SHOCK STUDY: US Farmers are being GOUGED (Even Worse Than We Thought) By Input Suppliers

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Futures and options trading involves risk of loss and is not suitable for everyone.

🌽 US farmers face a competitive disadvantage as a new NCGA study shows they pay significantly more than Brazilian farmers for corn and soybean inputs like seed, fungicides, and insecticides. NCGA is now pushing for greater price transparency to help level the playing field.

🌾 Grain futures pulled back Wednesday as easing heat forecasts and profit-taking sent corn, soybeans, and wheat lower. Forecasts still call for warm, dry conditions ahead, but the worst of the heat dome is now expected to shift west.

🇨🇳 China booked its largest US soybean purchase since November, buying 472,000mt for 2025/2026 and 2026/2027 delivery. Despite the renewed buying, US soybeans still face a pricing disadvantage due to China's added tariff and cheaper Brazilian supplies.

💣 The US resumed military strikes on Iran, hitting 90 targets as President Trump warned of more action and a possible port blockade. Iran has vowed retaliation and threatened to close the Strait of Hormuz, stoking fears over global oil supply.

⛽ US ethanol production slipped last week to 1.09 million barrels per day, with stocks also declining. Corn Belt ethanol margins eased slightly but remain in positive territory.

Transcript

SHOCK Input Study

SPEAKER_01 0:08

Morning guys. It's Thursday, July 9th, 5 23 a.m. Central Time. Grain markets are mixed to lower this morning. December corn futures down five cents at 451 and a quarter. November soybeans down four and three quarters at 11.87 and a half. September Chicago wheat down two and a quarter at 605 and a half. September Kansas City wheat down four cents at 641 and a quarter. September spring wheat up a quarter cent at 631. We're going to talk about price action in a minute, but we've got to lead off today with this national corn growers study, which has been the talk of the town.

SPEAKER_00 0:40

So according to the study, U.S. farmers consistent consistently paid more than Brazilian farmers for corn and soybean inputs between 2023 and 2025, even after accounting for exchange rates. The largest price gaps were in corn seed, fungicides, herbicides, and insecticides. Brazil's wider use of generic products and single active ingredient chemicals helps to keep costs lower while U.S. farmers rely more on more expensive premium products. NCGA is calling for greater price transparency to help reduce unnecessary costs and improve the competitiveness of U.S. farmers.

SPEAKER_01 1:16

Mackenzie, prior to reading this study, if I would have told you Brazilian farmers pay less in inputs, would that have been surprising to you?

SPEAKER_00 1:23

No.

SPEAKER_01 1:23

No, I don't, and I wasn't surprising to me either. And I and I don't think that the viewers and listeners are going to be surprised that things are cheaper. It's just the magnitude, the magnitude of the price differences here is pretty shocking to me when I saw the numbers. So based on the study, which is is national corn growers and also a company called Kinetic uh worked on this. So seed corn in the United States is 68% more expensive than it is in Brazil. Uh fungicide, as it relates to corn, 120% more expensive uh in the U.S. versus Brazil. Herbicides for corn, 119% more expensive than Brazil. Insecticides, 87% more expensive than in Brazil. And soybeans, uh, similar uh but different. Uh soybean seed, 24% more expensive in the U.S. versus Brazil. Soybean fungicides, 133% more expensive in uh the U.S. versus Brazil. Herbicides, 109% more expensive, and insecticides, 31% more expensive. So I think that when you actually put a number on it, it becomes pretty shocking. There's there's a lot of things to discuss here. Premium subs. Uh, I'm gonna tape a video today with Krista Swanson from National Corn Growers who wrote this piece, and we're gonna do a dive into the whole thing. I asked her when I asked her if she could be on the show. She said, Yeah. And I said, Are you comfortable with some criticism of the fertilizer companies? Because that's what this is gonna be. And she said, Yeah, yeah, let's go. So we're taping that today. Uh, premium subs, it's gonna be out tomorrow. Um, I have kind of a list of things that you guys might want to think about or consider as it relates to all this. And I'm certainly not an expert on the difference in production cost between the U.S. and Brazil. I know a lot about how U.S. production costs work. I don't know as much about Brazil. One thing to keep in mind is uh as it relates to corn, I don't know that it's really a level playing field. The national average corn yield in Brazil uh last year was less than 100 bushels per acre. The U.S. national average corn yield last year was 186 bushels per acre. They are yielding drastically, drastically yet less than we are. It's not necessarily because of inputs, though. It's because they plant that second and larger corn crop into very dry conditions. They just corn isn't the priority in Brazil. Soybeans are the priority in Brazil. And soybeans and the soybean costs, I think, is where the playing field is a little bit more level because the yields are almost identical. Brazil was like 53 bushels per acre nationally last year, and so was the United States, very, very similar. So I don't know that cheap inputs are the are the cause or cheaper inputs in Brazil are the cause for the lower yields, but it's something to be considered. Um, Brazil has faster generic approvals, more access to single active ingredient products, and a less consolidated input market than the U.S. Okay, that's those are pretty broad terms. This is one piece that I found to be very interesting. Countervailing duties. Countervailing duties. Listen to this. When a U.S. company feels foreign competitors are selling a farm chemical too cheap, it can petition the government to slap an extra duty or tax on the imported version. That tax makes the cheaper import too expensive to compete. So U.S. farmers end up uh buying the pricier domestic or branded product. National corn growers argues this has happened with phosphate, uh the herbicide 24D, and now glyphosate, with compass companies using this legal tool to knock out cheaper competition rather than actually competing on prices. It's no secret or surprise that the U.S. farmer is getting gouged by the fertilizer companies and the input suppliers. Um it's just now, hey, can we prove it? The uh the DOJ is now investigating this consolidation. There was a criminal antitrust probe opened in March looking at nutrient, mosaic, CF, uh, Coke, and Yara for possible price collusion. That probe was expanded on July 1st. Uh DOJ and FTC are also examining fertilizer exports, uh, fertilizer exports and whether they've been used to restrict domestic supply and keep prices elevated. The USDA leaning in also, uh, we've talked about Steven Baden and he called nutrient and mosaic a duopoly, and uh they're getting some sort of of traction in that sort of investigation. Does it lead to anything? I don't really know. Uh one of the cool graphics was market uh concentration, greater concentration among a small group of large global manufacturers and several U.S. crop protection markets may influence product availability, competition, and pricing. It's just um this is what I thought it was, but

Grain Pullback, Cooler Forecast

SPEAKER_01 5:49

to a much, much greater magnitude. If you guys have thoughts, let me know. Premium subs. We're gonna have a much better and complete story for you in tomorrow's video.

SPEAKER_00 5:57

Grain futures pulled back yesterday as updated weather forecasts eased concerns over extreme heat. The December 26th corn contract fell eight cents to close near 456 per bushel, while the November soybean contract slipped about six cents to settle near 1192 per bushel. Forecasts continue to call for warm, dry conditions across the corn belt in the weeks ahead. But the heat dome that was expected to bring widespread excessive temperatures is now forecast to shift farther west. Wheat features closed lower as well, pressured by weakness in corn and soybeans and the ongoing U.S. winter wheat harvest.

SPEAKER_01 6:33

Okay. Was there really a shift in the weather forecast to cause this uh selling pressure that we saw in corn yesterday and again overnight? Let's take a look. I've got just the heat or or uh temperature maps included here. We're gonna do the Euro, then we're gonna do the GFS. The Euro says, as of this morning, that during the next seven days, U.S. corn areas will be 3.3 degrees above normal on average. And crop profit includes uh in their stuff the daily forecast change. The change here is actually warmer day over day for the Euro one to seven. Okay. Here's Euro eight to 14, 5.8 degrees above normal expected for U.S. corn areas over the next seven days for eight to fourteen. That forecast was 0.2 degrees cooler than the prior day. That's not a material change. Where the material change appeared was in the GFS. So we've got a little bit of a battle between the Euro and the GFS here. The GFS over the next seven days uh says that U.S. corn areas will be 2.3 degrees above normal on average, and that's a difference of 1.4 degrees. That the temperature, the expectation dropped by 1.4 degrees. So you're talking 1.4 degrees cooler than the prior day forecast, even though we're still going to be above average. You go to 8 to 14, and we still we saw something similar, still four degrees above normal in the GFS is what's being projected for U.S. corn areas, but that's three and a half degrees cooler than it was the prior day. So if I had to look at all this just, you know, combining it, I'd say that the GFS for that eight to fourteen was probably way too warm. If it was really like seven and a half degrees warmer than normal, that was probably just an overkill in the forecast. And maybe now the two are lining up because you've got the GFS says, okay, eight to fourteen is going to be four degrees above normal. And then you go back to the Euro and eight to fourteen, five point eight degrees above normal. So it might be call it somewhere in the middle, four or five degrees above normal. Um, in today's premium video, my our friends at Crop Profit have done a ton of like really cool stuff for me. But what they did in for today's premium video is the coolest thing that they've done for me. I've got some really great historical data on overnight temperatures during the month of July and how it correlates to national corn yield. So if you really want to know what the story is with these overnight temperatures in particular and how it has related to national corn yield versus trend in the past, you've got to watch today's premium video. It's gonna be fantastic. Ryan Moe is gonna join me to discuss. We're gonna talk about cash markets and spreads. We're gonna lead off with that piece because I think it's super interesting. Uh precipitation, no matter you look at the euro, you look at the GFS, we're talking below normal rainfall for the corn belt over the next 14 days. The uh euro says uh over the next 14 days, 62% of normal rainfall for U.S. corn areas. The GFS is similar, but but locations are different, 63% of normal rainfall. So I don't know if the if the forecast or the concern regarding heat has really changed here. I get the GFS cooled off, and maybe that's what the trade is looking at, but there might be some other things also. Um here's a D, let's do D's corn first. So you got your correction after a sharp rally. We went up to 465 and three-quarters yesterday. We're down uh closer to 450 this morning. It's been a pretty significant correction. Shift toward a cooler forecast, yeah, maybe for the GFS at least. No confirmation of Chinese buying. So we saw that uh China was confirmed to have purchased some U.S. soybeans. We'll get to that in a second, but there was a lot of chatter about China buying U.S. corn, and we've seen no confirmation there. So maybe you've got kind of like a uh disappointment trade going on in corn here where it's like, man, we thought China was gonna buy something and they haven't. Uh soybeans, similar correction, but not nearly as bad. You got just a correction, you rejected uh trade above $12 yesterday. We do have confirmed Chinese buying, which is good. We need to see more of it. We'll get to some specifics in a second. HRW

China Buys More US Soybeans

SPEAKER_01 10:15

wheat and the SRW wheat chart looks very similar. We went up and tested those mid-June highs yesterday and uh rejected that. Let's get to the soybean stuff.

SPEAKER_00 10:24

So China booked its largest U.S. soybean purchase since November on Wednesday. The USDA reported sales of 17 million bushels of beans to China. Of the total, 5 million bushels are old crop and 12 million bushels are new crop beans. The sale follows Chinese state-owned grain trader Kafko booking at least 10 cargoes of U.S. beans earlier this week for September and October shipments. The purchase has renewed optimism for increased Chinese imports of U.S. agricultural goods. Despite the recent purchases, U.S. soybeans remain at a competitive disadvantage due to China's additional 10% tariff.

SPEAKER_01 10:58

So we saw a little bit of old crop uh business to China and soybeans, which is interesting. China has for old crop exceeded the 12 million metric ton purchase target that was laid out by the White House. We're getting close to like 101% of that target for old crop. Here's where we're at for new crop, based on what I'm able to confirm. Uh, the total total Chinese purchases of new crop U.S. soybeans are 536,000 metric tons. Um, those were all confirmed uh via USDA or flash sale. I think that the real number might be higher than that. It might be like closer to 800,000. I wouldn't be surprised if you saw another flash sale today based on the uh trade chatter that Reuters and Bloomberg reported. So yeah, we're putting a very small dent in it, but ultimately, I think if you're gonna hit that 25 million, you're gonna need to see some perhaps larger purchases, like instead of a 200,000. Maybe you need to see like a million in a single clip. That would be very nice, and it would uh certainly get the markets excited.

SPEAKER_00 11:55

If 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_01 12:01

Brian Spok was on yesterday to do charts with McKenzie, and his stuff is absolutely fantastic. I know a lot of you guys are watching Fundamentals, you're watching weather in your backyard, you're listening to the show, and you're you're listening about the headlines and the latest news. But the charts oftentimes tell a totally different story. And Brian is the best in the business at reading and explaining and analyzing the grain charts, the livestock charts. Um it's it's really, really great stuff. Um, you got to kind of lock in to watch it because he covers a lot in a in a in a short period of time. But um it's absolutely worth watching. Understanding crop scare events was what I did on uh Tuesday. How long do they last? Um, what are the kind of telltale signs that we're in the middle of a crop scare event? Is this a crop scare event? That's what I talked about earlier this week. Uh, in today's premium video, again, we're gonna have some absolutely fantastic, fantastic, fantastic info from our friends at Crop Profit regarding overnight temperatures and corn yield. We're gonna talk uh cash spreads, some grain marketing type stuff. Uh tomorrow's premium video, we'll have Krista Swanson from National Corn Growers. We'll talk in depth about this whole uh study and input business. 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, no other fee, no other obligation. Nobody will try to sell you anything else. Mackenzie, we do uh ballpark 20 premium videos per month, which means every video costs you like two and a half bucks.

SPEAKER_00 13:21

That is pretty cheap.

SPEAKER_01 13:22

It's a steal. Some guy on YouTube yesterday was like, Hey, I would buy one video. I'm like, I'd say selling you one video for two and a half bucks. Like we

Iran Update

SPEAKER_01 13:29

should be charging five times what we charge given the uh ROI that the premium subscription provides. But hey, 50 bucks a month, guys. Sign up, check it out, cancel it anytime.

SPEAKER_00 13:37

On Wednesday, President Trump said the U.S. would likely carry out additional strikes on Iran and could reinstate a blockade on Iranian ports. He also stated that the ceasefire with Iran is over. The strikes are in response to Iran attacking ships in the Strait of Hormuz. Iran has vowed to retaliate and has warned it could close the strait, raising concerns about global oil supplies. On Tuesday, the Trump administration revoked a waiver that had allowed Iran to export its oil despite the escalation. Trump said he believes the war is unlikely to resume and that negotiations with Iran could still continue.

SPEAKER_01 14:12

I think what I'll do is I'll start selling single premium videos, except they're going to be like $2,000 a video.

SPEAKER_00 14:17

That's what you do. Yes.

SPEAKER_01 14:18

That's that's what we should do. Um, okay, so back to Iran. Um, escalation. There was more military conflict. Wednesday, uh, U.S. Central Command said that it hit 90 targets on Wednesday. Traffic through the Strait of Hormuzes dropped off. WTI crude futures cared yesterday. They don't care this morning. We're up 17 cents in the August WTI at 7369. So I think that the the market, even though traffic is slowed, the market seems to be of the opinion that this again is not going

Ethanol Production - Strong Corn Demand

SPEAKER_01 14:48

to last very long. And I don't know if that's right or wrong. Trump seems to think that we can we can win this war very quickly, but um, you know, the last couple of months have kind of told us otherwise.

SPEAKER_00 14:57

US ethanol production declined last week. Weekly output was reported at 1.09 million barrels per day, down 2.1% compared to the prior week, but up 1.6% versus the same week last year. Ethanol stocks declined to 23.93 million barrels. The print was down 3.1% compared to the previous week and down 1% versus the same week last year. According to Reuters data, U.S. ethanol margins range from 10 cents to 35 cents uh positive across the corn belt.

SPEAKER_01 15:23

So that looks to be the best weekly ethanol production print on record for this particular week in time. And this just underscores the fact that demand for U.S. corn, whether it's ethanol, whether it's exports, it's fantastic across the board. And I don't know what the national corn yield is going to be. Uh, but if it falls short, we're probably too cheap and by a significant margin because we are not uh we're not convincing anybody to not buy U.S. corn at these sort of price levels. U.S. corn is very, very attractive, whether you're a domestic buyer, whether you're a uh feeding livestock, whether you're an importer, it's it's awfully cheap. And if this yield doesn't live up to uh current expectations, and I don't know what the market thinks. I mean, different traders have different opinions, but man, if you you take three, four bushels off trend in corn, and I think you've got yourself a real story here. I I continue to feel like the market is just not reflective of the risks associated with the possibility of a lower corn yield. But what do I know? Uh, what did Caldi yesterday?

SPEAKER_00 16:22

Cattle futures were mixed, live cattle were 35 cents to a buck 58 lower, fears were 55 cents lower to a buck 40 higher, box beef prices were lower, choice was down 457 at 381.20, and select was down 280 at 363.09.

SPEAKER_01 16:35

Stock markets mixed this morning. Treasuries are mixed US dollars about flat, but has been stronger as of late. Crude oil is up 16 cents in the August WTI at 73.68. Have a great day, guys. Back on Friday.