Why Did Cargill Stop Buying Soybeans from Brazilian Farmers??

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🌱 Brazil Soybean Export Disruption
Cargill has paused Brazilian soybean exports to China after Brazil implemented stricter pest and weed inspections at China’s request. Some shipments have failed the new standards, forcing exporters to halt purchases from farmers and causing local soybean bids to disappear in parts of Brazil.

🛢️ Iran War Drives Fertilizer Concerns
Bloomberg’s Odd Lots podcast highlighted how the Iran conflict and disruptions through the Strait of Hormuz are pushing fertilizer prices higher—just ahead of spring planting. Rising input costs could eventually translate into higher global food prices.

📈 Grain Futures Rally
Soybeans surged again Wednesday with May beans closing near $12.14. Corn and wheat also gained as crude oil rebounded and geopolitical tensions escalated, while speculation grows that higher fertilizer and fuel costs could influence US acreage decisions.

🤝 US-China Trade Talks Ahead
US and Chinese trade officials will meet in Paris this weekend ahead of President Trump’s planned China visit later this month. Markets are watching closely as analysts suggest new soybean purchases could follow.

🏭 Ethanol Production Jumps
US ethanol output climbed to an eight-week high, while inventories dropped. Margins across the Corn Belt remain solidly positive, providing support to corn demand.

🛢️ Record Strategic Oil Release
The International Energy Agency announced a record 400 million-barrel emergency oil release, but crude still rallied above $88 as markets worry about prolonged Middle East disruptions.

📊 Inflation Holds Steady
US CPI rose 2.4% year-over-year in February, matching expectations. However, the report doesn’t yet reflect the recent surge in energy prices, which could add inflation pressure in the months ahead.

Transcript

Cargill Stops Buying

SPEAKER_01 0:08

Good morning, everybody. It's Thursday, March 12th, 5 23 a.m. Central Time. Grain markets are higher across the board this morning. May corn futures up four and three quarters at 465. May soybeans up 11 cents at 12.25. May Chicago wheat up 5.5 at$6.25. May Kansas City wheat up three and three quarters at 6.17 and a quarter. May Spring wheat up five cents at 643. Big news out of Brazil yesterday. Why don't we start there?

SPEAKER_00 0:33

So Cargill has paused Brazilian soybean exports to China due to new inspection requirements that were introduced by the Brazilian government last week. Following a request from China, Brazil's ag ministry implemented stricter pest and weed inspections. Some soybean shipments have failed to meet the new standards, blocking them from export. Brazilian grain traders posting on X indicate that bids for local soybeans have all but disappeared. There are ongoing negotiations between exporters and officials to resolve the inspection issue, but no solution has been reached.

Odd Lots

SPEAKER_01 1:22

So they're all about these inspections, and China's uh pretty strict with this stuff, apparently. Similar incidents occurred in January of 2025 and also December of 2024. It was back in August of 2016 that both Cargill and Dreyfus stopped buying soybeans at certain locations due to poor profit margins. I don't know if China is like playing some games here, perhaps, because of this truce with the United States. Maybe that's one possible cause. Maybe uh the soybean board is just too damn high and they've widened the basis enough and they're like, you know what, we just don't want to pay up for these soybeans. And um, maybe that's part of it. I don't really know. I feel like this is going to be short-lived. This does not, I don't know what the impact on the market is. I mean, you look at the board and say, oh, maybe it's friendly. I don't know if that's the impact. Uh, but this this situation does not add or subtract bushels from the balance sheets. Brazil's got a massive soybean crop. Farmers can't sell beans, apparently, right now, at least to uh certain cargo locations. I think that that will resume though. If I had a guess, they'll have this thing sorted out within a week. And if they don't, maybe this turns into a bigger story.

SPEAKER_00 2:26

Bloomberg's popular podcast, Oddlots, reported on the fertilizer crisis driven by the Iran war. It explained that halted transit through the Strait of Hormuz has disrupted supply and pushed prices higher. The situation, of course, comes at an inopportune time, just ahead of the spring planting season when fertilizer demand is typically strongest. Experts warn that higher fertilizer costs could eventually push food prices higher by increasing input costs for farmers.

Soybean Rally, Bean Oil

SPEAKER_01 2:53

Okay, there's nothing here that you guys don't already know, and there's nothing here that we haven't already talked about. The story here is that the Adlots uh podcast in particular is very popular. Everybody with the Bloomberg terminal, which is every big trader in the world, um, probably saw this headline. And it's interesting because this situation, the hey, lack of fertilizer, uh, right in like the worst possible timeframe for the North American growing season, uh, it's it's a big deal. And you've got large speculators, uh, the fund type community that are now looking at this stuff. This is now mainstream news fertilizer and and corn prices and that whole relationship. They went to great depths to talk about uh in the podcast. I listened to the whole thing. They talked about the fertilizer corn uh price ratio that like our friend Josh Window talks about all the time. But they got into some some pretty specific stuff here, which uh could that help to encourage speculative buying in the corn market? I believe that it could.

SPEAKER_00 3:48

Soybean, uh soybeans were sharply higher yesterday with the May 26 contract gaining roughly 12 cents to close at 1214 per bushel. Corn and wheat futures also moved higher. The May corn contract rose eight cents to settle near 460 per bushel, while while May Chicago wheat futures climbed about four cents to close near 595 per bushel. The gains were driven by a rebound in crude oil prices as tensions in the Middle East escalated. Soybeans found additional support on optimism over the upcoming G Trump meeting at the end of the month.

Commercials Own More Grain

SPEAKER_01 4:20

U.S. Treasury Secretary Scott Bessant and also U.S. trade rep Jameson Greer will meet with their Chinese counterparts in Paris this weekend. And soybeans are supposed to be on the docket. Uh this Bloomberg article that we've got up on the screen here, they discussed the idea of China buying more U.S. soybeans simply because of um like geopolitical goodwill type stuff type stuff, like not because of economics, which is super interesting. The soybean market is acting very, very well. We're within an earshot of that high that was posted on Monday in this nearby May contract. The soybean oil market has been the leader here. It's up$21 uh dollars or about 45, 44% rather from the December 2020 low to Monday's high. That's an incredible move. And that has to do with um two things. The bean oil rally has to do with two things. It's these RVO rumors, which uh were there's supposed to be a leak this week, and it was good news. So the market rallied. And then also you've got the surge in in crude oil prices, and this stuff is all uh tied together because of the strong soybean oil market. The uh crush margins are excellent. We are sitting right at some multi-year highs. You can see this board crush chart. We've peaked at like 233 uh two separate times the last couple of years, once in 2025 and once in 2024. If you break out above that, this would start to look even better. So that will encourage uh U.S. processors to crush beans at capacity, even though they were kind of doing so already. Uh Maycorn Futures look good. I think it closed above 465, which was that old high from back in November. I think that would look very good from a technical standpoint today. Kansas City wheat futures sitting at 617. You're about 30 cents off the highs that were posted earlier this week. But um it uh it looks better. Everything looks a hell of a lot better here following this Iran situation.

SPEAKER_00 6:07

According to Bungie, the conflict in the Middle East has pushed grain and oil seed prices higher, which has boosted farmer selling. The price rally has allowed the company to build inventories, which could be essential if the conflict persists, as prolonged disruptions may lead to supply shortages and higher prices. To navigate the conflict, Bungie is implementing some of the same strategies it used after Russia's invasion of Ukraine, including shifting export routes and relying more heavily on trucks and rail for transport. Meanwhile, the company is still hopeful that the Trump administration will finalize biofuels policy, which could increase demand for oil seeds.

SPEAKER_01 6:45

So the article says that the Middle East conflict has sent grain and oil seeds up, prompting growers in North and South America to sell crops they've been holding. Uh Greg Heckman, the CEO of Bungie, said this they got the opportunity to sell because prices went up, and we got the opportunity to own more inventory. You guys tell me if that's good or bad, that the commercials own more and the farmers own less. He said, We're hearing from our customers in the trade that inventories are okay at this point, but people are concerned if this would carry on a long time. Then they begin to be concerned about levels of physical supply and ultimately price. There's not a supply shortage right now. But if this fertilizer thing persists, it could be maybe it's a 2027 thing. I don't know that it's a thing for this year necessarily. Although the more we talk about fertilizer, the more I hear stories of, you know, Joe, there just wasn't a whole lot bought in our neighborhood. And I think that that's the exception rather than the rule. But I think that, um, and I'm I'm learning more about this every day, but I think that there are more farmers in the U.S. that did not have their needs covered than perhaps I had thought, uh, the more that I hear about the situation.

SPEAKER_00 7:49

If 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?

Crude Update

SPEAKER_01 7:54

Matt Bennett was on yesterday for a 20 questions segment. We had some excellent, uh, mostly grain marketing questions that came in from our premium subscribers. My advice to uh my answer to one of the questions was fade the accumulators uh with regard to your marketing in one specific scenario. What exactly does that mean? I guess you have to watch the video to find out. Um, we've got some more kind of hardcore grain marketing stuff coming up today and tomorrow. 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 is no other fee, no other obligation. Nobody try to sell you anything else, just a ton of uh content uh direct from us every single business day, guys. New premium video every single business day. Give that deal a shot this morning.

SPEAKER_00 8:33

Oil prices advanced yesterday, despite the International Energy Agency announcing a record release of 400 million barrels of oil from strategic reserves. A definitive timeline for when the barrels will reach the market was not disclosed. Oil prices briefly retreated following the announcement, but quickly rebounded to above$88 per barrel. The rise in oil prices suggests markets remain concerned about a prolonged conflict that could lead to severe supply disruptions.

Inflation to Spike?

SPEAKER_01 9:02

Crude is higher this morning, and maybe that's why the grains are higher this morning. I don't know. We're trading just about 90 bucks in the um May WTI contract. The trading range this week has been incredible. Crude oil's traded a$43 range this week. Uh that's like something that sometimes you don't see over the course of years, even, and we've done it in one week. Um, we are trading this morning, ballpark$15 uh per barrel or about 20% above Tuesday's low. So the volatility here has been absolutely incredible. I think that if uh spot WTI futures closed above that 95.03 level, this uh weekly chart would look uh fairly friendly headed into the weekend. So yeah, this is this continues to be a big influence on our ag markets, I think.

SPEAKER_00 9:41

Consumer prices rose 2.4% in February from a year ago, matching expectations and unchanged from January. Notably, the February CPI report that was released yesterday reflects price levels before the war with Iran began and energy prices surged. The recent jump in energy costs is expected to add to inflationary pressures in the coming months. The Fed is largely expected to hold interest rates unchanged at its meeting next week as officials assess the economic impact of last year's rate cuts along with ongoing geopolitical tensions. Markets are currently pricing in a potential rate cut in September.

Ethanol Production

SPEAKER_01 10:18

Yeah, so this uh data means nothing now because it does not include any of the recent stuff. This is February CPI. Uh, interestingly, gasoline accounts for about 4% of the CPI number. So theoretically, if you saw a 25% increase in gas prices, that might increase your total CPI by 1%. And if you saw a 1% jump, if you went from 2.4 to 3.4% in one month, that would be absolute insanity. That's that's pretty crazy. Um, and that may be people, you know, traders are looking at this and they're saying, hey, inflation could be back. And maybe because of that, we need to own corn and soybeans and wheat and commodities that are cheap and tangible type stuff. Uh gas prices based on gas buddy data uh versus last month are up 66 and a half cents. 361 national average up from uh about 295. I think that's like a 20% jump. I'm not good at math, but um, I think that's like a 20% jump. So you could very easily see a spike in CPI uh the next couple of months because of these higher gas prices. And higher gas, higher diesel prices, of course, correlate to higher prices of everything because everything moves on a truck. It's um there's there's a lot to this uh potential inflation play. It's it's very early, of course, and this whole crude oil thing could be very short-lived. A lot of these geopolitical things are, but it's something to take into consideration.

SPEAKER_00 11:37

U.S. ethanol production climbed to an eight-week high last week. Weekly output was reported at 1.13 1.13 million barrels per day, up 2.8% compared to the prior week and up 3% versus the same week last year. Ethanol stocks fell to 25.58 million barrels. Uh, the print was down 2.9% compared to the previous week and down 6.3% compared to the same week last year. According to Reuters data, U.S. ethanol margins remain strong across the corn belt, ranging from 10 cents to 35 cents positive.

SPEAKER_01 12:07

This uh week of ethanol production was tied for the third best ever on record. So we're doing very well. However, USDA has a very lofty projection for corn usage via ethanol penciled into his balance sheet. And uh, we're actually off the pace needed to hit that projection by just a little bit. I don't think it's anything to be concerned about, but uh it could be could be 10 or 20 million bushels. Yeah, perhaps it could be. Uh what did cattle do yesterday?

SPEAKER_00 12:31

Cattle futures were lower once again. Live cattle were buck 65 to 222 lower. Feeder saw losses ranging from 462 down to 657, boxed beef prices were higher once again. Choice was up 203 at 396.70, and select was up 248 at 389.25.

SPEAKER_01 12:46

Stock market's off this morning. The SP's down about four tenths of a percentage point. The Dow's down 240 points, Treasury's off just a little bit, US dollar is higher. Crude oil again, May WTI up 374 last trade at 89.81. Um, looking a little bit uh stronger here this morning. Have a great day, guys. We'll be back on Friday.