USDA Wants to Help Farmers - Are They For Real?? Will Farmers Trust Them??

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In today's update: The DOJ is investigating potential price fixing in the US fertilizer industry, with farmers asked to provide confidential input on the practices of Nutrien, Mosaic, CF Industries, Koch, and Yara. Winter wheat conditions hit their lowest rating since 2023 amid widespread drought across key HRW states. Soybean futures tumbled Monday on expectations of a shift in planted acres away from corn. The US naval blockade of the Strait of Hormuz is rattling energy and input cost markets, with crude oil topping $99/barrel. Brazil's soybean harvest is nearly wrapped up at 87% complete. And weekly export inspections showed strong soybean shipments — up 47% year-over-year — while wheat came in at the low end of expectations.

Transcript

Fertilizer / DOJ

SPEAKER_01 0:08

Morning guys, it's Tuesday, April 14th, 524 a.m. Central Time. Train markets are mostly higher this morning. May corn futures up two cents at 442 and a quarter. May soybeans up a half cent at 1162 and three quarters. May Chicago wheat up one and a half at 583 and a half. May Kansas City wheat up two and a half cents at 605 and three quarters. May Spring wheat unchanged at 624.5. We've got some fertilizer news to start this morning.

SPEAKER_00 0:32

So U.S. farmers are being asked asked to provide uh excuse me, provide confidential input to assist in the DOJ's investigation into alleged price fixing by fertilizer companies. The U.S. fertilizer market remains highly concentrated with only a handful of major players. Fertilizer prices have not fully retreated since supply disruptions following Russia's 2022 invasion of Ukraine. And then, as we're all aware, prices have surged recently due to the Iran war. Production cuts and rising input costs for fertilizer companies are expected to keep fertilizer prices elevated.

SPEAKER_01 1:07

Mackenzie, farmers, this day and age don't like helping the USDA with things. We talked about the most recent response rate to the USDA uh acreage survey, which was 37%. Do you think that the farmer uh comes out of his shell here to help USDA with this, or not so much?

SPEAKER_00 1:28

Not so much. I don't think they're gonna flock to help with this situation.

Crop Progress / BAD HRW Ratings

SPEAKER_01 1:32

I think that maybe they should, but I have some kind of differing and conflicting thoughts here. So this is the story. Specifically, the DOJ is investigating the practices of nutrient, mosaic, CF Industries, Coke, and Yara. These five companies control an overwhelming majority of nitrogen, phosphate, and potash sold in the U.S. Uh, U.S. Deputy Secretary uh Steven Vaden, your boy, he's all over this stuff. Um, he spoke to members of the North American agricultural journalists on Monday. Uh, he encouraged farmers to reach out with their concerns they could be used as the DOJ and Federal Trade Commission continue looking into the issue. We know that farmers might have a lot of information, Vaden said. He spoke to reporters about uh Mosaic's announcement last week that they would idle production at two plants in Brazil, removing some phosphate from the global market. And uh Mosaic kind of snapped back and was like, hey, you know, it's our business. We're gonna do what we want. And um, that's fine. So I uh I hope there's progress here. Part of me, this the skeptic in me says, you know what, the White House and the administration, they've got a real um uh issue on their hands here because they uh fertilizer is already really high. But then you go in and you attack Iran and fertilizer gets higher, and it's a bad look for them. So they've got to make it look like they're doing something, even if they don't accomplish anything. I hope that they do accomplish something. I hope the skeptic in me is wrong. I'd love to know how you guys feel about this. Is there will there be any real progress here or not? I don't know. And also, are you gonna help the USDA when they come uh sending you letters or emails or knocking on the door? I don't know. I feel like a lot of people probably uh will not, and maybe they should.

SPEAKER_00 3:07

According to the USDA's crop progress report released yesterday, 34% of the U.S. winter wheat crop was rated good to excellent as of Sunday, down from 35% the previous week. The rating is the lowest for the week since 2023 and the fourth lowest in the last 10 years. U.S. corn planting was 5% complete through Sunday, up from 3% the prior week and slightly ahead of the 4% average. Soybean planting kicked off last week, reaching 6% complete versus 2% on average. And then the U.S. spring wheat crop was 6% planted compared to 2% last week and 7% on average.

Price Action and Charts

SPEAKER_01 3:45

There's a little bit of concern about um corn planting in some areas because it's been wet. Soybean planting is well ahead of the five-year average. And what's what's been happening here is the trend more recently is that a lot of farmers prefer to plant soybeans ahead of corn. The uh the agronomy data that's out there suggests that that is now best practice in a lot of areas. What we've really got to focus on, and the most important thing here, is winter wheat ratings. And the winter wheat ratings are not good, and they're skewed as a matter of fact. The national winter wheat rating is skewed by strong ratings in SRW states. But when you look at your big HRW wheat states, Kansas, Oklahoma, Texas, Colorado, and Nebraska, those are the five largest uh growers of HRW wheat in the U.S. The average rating of those five states is 17.4% good to excellent and 45% poor to very poor. I think we've got perhaps a real problem as it relates to the HRW wheat crop in the United States. Here's the forecast for the next seven days. There's not any rain uh forthcoming for the western half of Kansas, for the Oklahoma, Texas panhandle area, eastern Colorado, southern Nebraska. There's nothing, and there's really not much in the extended forecast either. We're hearing a lot of stories from subscribers come in about um early crop insurance claims and crops that just look absolutely terrible and crops that aren't going to yield. I'm uh I'm a little bit surprised that the HRW wheat market is not acting a little bit better because of this. I understand in the U.S., you know, supplies are adequate in the world, supplies are adequate, but I feel like this story should be maybe garnering a little bit more attention. If you guys are in any of those areas and you're dry and you're seeing poor crop conditions, drop us something in the uh YouTube comments.

SPEAKER_00 5:20

Soybean futures were sharply lower on Monday, with the May 26th contract falling nearly 14 cents to settle near 1162 per bushel. The sell-off was driven by expectations of larger than expected U.S. soybean acres. Rainfall across the corn belt has disrupted planting, fueling speculation that some farmers may shift acreage from corn to soybeans. Additionally, Trump's blockade of the Strait of Hormoes has raised concerns about fertilizer prices climbing even higher. Another reason why farmers may shift acres. Additional support stemmed from Trump threatening to impose a 50% tariff on China following reports that Beijing may be considering a shipment of new air defense systems to Iran.

Iran Update

SPEAKER_01 6:02

Yeah, that China headline is probably not the best thing in the world for the soybean market. We rejected in this May contract, May 26, your old your old crop futures, rejected an upside breakout on the charts yesterday and then kind of reverted back lower. You can do some fancy technical analysis here, but this is still very much a choppy, choppy contract. Same thing with new crop. We kind of rejected some new highs yesterday. I'd argue that it's been sideways to higher. The bean market has acted very well relative to corn, which has been much weaker. Uh, we've been in a bare trend in the corn market, whether it be old crop, new crop since late March. And I don't really know where the support level is here. I mean, it's tough to say we've kind of broken out below any of the trend support. And yeah, you got that low from a couple days ago, 469 and a quarter underneath the December contract. But uh this thing looks like it kind of wants to drift lower, and there's been a lot of selling pressure that's emerged anytime we're higher. I'm told, uh, just anecdotally, there's a ton of unpriced old crop corn bushels sitting in the western corn belt in particular. And the reason farmers in the western corn belt are perhaps sitting on more than farmers in the central or eastern corn belt is because basis has been so incredibly bad and uh they just haven't had a real opportunity to take advantage of any sort of real basis pop or anything along those lines. Uh, here's Kansas City wheat. We do have an open gap on the chart uh from, I believe that would have been Sunday night, sitting at about 6'10. So that's something to be aware of, but it looks a little bit better here the last couple of days.

SPEAKER_00 7:23

The U.S. launched a naval blockade of the Strait of Hermuz yesterday, intensifying pressure on Iran. The move comes as both sides consider another round of peace talks following failed negotiations in Pakistan this last weekend. Meanwhile, the current ceasefire remains fragile and could collapse before its April 22nd expiration. Iran denounced the blockade as an act of piracy and threatened retaliation, heightening the risk of broader conflict and increasing the likelihood of a significant supply shock in global energy markets. U.S. crude gained 2.6% yesterday, settling just above$90,$99 per barrel.

SPEAKER_01 8:01

So they kind of like agree that there's going to be more talks, I guess. I mean, Iran doesn't like what's going on. Crude oil, which has been had been a driver of grain prices, has, I would argue it's settled down. We're a little bit more range-bound. Still big time volatility intraday, certainly, but you look at the bars here from the last four or five trading days, and it's kind of more of a sideways affair, which has left the grain markets to kind of do their own thing. So it's a wait and see. We're trading near 97 bucks in the May WTI this morning. And part of that little sell-off from yesterday's highs had to do with the idea that, oh, they might start talking again. The back and forth uh headline stuff is exhausting.

SPEAKER_00 8:36

If you guys haven't checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of our recent premium videos?

Brazil Crop Update

SPEAKER_01 8:41

Pete Meyer, a veteran market analyst and trader, was on yesterday. Pete told me he's been in the business for 43 years. That's a long time. Um, but, anyways, uh, we talked, I told Pete to put his farmer cap on and tell us what he thinks about grain marketing, whether it's old crop corn, new crop corn, old crop soybeans, new crop soybeans, all that stuff. Um, we talked about the funds, and Pete has an intimate knowledge of the funds and how they work because he used to work with the funds as an analyst. We talked about Iran, acres, uh, the fertilizer situation. 45Z is uh farmers actually gonna get paid. Ethanol plant's gonna pay farmers for uh low carbon corn. Pete has the answer to that question. And um it's not it's not the most fun topic in the world right now, but it's stuff that you need to know. Jim was on Friday for Macro Friday, talked about everything from inflation to interest rates, investing. Uh, Jim is a fan favorite, absolutely fantastic. I talked about courage calls and um how it could be a good strategy for farmers who can't make a decision, which is a lot of you. You know, you know who you are. Um, but uh it doesn't apply to anybody. It's not my favorite thing in the world. In addition, in the premium stuff, we are now adding every single day a daily fund tracker, which is something that our premium crowd had been requesting for a while, and now we're doing it. So every single day we've got updated uh fund positioning and we do estimates. So we include the CFTC stuff, which is updated once a week, and then we pair that with estimates that Reuters puts out every single day, and we spit you out uh a real-time estimate of where the funds sit in corn soil, it means SRW wheat. Uh, this could be a, I think it will be a very useful tool as we uh move forward here. 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. Uh no other fee, no other obligation, nobody to try to sell anything else. Ton of tons of great content from us every single business day. That's all we do. We just pump out content. We don't want to talk to you on the phone. We don't uh want to really deal with you at all. We just want to blast you out our stuff. Um, guys, we don't make any money on the podcast. We make very, very little money from YouTube. This is the only thing that keeps us going. So support independent media, support what we're doing here. Um, sign up today. You guys will like what you see, I promise.

SPEAKER_00 10:40

The Brazilian soybean harvest is nearing completion, according to well-followed private group Ag Rural. As of last Thursday, 87% of the crop had been harvested, up from 82% the prior week. Planting of Brazil's second and larger corn crop is complete. Conditions have been slightly drier than normal over the last two weeks.

Grain Shipments

SPEAKER_01 10:59

Uh, to pull back and just look at kind of uh global production, the U.S. is, of course, the largest corn producer, 33.3% of all global corn production. Uh, Brazil's gonna be about 10% um the way that it looks. Exporters, Brazil is a little bit bigger by comparison. Brazil's gonna be 21% ballpark of all global corn exports. The U.S. is about 40%. There are um maybe some issues with the second corn crop. This is some stuff from our friends at Crop Profit. Over the last 14 days, Brazil second corn areas have seen 85% of their normal rainfall. And there are some areas in Brazil, some of these second corn areas that have been very dry. Uh looking at the forecast here for the next seven days, it's gonna be dry. Only 63% of normal rainfall for second corn areas. And some of these areas are gonna see like no rain. There is some relief in sight in the eight to 14 day period. Our friends at Crop Profit estimate based on Euromodel data, 90% of normal rainfall for the Brazilian second corn crop. So I don't think it's enough to sound the alarm here. You look at the corn market and how it's acting, and nobody's concerned.

SPEAKER_00 11:57

U.S. corn shipment were near the upper end of pre-report expectations last week. USDA reported that 70 million bushels of corn were inspected for export during the week ending April 9th. And the print was down 13% compared to the prior week and down 2.6% versus the same week last year. Soybean shipments were reported at 30 million bushels. The print was up 1.2% compared to the previous week and up 47% versus the same week last year. China accounted for 42% of the week's inspections. And then wheat shipments, they were near the lower end of expectations at 12 million bushels. The print was down 6.4% from the previous week and down 48% from the same week last year.

SPEAKER_01 12:37

Corn shipments remain very strong. We're probably ahead of the pace needed to hit USDA's export target by just a little bit. So I don't think they need to make an adjustment there in the next month or two. But maybe at some point they've got to come up just a little bit. Soybeans, we are shipping soybeans to China. They're they're taking what they bought, but I don't think they're gonna buy any more old crop beans from the United States. And um if they did, that would be hugely positive. But every headline and comment that we've seen from China says, no, we're probably done with old crop. New crop, uh, I we've heard from both the U.S. and China that, hey, 25 million is still gonna be the number, but they better start buying new crop soon because uh to hit that sort of target, they usually would need to start buying um in the spring. What did cattle do yesterday?

SPEAKER_00 13:18

Cattle futures were mixed. Live cattle were a buck 12 lower to 40 cents higher. Feeders, meanwhile, saw gains ranging from 32 cents up to a buck 75. Box beef prices were higher. Choice was up 102 at 381.92, and select was up 230 at 383.64.

SPEAKER_01 13:33

Stock market's been um very resilient, I would say, as of late. Um, I think the stock market wants to rip, but it wants to wait till this Iran thing settles down. Uh, the SP's up nine points this morning. The Dow's down 20. Treasury's up just a little bit, crude oil's down$1.77 in the May WTI at$97.30. Have a great day, guys. Back on Wednesday.