands right now.
SPEAKER_01Soybean futures declined for the eighth consecutive session yesterday. The November 26th contract fell about four cents to settle at 1132 per bushel, its lowest level since mid-March. Futures were pressured by a multitude of factors, including favorable weather forecasts, weakening crude oil prices, and a lack of Chinese demand. However, losses were limited due to strength in soybean oil. Meanwhile, corn futures were narrowly mixed and wheat futures closed mostly higher.
SPEAKER_00Here's a decent corn chart. Let's look at some charts. The contract bottomed at 441 on Monday, and that was what I'd call a stop run below the January low. Uh, we broke out below that January low very briefly, probably had a lot of stop orders hit, a lot of uh selling, and then it bounced back. And uh we're trading near 450 this morning, so it looks a little bit better. If we are to see any sort of material recovery, that area from 469 and a quarter up to that trend line, which is going to be somewhere in the 470s, depending on the timing, could be below that if it happens later. That would be an area to consider as a recovery zone. Uh soybean market, next support at 1118. We are higher this morning for the first time in a while. There's still quite a bit of fund length, uh, supposedly, in the soybean market, if you're to pay attention to the private estimates. And I can't help but wonder if the funds and large speculators will choose to hold on to that length into the U.S. growing season. That will depend on a couple of things. Uh, the big one will be weather, and the second big one will be China. I threw in some export sales stuff this morning just because it's kind of a slow news day. So current marketing year, soybean export sales are not good. We're down 18% versus the same period last year, and that's largely due to reduced Chinese purchases. So this is kind of the bearish demand piece, the bullish demand piece is biofuels. And uh that's now uh domestic crush is now a larger portion of our demand for U.S. soybeans than uh exports. China has purchased damn near all of the 12 million metric tons of U.S. soybeans for current marketing year delivery that it uh supposedly promised the White House. We never heard a peep from China about this, but they did come out, come in, and buy almost all of the 12 million metric tons of uh soybeans that the White House discussed for the current marketing year. However, they've bought nothing for new crop and they've got a lot of time to uh make these purchases. The White House says China has committed to 25 million metric tons of U.S. soybean purchases for 26, 27 delivery. So this this crop that's in question here, this is the crop that's in the ground right now. And um China would typically start buying soybeans uh pre pre-harvest. That's what they typically do, but they've been they've been later and later, it seems, in recent years to get going. So it's it's still very possible. And I think I'm not gonna say likely, but it's still very possible that they um hit that target. To look at wheat, uh, we've got a little bit of a bounce going here this morning, and it's long overdue. I I I know we saw
Crude Update
SPEAKER_00some liquidation, and I know U.S. wheat got too expensive on the global export market, but that was a hell of a dive. So to see a little bit of a recovery here is uh definitely a good thing.
SPEAKER_01Oil prices tumbled yesterday as WTI crude fell 3.4% to close at 88.20 per barrel. The decline came despite Iran reportedly shooting down a U.S. Apache helicopter near near the Strait of Hormuz and President Trump vowing to respond. Instead, the market focused on Trump's claim that the U.S. and Iran are within days of reaching a deal to end the conflict. Trump, however, has repeatedly said for weeks that a deal with Tehran was close, yet no agreement has ever materialized. Additional pressure came from Energy Secretary Chris Wright, who indicated that oil exports through uh the strait are increasing and are expected to continue to rise.
SPEAKER_00Oil prices are approaching the lower end of what I'd call the post-Iran trading range, um, the range that we've been trading since the initial attack uh at 88 bucks this morning. You're closer to the lower end than to the upper end. EIA had a short-term energy outlook out yesterday on June 9th. Uh, Brent Crude averaged $107 per barrel in May. That's $10 lower than the April average, the first monthly decline since December. What's the reason for the drop? Prices fell as reports surfaced that the U.S. and Iran were nearing an agreement to extend the ceasefire and to reopen the Strait of Hormuz, though the deal hasn't been finalized. Supply picture is still extremely tight. Middle East producers have cut output by more than 11 million barrels per day in May compared with pre-conflict levels, which has forced large draws on global inventories to meet demand. But EIA's thesis, to make a long story short, their thesis right now, prices have peaked, and EIA sees them easing gradually uh later this year and into 2027. But everything hinges on whether the strait uh reopens and if it happens on schedule. And I don't know what that means. What is the schedule? I mean, I thought the schedule was like we were going to reopen two months ago. You know, but um in any case, I I think that you look at financial markets, you look at how crude's acting, you look at treasuries, you look at the stock market, which has been off, but not off by a ton. I mean, relative to what it could be doing given this uh big spike in inflation and gas prices. It feels to me like the the marketplace is not my opinion, feels to me like the marketplace thinks this thing is gonna end soon, and we'll see.
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_00I did an in-depth corn marketing review yesterday, just focused only on corn. I talked about old crop. If you still have unpriced, well, I ran through all my recommendations, and then I talked about just things in general. So old crop bushels, if if you still have them, what's the game plan? What are some areas to consider? What are some thoughts? Uh, new crop, I ran through everything that I've advised. And when I put out recommendations for grain sales, it's just um here's the price, here's the percentage of expected production, here's the date that we did it. And I list all of them in our email every morning and I run through them in great detail in these uh videos. I talked about the 2027 crop. Maybe the most pressing, one of the more pressing things would be HTAs. If you've got December corn HTAs, I uh made some, I guess I'll call them official recommendations, official slash unofficial, but uh gave it, gave guys the green light on a couple different things. Um, if you feel like grain marketing is too complicated, you should sign up and just watch this video. And if you don't like it, then just cancel the subscription. But you'll like it because it's easy to follow, it's simple. We've done a pretty good job this year. Um, if you want to see that stuff, go to standardgrain.com. You can sign up this morning. This is a $50 per month subscription. You can cancel it anytime. There's no other fee, no other obligation. Nobody will try to sell you anything else. If you are the decision maker in your farm operation, you do the marketing, you buy the crop insurance, you pay the people, um, you deal with all that stuff. This is the stuff that will help you to make decisions. Um, our YouTube show here, our podcast, it's generally useless to you as a farm decision
USDA Preview
SPEAKER_00maker. What you need to see is the premium stuff because that is where uh we steer you in the right direction with regard to all of your farm decisions. Uh, give that deal a shot this morning, guys.
SPEAKER_01The USDA will release its monthly crop production and WASDI report on Thursday morning at 11 Central Time. The agency typically leaves its U.S. production estimates unchanged in June. Traders are expecting no significant changes to either U.S. or global ending stocks on the demand side for U.S. corn. Any changes will likely come in the 25-26 balance sheet, with exports being the most likely area to be revised higher for soybeans. Uh, traders, of course, have grown frustrated with the lack of U.S. soybean purchases by China, which could lead to a downward revision in demand, although it may still be too early for USDA to make that adjustment.
SPEAKER_00Never say never. Anything can happen, but this report is likely to be a snooze fest. The big report is at the end of the month, June 30th, is updated
Screwworm Update
SPEAKER_00acreage numbers, which should be slightly more accurate than March, I would hope. And also grain stocks. That that report on June 30th is a market mover. This one historically is not.
SPEAKER_01The USDA is ramping up its efforts to contain the new world screw worm outbreak. Yesterday, the agency announced it was uh it has developed a new fly strain that is expected to double sterile fly production. However, Ag Secretary Brooke Rollins stated that sufficient production capacity to cover Texas and other potential outbreak areas is unlikely to be in place until next summer. Over the past week, the USDA has confirmed five cases of new world, new world screw worm here in the U.S., uh, four in Texas and one in New Mexico. Despite these developments, the markets have performed quite well. All live and feeder cattle futures contracts closed higher yesterday, with live cattle gaining as much as 289 per hundredweight and feeder cattle rising by up to 325. Following yesterday's close, however, Mexico announced it will halt most imports of live U.S. animals due to the outbreak, although U.S. cattle exports to uh Mexico are limited and largely consist of breeding and dairy cattle rather than feeder cattle.
SPEAKER_00So the screw worm thing, if I understand it correctly, like there's there, it's not just cattle that this can affect. It can affect a whole bunch of different animals, right?
SPEAKER_01Yeah, it can affect all kinds of animals. Actually, the uh the case in New Mexico that was actually found in a dog. So that's even more concerning how much how how it can spread even easy more easily.
SPEAKER_00I had a couple questions come in this week about this, and it would they were not uh cattle questions, they were grain questions. It was like, hey, what if what if screw worm gets into enough animals that it impacts uh feed demand, you know, for things for corn and meal? I I haven't heard that discussed a whole lot, and I don't have a real strong opinion about it, but it seems like it's at least worth noting at this point in time. I don't think there's been a ton of analysis done on it, but yeah.
SPEAKER_01I mean, things would have to get really bad. It would really have to spread far and wide and get pretty deep. But yeah, that could definitely happen if it got out of hand.
SPEAKER_00Yeah, okay. We don't want to go in that direction. Uh we had a flash sale yesterday.
SPEAKER_01We sure did. U.S. exporters sold uh five million bushels of corn to unknown destinations for delivery during the current marketing year.
SPEAKER_00And accumulated corn export sales are up 26% this year compared to the same period last year. And USDA, in their infinite wisdom, is projecting that uh U.S. corn exports will decline in the uh forthcoming marketing year, which um put that under the I'll believe it when I see it category because demand for U.S. corn has been absolutely phenomenal. Uh stocks are under some pressure this morning. The SP is down 57 points. That's about eight tenths of a percentage point. Uh crude oil is down just nine cents in the July WTI 8809 last trade. Have a great day, guys. We'll be back on Thursday.