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
Did Corn Prices Just Bottom on a "Friendly" USDA Report? + Morocco Phosphate Duties Dropped
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🌽 Corn futures rallied Tuesday after USDA pegged June 1 stocks at 5.3 billion bushels, below every trade estimate, while 2026 planted acreage came in at 95.34 million acres. The Dec26 contract gained 6 cents to close at $4.36/bushel, while soybean stocks and acreage came in above expectations and wheat acreage fell well short of forecasts.
🌍 President Trump has temporarily suspended duties on Moroccan phosphate fertilizer for up to eight months to ease shortages tied to the US-Iran war. The DOJ continues investigating major fertilizer companies over antitrust concerns, even as the administration works to boost domestic production long-term.
🔥 A brutal heat dome is gripping the Corn Belt and Plains, with heat index values hitting 100–110°F across Iowa, Nebraska, Missouri, Illinois, and Kansas. Crop stress is worst in the western Corn Belt and Plains, while livestock producers watch for heat stress in fat cattle.
💵 The Brazilian Real posted its worst month of 2026 in June, falling about 2.7% on a stronger US dollar and rate expectations. Inflation worries, falling oil prices, and election uncertainty added pressure, though some analysts see room for a rebound.
🌾 USDA reported a flash sale of 100,000mt of hard red spring wheat to Nigeria for the 2026/2027 marketing year. Total wheat sales remain down 17% versus last year.
🥩 CME is launching new beef trim futures covering 50% and 90% lean beef trimmings starting July 20, pending approval. The contracts won't change cattle or beef supplies but aim to improve price risk management and transparency across the supply chain.
USDA Report
SPEAKER_00Morning, guys. It's Wednesday, July 1st, 5 34 a.m. Central Time. We're getting started late, McKenzie, because of my own technical errors. It's all my fault. I'm sorry. Uh December corn futures up one and a half at 437 and a half. Not a terrible performance yesterday following the USDA report. November soybeans down a quarter cent at 1143 and a half. September Chicago wheat up two and a half at 591 and three quarters. September Kansas City wheat up three and three quarters at 629. September spring wheat up four cents at 610.5. Okay, let's start off with the report.
SPEAKER_01So the USDA estimated June 1st corn stocks at 5.3 billion bushels, which was below every trade estimate. USDA pegged 2026 U.S. corn acreage at 95.34 million, down 3.5% from last year, but slightly above the average trade estimate. The report sent corn futures higher, with the December 26th contract gaining six cents to close at 436 per bushel. Meanwhile, soybean stocks were pegged at 1.06 billion bushels, exceeding the average trade estimate, while planted soybean acreage increased from March and is projected to be 5.1% higher than last year. Wheat stocks came in slightly below expectations, and planted wheat acreage was well below analyst forecasts.
SPEAKER_00Let's do acreage first. This is just general chart of principal crop acres. This is what we uh plant or planted in the United States this year. Corn is still king as it usually is: 95.3 million acres, soybeans second, 85.4 million acres. Then you've got hay, winter wheat, cotton, spring wheat, sorghum, canola, barley. The list kind of goes on here. Corn acres down from last year, pretty much everywhere across the corn belt. And this is mainly because we planted so many acres last year. And I think going into uh the growing season, the soybean market was perhaps just slightly better relative to corn than it was last year. It still wasn't good, and neither of these crops make any money. But there was a little bit of a shift away from corn and into soybeans. I don't know necessarily that it had a whole lot to do with the fertilizer situation, which was a it's an issue that we've been talking about for months now. Um, the the initial March uh acreage survey was taken during the first couple weeks of March, like right at the onset of the Iran conflict. And yesterday's number was identical to the March number for the most part. So there wasn't any like big drop in corn acreage following the spike in fertilizer prices, the way that I see it. This was more just a crop rotation and uh price sort of thing. Soybean acres expanded uh just about everywhere versus last year, as was expected. So if you go back to the uh to the average trade guesses on corn and soybeans, the trade did a pretty damn good job of uh predicting what the government was gonna say. Uh Brian Split was on Friday and uh they nailed the number also. They said 95.3, and I told them he was boring, but uh boring was right uh this time around. One little surprise here uh winter wheat acres came in well below expectations. Uh the wheat market was able to find some sort of bottom on that. We'll talk about price action here in a second. Let's go to grain stocks. The corn number was friendly at 5.295 billion bushels. It was more than 100 million bushels below the average trade, yes. Now, big picture, that's still a very large corn stocks number. That that June 1st corn stocks number in the United States is up 14% versus last year. On farm corn stocks as of June 1st, up 15.8%, damn near 3 billion bushels on the farm as of June 1st, off farm up almost 12%. The uh state by state breakdown would indicate kind of what I said yesterday. Hey, the corn is there and it's in the Western corn belt. Minnesota corn stocks up 20% versus last year, South Dakota up 15.8%, whereas Illinois is up only like 7%, Iowa's up only 9%. So the um what USDA is telling us here about corn stocks and location very much jives with what the basis and cash market has been telling us that the corn is is here, it's more so in the western corn belt than in the east. Um, fortunately for our crowd, we talked about corn stocks in 1988 yesterday, McKenzie. U.S. corn stocks as of June 1st were not uh larger than 1988. They were still very large at 5.29 billion bushels. Our crowd is very smart. And when I put up that chart of 19, uh, the Bloomberg chart, and it was like corn stocks could be as big as 1988. People are like, wait a minute, Joe, that's not the whole story. No, it's not the whole story. It's a 15-minute show. I'm not gonna give you the whole story every single day. I can't I can't talk about every single thing every single day, but I think that this is people what people wanted to see. They wanted to see ending stocks to use ratio. And no, we're not anywhere near the 1980s in terms of the supply and demand situation. Um, it's interesting to note that um corn stocks, just the amount of corn sitting around the country is very similar to 1988, but no, uh, we're not there in terms of supply and demand and that sort of thing. More recently, if you look at ending stocks to use ratio, we're talking 13% at the end of the current marketing year, which ends on August 31st. And 13% is uh in line with the bear market years from 2014 through 2019 and not in line with the bull market years of 2021 and 2022. So that explains current prices to some degree. But I figured I'd throw that in yesterday because we had a few comments about it uh yesterday. Soybean stocks as of June 1st up 5.3% nationally on the farm down 10.9%. And that also jives with what I've kind of uh be of understood about cash soybean movement. I think a lot of farmers sold soybeans early and held on to corn, and this would uh tell us as much prices yesterday acted well. The corn market bottomed, D's corn, at 425 and three quarters um before the report, and then we rallied back. It wasn't like a reversal day necessary. You could call it a reversal, but whatever. This is all this is all just terms that people use. But we we were able to reject the lows and trade higher. Now you're gonna have to get back up and trade above that 449 and a half where we peaked there in mid-June. I think it's good that this report's out of the way and that it wasn't super bearish. I think that some of the selling interest could perhaps disappear. I think we're gonna be on to trading weather and demand and that sort of thing. I'm happy to have this one behind us. The soybean market has acted well. We're still very much range bound. Um, there was nothing super bullish or super bearish in the report. The wheat market, all three classes of exchange traded U.S. week posted fresh uh multi-month, I guess you could say two or three month lows yesterday, and then finished the day higher. In the case of this September HRW contract, a little bit of trend resistance, maybe around 639
Phosphate Duties Suspended
SPEAKER_00today. But uh that was a good look for the markets yesterday, and we hope that we can build on that uh today and through the remainder of a holiday shortened week.
SPEAKER_01President Trump has temporarily suspended duties on Moroccan phosphate fertilizer to help ease fertilizer fertilizer shortages caused by disruptions from the US-Iran war. The duties will remain suspended for up to eight months or until the fertilizer emergency declared by Trump is lifted. The administration is also working with the fertilizer industry to expand domestic production. But those efforts, of course, will take time, making Moroccan imports an important short-term source of supply. Meanwhile, the DOJ continues to investigate several major fertilizer companies over potential antitrust violations.
SPEAKER_00I'm no fertilizer expert, but if this chart is correct, the duties went on sometime in 2020, I guess. And um maybe I'm wrong about that. I didn't do my full research this morning. I was tied up with USDA business, but we haven't um imported anything from Morocco the way that it looks since 2020. Um, this is a chart with some annotations from Bloomberg that I think is decent. So yeah, the phosphate duty order issued in in 2020 or early 2021, prices spike. We spiked again in the during the Russia-Ukraine conflict, kind of backed off, and then the Iran conflict begins and we spike again. This is a chart of uh DAP futures at the Gulf, and DAP uh diamonium phosphate is like one of the most widely used phosphate products that farmers use. 745 a ton at the Gulf, still very expensive. Uh, your peak from 2022 was uh just above a thousand dollars. So we haven't seen a ton of relief here. Maybe we'll see it. I'm sure that retail prices are higher than this, of course. I was unable to find any really great retail information. I asked, or I emailed our friend uh Josh Linville about this yesterday. And I said, hey, Josh, you got a couple comments for the podcast. He said, Yeah, here it is. He said, This is a massive win for both U.S. and Canadian farmers who rely on shipments of phosphate from the U.S., but maybe not as much as some expected. From a purely economic point of view, this does very little with NOLA phosphate values being some of the lowest in the world versus major global uh price comparisons. However, we could see an influx of shipments from Morocco as they look to reward the decision by President Trump. While far from the silver bullet, some have been expecting any help in this environment is welcome news. And yes, any help is welcome. This is one of Josh's charts. This is NOLA DAP and new crop corn, the ratio, and essentially DAP at the Gulf is as expensive relative to new crop corn as it's ever been uh within a within a margin. So um hopefully some relief on the way. Um, on a side note, we've got a really good premium video with Chris Barron that's gonna be out uh for our premium crowd on Thursday. Uh tomorrow, he did 2025 corn and soybean budgets, a review, kind of a real-time look at 2026 corn and soybean budgets, and an early preview of what Chris knows about 2027
Heat
SPEAKER_00corn and soybean budgets. I can tell you that it's uh it's not good and it wasn't a fun video for me to make, but uh, we kind of tell you how it is.
SPEAKER_01Extreme heat continues to grip the plains and the cornbelt. A widespread heat dome that settled over the cornbelt and eastern plains earlier this week is expected to linger through the end of the week. Heat index values of 100 to 110 degrees Fahrenheit were common across Iowa, Nebraska, Missouri, Illinois, and Kansas on Tuesday. The greatest crop concerns remain in the western cornbelt and plains where rainfall has been limited. Livestock producers are also closely monitoring heat stress in fat cattle. Thunderstorms are expected to develop along the northern and western edge of the heat dome throughout the week, bringing scattered rainfall to parts of the Dakotas, Minnesota, Nebraska, and Iowa.
SPEAKER_00This is an odd situation, Mackenzie. It's July 1st. We've got a heat dome, and I'm not hearing a lot of farmer complaints or concern about this situation at all, which is very rare. And I think the reason for that is what we talked about yesterday, how it's been so cool over the last couple of weeks. I think that the heat is welcome. I wanted to show you guys this. There is a little bit of conflict in the weather models this morning with regard to rainfall, as there always is. But this is the Euro model from our friends at Crop Profit. And the Euro model this morning would indicate that U.S. corn areas will see 138% of their normal rainfall over the next seven days, despite the heat ridge or dome, which is going to be, you can almost see where it's going to be. It's going to be like across the Iowa-Missouri border, and then kind of across like central Illinois and into northern Indiana. That's kind of where the dome is going to be, and that's where the rain is going to be locked out. But then you look at the GFS for that same time period, and you've got actually like above normal rain uh being predicted for places like Illinois and Indiana. So I don't know exactly how crazy this uh ridge is going to be that the in terms of locking out moisture. The heat's going to be there, but um the rainfall and the predictions are variable depending on the model. The GFS has 170% of normal uh corn belt rainfall for the next seven days. And most of that, most of that, that it's skewed because uh places like northern Iowa, southern Minnesota, uh Wisconsin, and a little bit of South Dakota are gonna see the vast majority of that. So that's that's I think why the number is higher. This is the temperatures over the next seven days. U.S. corn area is expected to run 4.7 degrees above normal. Uh rainfall during the 8 to 14 day expected to be pretty much normal based on Euromodel data. Of course, when you get out into the eight to 14 day period, the models are less reliable the further out that you go. Temperatures still expected to stay warm. I just I wonder what an extended uh streak of I know people always comment. Oh, Joe, it's it's the summer, it's gonna be hot. Yeah, but but relative to normal, that those statistics they do matter. And um, when the growing season is all said and done, I wouldn't be surprised if they had some sort of impact. Um, but you guys tell me what you think.
SPEAKER_01If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers why report day is a great day to be a subscriber?
SPEAKER_00Great day. Pete Meyer uh jumped on with me at about 11.02 a.m. Central Time yesterday. And USDA, again, was late with the numbers. Their website didn't update. I have other ways of getting the numbers, but um, I'm not thrilled with what with what's happening there. And they're probably not thrilled either. You know, USDA's staff has been gutted, uh, their budgets have been gutted. NAS doesn't have what it used to have. It's not, it's not their fault. Um, but in any case, we we talked about the report in a quick five-minute video. Pete did a very good job of helping me to explain uh what just came out. The video that we did with Paul Nefer earlier this week is something you absolutely need to watch. If you're a corn grower, if you're in the ethanol business, if you're involved in U.S. agriculture in any way, shape, or form, uh, this 45Z stuff is something that you absolutely need to be aware of. 45Z is worth what per bushel? Paul ran through some very specific, like county-based examples of what the tax credit, which the ethanol plants will receive, the the fuel producers will receive, what's it going to be worth? Will it be passed on to farmers? We don't know. Paul has some ideas on that, and I and I tend to agree with what he said, but I'm I'm a little bit more skeptical than Paul, and it's just a matter of opinion at this point. I'm probably a little bit more skeptical on this whole thing than than most people. I just I don't see a world in which the ethanol plant is paying the corn grower a ton of money for low CI corn over an extended period. I think it I think it'll happen for a couple of years, and then when everybody that that lives near an ethanol plant converts to low CI, why would they pay you anymore? But I think for a couple of years it could be good. In any case, Paul laid out some really great details. 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 tried to sell you anything else. Matt Bennett will be on with me today for a 20 questions mailbag segment. We had a whole bunch of uh questions that came in from our premium subscribers following yesterday's USD report. So this will be super timely uh grain market info, grain marketing
Brazil Currency
SPEAKER_00related info, uh, questions that actually come from real farmers. This is this the stuff that you guys want to know. If you're the decision maker in your farm operation, sign up this morning. We will help you to make decisions.
SPEAKER_01The Brazilian Real posted its worst month of 2026 in June, falling about 2.7% as a stronger US dollar and expectations for higher U.S. interest rates weighed on the currency. The combination of factors caused investors to unwind carry trades that had favored the Brazilian currency. Inflation concerns in Brazil also weighed on sentiment, while lower oil prices and political uncertainty ahead of October's election put further pressure on the currency. Nonetheless, some analysts believe that the Real has already priced in much of the negative news, leaving room for a rebound if conditions were to improve.
SPEAKER_00This is a big deal for the uh soybean grower in Brazil, in particular, just the Brazilian farmer. The reality of the situation is that the dollar has been very weak relative to the Brazilian currency up until the last few weeks. You can see just those last like five or six bars on the chart here. Yeah, we've seen some dollar strength versus the uh uh Brazilian currency. Brazilian farmers really prefer to see a weak Brazilian currency and a strong US dollar because X when they export soybeans, they get paid in dollars and then they can turn those dollars into more local currency. So the Brazilian farmer is very much on the struggle bus right now. They're dealing with very high interest rates, they're dealing with currency obstacles. Um, they're in a worse spot than you guys are in. There's gonna
Spring Wheat Flash Sale (Rare)
SPEAKER_00be some bankruptcies in Brazil. There's gonna be a lot of consolidation. Acreage is not gonna decline, but you're gonna see bigger operators get even bigger and some of the smaller ones go away, unfortunately.
SPEAKER_01USDA reported a flash sale of wheat yesterday. U.S. exporters sold four million bushels of hard red spring wheat to Nigeria for delivery during the current marketing year. Accumulated wheat sales are down 17% compared to the same period last year.
SPEAKER_00Very uh rare, I would say, to see a uh spring wheat flash sale. And why didn't they buy more? The stuff's
CME Beef Contracts?
SPEAKER_00dirt cheap. I mean, why not add another zero on that? You know, we could certainly use the demand. Um, CME is doing some new futures contracts, the way it looks.
SPEAKER_01They sure are. The CME is launching new beef trim contracts. The new contract, the new futures contracts will cover 50% lean and 90% lean beef trimmings used to produce hamburgers and other ground beef products. The new contracts will give food companies, meat processors, and other participants in the beef supply chain a better way to manage risk. They will also improve price transparency and contract negotiations. The contracts won't affect cattle or beef supplies, but they do represent an important market infrastructure improvement. Trading is expected to begin on July 20th, pending regulatory approval.
SPEAKER_00Is this necessary? Is this something we need?
SPEAKER_01Uh that's debatable. Like I said, it's not gonna impact fundamentals by any means. It's just it's gonna, there's it's another price management tool, uh, price risk. Um, and obviously it won't be that deep of trading to begin with. I don't know. So will the contract actually stick around? It's again, I don't I don't know how it's all gonna pan out.
SPEAKER_00We'll find out. You know, CME very often experiments uh over the course of history with new futures contracts, and sometimes they work and sometimes they don't. And sometimes they have ones that did work and they don't work anymore. We don't have pork belly futures anymore because the interest just fell off the face of the earth. Some people think feeder cattle futures may go in that direction eventually. Um, I don't know. What did uh cattle prices do yesterday?
SPEAKER_01Uh cattle futures were lower. Live cattle were 58 cents to a buck 22 lower, with the exception of the front month contract, which gained 80 cents. Feeder saw losses ranging from 287 down to 347. Box beef prices were mixed. Choice was up $1.72 at $393.16, while select was down $250 at $371.68.
SPEAKER_00SP is marginally lower this morning, down about 12 points. Uh crude oil is down 63 cents in the August WTI at 68.88, kind of reverting back to pre Middle East conflict territory. Have a great day, guys. We'll be back on Thursday. Quick note uh we are off Friday. The markets are closed for uh the 4th of July, but uh we will be here tomorrow. Have a great day.