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 Prices GAP Higher on ZERO RAIN Forecast
Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.
Joe's Premium Subscription: www.standardgrain.com
Grain Markets and Other Stuff Links —
Apple Podcasts
Spotify
TikTok
YouTube
Futures and options trading involves risk of loss and is not suitable for everyone.
🌽 Grain Markets Surge Overnight 🌾 Corn, soybean, and wheat futures opened sharply higher Sunday night on a combustible mix of weather worries and geopolitical shocks. ☀️ The US Corn Belt faces a dry, hot week ahead, adding fuel to the rally even as some early selling emerged this morning.
⚔️ Black Sea Conflict Escalates 🚢 Ukraine and Russia traded attacks on key grain export regions, disrupting shipping through the Sea of Azov and prompting closures of the Don-Azov Channel and Kerch Strait. 🌾 Russia also struck Ukraine's major export ports of Odesa, Chornomorsk, and Izmail, stoking fears over Black Sea grain flow.
🇺🇸🇮🇷 Middle East Tensions Boil Over 🛢️ The US launched a third round of strikes on Iran over the weekend, triggering Iranian missile and drone retaliation against American allies. 🚫 Iran has declared the Strait of Hormuz closed, and shipping traffic there was nearly nonexistent Sunday despite US claims it remains open.
📊 USDA Report Shakes Up Stocks 📉 Friday's USDA update slashed 2026/27 corn ending stocks estimates well below expectations and projected the smallest US wheat harvest in 56 years. 🌱 Soybean stocks held steady but still missed trade estimates, while soybean production got a bump.
💰 Funds Turn Bullish 📈 The latest CFTC Commitment of Traders report showed large money managers net buying 52k corn, 31k soybean, and 7k SRW wheat contracts last week. 🐂 It's a clear signal that speculative money is leaning bullish across the grain complex.
🇨🇳 China Keeps Buying US Soybeans 🛳️ USDA confirmed another 264,000mt soybean sale to China for 2026/2027 delivery, adding to last week's 736,000mt in flash sales. 🌱 The steady demand is a bright spot for US soybean exports.
🖥️ AI Data Centers vs. Farmland 🚜 The booming AI data center industry is competing with agriculture for land, water, and power, sparking concern among farmers and ranchers. ⚖️ Roughly two dozen states are now weighing legislation to regulate or limit new data center development on farmland.
Intro
SPEAKER_01Morning, guys. It's Monday, July 13th, 5 23 a.m. Central Time. Grain markets are mostly higher to start a new week. December corn futures up five cents at 466. November soybeans up seven at 11.97 and three quarters. September Chicago wheat down two and three quarters at 637.5. September Kansas City wheat down two and a half cents at 673.5 last trade. September Spring Wheat up a half cent at 653. Before we get started, guys, if you are not subscribed to the YouTube channel, if you guys are watching on YouTube every day and you have not hit the
Sunday Night Gap, Weather, Charts
SPEAKER_01subscribe button, do us a favor, hit the subscribe button. It would really help us out. All right, we had a uh pretty exciting open of the grain markets last night. Let's start there.
SPEAKER_00So the grain markets opened sharply higher on Sunday night amid a combination of weather and geopolitics. Weather forecasts indicate that the U.S. corn belt will be almost void of rainfall over the next seven days. Rains may return to eastern and northern areas of the region during the 8 to 14 day period based on this morning's weather models. Temperatures are slated to run well above normal across U.S. corn and soybean areas during the next week and are likely to continue into the eight to 14 day period. Conflict in both the Black Sea and the Middle East during the last 72 hours also resulted in buying interest. Corn, soybean, and wheat futures opened sharply higher last night, although some selling interest has emerged early this morning.
SPEAKER_01Premium subs, you guys kind of knew what was going to happen, I think, to some extent uh before the open last night because I did a Sunday weather and geopolitics update. There was just a lot. There was a lot going on yesterday in terms of weather forecasts and the geopolitical stuff. We're going to get to uh Russia, we're going to get to Iran as well. Uh, but let's go back and look at the weather real quick. So this is a bullish forecast on July 13th. No rain for the corn belt for at least a week. And even when you go out, and this is the Euro and the GFS, doesn't matter which one you look at. There's there's very, very little rain for the U.S. Corn Belt being advertised. Even when you go out to that like eight to 10 day period, you know, the Euro says eastern cornbelt rains and maybe some of the southeast and the GFS has the locations a little bit different. But you look at that like kind of I state corridor, like your Indiana, Illinois, Ohio or uh uh Iowa would be the last I state. Um kind of all dry, even even into that um 10-day period. So I think that this is a friendly forecast to start the week. Um, the the actual amounts, if you're gonna quantify it, like our friends at Crop Profit do, uh, based on GFS data, it's estimated that U.S. corn areas will see only 32% of normal rainfall over the next seven days. You go to the Euro version of this, it's even drier, 28% of normal rainfall expected. You go out to the 8-14 and it looks a little bit better, but still dry in a lot of areas. The GFS says 68% of normal rainfall during the 8 to 14 day period. The um euro says 84%. So maybe you normalize just a little bit during that 8 to 14 day period, but still below normal. With regard to temperatures, there's a big uh kind of discrepancy between the Euro and GFS this morning. The Euro indicates that over the next seven days, U.S. corn areas will run seven degrees above normal on average. So widespread heat being projected there, where the GFS is warm but not as warm and keeps a lot of the warmer temperatures in the uh northwest part of the corn belt than in the northern plains. Dakota's in Minnesota in particular, only 4.3 degrees above normal for U.S. corn areas. The GFS just kind of keeping the heat uh a little bit further west. When you go, when you look at um, this is what I wanted to show you, temperature anomaly. So this is like July month to date, what we've done in the corn belt. U.S. corn areas have run 3.4 degrees above normal on average so far during the month of July. And we know that July, of course, is hugely important as it relates to corn yield potential. Perhaps more importantly, is this next map. This is daily minimum uh minimum temperatures uh versus normal. So this would be like your overnight lows. And essentially your overnight lows are running four degrees above normal across U.S. corn areas so far, July month to date, which is statistically significant. And premium subs, if you guys watched the video that we did on Thursday last week, and I'll talk about in a second, you know exactly what that means. To look at the charts, uh D's corn gapped higher last night. Gapped higher. There's a gap at 462. We traded basically right up to that April low, which was uh 469 and a quarter. I believe we traded one tick above that, and we kind of reverted back lower. You got a friendly weather forecast, you've got this friendly Black Sea stuff we'll talk about. The Middle East thing is um kind of escalating again. November soybeans posted some fresh multi-week highs, but have reverted just a little bit lower early this morning. We traded up to 1207 and a quarter last night, back down to um the 1190s early this morning. We'll talk about the USDA report a little bit later, but it's honestly like the least exciting thing that's happened the last 72 hours. HRW we features look very good. Big breakout above technical resistance on Friday. And we did make some new highs overnight and backed off a little bit. This uh Russia thing is probably something to be
Russia/Ukraine Sparks Wheat Rally
SPEAKER_01aware of. So very uh positive Sunday night action. We've given back some of the gains, but uh corn and soybeans in particular and and especially corn look much better to start the week.
SPEAKER_00So you mentioned the Russia situation. Wheat futures surged on Friday following an escalation in the Ukraine-Russia war. The July 26 Chicago wheat contract climbed nearly 21 cents to close at 632 per bushel, while the July Kansas City wheat contract gained about 20 cents to settle around 663 per bushel. The rally was fueled by Ukraine and Russia exchanging attacks on key grain export regions, raising concerns about Black Sea grain shipments. We also drew support from Friday's USDA report, which lowered its 26-27 world-ending stocks estimate below uh both last month's projection and analysts' uh expectations. In addition, the USDA projected the smallest U.S. wheat harvest in 56 years.
SPEAKER_01Yes, the USDA report was friendly, the wheat market, make no mistake. But the reason, and make no mistake for this, the reason for the big spike in wheat on Friday was uh Ukraine struck a Russian oil tanker and it raised the idea or possibility that Russian exports could be disrupted. And that's hugely important because Russia is the world's top wheat exporter. USDA projects that they will account for 22.3% of all global exports uh this year. Russia and Ukraine in in total, they're they're big wheat exporters, but the numbers really haven't come down a whole lot or at all since uh this war began like four years ago. You know, there was a whole there was a whole time frame in which we traded these Black Sea headlines on like a daily basis, and and we got to trade them again on Friday for a second. I just I'm not sure how long the market's gonna be interested in this because the last three years have basically told us that these headlines don't matter and don't really move the market. Uh, Ukraine is also a large corn exporter, fourth largest corn exporter. There's really four big ones. The U.S. is head and shoulders above everybody. Brazil would be a distance second, then Argentina, then Ukraine is like the uh fourth largest corn exporter, 10.9% of all projected uh global corn exports uh for the new crop marketing year. So
Middle East
SPEAKER_01I think that that uh story and that headline when it was out on Friday, it helped to certainly induce some buying interest in the wheat market and probably corn as well.
SPEAKER_00Middle East tensions have further escalated, raising uncertainty over the Strait of Hormuz. The U.S. launched its third round of strikes on Iran in a week over the weekend, prompting Iran to retaliate with missile and drone attacks on American allies across the Middle East. The status of the strait remains unclear after Iran declared the waterway closed, while the U.S. insisted it remains open. Despite that claim, shipping traffic through the waterway was nearly nonexistent on Sunday prior to the latest escalation. Both Washington and Tehran had signaled that there was still room for peace talks. However, the renewed strikes have greatly dimmed hopes for near-term negotiations.
SPEAKER_01Crude oil is up $2.40 in the August WTI this morning, still sitting below $74. That tells me that the trade is not overly concerned, despite the fact that the strait appears to be kind of closed-ish for the moment. The U.S. and Iran, depending on whose rhetoric you'd like to believe, are debating whether or not the strait is open or closed. The U.S. Central Command says, oh, it's open. And Iran says, no, it's closed. But the the shipping actual activity would indicate that, yeah, the the tensions have escalated and this thing has really slowed down. So, you know, I don't know, higher crude market this morning. Is this enough to support the grains? Probably not by itself. I mean, we're not we're not at 100 bucks anymore. We're in the we're in the 70s. So I think that what's going on in the grains has a lot more to do with weather and uh perhaps the USDA report. We'll get to that in a second, and uh maybe the uh Russia-Ukraine thing as well.
SPEAKER_00If 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_01Friday's video is absolutely fantastic. Krista Swanson, who is the chief economist for the National Corn Growers Association, joined me. And uh, she was part of that uh study that everybody was talking about last week, Brazil versus U.S. production costs. And we spent about 25 minutes talking about it. And it wasn't, we didn't spend 25 minutes talking about the study because you guys all saw the study. A lot of you guys probably read it, saw the charts. We talked about the why, and I I asked what I thought were pretty tough questions, and I thought she did a fantastic job of kind of explaining um exactly what's going on. This is a very nuanced situation. There are a million details. I covered as many of them as I possibly could, but I think that we still left a lot of stuff out. We may have to do a follow-up on this, but uh I'm sure Chris is gonna do a lot of media following that um that report because it was it was very widespread. A lot of people read it, but I promise you that I asked the best questions out of uh anybody that's gonna interview her. Um, Ryan Moe was on Thursday, and we had uh my friends at Crop Profit put together for me and some absolutely fantastic data regarding overnight low temperatures and corn yields and how they correlate. And we made the charts and graphics available and we kind of told you what's going on this year and what that could lead to. It's it's absolutely, absolutely fantastic stuff. Uh, Ryan works on kind of the commercial side of the brokerage business, and he talked a lot about uh we went into basis and spreads and the cash market and grain marketing and uh basis contracts and DP and all that stuff. Ryan's a fantastic guest. Uh happy to have him. 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. Um, if you are the decision maker in your farm operation, if you do the marketing, if you buy the crop insurance, if you pay the people, uh, this is something that you absolutely need to watch.
USDA Report
SPEAKER_01We cover everything marketing, weather, uh, transition planning has been a big topic that we've done a ton on recently. Give that deal a shot this morning, guys.
SPEAKER_00Friday's USDA report cut corn stocks more than expected. USDA projected 26-27 U.S. corn ending stocks at 1.79 billion bushels, down 8.7% from June and 4.4% below the average trade estimate. Global corn ending stocks were also reduced to 275.3 million metric tons, coming in below both the June forecast and analyst expectations. U.S. soybean ending stocks were unchanged from June at 310 million bushels and also fell below the average trade estimate. World soybean ending stocks declined modestly to 124.2 million metric tons. On the production side, the USDA raised its U.S. soybean production estimate while leaving corn production unchanged.
SPEAKER_01So USDA did not change their corn and soybean yield projections or estimates. They usually don't in July. August, September is when you start to see uh some changes there. And uh that was not a surprise. The old crop corn balance sheet for the United States was interesting. USDA had to kind of resolve for a slightly lower stocks number, and they did it through feed and residual. Uh, they raised that number by 150 million bushels, they cut the ethanol number by 25. So your old crop carryout number dropped uh from one point, or I'm sorry, 2.142 down to 2.02. It's friendly-ish. I mean, we still got a 2 billion bushel carryout being projected. That in itself is not friendly, but relative to expectations, maybe a little bit friendly. And then your new crop uh carryout situation for corn, I would say, I mean, I'm not gonna say this is bullish, but if that 1.79 was was realized, I'd say that that's friendly. That's that's not like a sub-4 corn market, I don't think, on the board, anyways. Um USDA did raise its new crop export projection, which is something that some people had been begging for. Um, but you've still got a lot of unknowns here. I mean, we don't know what the demand's gonna be. We don't know what the yield's gonna be. There's there's a lot of questions, but um, you've got a tight-ish balance sheet in corn, a tight-ish uh US balance sheet being projected in soybeans. And I'll tell you what, if the yields fall short, and they they in the case of soybeans, they don't need to fall short by very much. You could have yourself a situation here. I'm um honestly just a little bit surprised at what I'm seeing on the board this morning. I feel like we could be acting a lot better almost uh given the weather forecast that I'm looking at. But uh, you know, we did
The Funds
SPEAKER_01have a lot of rain during the month of June and into the first part of July in some places, and maybe the market's just not as concerned about a dry forecast as it would typically be.
SPEAKER_00As usual, the CFTC released its weekly commitment of traders report on Friday for the weekending Tuesday, July 7th. Large money managers were net buyers of 52,000 corn contracts, 31,000 soybean contracts, and 7,000 SRW wheat contracts.
SPEAKER_01Hey, to go back to the report real briefly, uh premium subs, you guys have full versions of ending stocks to use ratio charts for corn soybeans and wheat, uh, global and domestic in your email uh this morning. Make sure you take a look at that for some additional context. Uh, the funds probably bought a whole bunch of corn on Friday. I think it was like 30,000 or something that was estimated. Probably bought some more overnight, but we're still just sitting with like a neutral position in the corn market. Large speculators still interested in a little bit of length in the soybean market, but that's not extreme
China Soybean Tracker
SPEAKER_01at all and uh short SRW wheat as they most often are. So this is this is very unexciting and kind of just neutralish uh in sentiment across the board.
SPEAKER_00China made more purchases of U.S. soybeans on Friday. USDA reported the sale of 10 million bushels of beans to China for delivery during the current marketing, during the new marketing year. Uh last week, China purchased a total of 27 million bushels of new crop US soybean uh soybeans through flash sales.
SPEAKER_01Yeah, so um the China soybean purchase tracker when you include last week's flash sales plus uh what's been included in the uh export sales report. We're up to 3.7% of that 25 million metric ton uh commitment that the White House has outlined.
AI Data Centers and Farms
SPEAKER_01We're just south of a million metric tons. So uh it's it's working in the right direction. It's slower than I'd like it to be, but uh we are moving in the right direction, certainly.
SPEAKER_00The rapid expansion of AI data centers is fueling concerns about growing competition with agriculture for land, water, and electricity. Because data centers require large tracts of land that are flat, farmland is an ideal option for new development. AI industry representatives argue that data centers use far less water than agriculture and can and can even help lower electricity costs by generating additional utility revenue. As U.S. farmland continues to shrink due to urban development and other factors, many farmers and ranchers worry the AI construction boom could accelerate the loss of productive agricultural land.
SPEAKER_01I'm very curious to hear what you guys think about this. I know a lot of you guys have either AI centers going up in your neighborhood or uh maybe you guys struck down an AI center proposal in your neighborhood. But if this is happening in your backyard, drop us a comment and uh let us know what you think. I I don't have a strong opinion about it. I think you guys know my opinion about AI. I think that I think that it's it hasn't quite lived up to expectations. It probably will eventually, but um, in terms of in terms of the impact on the economy and that sort of thing. What did uh cattle do on Friday?
SPEAKER_00Cattle futures were lower once again on Friday. Live cattle were five cents to a buck 30 lower. Feeders saw losses ranging from a buck 13 down to 198. Cash cattle trade last week across all regions was mostly $7 lower at $248.
SPEAKER_01I think the outside market's probably just adjusting to the Middle East stuff a little bit this morning. The stock market's just flat to a little bit lower, and crude oil's up again, $2.30 in the August WTI $73.74 last trade. Have a great week, guys. Back on Tuesday.