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
BIG Corn Yield Estimates! How Could the Balance Sheet Be Impacted???
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.
🌽 StoneX Crop Estimates — StoneX pegged the national corn yield at 184.8bpa (16.16bil bu), above USDA's 183.0bpa, while soybeans came in at 53.0bpa (4.47bil bu), just above USDA's last call. 📊 USDA updates its own numbers on August 12, so all eyes are on that report next.
📉 Grain Markets Slide — Corn (Dec26) and soybeans (Nov26) both closed lower Tuesday, pressured by falling crude oil on Iran diplomacy hopes and better August rain chances across the Corn Belt. 🌦️ Wheat also slipped despite ongoing Black Sea shipping chaos.
🇨🇳 Another China Soybean Flash Sale — USDA confirmed a fresh 132,000mt soybean sale to China for the 2026/2027 marketing year. 🔥 That's the third flash sale to China in just the past week.
⚓ Black Sea Export Crisis — Russian strikes near Odesa have shipowners suspending calls, choking off Ukraine's grain export routes and crushing local prices by ~30%. 🚂 Rail/road/river alternatives won't hit meaningful capacity until late August, and even then only handle about half the usual volume — risking 30mmt+ in lost exports.
📈 Farmer Sentiment Rebounds — Purdue/CME's Ag Economy Barometer jumped to 126 in July from 113 in June, though still below last year's 135. 💰 High input costs remain the top worry, but optimism about future export markets persists.
🏭 ADM Raises Guidance — ADM hiked its profit outlook again after a strong Q2, powered by biofuels policy tailwinds and a 129% surge in Ag Services & Oilseeds profit. 🚀 Shares rose 2%+ on the day and are up 38% YTD, while the S&P 500 also closed at a fresh record high.
StoneX Yield Survey
SPEAKER_00Morning guys. Wednesday, August 5th, 5 27 a.m. Central Time. Grain markets are mixed to lower this morning. December corn futures down four cents at 461 and a half. November soybeans down six and a quarter at 11.71 and a half. September Chicago wheat up three and a half cents at 642. September Kansas City wheat up three and a half cents at 7.10.5. September spring wheat up one at 685.5. It's crop estimate season. And there was a big one out yesterday. Let's start off there.
SPEAKER_01Well followed. Private group Stonex released U.S. crop estimates yesterday. Based on a customer survey, the group pegged the national average corn yield at 184.8 bushels per acre, above USDA's most recent estimate of 183. The crop was seen at 16.16 billion bushels versus USDA's most recent forecast of 16 billion bushels. The national soybean yield was projected at 53 bushels per acre, steady with the USDA's most recent projection, and the crop was forecast at 4.47 billion bushels. Compared to USDA's most recent estimate of 4.44 billion bushels, USDA will release its updated projections on August 12th.
SPEAKER_00All right. So that's a bigger than USDA corn yield number and a soybean yield number that is on par with USDA. Before we get into the state by state stuff, and I'll show you the map and then we're going to do a hypothetical US corn balance sheet. I'll explain to you guys a couple of things about this survey. They've been doing the survey since the 1990s for decades, and they've been doing it in the exact same way. Stone X brokers who generally speaking handle commercial business, grain elevators, that sort of thing. They call up their customers in the elevator business and they say, Hey, what's your opinion of the crop in your area? And uh they get a whole bunch of responses. I think it's like thousands of responses. They aggregate the data and they spit out some yield numbers. So that's the way that it works. I don't think there's really any sort of agenda here. Some people might argue that, Joe, these are guys that buy grain, they want cheap grain, so they're going to put out big yield estimates. That's not how it works. Uh, there is a gross misunderstanding of how grain elevators and commercial entities make money. It's not through flat price. They make money through spreads and bases. And as a matter of fact, they do a hell of a lot better when prices are higher and uh there's more volatility. Let's take a look at the map here. So to look at some of your most important corn growing states. Um, Iowa, they've got the yield pegged at a monster 218. Illinois, they've got pegged at 212, Indiana at 203, Minnesota pegged at 206. You go to some of the problem areas this year, North Dakota, they've got pegged at 143, South Dakota, they've got pegged in 163. So they're certainly acknowledging the idea that, hey, stuff in the central and eastern part of the cornbell is probably pretty good, and the Northwest in particular is um in trouble. And this doesn't have to be gospel, but I'll tell you what, they did a pretty darn good job last year. Last year, the Stonex survey, they came, they were like the first one through the door with a big yield estimate, and um they ended up being mostly correct. They kind of tracked USDA uh for a few months and and ended up being mostly correct. I think their their final August survey number was like two bushels away from the final USDA number, which is actually pretty impressive. Okay, so let's run a hypothetical US corn balance sheet scenario given this yield number. And this is a um a tool that I actually made available to our premium subscribers yesterday. And I ran through a whole kind of uh educational video on how US corn balance sheets work. But what I did here is I took the July version of USDA's new crop US corn balance sheet, I plugged in the Stone X yield, like 184 uh.8, you can see that circled. And what that what that does when you plug in that number and you leave all else unchanged on the supply side, you leave harvested acreage unchanged, you leave beginning stocks unchanged, you increase supply by 157 million bushels versus USDA uh in July. USDA's methodology this early in the year essentially works like this if you change supply uh through a bigger crop or whatever, smaller crop, they're uh about half of that change is gonna be offset by demand. So in this instance, we increased supply by 157 million bushels. If that were the case, and this is how USDA's balance sheet or supply side looks next week, they're probably gonna increase their demand estimates by about half of the production increase. So I went in and since they use round numbers in in uh their early balance sheets, I raised exports by 25 and I raised feed and residual by 50 for a total of 75 million bushels of increased demand. That leaves you with an ending stocks figure of 1.866 billion bushels and a stocks to use ratio of 11.4%. And uh premium subs, you guys understand a whole lot more about this because I did a whole video on it yesterday and I made the tool available. You can go in and play with your own scenarios. But generally speaking, if Stonex is correct or near correct with the size of the crop, um, it probably doesn't lead you to bull market territory. That being said, all of the demand estimates are just guesses. You're guessing what sort of demand will occur in a marketing year that does not begin for another three or four weeks. The marketing year doesn't start till September 1st, it doesn't end till August of 2027. So those demand estimates, it's the best they can do right now, but they're really just uh kind of placeholders until you start to see actual data. You start to see actual export sales and shipments, you start to see actual ethanol production, um, some actual grain stocks numbers. But um, that was uh a fairly large corn yield estimate from Stonex
Price Action, Charts, Weather
SPEAKER_00and be prepared to see some similarly large estimates from other groups ahead of next week's USDA report. Let's go to uh price action.
SPEAKER_01Green and soybean futures moved lower yesterday, despite the USDA lowering corn crop condition ratings on Monday. The December contract lost seven cents to close near 466 per bushel. Soybeans suffered steeper losses, with the November contract falling nearly 15 cents to settle near 1178 per bushel. Both corn and soybeans were pressured by a decline in crude oil prices and forecasts calling for better rain chances and more moderate temperatures across the across much of the corn belt during the first half of August. Wheat futures finished lower as well, despite ongoing uncertainty surrounding Black Sea shipping disruptions.
SPEAKER_00So corn market, we had a nice day, uh, was that Friday? And then uh gave most of it back. Uh no, that was Monday. And then Tuesday we're down. We're down again here to start the day today. Um, big U.S. crop estimate from Stonex, and there's gonna be more big U.S. crop estimates. So I think there is some concern here among the trade that USDA could come in with an unchange to even higher crop estimate next week. It's on Wednesday. Um, weather forecast we're gonna get to in a second. I'd argue that it's kind of uh improved-ish, but that there are some caveats. We'll talk about that here in a second. Soybeans traded in the November contract, their lowest level since July 6th overnight. And the way that the weather is setting up, of course, we're always told the bean crops made in August. Um, it looks favorable for a good chunk of the corn melt, and perhaps favorable for all of it, if you look at the extended forecast. Again, we'll get to the maps in a second. Uh, wheat has not acted well considering that you've got these big disruptions in the Black Sea. It's estimated right now that like 40% of combined Russia-Ukraine grain shipping capacity is offline. That's the estimate floating around. Um, I don't know how real that is, but wheat hasn't acted well when you consider the fact that you know you've got two huge wheat exporters with a huge chunk of their capacity offline, and wheat doesn't really want to rally. Part of the problem here this morning is that you've got rain on the radar over Iowa, a little bit of Kansas, a little bit of uh Minnesota, Wisconsin, a little bit of Illinois, never helpful as it relates to price action. The forecast, I'm using the Euro ensemble this morning, um, over the next seven days involves uh, I'd say material rainfall for like call it half to two-thirds of the Corn Belt, a lot uh of additional rain for Iowa, Illinois, Missouri, Indiana, uh, Wisconsin, Michigan, Ohio, places further east. But you can see that the west is still kind of dry during the next seven days. You go out to the 10-day map and you got maybe a little bit of a better shot for some rain across the plains. And then it's really perhaps in this extended like 10 to 15 day period. And I don't have much confidence in this, but this is what the models are showing this morning, is that you do, in fact, see some material rain in North Dakota, South Dakota, Nebraska, Kansas. If those rains materialize and it happens, you know, call it mid-August, that
More Soybeans to China
SPEAKER_00could still, I think, be helpful to the soybean crop. And that's probably something or one of the things that the trade is kind of uh looking at here this morning. Let's go to flash sales.
SPEAKER_01Yep, we had another flash sale of soybeans yesterday. U.S. exporters sold five million bushels of beans to China for delivery during the next marketing year. This was the third flash sale of soybeans to China in the last week.
SPEAKER_00Okay, everything that we know officially would indicate that China has now hit 14.7% of the 25 million metric ton new crop soybean purchase target outlined by the White House. They're at 3.665 million. And there may have been some sales done behind closed doors that have not yet been reported. I wouldn't be surprised to see some more reported today, tomorrow. Um, I think of Newswire's Reuters said that they bought like a million tons uh late last week, and we've only seen about half that reported. So you could see um some more flash sales reported here um, you know, today, tomorrow, Friday.
SPEAKER_01Russian missile and drone attacks on ports and commercial vessels have prompted shipowners to suspend calls around Odessa, creating a major bottleneck for grain shipments. While Ukraine is turning to alternative export routes by railroad and the Danube River, uh officials say those options won't reach stable operating capacity until the end of August. Even then, those alternative routes will only be able to handle about half the volume typically shipped through Black Sea ports. The disruptions have already driven Ukrainian grain and oil seed prices down by roughly 30%. And the country's ag ministry estimates losses to the farm sector could total between 1.5 billion and 3 billion this year.
SPEAKER_00So the wheat market, as we mentioned in the chart portion, has stalled and hasn't, it did react to this, and now it feels as if it's done reacting to this. I can't help but wonder if we're in the kind of like uh call it the show me the money phase of the wheat market where, hey, we rallied a little bit on these disruptions, but now you need to show me the export business. You need to show me the shift and export business to the United States for U.S. wheat features to rally. And we haven't seen that. We haven't seen that really at all. So I'm I'm wondering if maybe that's the case. And I think the road crop markets moving lower is probably not helpful either.
SPEAKER_01If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of our recent premium videos?
SPEAKER_00As I mentioned yesterday, I made a corn balance sheet tool available to our premium subscribers, and I kind of uh provided a quick tutorial on how to use it. You can't just go in and punch in yield numbers and say, oh my gosh, look at the carryout. There's there's more uh there's more to it than that. It's not that simple. I also talked about one big crop estimate, not the Stonex estimate, actually a different one that's even bigger. So uh be prepared for some of that. But um we had a lot of positive feedback on this. I may do the same thing for soybeans once we know a little bit more about the crop. Pete Meyer was on earlier this week, talked about the potential for corn acres to rise and why some of the RMA data is indicating such, and talked about the process and why he thinks that way. Also, we're starting to see some specifics as it relates to 45Z and how farmers may be paid for low-carbon corn. And there's some really specific stuff floating around out there. There are some caveats, uh, but that's something to be aware of because it some of the numbers I've seen are are game-changing type numbers. Uh, Ryan Moe was on last week and had some really sage advice as it relates to basis contracts and rolling HTAs. We talked about corn basis seasonals. Do such a thing exist? Crush plant maintenance, how can that impact your basis situation? Um, fantastic stuff and really some great advice from Ryan. In today's video, Brian Splits gonna run charts with McKenzie, which should be uh very interesting as it always is. Brian is the best in the business as far as uh analyzing and explaining uh grain price action via charts. If you 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. If you're the decision maker in your farm operation, this is just something that you have to buy. Everybody else is buying it. Your neighbor's buying it, your neighbor has all the info that we're putting out about transition planning and agronomy and grain marketing and crop insurance. And if you're
Farmer Sentiment Survey
SPEAKER_00missing out on our stuff, you're probably missing out on some really important uh decision-making type tools. So uh give that deal a shot this morning, guys.
SPEAKER_01After three consecutive months of decline, U.S. farmer sentiment improved in July. Purdue University CME Group Ag Economy Barometer Index climbed to 126. That was up from 113 in June. The increase in sentiment reflected stronger readings in both the current conditions index and futures expectations index. Despite the rebound in sentiment, high input costs remain farmers' biggest concern, with 46% of respondents identifying them as their top challenge. Meanwhile, farmers remain relatively optimistic about export opportunities, with 56% of respondents saying they expect new foreign markets to open for U.S. agricultural products over the next five years. However, that number is actually down uh from 64% at the same time last year.
SPEAKER_00So it said in the report that they're worried about input costs. It's just, I didn't see input costs mentioned in this graphic. And maybe that's maybe that's cost control. Is that what where that would be? I don't know. But like you could throw cost control and financial considerations into that same thing. Uh, farm transition, of course, is a huge topic. And uh, we've done a lot about that. Crop or livestock prices are absolutely a concern. I think input prices would be the bigger concern compared to this year. What are your expectations for cash rent in your area? About the same, about the same versus last year, but 19% expect it to be higher, which is uh not fun at all because no nobody's making money as it is, and uh you throw in some higher cash rents and it does not help matters. Um, would you say that things in the U.S. today are generally headed in the right direction or on the wrong track? I've kind of been using this as my farmer presidential approval rating. Maybe that's the wrong way to use it, but 54% still
ADM Earnings and S&P 500
SPEAKER_00say we're headed in the right direction. And, you know, Trump has promised, of course, the golden age in agriculture, and uh it remains to be seen.
SPEAKER_01ADM raised its profit outlook for the second time this year on Tuesday. The higher forecast followed stronger than expected second quarter earnings, driven by robust processing margins in support of U.S. biofuels policy. The company expects biofuels demand to remain strong as elevated energy prices and favorable global blending policies continue to support the market to capitalize on the growing demand. ADM announced last week that it will expand oil seed crushing capacity at four U.S. facilities. ADM shares were more than 2% higher yesterday, and the stock is now up 39% year to date.
SPEAKER_00Yes, absolutely fantastic action from ADM. A lot of this because of favorable U.S. biofuel policy. They're seeing some strength in other sectors as well, but the stock has acted very well and it's outperformed the broader stock market. The SP is only up 13% year to date, while ADM's up 39% over the last year. ADM's up 41%, the SP is up only 23%. Um, to look at this uh since the start of 2020, and I like to use the start of 2020, like, hey, let's just do the post-COVID era. Uh, the SP has still outperformed ADM. And you can almost like see the biofuel narrative in the ADM stock price. People were really bold up on the biofuel stuff um in 2022 and into 2023, and then the enthusiasm kind of died. And now uh we've got some more concrete evidence that this is all very much the real deal, and ADM has acted very well, but still uh in the post-COVID era has underperformed the broader stock market. On another note, the SP 500 posted a fresh all-time high yesterday amid strong AI linked earnings, hope for an Iran deal. Uh the stock market SP 500 is up 13% year to date, up 23% over the last year, and up 60% from the April 2025 Liberation Day low when Trump slapped all the tariffs on everybody. Um, I would have uh hate to have been the person who sold all of my equities on that day because you missed out on a 60% rally, and uh that would be just soul crushing. Uh, what did cattle do yesterday?
SPEAKER_01Cattle futures were higher, live cattle were 85 cents to a buck 73 higher, feeders were 35 cents to 360 higher, with the exception of the back month contracts, which saw uh marginal losses. Box beef prices were also higher. Choice was up 292 at 396.65, and Select was up 205 at 346.50.
SPEAKER_00SP's up another 27 points this morning. Dow Jones up 175, Treasury's up just a little bit, crude oil's up 59 cents at uh 76.36 in the September WTI, but it got smacked yesterday. Everybody have a great day. Back on Thursday.