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
MIDWEST STORMS - Flattened Corn Fields, Heavy Winds - How Much Damage was Done??
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🌩️ Severe storms tore through the Corn Belt Tuesday, spawning tornadoes in Illinois and Indiana and knocking out power to nearly a million people. Parts of Indiana and Ohio saw 6"+ of rain in 24 hours, and more stormy weather is expected through the week.
🌾 Russian August wheat exports could hit a 10-year low as Sovecon slashes its forecast to 3-3.4mmt amid Black Sea shipping disruptions. Ukraine's exports are also sinking, down 76% in August y/y, after drone strikes suspended operations at two major Novorossiysk grain terminals.
📡 The USDA is overhauling NASS crop reporting, tapping Kip Tom to modernize a system plagued by falling survey response rates. The plan leans on satellite imagery, drones, and machine-generated data to eventually deliver faster, more frequent (and more accurate) corn and soybean estimates.
📊 The USDA's Crop Production and WASDE report drops Wednesday at 11am CST, with traders expecting cuts to corn and soybean yields after a hot, dry July. This is the first report to incorporate actual survey data, and both new crop US and world carryout estimates are expected to shrink.
🚢 USDA confirmed fresh flash sales Tuesday, with 136,000mt of soybeans sold to China and 180,000mt of soybean meal sold to the Philippines. Both deals are set for delivery in the 2026/2027 marketing year.
Midwest Storms, Crop Damage
SPEAKER_00Morning guys, it's Wednesday, August 12th, 5 23 a.m. Central Time. Grain markets are higher across the board this morning. December corn futures up five cents at 465 and a half. November soybeans up six and three quarters at 11.75 and a half. September Chicago wheat up 22 and 3 quarters at 6.53. We've got some Black Sea escalation that we'll discuss here in a second. September Kansas City wheat up 27 and three quarters at 7.27. September spring wheat up 15 and a half at 674 and three quarters. Before we get to Russia, Ukraine, let's start off with some of the nasty Midwest weather that we saw yesterday.
SPEAKER_01So severe storms rolled across the Corn Belt yesterday. In addition to heavy rainfall, the storms produced several tornadoes across Illinois and Indiana, along with destructive winds of up to 100 miles an hour. Excessive rainfall prompted numerous flash flood watches and warnings. The heaviest rain fell across Indiana and Ohio, where localized rainfall totals top six inches. By midday Tuesday, nearly one million people across the region were without power. The storming pattern is expected to continue across the Corn Belt through the rest of the week.
SPEAKER_00Look at the picture they used.
SPEAKER_01Do I think he is?
SPEAKER_00No, he is.
SPEAKER_01Oh, he is. Yeah, I did know that. You've talked about that before.
SPEAKER_00The giveaway last night, if you went to the game, was they gave you a Pope hat with like a White Sox logo on it.
SPEAKER_01Oh, that's nice.
SPEAKER_00Anyways, um, here's the uh map of kind of where the wind gusts and the straight line stuff occurred. It was pretty nasty in a lot of areas. Uh, after I moved out of the city, I grew up in Beverly. I'm a native Southsider, but uh, we lived in Tinley Park for a while. And we lived in the the portion of Tinley Park that's in Will County, south of I-80, and right where I used to live got absolutely hammered. Uh, the people that I talked to in that area said it was it was like a hurricane. It was it was terrible. So there were absolutely some cornfields flattened and a lot of rain in some areas. The heaviest rain, however, was further east, and there was some of this high winds, uh, some of these high winds there also. That little pocket in Indiana, that uh that dark yellow brown stuff, and also that one in Ohio. I think that there were reports of up to 10 inches of rain locally in some areas of those little circles. And most of it in those circles was probably four, five, six, but that's a lot of rain. And there's absolutely gonna be uh some setbacks and crop damage and some stuff that's zeroed out as a result. Uh bam weather here on X, 70 mile an hour per winds, laid corn flat in London, Ohio this morning uh because of the round of storms. So if you guys have any information, if you have some downed cornfields in your neighborhood, uh drop us something in the YouTube comments, or you can email info at standardgrain.com. I've only heard just anecdotal reports of damage so far this morning. I don't believe it to be extremely widespread. But if you know a little bit more about it, uh let us know. The forecast to stay on the weather front here is still calling for a lot of rain just over the next five days for a lot of the corn belts. So a lot of the same areas that were wet yesterday uh are going to see more rain. And the Euro and the GFS, a little bit of divergence. The GFS is a little bit drier. The rain is not as widespread. But in any case, I would probably call this a bearish type forecast here on August 12th,
Russian Ports Attacked, Wheat Rallies
SPEAKER_00especially as it relates to soybean prices. Soybean futures, the November contract, posted some fresh multi-week lows yesterday. We're up this morning, I think, because of our next story.
SPEAKER_01Yesterday, Sovacon cut its estimate for Russia's August wheat exports to three to three point four million metric tons, down from four and a half million metric tons a year ago and the lowest level since the 2016-2017 season. The reduction comes as ongoing Black Sea shipping disruptions weigh on exports and push up freight costs. Ukraine also lowered its grain export outlook with this season's total exports now expected at 38 to 40 million metric tons. That's as much as 12% below the prior forecast. To find an alternative export route, Ukraine is considering shipping grain by rail through Moldova to a Romanian port at a discounted freight rate. The route, however, would only provide enough capacity to handle about 10% of Ukraine's grain exports.
SPEAKER_00Okay, we did have a big headline overnight, and this is why weed futures are higher this morning. Overnight, two large grain terminals at Russia's Novorosik port were attacked by Ukrainian drones. Operation have been suspended, has been suspended at both of these ports as a result. The two terminals reportedly, this is what I read this morning, and I'm gonna have to go back and reread all this. The two terminals combined have an export capacity of 15 million metric tons per year. Reuters reported early this morning that Ukraine exports for the month of August are down 76% versus the same period last year. That includes wheat, corn, and barley. So this attack on these ports, which are apparently pretty large ports in Russia, is the reason why wheat features are up 20 to 30 cents this morning. Uh the last go-around, the last time we had one of these rallies, it totally failed. A lot, I think this is probably why row crops are higher this morning. It's just wheat's kind of dragging everything. But we've got a USDA report later today. And, you know, the last time we had a wheat rally on this, it totally failed. And depending on what happens in row crops, you know, after 11 a.m. Central time, that could perhaps have some impact on whatever's going on in the wheat market. This all matters, of course, because Russia and Ukraine combined account for ballpark 29% of all global wheat exports. So when there's an escalation there, the market does pay attention. Um, Russia's the big one, Ukraine kind of uh secondary. Ukraine also exports a lot of corn, 11% of projected uh global corn exports. But again, we've got a report today, and USDA may need to adjust some of these export forecasts. The tricky thing about it is that they could they could adjust Russia and Ukraine wheat exports as an example lower, but it may not affect the carryout because the wheat's still there.
Kip Tom and USDA Data
SPEAKER_00It's in the country, it's gonna be reflected in ending stocks or domestic usage or something, but it uh it's not like it disappeared. So it's a tricky situation to analyze.
SPEAKER_01Kip Tom, an Indiana farmer and former U.S. ambassador, has been chosen by agriculture secretary Brooke Rollins to lead an effort to modernize NAS crop reports. The current system is viewed as inefficient, while farmers' confidence in the reports have deteriorated. In place of farmer surveys, Tom wants to combine satellite imagery, machine-generated yield data, drones, and other digital tools to produce more accurate acreage and yield estimates. The changes could lead to more frequent, frequent reports, potentially moving to a report schedule of every two weeks. The effort will initially focus on corn and soybeans, but could eventually expand to wheat, livestock, and specialty crops. The overhaul will not happen overnight. But Tom plans to move quickly by identifying potential contractors and beginning to test uh new systems. Traditional farmer surveys and field checks are expected to remain part of the process during the transition.
SPEAKER_00I love this. This is great news. Um, I like Kip Tom. I know Kip Tom. Uh he's been a guest in our premium videos uh on several different occasions. As a matter of fact, I sent him an email this morning after reading this article, and I pretty much offered any advice, any help that I could give him. I said, I said, uh, Mr. Tom, we've got thousands of premium subscribers. They're the most progressive farmers in the country. They're the best at what they do. I think we can probably take their opinions and input on all of this and perhaps provide some assistance. I felt it my civic duty to at least uh make what I know available and perhaps take our crowd and leverage it into better USDA data. Um, you guys know we've we've had a lot of comments about this in uh the YouTube comment section as of late. And there's there's a lot of people say a lot of things about USDA data. The the one thing that you should know is that these big companies who sell you guys stuff, whether it's John Deere, Seed Companies, Fertilizer Companies, they have the data. They have all the data. They know what your acres are, they know how many passes you took, they know how much seed you bought, they know how much fertilizer you used. Not only do they have the data, in some instances, it's been reported that they sell the data to people like hedge funds and trading houses, uh places like that. So it's not a level playing field. And for that reason, we need to level the playing field. We need farmers to have access to the best data that's out there. And right now they have access to what I would argue is very poor data from NAS because the survey response rates are horribly low. Um, the surveys are antiquated and they need to be updated and modernized. And uh hopefully they can come to some sort of uh solution.
SPEAKER_01If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about yesterday's premium video?
SPEAKER_00So in yesterday's video, I read first of all, I did a national uh corn yield tool and made it available as a spreadsheet download. So a lot of people have uh very strong opinions about the yield potential in their particular state. Joe, I'm in North Dakota, and after today's report comes out, they're gonna say USDA is 20 bushels too high in North Dakota. Okay, I've got a tool available. You can go in and punch in what you believe the number is, see what its impact is on the national situation. And we had every state in there with the uh harvested acreage from June, last year's yield numbers. I'm gonna update the tool and resend it following today's USDA report. So that's uh kind of a useful thing to have on your desk and just uh play with. I will have a USDA snapshot video out today after the report. Uh I hit record at about 11.02 usually, and uh, I need about two minutes to just kind of digest. And usually the video is blasted out by 11.15, 11.20. So that's the game plan today. Josh Lindville was on earlier this week. Should I buy fall fertilizer now? Um, Josh had some fairly strong opinions on this situation, identified and walked through all of the risks in both directions in terms of fertilizer prices and things you should consider. 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 it anytime. There's no other fee, no other obligation. Nobody will try to sell you anything else. If you are the decision maker in your farm operation, you do the marketing, you pay the people, you buy the crop insurance, you buy the inputs, uh, you pay the
USDA Preview
SPEAKER_00cash rents. This is something that you need to see because uh we talk about all of those things and more, and it will just it'll help you to make better decisions. Give that deal a shot this morning, guys.
SPEAKER_01The USDA will release its monthly crop production and WASDI report here this morning at 11 Central Time. Traders expect the agency to modestly reduce its corn yield and production estimates. Soybean yield and production estimates are also expected to slightly decline. The new crop, U.S. corn, soybean, and wheat carryout estimates are slated to decline compared to last month's. Similarly, the world new crop corn and wheat carryout projections are also anticipated to decline, uh, while the soybean carryout forecast is expected to be left unchanged.
SPEAKER_00The corn and soybean yield estimates are the big ticket items today, and that'll be the first thing everybody looks at. I'll also be curious to see um the world stuff. Again, I mentioned this yesterday. Russia, Ukraine, do they do they mess with the export numbers, um, production numbers, perhaps? It'd probably be export numbers more than anything. What do they do with Europe and the Europe uh corn production number as an example? They've had this heat wave and drought there. There's there's a lot
China Soybean Tracker
SPEAKER_00of things uh that could be changed, but uh make no mistake, I think the corn and soybean yield numbers, even though they're early estimates and they're subject to change, uh, that's going to be kind of the thing that everybody watches.
SPEAKER_01We had a couple of flash sales reported yesterday. U.S. exporters sold five million bushels of beans to China for delivery during the next marketing year. Exporters also sold 180,000 metric tons of soybean cake and meal to the Philippines for delivery during the next marketing year.
SPEAKER_00Let's check in on China's progress towards its 25 million metric tons of soybean purchases for new crop delivery that the White House has said that they agreed to, although China never really said it. We're up to 16.9% of the 25 million. We're at uh 4.2 million metric tons and change when you combine the stuff that's been uh confirmed via weekly reports plus recent flash sales. We're making a little bit of headway. I personally would if if if we had a pace chart, I think I had a pace chart in the last go-around. Maybe I need to do another one. I'd say we're probably behind the pace needed by a little bit uh just because we ship most of our soybeans immediately post-harvest. But um, hey, maybe purchases accelerated or will accelerate uh sometime soon. What did cattle do yesterday?
SPEAKER_01Cattle futures were mostly higher. Live cattle were 58 cents lower to a buck oh eight higher. Feeder saw gains ranging from eight cents up to a buck fifteen, with the exception of the front month contract, which lost 58 cents. And then boxed beef prices, they were lower. Choice was down 11 cents at 371.31 and Select was down a buck oh four at 349.80.
SPEAKER_00SP is up 22 points this morning. Fairly quiet in the stock market. Uh, crude oil is very quiet, down seven cents in the September WTI at 83.14. Have a great day, guys. Report at 11. We'll be back on Thursday.