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
Banks See Ag "Bull Cycle" + Corn Accumulator Mess
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🌍 War & Bullish Setup
Bank of America says ag markets may be underpricing the Iran war. Prolonged conflict could tighten fertilizer supplies and spark a new grain bull cycle 🌽📈
⛽ Energy Shock = Fertilizer Risk
Damage to Qatar LNG + soaring nat gas prices = major nitrogen concerns. Urea futures hit multi-year highs… big implications for crop costs ⚠️
🌽 Grains Higher
Corn, beans, and wheat all pushed higher Thursday on energy + fertilizer fears. New calendar-year highs in corn contracts 🚜
💰 Funds Still Long
Funds were net buyers again—holding large long positions in both corn and soybeans 👀
🛢️ Oil Surge
Crude spiked sharply this week amid Middle East attacks. Higher energy = higher input costs + biofuel support 🔥
🏛️ Fertilizer Bill
New bipartisan “Fertilizer Transparency Act” aims to improve pricing visibility and boost domestic production 🇺🇸
🌧️ Weather Update
Better moisture in the Corn Belt, but worsening drought in the Plains. Mixed outlook heading into planting season 🌦️
👉 If you’re watching inputs, energy, and geopolitics… this could get interesting fast.
👍 Like & subscribe for more daily grain market updates
💬 Drop your thoughts in the comments—bull market coming?
Bank of America is Bullish Ag
SPEAKER_02Morning, guys. It's Friday, March 20th, 5 26 a.m. Central Time. Grain markets are mixed this morning. Welcome back to Grain Markets and Other Stuff. This is the best grain market show in the galaxy. My name is Joe. Mackenzie Johnston is my co-host. Mackenzie, say good morning to the people.
SPEAKER_00Good morning, everyone.
SPEAKER_02Brian Sputis here. Brian, say hi. Hi. All right. Excellent introduction. Um, let's go.
SPEAKER_00So analysts at Bank of America believe agricultural markets could turn bullish if the Iran war drags on. If the Kong if the conflict extends into the second half of the year, a worsening shortage of nitrogen fertilizer could trigger a new grain bull cycle. The disruption to global fertilizer supplies is already broader in scope than the crisis seen in 2022. If the conflict continues into the second corner, analysts anticipate corn prices to rise 20 to 30 percent amid production risks. Wheat is projected to gain 15 to 20 percent as a key food security hedge, and soybean oil could increase five to ten percent, supported by its ties to energy markets.
SPEAKER_02I love the headline and the sentiment, Brian. However, part of me thinks this is the sort of stuff you see at the top. What do you think?
SPEAKER_01No. Uh I mean that that could be the case um if the war were to end uh very quickly. So that this is the preface of if the war continues into the later part of the year, and it very well could, uh, and I think there are real concerns about this. Um, you know, think about the idea of things being grown globally. This isn't just an issue of domestic U.S. producers maybe not having fertilizer, maybe they do. Uh if there's some fertilizer constraints in certain countries around the world at certain times of year, we could have uh, you know, some problems with some wheat crop here and there, maybe it's the canola somewhere, maybe this or that. So, you know, if you have uh uh uh several countries around the globe that have some fertilizer constraints that reduce yields uh slightly, um you could have a several million ton impact across the globe. So I do think there's validity to this conversation. Um, and so when I think about like there's product that's not moving right now, and then undoubtedly there's energy. So LNG needs to move to certain areas, and that's a base uh for this process. You you break down the LNG, you get the ammonia. So I I think the fund manager right now is thinking what happens if there's uh a problem and and we have uh a shortage of uh anhydrous ammonia and we can't do some of the fall application that we would do for next year's crop. So this isn't just like right here, right now. I think we're thinking big picture long term on this. Um, but yes, are there times when you think about like back in 2022 and then there was a cover The Economist and it had the picture of wheat with like skulls on the shaft, right? So yeah, I hear you. Um, but I I this feels like we're we're not sitting here at at uh$13 wheat with these headlines coming out, right? This is kind of just possibly getting started. We have we have KC wheat funds a little long, still short, a little SRW. This isn't like we're we're balls to the wall uh all in on this thing yet.
SPEAKER_02Yeah, it's it hasn't hit a fee for pitch, not even close. Um I had these charts yesterday and I've got a different version also. And so you talked about the fundamental stuff, the fertilizer, the lack of uh reduced production possibilities, but you've also got just this general idea that commodities undervalued ag commodities are cheap relative to the broader commodity sector. Uh, this is one I pulled I pulled this morning. So this is percent return since the start of 2025. The broad commodity sector is up 31%, and the ag sub-index, which is ags and livestock, is like flat basically during that same time frame. So I think what you said has validity. There's there's you know the fertilizer issue, hey, maybe less production. And also just now they're you got a fund manager who's looking at this and saying, man, this stuff is hasn't done a damn thing. And the rest of the commodities, a lot of them have rallied sharply. So maybe I ought to buy some corn or wheat or soybeans. Right.
Grain Price Action
SPEAKER_01I mean, you think about last time crude oil was 100 and and uh the times before that. We are undervalued in agricultural commodities relative to energy values. And and then you think about crude oil, and it's not even just crude oil. Like crude oil is off the highs, but yesterday we had unleaded gasoline and heating oil on on the board making new highs above the uh kind of that panic high coming out of the the weekend where the war started. So crude oil is eased. It's the products that are that are a problem right now. Let's go to grain price action.
SPEAKER_00Corn futures moved higher yesterday, with the May 26th contract gaining nearly seven cents to settle around 470 per bushel. Soybeans also advanced, with the May contract rising about seven cents to close near 1169 per bushel. The rally was driven by soaring oil prices and expectations of disruptions in fertilizer supplies tied to the Middle East conflict. Wheat futures followed suit. The May Chicago wheat contract uh rose roughly four cents to close at 608 per bushel, while the May, Kansas City wheat contract gained about one cent to settle near 627 per bushel.
SPEAKER_02All right, we'll glance at some charts here. Brian, here's May Corn, best close of the year yesterday.
SPEAKER_01Yeah, I mean, um, you know, a new high close is not a uh a bearish thing. And I think uh if we can kind of continue to get some closes above that November high, that was something that uh we discussed in our our premium video on Wednesday. Uh especially as we finish the week, uh especially as we finish the month and we get through the quarterly stocks, we've got the ability to really start turning the corner on these charts with some good weekly and monthly closes. Uh here's D's corn, same thing.
SPEAKER_02Best close of the year yesterday.
Accumulator Mess
SPEAKER_01Yeah, and and here we are. Um, you know, it's obvious we're also respecting a little bit of short-term resistance that we've built in here. We had that initial peak at 98.5, then we had the high at 95 and a half, that recovery high. So we went and revisited that. But um, you know, if we were to zoom all the way out on this particular contract, this$5 area has been a very, very important zone, uh, save for the contract high of$512.5. And so uh if this market uh does start taking out those highs uh from the the initial uh coming out of the week, the the weekend the war started up at 498.5, then we're gonna go look at the contract high, which is only gonna be uh 12.5 cents above five bucks. And if we start making new contract highs, then that to me says that the money is really coming here. So I I think right now I would imagine that unless we see some major escalation uh in sentiment here, we could probably chop around within that trading range that was scored from that one Sunday night high to the the Tuesday morning low, which was also the report. But look at where that Tuesday morning report day low was. It was right down to support. They bought it right where they should have.
SPEAKER_02I'm gonna ask you a question, and this is we're gonna go off on a tangent just a little bit here. I have been made aware that as it relates to uh grain marketing, cash corn sales, a large portion of sales that farmers have made, new crop corn, are tied to structured products, accumulator contracts, premium pricing contracts, and the double up feature is now in play for a lot of these. There was a lot of double ups in the 480, 490,$5, probably up to 510 or 520 range. So, you know, these structured products were pitched uh by the grain buyers when prices were lower, and a lot of people bit and they took the premium price and they took the double up feature. And now they're kind of sitting here wondering like, first of all, what the hell do I do with this? But I'm more curious what you think this means in terms of impact on the market or farmers selling as we move forward.
SPEAKER_01Yeah. Um, and and it's hard to say how much is out there as far as the accumulator. I think the uh suggestion is there's maybe a heavy amount of them out there compared to. It's a lot, man. So um, and and don't get me wrong, I don't I think the accumulator has a place for a small portion of your bushels. Um, you know, it is a way to get a higher price than where the market is at the time, but there's a little sacrifice. You don't know if you're gonna be selling uh, you know, 5,000 bushels or is it 10? So I don't think that's anything that anybody should do very heavily, but I think if you're looking at a diversified way of marketing bushels, it has a place for a small amount. Now, mechanically in the market, uh, what does that do? That means that there are an awful lot of sold calls. And if your double ups that you'd mentioned are 480, if they're 490, if they're five bucks, uh, you know, we're already potentially in the money on two of those double-ups right now, and we're knocking on the door of the third. And uh, this is where this this type of market uh structure can accelerate a bull market. Yes. Um, because then this causes a lot of action of okay, now I have to buy it to cover that. Um, and so I think that this could be another feature of something that develops into a more bullish uh uh uh you know structure of the market here, covering all of these sold calls that have been done by the commercials uh for these uh these double up accumulator programs. And so uh and I'll tell you, you can you can effectively structure your own accumulator if you want to and then manage it yourself. Uh when we were at 470 on the board, you could have bought a$5 put, sold two$5 calls, and sold a$420 put. That's what they do when they do an accumulator. That$420 is the knockout, the$5 is where you're accumulating, but it's also your double up. Um and so when you if you were to have that position on in your account right now and see how it's moving, uh it moves pretty fast. Um and a lot of this is a component of time and all that. So uh I think it could cause problems, especially if we start getting bit above$5. That's gonna be a part of the mechanism of why there's additional buying breaking through five.
SPEAKER_02Yeah. Uh Matt Bennett and I have a really good premium video on DIY, premium pricing, or accumulator contracts, exactly what you discussed. And we go through some specific examples and charts. The one other thing I'll mention is that if you've got the accumulator and you don't know if you've got the bushels priced or not, if it's structured that way, where it's like all or none at option expiration, you don't, you're not gonna sell as much. You're not gonna sell as many additional bushels. So not only do you have people perhaps jumping in and like buying calls to offset this accumulator, you're gonna have on on the flip side some people who just kind of pulling offers, right? Get the deer in the headlights, kind of, I don't know where I stand, so I don't want to sell as much. It um if you run, if this bull market continues, that whole situation, it's it's fuel to the fire, man. It really is.
Qatar LNG
SPEAKER_01I absolutely agree. And uh, you know, the the thing, at least if it's in your account, you can get out, you can manage it, you could say, hey, you know what, I'm gonna take the sold call, I'm gonna take the 10 cent loss on that. I'll sell a little bit of cash. And but when it's out there in the OTC market, you're kind of just like, oh, all right, now I need an account to help offset what's going on in the OTC market.
SPEAKER_02Yeah, I don't do ads on Friday, but if you guys want to see that uh video, me and Matt did, just shoot me an email and uh we'll get you signed up.
SPEAKER_00Iranian strikes have caused significant damage to about seven about 17% of Qatar's LNG export infrastructure, uh, with repairs expected to take three to five years. The disruption is estimated to result in roughly$20 billion in lost annual revenue and could contribute to a global natural gas shortage. The impact extends beyond natural gas, with liquefied petroleum gas exports projected to decline by 13% and sulfur exports by 6%. The damage could set Qatar's energy infrastructure back by 10 to 20 years.
SPEAKER_02The uh CME urea contract at the Gulf posted fresh highs for this move yesterday up to 617 a ton. That's up$263 or 74% from the December 2025 low. And that's not a retail price. Retail price in the Cornwall Bryan's north of 700, some of them might be approaching 800 if you can buy the stuff at all. So it seems like as the days go on, this fertilizer situation or problem is becoming more and more real. And the idea that it it is long lasting becomes more and more likely.
Fertilizer Transparency Act
SPEAKER_01It is. Uh now the caveat would be you know, and it if you were to go back a slide to Cutter and LNG, and if there's going to be a short-term resolution to what's going on in the Middle East, it's going to be because of pressure from other Gulf states like Cutter, uh, who houses a US base. Um, the cost benefit uh of what's happening right now for the Gulf states, uh very low uh benefit for them right now. And I I think they would like to see this thing finished sooner rather than later, because this is causing some, as you'd put it here, a potentially a decade worth of issues for infrastructure for them. So if there's gonna be international pressure that gets this thing resolved sooner rather than later, it's because of that. But this is what we talked about logistically. So if Cutter's got this LNG problem, now is Egypt getting its LNG so that it can start the process to get the ammonia. Uh, you know, Iran themselves, they have what, uh, how much of the world's urea do they produce? So I don't imagine they're sitting there pumping that out full bore right now while the war is going on. So that's why these these fund managers are seeing this as a potential big picture issue. Yep, let's stick with the fertilizer theme.
SPEAKER_00U.S. senators have introduced the Fertilizer Transparency Act, which is meant to improve fertilizer market transparency and support farmers facing high input costs. The bill aims to ensure that all market participants have access to consistent and reliable pricing information. It also seeks to promote increased domestic fertilizer production and uh reduce reliance on less transparent global markets. The legislation comes at a time uh when farmers are struggling to secure fertilizer supplies ahead of the spring planting season, driven in part by a sharp rise in costs following the Iran War.
SPEAKER_02So, what I'm seeing here, Brian, is a lot of talk. Uh, there was supposed to be this DOJ investigation, and maybe it's ongoing. I don't know. They haven't said a ton about it. Um, you had uh the USDA uh deputy secretary Steven Baden was talking about this, and he made some some pretty severe accusations against a couple of the companies. And now you've got this. But to this point, I mean, for months and months and months now, it's been all talk, and and maybe what's going on here finally spurs them into some real action. I just I'm very skeptical this is going to result in any change.
Crude Oil, Energies
SPEAKER_01Skeptical of our government doing something positive and getting the job done. Oh, that's crazy. Um, yeah, you know, I think the one statement in that whole process that I heard that I think I could agree with that probably needs to happen in in numerous industries is pr production domestically, um, and and being able to have that domestic production so that we're not as vulnerable. Um and uh and then that follows right onto the other side of things that we need to have more domestic consumption of. But uh that's a you know another topic. But yeah. Okay, let's talk about oil.
SPEAKER_00Oil prices surged yesterday as the Middle East conflict escalated. Brent crude rose about$119. Uh, excuse me, Brent Crude rose above$119 per barrel before pairing gains, while U.S. crude climbed past$101 per barrel before retreating. The heightened volatility was triggered by Iranian strikes targeting refineries and export routes in Saudi Arabia, Kuwait, and the UAE. These attacks have raised concerns about significant damage to production facilities, which could have long-lasting could have a long-lasting impact on the global global economy to ease supply disruptions. The U.S. and its allies are planning to release strategic reserves, and the U.S. may also ease restrictions on Iranian oil already in transit.
SPEAKER_02Um, Chris Wright, who's the energy secretary, came out yesterday and said that we will not um implement restrictions on oil and gas exports. And if you really wanted to knock crude prices down, that's the way that you do it. But it's not going to happen. Um, crude looks pretty damn good on this weekly chart. And the longer you stay above 95, Brian, I mean, the better it looks, I think.
SPEAKER_01Yeah, absolutely. Um, whenever you've got the uh, you know, a major peak like that, um, if uh again, closing the week, closing the month. And then this month is also the end of the quarter. So we're looking at some quarterly closes as well. Uh, but just to bring that up, right? So crude oil hanging around$95,$96 a barrel, that that peak that we made was$119.48. And again, we're just kind of looking at this for some context, but unleaded gasoline made a high of$322.05, and uh we had a high yesterday of$327. So we had traded five cents above that, that relative to$119.48. That's where our Bob is. Uh, and then when you look at heating oil, uh, we're at uh about 447 right now, and that high that we had coming out of the week in the war started was 447, and we had traded above that yesterday. So the products right now are trading like where crude oil, if it was right back up to 119. And that's the real problem. I know the headlines are gonna look at crude and they're gonna say, oh, crude, crude, crude, but everything that the uh the semi-truck, you know, that takes all of our products across the country that uh goes to the get the grocery store, uh, our clothes that are shipped from stores to store, they're gonna cost more to get there. And then everything we put in our own car uh to drive where we're going on the gas, that's more expensive. So I know crude oil gets the headlines, but the the real numbers that matter is the uh the RBOB and the heating oil.
Trump, China Visit
SPEAKER_02And it's inflationary. I've had charts in the past. I should have thrown one into in today. Um I've had charts of like CPI and corn laid over together and like they look the same the last seven, eight years for the most part. So if this inflation thing gets ramped up, I'm gonna be really curious to see how these inflation reports look the next couple of months. Because I mean, when you when you run gasoline prices up 25, 30 percent, I mean, there's gotta be an impact, you know.
SPEAKER_00President Trump's visit to China is now expected to take place in May. On Thursday, Trump said his meeting with Xi Jinping had been rescheduled and suggested it would occur in mid-May. Earlier in the week, the White House noted that China supported delaying the meeting. The trip originally planned for the end of this month was postponed as Trump remained in Washington to focus on the war.
SPEAKER_02Brian, what are your expectations with regard to Chinese purchases of U.S. soybeans? Will there be more old crop purchases and where will there be 25 million metric tons worth of new crop purchases as the administration has advertised?
SPEAKER_01Um, I don't know. I think the the 25 million ton number, um that seems to be something that is a very reasonable number that we should be able to hit for the next couple years. Uh, whether or not we get the 8 million tons, uh, well, we just had a major reset in a lot of these values. And and so, you know, the the thought of of July soybeans being 80 over November and then trading to, you know, under 30 over November yesterday. Uh, the the fact that we had flat price uh reset as much as it did earlier this week. I think if if we are going to see some buying come in here uh again on some old crop, this is probably uh an area where uh where we might start seeing that.
SPEAKER_02So is so that's possible, but the other possibility is that the market thinks that there will be no additional old crop purchases, and maybe that's why we've seen the bear spreading and the weakness in old crop versus new.
SPEAKER_01You could think of it a couple different ways. Right. And then that just changed it to now maybe now that they will because of what just happened, right? So yeah, the market the thought that it won't happen, and that's why all of that just happened in the markets with the spreads and the futures. But now that it is here, does it look more attractive again? I don't know, but that's why I said if they are gonna do it, it's after this reset.
Drought Monitor
SPEAKER_02I'll tell you what, if China's gonna buy 25 million um of new crop beans, they better start pretty soon because that's that's a substantial purchase amount. They're gonna have to start by probably now. It should be March, April, May. You know, they should be getting going with some new crop purchases.
SPEAKER_00A large portion of the Corn Belt received precipitation last week, leading to improved drought conditions in Indiana, Illinois, Michigan, Wisconsin, and Missouri. According to the Climate Prediction Center's most recent monthly precipitation outlook, the region is expected to see above average precipitation in April. Meanwhile, hot and dry weather-intensified drought conditions across the high plains with deterioration observed from South Dakota all the way down to Oklahoma. When we look at the percentage of U.S. areas experiencing drought, corn country currently stands at 41%, soybeans 42%, winter wheat 55%, spring wheat 21%, and cattle country 54%.
SPEAKER_02They had this monthly precipitation outlook out yesterday, which I would throw in the trash, I think, for the most part. Um, there's not any rain in the forecast, really. Brian, what are you hearing about the drought situation? First talk about the corn belt, then we'll talk about some winter wheat stuff.
SPEAKER_01Yeah, um, you know, we've had a little bit of improvement in some areas of some some rain came through, and there's obviously gonna be some hit or miss spots that uh needed it and didn't get it, and then maybe some areas that uh got too much or what have you. But um this is gonna be something that uh, you know, I was reluctant to really uh get too worked up about, you know, as we were thinking, maybe December, January. But now we're getting close to planting. And uh if these drop monitor maps don't really improve much as we progress into the next month or two, um, that's gonna be something that adds to everything else that we're talking about right now on that potentially friendly side. Um so I think that this is where we are getting into after the the quarterly stocks and the planting intentions report, where these maps start to matter a lot more. Um, and as far as the winter wheat goes, Joe, um if you're growing hard red wheat and you've got wheat going from uh you know coming out of dormancy, then you get a freeze, then you go to 91 degrees, and then you just don't have any rain in the forecast, it's not a very good recipe for uh for for the wheat crop itself. Uh so you know this this wheat market definitely has uh has taken these forecasts and everything. Else going on and added some risk premium. And I think the wheat charts look really good. And this is just something else that could add again more fuel to the fire. Because we just had a period where very early in the year, at the very beginning of the calendar year, every single thing we were dealing with, narrative-wise, was bearish. And now it's starting to turn the corner here. And I really love the fact for agricultural commodities, corn, soybeans, and wheat. Beans made their lows January 2nd, wheat made their lows January 2nd, corn made their lows so far for the year, right after the January report. So we've got early year lows in all three of these products. I think that's also supportive, calendar-wise, to uh a possible bull market.
SPEAKER_02I've mentioned in the past regarding drought and drought in the spring. I've always alluded back to 2012 where it was dry all spring, but the corn market didn't rally until midway through June. If the corn market continues to rally, people are going to cite the drought as being one of the reasons, even if it is or or it isn't, you know, it's just the way it's going to be.
SPEAKER_01Right. Uh, because there's other things going on, but right, but you know, a lot of times it's dry and then the the crop goes in quickly, and then that can be bearish in other years. Uh, but if it's dry in a year where the narrative surrounding agriculture seems to be friendly, then it's it's gonna be seen as friendly. Guys, have a wonderful weekend, Brian. Thank you for joining us. Privilege as always.
SPEAKER_02Uh, we'll be back on Monday, guys. See ya.