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
Coward Joe Sells Out + $500M USDA Cash for Fertilizer
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🌱 USDA Fertilizer Investment – USDA is putting $500 million into expanding US fertilizer production, targeting nitrogen projects in Louisiana and Nebraska to cut import reliance. 💰 Don't expect relief at the farm gate anytime soon though — most projects are years from completion, and experts say it's still far short of what's needed for real self-sufficiency.
🌾 Wheat, Corn & Soybeans Rally – Wheat futures extended gains for a second day after USDA pegged this year's harvested wheat acreage at just 32.1 million acres, the smallest since 1877! 📈 Corn and soybeans rode the bullish wave higher too, both notching back-to-back gains.
🔥 Extreme Heat Hits the Corn Belt – Triple-digit heat indexes are scorching the Corn Belt and Plains, adding stress to corn and soybean crops in the driest spots. ⛈️ Some relief is on the way though, with scattered storms and slightly cooler temps expected next week.
⛽ Ethanol Production Climbs – US ethanol output jumped to an eleven-week high, up 2.5% week-over-week and 3.3% year-over-year. 📊 Stocks rose too, and margins across the Corn Belt remain solidly positive.
🛢️ Strait of Hormuz Oil Flows Rebound – Oil shipments through the Strait of Hormuz are nearing pre-war levels, backed by US military support and alternative export routes. 🕊️ Trump says peace talks with Iran in Qatar are going well, which helped push oil prices lower.
📱 Robinhood Launches 24/7 Futures in Europe – Robinhood is rolling out round-the-clock perpetual futures trading in Europe, covering gold, silver, crude oil, currencies, and ETFs with up to 10x leverage. ⚠️ Ag commodities aren't included yet, but the move fuels concerns that 24/7 trading could eventually reshape the grain markets too.
Joe Sells Out
SPEAKER_02Morning guys. It's Thursday, July 2nd, 5 23 a.m. Central Time. Grain markets are mixed to hire this morning. Matt Bennett is here. Matt, good morning. Morning, Joe. Man, we have some news for the people, and our premium subs already know this, but I'm going to tell you the news. I'm pretty straight and to the point. Here's the news Standard Grain, the subscription and information business that I personally have spent years and countless hours to build, is now a wholly owned subsidiary of the business owned by you, Ryan Split, and some other partners, Ag Market. You guys own what used to be my business. Interesting stuff, right? Um, full disclosure, since I've always been very transparent with you guys, and I'm going to be transparent with the public crowd here. This deal makes me a part owner of Ag Market. I do still have a very significant stake in the business, just in a different way. For the guy, most of the people watching are not paid subscribers, but we felt the need to just address the public. How do you feel about the whole thing?
SPEAKER_01Well, I mean, I think it's great. You know, whenever I look at um what you uh McKinsey, um you you two get up every morning to do. Obviously, I get on with you, uh, but clearly you're doing a lot to help bring information to the grower. You know, we've done a lot to bring information to the grower over the years, but you guys have figured out a way to get it to a heck of a lot more people, and it's been great stuff. And so obviously we've partnered. I mean, shoot, we've known each other for quite some time, but my my thought is that uh it takes a little bit of load off you guys, you know, to where you can have a life. And uh we've got a pretty good little team, you know, put together to help in a partnership role. So I just think there's a lot of great things we can do to help you you guys build it out without uh killing yourselves.
SPEAKER_02To give a quick explanation of of why this all went down, um managing the business on my own, the business part of the business paired with daily content creation, which is a grind, man. We produce 10 videos a week. We do the the daily podcast public show, plus we do a premium show every single day. It's it's a lot, man. It's a lot of work. And if you guys have never done content creation, do it for a week and you'll find out how hard it is. It's it's a ton of work. So for me, it had just become kind of an overload situation where I thought about a lot of different options and uh partnering with Matt and Brian and their group, people that I've known for years, trusted for years. It it really made sense for me. So um I think it's gonna make sense for you too, Matt. I think it's gonna work out really well in terms of the day-to-day stuff, guys. I'm still gonna be here doing the podcast every day. McKenzie's gonna be here doing the podcast every day. I'm gonna get a little bit more vacation time, but other than that, I mean, not a whole lot's gonna change. But we felt uh we owed you guys kind of an explainer and an explanation. I think there's gonna be like a press release later today, right?
SPEAKER_01Yeah, there is. And uh just so everyone knows, I mean, like you said, you guys will be here every day. But essentially, um, like you said, you're gonna be coming a part of our team. Kenzie's gonna become a part of our team. Uh, we're all gonna be one big happy family.
SPEAKER_02So uh it'll be fun. Uh, premium subscribers, we addressed all of this in yesterday's uh premium video, but um, you don't need to do anything. Your credit card information, email addresses, text messages, it's all gonna stay the same. You don't need to do anything. One thing I want to be very clear about for uh both our public crowd and for the paid crowd, and this is we have this in writing, Matt. This is part of the deal. This deal gives me complete and total editorial control and autonomy. Nobody's ever gonna tell me what to say. If I was ever lying about anything here, guys, you would know it because I'm a terrible liar. I told the premium crowd that yesterday. So that's the story. Um, if you guys have questions or comments, I mean,
$500mil for Fertilizer
SPEAKER_02I don't know. Do I even care what the public crowd thinks? I don't know. But um, premium subs, feel free to text or email me. Okay, let's get into the show.
SPEAKER_00So the USDA is planning to invest $500 million to expand U.S. fertilizer production in an effort to reduce reliance on imports and help lower fertilizer prices. The funding will support new and existing fertilizer projects that are ready to move forward quickly. While the investment is expected to increase fertilizer production over time, farmers are unlikely to see lower prices in uh in the near term because many of the projects are still years away from completion. Earlier this week, President Trump also temporarily suspended duties on Moroccan phosphate fertilizer imports, a move the USDA estimates could reduce phosphate fertilizer prices by as much as 22%.
SPEAKER_02Matt, from a farmer boots on the ground standpoint, fertilizer is still very expensive, still a big-time obstacle, correct?
SPEAKER_01That's correct. You know, I know you did uh some stuff on the premium with uh uh Chris and Shay, but you know, just uh I got prices here this week, you know, and I just ran the math on it. And you know, if a person did like a 200, 200 DAP and potash uh ratio, which is something a lot of folks do, uh it's just a nice round number, but that's gonna run you 150 bucks an acre plus. And then, you know, you throw in anhydris. And if you're a typical producer and you don't have uh an anhydris bottle on your farm, you know, your full service price is gonna run 850 or better uh at this stage of the game. And so you're gonna have 250 bucks an acre wrapped up in fertilizer alone. This type of move is great, but it's not for 2027 by any means. I mean, it's gonna take a little while until this thing kind of helps uh any sort of a grow or get any relief whatsoever, in my opinion.
SPEAKER_02Okay, so our friend Josh Linville at Stonex had some pretty strong opinions on this. I asked him about it yesterday. This is what he said about this $500 million investment from USDA. Unfortunately, like the last $500 million promised to the fertilizer industry, likely this will not do too much to move the needle. The U.S.'s biggest fertilizer need that it can cover itself is nitrogen. For fertilizer year 2026 ended yesterday. Our forecast showed a need for 5.1 million tons of urea to cover demand. If we truly wanted to become more self-sufficient as a North American marketplace, we would invest in nitrogen production. However, a world-scale facility would cost somewhere in the $4 to $5 billion with a B dollar range. Unfortunately, even if they gave every dollar to one single entity with the intention of building nitrogen production, this would not be enough to cover the initial margin required to get the project started with the money likely to be spread out over several companies. I'm afraid it will not do too much to move us towards self-sufficiency. So, hey, you know, I applaud the effort. Some of the dollars, as government dollars always are, probably get uh call it misdirected. But I don't think this is gonna bring per uh prices down anytime soon, Matt.
SPEAKER_01No, not at all. I mean, there's no question about it. It and I'm glad Josh put uh I mean, I I wouldn't have even had an idea what it would cost to build a facility like that.
SPEAKER_02Me either, buddy.
SPEAKER_01That's why I think 500 million sounded uh I don't know, sounded pretty shy.
SPEAKER_02Is that a lot of money these days? I mean, in the in the era of uh the money printer. I don't know that it is.
SPEAKER_01I don't know that it is either. And the thing is, when you start doing these government projects, you're doing prevailing wage on everything.
Grain Market Pop
SPEAKER_01I mean, everything's gonna be overinflated on what it's gonna cost you to build anything. So I don't know. All right, let's go to price action.
SPEAKER_00Wheat Futures extended their rally on Wednesday with the July 26 Chicago wheat contract climbing roughly 11 cents to settle at 592 per bushel, while the July 26 Kansas City wheat contract rose about 12 cents to close around 623 per bushel. The second consecutive day of gains was fueled by Tuesday's USDA friendly USDA report. Corn Futures also posted their second straight day of gains, also supported by the USDA report, with the December 26th contract rising about six cents to settle near 442 per bushel. Soybeans followed wheat and corn higher as the November 26th contract gained roughly six cents to close near 1149 per bushel.
SPEAKER_02All right, Matthew, we've had a nice little uh pop, we'll call it in the corn market since Tuesday's USDA report, which I'd call neutral to friendly. The stacks number was a little bit friendly, acreage was neutral, but the report's behind us, and I think that's a good thing.
SPEAKER_01Oh, yeah, it's absolutely a good thing. You're gonna trade weather from here on out. You know, that's a mixed bag. I mean, you look at uh again, crop condition ratings. I think you and I both have a a similar distaste for those. But uh, if you benchmark last year versus this year, you would assume, you know, that this crop isn't doing quite as good to get started. We know there's been a lot of extremes. Uh, we know there's been significant moisture um excess, you know, for a lot of folks. And so, you know, you look at this corn market and you've got to think that maybe you've put a little bit of a short-term low in place for now. I do think there's a, oh, I don't know, uh, some sort of a uh psychological barrier that you're not gonna move significantly lower when you've got ECO, SEO, ARC, PLC. Uh there's a there's a lot of reasons why grower's not gonna get real aggressive selling down at $4, for instance, if it would move that low. So I kind of feel like this market should be a little bit supported for the time being. It'd be interesting to see how we get through pollination, how long this heat sticks around.
SPEAKER_02We talked about this, or at least I mentioned it in the uh premium video that we did yesterday. But you look at this corn chart and you look at that rally in particular that that was like, you know, in the initial onset of the thing in the Middle East, late February into March, and then we uh rallied again in April, May. I feel like the large speculator was kind of chasing a headline that did not really come to fruition. Like crew never went to 200 bucks, right? And now you're back below 70. They were chasing an inflation trade that uh maybe has has passed us now. And I feel like the liquidation event and the fact that they were actually starting to build a short was it was just maybe a little premature. I mean, especially in light of some of the weather events we're gonna get to in a second.
SPEAKER_01Right. And and whenever you look at, for instance, Joe, you take 100 million out of the mix. That's not huge. We talked about it on premium the other day, but 100 million out of the mix, if you're gonna throw that in the balance sheet, which you make the assumption it's gonna make its way there, you know, you're gonna take old crop down, you're gonna take new crop down, you take new crop down to 1.8, essentially. And what do you what's the 1.8 billion on new crop mean? Well, what it is, you know, is it's essentially what we're already looking at for acres, first of all, and for yield being, I think 183. Uh, but more importantly, Joe, they slashed the heck out of demand in the May uh WASDI. Why did they do that? Because that's their protocol. Whenever they take product uh production down, they take demand down. It's just what they've always done. It's not like they were trying to cook the books, it's just they were saying, hey, if production is going to be down, their assumption, if you will, is that corn is gonna go up somewhat, it will ration demand and you'll pull back on demand. Uh, we're not rationing demand right now. So not at all. Yeah. So the long deal here for corn, on down the road at some point, you've got to assume if we don't raise a big crop, you're doing three and a half million acres less than a year ago, and you're boiling through corn demand like it's going out of style. I'll tell you what, you could get that uh new crop balance sheet pretty snug uh before it's all said and done.
SPEAKER_02I think the sell-off was premature. Matt, cash corn in the Western corn belt's still like in the low threes. It's outrageously cheap. Um, no beans look better by comparison, much better. You go up and take out that trend line in the 1160s, and uh it could be game on. Weather premium. I think there's still some weather premium here, Matt. I don't think this this it's not trading like the corn market. The corn market's trading like you got a made crop almost. Whereas in beans, you're not there. I think people are optimistic about China.
SPEAKER_01Yeah, I think they're optimistic about China. Obviously, you've got good crush demand. It wasn't quite as good as what they were expecting for this last month, and actually uh adjusted uh April a little bit lower. But regardless, crush has been fantastic, it's been way better than a year ago every single month. The other thing about beans, you know, and I don't know that this is necessarily in the market yet, but beans don't like wet feet. And I'll tell you what, there's a lot of punk beans around the corn belt. Can they come out of it and make a good crop? Absolutely. It's not rated that great of a crop. Uh, a big reason for that is you've got a ton of yellow beans. And so, you know, I think the verdict's out on this bean crop right now. I mean, obviously it's an August crop, we know that, but I don't think it got the kind of start that you'd want to see if you were going to see a mid-50s type crop. That's just my opinion.
SPEAKER_02Kansas City wheat, I think, given the acreage number you saw on Tuesday, could probably be acting better. I mean, you pair that with the I with the fact that the HRW crop was just garbage. Um, uh this this could be acting better. I'm hoping we can uh start to climb here a little bit.
SPEAKER_01Yeah, I mean, you would hope so. I mean, there's been talk about how hot they are in Europe. I mean, uh clearly they raise a fair amount of wheat. Uh it's definitely a topic. Uh, but wheat's just been a dog for so long. And you've got to hope that you can climb out. You know, as you're obviously uh more than halfway through harvest, you know, there's a chance you could kind of see this market actually take hold. It'd be nice to close above these moving averages and take off
Joe is Worried About the Heat
SPEAKER_01and go, but I'm not gonna be counting on anything.
SPEAKER_02Okay, let's get to U.S. weather. A lot of people are not concerned about the heat. I have some concerns that uh we'll get to.
SPEAKER_00Extreme heat continues to blanket the corn belt in the plains, with temperatures climbing into the upper 90s and triple digits on Wednesday, and heat index values exceeding 100 degrees Fahrenheit in many areas. The hot, humid conditions are increasing stress on corn and soybean crops in areas that have received minimal rainfall. However, a large portion of the corn belt has received precipitation along with cool temperatures recently, limiting widespread concerns. Scattered thumb, scattered thunderstorms are expected to develop along the northern and western regions of the corn belt, bringing some relief to the heat. Uh, the heat is forecast to ease somewhat next week, although temperatures will likely remain above normal across much of the region.
SPEAKER_02All right, Matt, let's let's do rainfall and then we'll do some heat stuff. But despite this heat dome, you're still going to see some cornbelt rainfall over the next five days and in a lot of very important areas at that. Iowa, Illinois, southern Minnesota, Indiana. Um, you go out to the uh 10-day forecast and it's widespread cornbelt rain, despite the heat. Uh our friends at Crop Profit estimate that uh over the next seven days, based on Euromodel data, U.S. corn areas will see 136% of normal rainfall. Here's the heat. So 3.2 degrees above normal uh on average over the next seven days. Um let's skip the eight to fourteen. Here's eight to fourteen day uh heat, still 4.1 degrees above normal. This is what's concerning to me. I think the crop personally, I'm no agronomist. I think we can handle 10 days of above normal temperatures, especially coming off the cooler couple of weeks that we had. But here's some of the extended stuff. And and I hate, I hate, hate, hate on extended forecasts like more than anybody. But I mean, this is what's out there. This is week three. So out past that 14-day period. Still talking 3.2 degrees above normal for the corn belt uh on average during that week. And then week four is more of the same, four degrees above normal expected. I know you can take your long-term forecast and throw them in the trash. That's what I always say. But um I would think, Matt, if you run into an entire month of July that's three to four degrees above normal in the corn belt, that's that's gonna ding the corn yield, isn't it?
SPEAKER_01Oh, yeah. I mean, the second biggest indicator of corn yield is heat in July. Obviously, precipitation is number one. You know, a lot of people will argue, I mean, this is a very important time, obviously, for uh corn over the next uh two weeks. Most of the corn in the U.S. will be pollinated uh two weeks from now. Uh, and so you don't want excessive heat. Now, the nice thing is a lot of us have moisture to go along with the heat. We should be okay. The problem is once you get on out past pollination, if, and I'm with you, I hate extended forecasts, but if you would stay hot through the whole month of July, one of the biggest things that can wreck a corn crop, you know, is hot nights if you don't give that chance, uh, that corn plant a chance to cool off. I mean, that's part of the reason why some of these guys, like for instance, in Panhandle, Texas, I've met guys that raise 300 bushel corn on pivots. It's because that corn's able to cool down overnight and it's able to rest. If you can't give it a chance to rest, you got some serious issues. So we'll we'll see how this play uh plays out. But certainly the whole month of July being above average temperature is not really what you want to see.
SPEAKER_02Yeah, I'm not telling, I'm not uh telling you guys that those long-term forecasts are reality. I think what I am telling you is that hey, if I'm a big money manager, Matt, I've got a book of corn positions and
Crude / Strait
SPEAKER_02I'm looking at that. I don't know that I want to be short a lot of corn. Like just personally, no. Okay, let's go to uh crude oil.
SPEAKER_00So, with support from the U.S. military, oil shipments through the Strait of Hormuz have climbed to about 10 million barrels per day, combined with another 5 million barrels per day moving through alternative export routes. Total flows are nearing pre-war levels. Future traffic through the waterway will depend on the outcome of ongoing peace talks. The U.S. is pushing for a long-term agreement that guarantees free commercial transit and opposes any Iranian proposal to impose tolls or transit fees. President Trump on uh Wednesday said that peace talks are progressing well, helping push oil prices lower.
SPEAKER_02Yeah, so there's increased crude oil traffic through the strait. Crude prices have dropped basically back to pre-war levels. And I and as I alluded to in the in the corn market section, Matt, I don't think this this was helpful to the uh price action in corn. I mean, I know it's a seasonal sell-off. You you tend to sell off, you know, in June or July and in corn prices, but uh I think this kind of exacerbated that sell-off.
SPEAKER_01Oh, absolutely. I mean, we're trading energy, we know that. And anytime you see the energy markets get smoked, I mean, it's gonna be really tough for the corn market to swim up current there. So uh yeah, I couldn't agree with you more there.
SPEAKER_02These are some of the uh crude oil stocks charts, and the SPR is the lowest it's been in years. Um, stocks at Cushing, the lowest it's been in years, but that's uh apparently old
Ethanol Production and 45Z
SPEAKER_02news now. And the new news is that the strait is reopened and oil is flowing, and the trade fully expects those numbers to recover.
SPEAKER_00U.S. ethanol production rose to an 11-week high last week. Weekly output was reported at 1.12 million barrels per day, up 2.5% compared to the prior week and up 3.3% versus the same week last year. Ethanol stocks climbed to a five-week high at 24.69 million barrels. The print was up slightly compared to the previous week and up 1.2% versus the same week last year. According to Reuters, Reuters data, U.S. ethanol margins range from 20 cents to 40 cents positive across the corn belt.
SPEAKER_02All right, Matt. So ethanol production has been very strong. We we grind corn for the most part at capacity in the United States for the most part. There's always downtime maintenance and that sort of thing. You'll run into different weather events. But uh, here's my question. We've got some 45Z stuff that's been out. And it would appear to me, based on what I've seen and the numbers that I've seen, the projections, this is gonna be a big time positive. Lots of money out there in tax credits for the ethanol producer. Do we get to a point where we're actually grinding more corn for ethanol in a in a substantial way because uh the plants are making so much money and we actually could see some additional like ethanol build out and additional capacity. You think we end up there?
SPEAKER_01Well, I mean, the the latter part of what you said is what's gonna have to happen if you're gonna end up grinding more corn. Because as you suggested, I mean, we typically run pretty close to capacity, especially over the last year. You've had a readily available supply of corn. Uh, these guys have been uh uh burning through uh corn uh grind like it's going out of style, you know. And so, yeah, if there's money to be made, uh let's face it, you know, this is a very mature or overmature industry. This it needs this type of news if you're going to keep the industry, oh, I don't know what you would say, in a growth stage or get it back to a growth stage. I think that's the only way you do it. So uh you're gonna have to have some build out. But if there's money to be made there, you can uh rest assured, uh, some shuttered plants that we've seen over the last few years are probably gonna get up and going again, you know, and then uh you you may see a little bit of new build out. Uh, there's a lot of money in that. Uh 45.
SPEAKER_02I'd love to see it. I mean, ethanol's been kind of a mature industry in the United States for a while now. We haven't increased capacity a whole lot, we increase efficiency and that sort of thing. But uh, we'd love to see some additional build out. I hope this all works out. I've told you guys my my about my skepticism toward 45Z and how it's going to relate
Robinhood and Perp Futures, 24/7
SPEAKER_02to the farmer, but as it relates to ethanol production and actual demand for corn, maybe in a roundabout way, hope hopefully will be very much positive. Yeah.
SPEAKER_00Robin Hood is bringing 24-7 commodity futures trading to Europe. The trading platform is launching perpetual futures tied to commodities, currencies, and ETFs. Commodities are a major focus of the rollout with traders now able to buy perpetual futures on gold, silver, and crude oil. While agricultural commodities aren't part of the launch, the move highlights the growing shift toward 24-7 trading and raises concerns. It could eventually expand to the grain markets.
SPEAKER_02Matt, would you like to hedge your corn production on Robinhood in Europe? Not really. So there's a big fight going on. CME sued CFTC over these perpetual futures. And it was Calci and I think a couple of others that want to launch perpetual futures contracts, which is just like an open-ended futures contract that never expires. They're doing it in crypto right now. They have a Bitcoin perpetual futures contract. These are really swaps, is what they are. And that's what CME is arguing. But uh the flip side of the argument would be that hey, this is this is the United States, man, capitalism and competition, you know, and there's some competition coming from Calci and from Robin Hood. And Robin Hood is already an FCM. Um I don't know if they do grains, but they do like crude oil and they do the SP 500 futures and all that sort of stuff. My personal thought is, man, we're in we're in a world of of AI and algorithms and um, you know, betting markets. I think this stuff's all going 24-7 eventually. CME's gonna fight it till the death, but man, I feel like that's the way of the future.
SPEAKER_01No, I mean, I don't think there's any question about it. Uh I just think it, I mean, clearly it's tough enough. Uh, you know, with the onset overnight markets many years ago, of course, everybody thought, oh, it's gonna change our lives, it's gonna make it to where we're up all night. Uh, not necessarily. I do think there's some people that trade grain, if you will, or merchandisers that maybe it uh disrupted their sleep schedule a little bit more than some of us. But uh bottom line is 24-hour trading is probably going to be here before too long in everything, and it's gonna be here to stay.
SPEAKER_02Yeah. Uh McKenzie, what did cattle do yesterday?
SPEAKER_00Cattle futures were mixed, live cattle were 60 cents lower to 50 cents higher, and feeders were 45 cents lower to a buck oh seven higher.
SPEAKER_01Quick cattle market thoughts, Matt. Yeah, I mean, you know, I heard about some two-weight, so like uh young, uh uh seven bucks for two-weight cattle locally. I don't know what it is out where you're at, uh, Kinzie, but I I know clearly this cash market is still very much uh just on fire, if you will.
SPEAKER_00Yeah, it's it's insane. Uh, we've had baby calves out here in sale barns. I've seen them sell for anywhere from twelve hundred to fifteen hundred dollars ahead. Absolutely insane.
SPEAKER_02It's not big money. Um, outside markets, not overly exciting this morning, guys. The SP is off three points. Crude oil's down 92 cents in the August WTI 6766. Uh, grain markets are closed tomorrow in observance of the Independence Day holiday. So we will be off. Everybody have a wonderful and safe 4th of July. Matt, thanks for joining us. We'll be back on Monday.