When Will Corn Traders Care About Planting "Disruptions?"

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🌧️ Heavy rainfall is disrupting planting across the Corn Belt, with some Iowa farmers potentially sidelined for another week. Speculation about acreage shifts to soybeans due to fertilizer costs is not universal, as many producers pre-booked inputs ahead of the Iran conflict.

🏜️ USDA's latest drought monitor shows improved conditions in parts of the northern Corn Belt thanks to recent rains, but Kentucky, southern Illinois, and parts of Kansas and Nebraska continue to dry out. A staggering 68% of the winter wheat crop is now under drought — the worst reading since December 2022.

🌾 Wheat futures surged Thursday on fears of a weekend freeze hitting Plains winter wheat areas on top of already parched conditions. The Kansas City May contract climbed ~17 cents to close around $6.42/bu, its highest level in over a year.

💰 Agricultural groups are pushing the Trump administration for roughly $15 billion in farm aid as part of a Middle East supplemental spending package. The proposal includes $10 billion for specialty crops, while lawmakers are also eyeing the Homegrown Fertilizer Act to boost domestic production.

📦 US corn export sales came in strong at 1.4 MMT for the week ending April 9, up 14% from the four-week average with Japan leading purchases. Soybean sales hit a marketing year low at just 248k MT, while wheat sales also came in near the low end of expectations.

🕊️ President Trump expressed optimism Thursday about a potential US-Iran deal, citing Iranian concessions on nuclear ambitions and a possible reopening of the Strait of Hormuz. However, Iran has not publicly confirmed these terms, and many global leaders expect any formal agreement could take up to six months.

Transcript

Planting "Disruptions"

SPEAKER_02 0:08

Morning, everybody. It's Friday, April 17th, 5 28 a.m. Central Time. Grain markets are mixed this morning. I'm still dying of a cold. So uh thank God that Brian Split is here to help us out with the markets. Guys, people are talking planting. We're gonna use the word delay, I guess. I'm not using it, but um the writers here are using it.

SPEAKER_00 0:26

So, according to Central Iowa farmer Corey Hillibow, recent precipitation has disrupted planting across the Corn Belt, and it may be another week before farmers in his area can resume field work. While speaking with Brownfield News, Hillibow touched on the impact of rising fertilizer and fuel costs tied to the Iran War. He also emphasized the need to bring input costs under control and addressed weak farmer sentiment amid ongoing economic challenges.

SPEAKER_02 0:53

All right, Brian. Um, here's what the rainfall over the last seven days looked like. A lot of rain in eastern Iowa, northern Illinois, southern Wisconsin, northern Indiana, almost all Michigan, northern Ohio, good chunk of Missouri caught some rain. What are you hearing in terms of, I'm calling them disruptions at this point? Uh, what are you hearing in terms of planting disruptions?

SPEAKER_01 1:14

Um, yeah, so if you're north, uh I've got some producers in uh uh Wisconsin that uh, you know, are are seeing a lot of activity, obviously. And uh I've had some producers in um Indiana tell me that uh when we spoke last week that they didn't think they'd have a lot of planting done, but uh talked to some of them yesterday and they were able to sneak in a couple days. Um, you know, if you're uh in other areas, it's been extremely dry, so you got planted early. Uh and now you're starting to see some some rain come after that. Uh in you know, Missouri, for example. Um, I think another interesting part of that conversation, and one of the things that um had Corey had also said is that uh over the last 11 years of keeping track, uh his best corn yields have come from the last week of April for planting. Um so you know it is we've gotten used to the crop going in early um and and going in very quickly. Uh, but uh I don't know that this is something that's gonna have a major yield disruption unless we really see this carry into uh the month of May. Uh and then maybe we're gonna talk a little bit more about uh the potential there. But uh late April planting on corn still can give you some very good yields.

SPEAKER_02 2:27

Here's a chart for you. And this would be the year that I would bring up with regard to planting delays and corn rallies. Uh 2019, we had an extremely wet spring, and the market did not begin to care really at all until May 14th, would be the date. And that doesn't mean that that's how this has to work this year, but that's probably a pretty good uh metric or idea as to like when the market would be concerned about this. Do you would you agree with that?

SPEAKER_01 2:51

Yeah, I remember 2019 because that was actually the year that uh we got together and started Agmarket.net. And that was our first growing season that we were dealing with as a group. And um the market felt extremely complacent to us um for probably two to three weeks. Uh, I do think that the amount of rain that we had uh and the amount of pooling and and fields was more severe in 2019 than what we're seeing thus far this year. Uh, but uh yes, to your point, the market waited quite a while longer than what we felt like, guys, this is a problem. And then it took off uh and it started with that gap higher as you can see on the chart.

SPEAKER_02 3:35

Weather forecasts moving forward. There are some places that will see rain during the next week and some places that won't, um, depending on which model you look at. The GFS has more rain for that pocket of eastern Iowa in particular, whereas the euro is a little bit drier. And then it's really the extended period that you kind of light up and see rain uh just about everywhere. So I'm not gonna say that uh we won't be using the delay word at some point in the future. I think it's premature uh to say like, oh, planting delays, corn rally. It's it's too early for that, ain't it?

Drought Monitor

SPEAKER_01 4:03

It is. Um, it's I think it's probably two weeks too early to talk about it. Maybe it's it's four weeks too early for the market to actually take note and uh really price something in.

SPEAKER_02 4:14

All right, let's stick with the uh weather topic here. We had a new drop monitor out yesterday.

SPEAKER_00 4:18

Widespread rainfall across parts of the Corn Belt over the last week, improved drought conditions in northern Illinois, northern Missouri, southwestern Minnesota, and southern and western Iowa. However, that precipitation, as we mentioned, has also led to planting disruptions. Meanwhile, warm and dry conditions intensified, drought across Kentucky, southeastern Missouri, and southern Illinois in the high plains. Another week of above-normal temperatures and limited rainfall further worsened drought conditions in parts of Kansas and Nebraska. When we look at the percentage of U.S. areas experiencing drought, corn country currently stands at 26%, soybeans 29%, winter wheat 68%, spring wheat 18%, and cattle country 63%.

SPEAKER_02 5:00

It wasn't that long ago that uh farmers in the central corn belt were concerned about the drought. And now that is pretty much gone, and it's it's more a concern about too much rain, if anything.

SPEAKER_01 5:11

Yeah, Joe, uh, over the years, I think if you've kind of followed drought talk, uh especially on our show, um, there's a history of moving from concern about one to concern about the other rather rapidly. There's always concern about something. And so uh, you know, we've seen these periods where we've seen uh, you know, extremely dry conditions turn to extremely wet, and vice versa, we've seen uh, you know, periods where it's been very wet, and then all of a sudden the rain shuts off, and you're here you are eight weeks later and you're talking drought again. Um, so this is you know the normal cycle here. But uh yes, uh if I was gonna be concerned about something, I'd be more concerned uh about too wet and potentially cool temperatures uh persisting than I would be about drought in this type of day and age on the crop. It seems like just wet is is more adverse to the crop than uh than periods of dry, especially with the genetics right now when you're dry and you just get the right rain at the right time. It seems to make all the difference.

SPEAKER_02 6:11

Yeah, I said something similar to that um a week or two ago. Like I like a wet year is probably worse for the crop than a dry year this day and age. And a lot of people like agreed, I think most for the most part. I got some emails and YouTube comments, people are like, yeah, like the way that things work now, it's almost like a wet, uh, cool year would be more of a problem. Let's talk about HRW wheat country, which is maybe a hotter topic uh weather-wise. We're gonna talk about the markets and we'll do some charts here in a second. But you look at that uh dark green area in Kansas, high production density, it's turned very dry. And there's really nothing in the forecast for the next week. I pulled Euro and GFS maps this morning. Um, I'm hearing some pretty bad things about the wheat crop in Kansas and surrounding areas.

SPEAKER_01 6:53

Yeah, I mean, if you're in that uh western half of Kansas, it's been uh a very trying time, um, especially, you know, going back uh maybe a week and a half because there was at least a forecast of rain, and uh there was a hope that there would maybe be some benefit to the crop, and then that rain didn't materialize, and then the forecast after that uh really just didn't leave any room for improvement for the crop. So um it's been uh one of those where you're watching the the crop itself degrade. Uh, you're if you're thinking Texas as well, that's been another area of dry. Um, so the market definitely took note. Uh we have a gap higher, um, and we've established a large trading range in hard-red wheat where six bucks seems to be very good support, and six sixty is the upper end. And I think as we progress into next week and get another round of crop conditions, it's gonna be really telling uh for the potential of this market to possibly break out to the upside.

Wheat Rally, Corn/Soy Action

SPEAKER_02 7:54

There is again some rain in the extended forecast, but we've been seeing this for two or three weeks now where hey, the rain's in the six to ten or the rain's in the ten to fourteen, and it just it has failed to materialize over and over and over again. And I wonder if this this next little round is going to be the same thing. Let's go to price action. Brian alluded to it. Wheat had a big day yesterday.

SPEAKER_00 8:13

It sure did. The May 26th Chicago wheat contract gained nearly five cents to settle near 599 per bushel, while the May Kansas City wheat contract climbed roughly 17 cents to close around 642 per bushel. The rally was driven by concerns over a potential freeze in winter wheat areas across the U.S. plains this weekend, along with ongoing dry conditions that have heightened worries over yield losses. As I just mentioned a minute ago, 68% of the winter wheat crop is currently experiencing some level of drought, the highest level since December 2022.

SPEAKER_02 8:46

So the July Kansas City wheat contract briefly posted a fresh high yesterday. That was a fresh high close, though. What does this chart look like to you, Brian?

SPEAKER_01 8:53

Yeah, so um if I was gonna draw a couple lines, I would say, you know, there's that first peak in March, and there's a second peak in March. So that's uh a peak to peak. It's a one uh the the next is higher than the first. And so we saw that again where this third peak was a little higher than the second peak. If we were to draw a line from one to the next, we got very close to that line, that overhead channel line uh on the high yesterday. So I would not consider this as it having broken out yet. Uh, and then in the same token, if you look at the lows, kind of that that first day after the uh the the initial high, we had that pullback. Then there's a secondary pullback in mid-March that's a little bit lower. And then you have those three lows to finish up the week last week, and those are all riding along the same line. So this kind of has you know what you might call a megaphone type of a look to it. And uh, you know, we could very well continue to consolidate wildly inside of this 60 cent range. Uh, but yesterday we did something which would be a close above 650, which we haven't been able to accomplish yet. So that is a new high close. Um, and I think as we go into the delivery period for the May contract, as we get towards the end of the month, uh, we're really looking for May to be able to maintain uh 648 and a half yesterday's uh, or I should say last month's high. If we could push through that on a close at the end of the month on a front month basis, I think that would be extremely strong. And that would, to me, suggest that we're uh in a breakout pattern. But we haven't done it yet. Uh we're still inside of this pattern, but I think we're we're getting close to where if we get some crop conditions early next week, uh we'll see what the forecast looks like, you know, as we come out of the weekend. But the market has potential to uh to push out of this pattern and go significantly higher if it has a reason to.

SPEAKER_02 10:34

To stick with charts, let's look at December corn. This looks to me like a like we're still kind of in a short-term downtrend, but I guess we kind of found some footing earlier this week.

SPEAKER_01 10:43

Yeah, that short-term downtrend, uh, we we have breached that short-term downtrend. It was a pretty aggressive uh angle of descent. Um and if anything, you know, there was a period of time where we were talking a lot about 470 being the upper end of the trading range, and that was really the case for uh for you know well over a year. And so now that seems to be hopefully uh now support where old resistance we pushed through it is now new support. Uh, we've retraced about half of that rally from the the early January low to the March high. Uh and I think we're trying to consolidate here a little bit and and figure out uh you know what the next impetus is as far as price direction. But um the the angle of the the descent has been violated, so we at least have have done that. Uh I like the way the May corn contract is holding, especially on the weekly chart. Uh, we did some pretty good action to the upside earlier this week, and the recent pullback has just kind of retested some of the the resistance that we broke through. I that would have been on Wednesday. Uh, and uh, you know, now we're pulling back and kind of rechecking a lot of these moving averages and trend lines. So I like the uh I like where the corn market is holding right now so far, put it that way.

SPEAKER_02 11:55

Here's no soybeans. Uh pretty quiet. You could argue that we're kind of gradually trending higher, but it's been a lot of consolidation the last couple weeks.

Push for More Farm Payments

SPEAKER_01 12:02

Yeah, I mean, really, it's sideways for the last month, and um there's uh a very well-defined uh range that's been carved out. So we've got uh a high that was made March 31st. That was the quarterly stock in the acreage report. Uh, that was at 1164. The high that we had coming out of the weekend this week uh when we were excited about crude oil again was at 64 and a quarter. So they're consistently selling at about a dime off of that high that we made in the month of March. Uh now, conversely, they continue to buy against the old high that was made back in November. So if you look at that November peak, it was at 1131 and a half. The December high was 1130. And we've got a series of lows that we've been making down at uh what we had 33 and and uh three quarters and 35, or those those two kind of spike lows after that sharp down draft, right? So we've got roughly a 30 cent trading range, and every two to three days we seem to be going from one end of the range to the other. Uh so market again is consolidating, it's waiting for additional information. But this has been some pretty good trade back and forth if you've been active with it. But as far as trying to get some long-term direction out of the market right now, it's somewhat difficult.

SPEAKER_02 13:16

All right, they were talking about another farm aid package in Washington yesterday.

SPEAKER_00 13:20

Yep. Agricultural groups are calling on the Trump administration to include additional farm aid in a supplemental spending package tied to the Middle East conflict. The push comes as fuel and fertilizer prices have surged, adding strain to an already struggling farm economy. Glenn GT Thompson, chair of the House Ag Committee, is proposing roughly$15 billion in aid, including$10 billion for specialty crops. Thompson noted that any new spending would likely need to be offset with cuts elsewhere, suggesting the dairy sector might be a good option to cut from. Lawmakers are also considering the Homegrown Fertilizer Act, which aims to strengthen domestic fertilizer production.

SPEAKER_02 14:00

This call for aid is not shocking considering the fertilizer and fuel situation. Brian, um, we've been talking to everybody about fertilizer, who got what bought. What is what is your knowledge of the nitrogen, the urea situation, uh, your customer base in particular, like who got who got what bought, who didn't get what bought. I mean, what do you know?

Export Sales

SPEAKER_01 14:19

Um for my customers, I think pretty much everybody except uh uh maybe a small group uh had their nitrogen bought. And uh I would say that maybe it would be the um the younger producer uh that's not as well capitalized, uh, you know, that doesn't have land that they've owned in their their operation for generations. Um they're maybe a little bit more vulnerable to the the scenario. Um and and for them, that has translated to an increase in soybean plantings. Um there were some late decisions that were made and they they went all to soybeans. Um, you know, what percentage of the overall uh uh acreage are we talking about? That's hard to really put a number on, but I do think there's you know some some 800 to a thousand acre producers that maybe had uh you know a uh 25% uh change in their acreage because of of uh fertilizer prices or more. Um you know, the other thing is I I it's it's not just domestic, right? So um there's certain crops that are very time sensitive for fertilizers. So we had Josh Linville on on uh one of our meetings um uh last week. And in his perspective, it's really the wheat crop uh globally is the one that's gonna be the primary uh uh concern initially for fertilizer constraints. Um and so I think you know, we looked at the KC wheat and we look at, you know, the the uh drought conditions and the lack of rain. Uh but I think there's other things going on in wheat besides that that are kind of bubbling under the surface that could be uh something that uh that takes this market to another level higher here. Yeah. Let's go to export sales.

SPEAKER_00 16:05

U.S. corn export sales were strong last week for the week ending April 9th. Net corn sales were reported at 55 million bushels. The print was up 3% from the previous week and up 14% from the prior four-week average. Japan was the largest buyer for the week. Net soybean sales notched a marketing year low and were near the lower end of pre-report expectations at 9 million bushels. The print was down 16% from the previous week and down 39% from the prior four-week average. Egypt was the largest buyer. And then net wheat sales were also near the lower end of expectations at 4 million bushels. The print was down 39% from the previous week and down 48% from the prior four-week average. Nigeria was the largest wheat buyer for the week.

SPEAKER_02 16:45

I think it was in the, it wasn't in the April report, it was in the March report. I think USDA came up with their export projection for current marketing year. I think they still might be too low, Brian.

SPEAKER_01 16:53

Yeah, I mean, based on the pace of of uh sales right now and what we had this week versus what we need to hit the uh the target, it seems like USGA should be raising corn for export. Um, the problem would potentially be like, yeah, we've got the pace to justify that right now. But I just really wonder what what this Argentine crop is going to do to our export sales uh later in our marketing year. And I just don't know how to rectify the discrepancy between, you know, having USDA at 52 million tons, and then we've got uh the Buenos Aires Grain Exchange and Rosario Grain Exchange, and I think they're at 62 and 67, respectively, right now. Um so uh, you know, sometimes those South American agencies can be a little fast and loose with their uh their numbers, but I think also the USDA can be extremely slow in adjusting their estimates of South American production. So that would be my concern about the export program as far as it relates to, you know, how does it finish up in the marketing area? Right now, pace is great. What happens in in July, August, September?

SPEAKER_02 17:56

USDA could wait two, three months before they make any adjustment. Uh soybeans are not good, and it's the second worst book of the last 10 years. China has not bought any additional old crop US beans. They basically bought kind of what we thought they were gonna buy, or what the White House said they were gonna buy. They bought they're up to close to 12 million metric tons, but I don't think they're buying any more old crop beans. We need to see them start buying new crop beans, so we need to see.

Iran Update, Crude

SPEAKER_01 18:20

We do. Uh, we need to get uh, you know, the new crop export program going. And and um, you know, that's been one of the things that over the last couple of years, China has showed up later and later uh to begin their new crop uh buying program. Uh sometimes it you know has it hasn't showed up until late summer uh or or even later than that, as in the case of last year. Um and just with everything happening in the Middle East and and our uh way that we're impacting China as far as as their energy, um, you know, what does that look like as we get to a meeting with them in May? Does that meeting even even occur? Uh but you're right, it seems like right now that last statement by President Trump about the additional eight million tons, that seems pretty questionable right now. Yeah. Uh let's go to Trump and the Iran situation.

SPEAKER_00 19:10

The US and Iran could be nearing a peace agreement on Thursday. President Trump expressed optimism about reaching a deal in the near future, noting that possibly uh negotiations could resume this weekend. According to Trump, Iran has agreed to abandoning ambitions for a nuclear weapon and turning over nuclear material material. The proposed deal would also include free oil for the U.S. and the reopening of the Strait of Hormuz. However, no evidence has been presented to support these claims, and Iran has not publicly confirmed making such concessions. Meanwhile, several global leaders believe that a U.S. Iran peace deal could take up to six months to negotiate.

SPEAKER_02 19:48

Yeah, it was printed in, I think Bloomberg also this morning had an article talking about how this could take four to six months. Um it seems like the impact on the grain markets, at least, Brian, is is uh it's dissipated. It's it we're not trading that's that story anymore.

SPEAKER_01 20:01

No, we're really not. And um, you know, crude oil uh for or for that matter has really lost its luster. Um we're trading just above 90 last I looked, and we're you know, that's almost$30 a barrel off of the high from uh you know a little over a month ago. So uh and I think one of the problems as it relates to kind of the uh the idea of the price of energy impacting things longer term is that the back end of the curve never rallied, right? So like we had nearby crude oil get up to almost 120, but if you went out and looked at crude oil out in like September, October, November, December, uh we're still we we never really got much above 80 in those contracts. So there was a there was a huge inverse in the crude oil market. It really just didn't portend to deferred crude oil values being supportive to to harvest values for for our crops. Uh, but this is a uh massive, just I mean you you've you've seen two huge moves here, right? The initial spike and then the low two weeks later, and then a run right back up to the highs and then right back down to revisit those lows. And so here we are, you know, swinging in these$20 to$25 ranges back and forth. Uh analyze this mess. Well, as of right now, I feel like if you're taking a position in crude oil, you should really try to stay with the opposite ends of the range at this point. Uh, try not to take positions in the middle of the range if you don't have to. And uh right now, I would say that I'm kind of watching the heating oil and I'm looking at June. Um, and it's got kind of a head and shoulder ish uh uh structure that seems like it's building. Um you could draw a little line. There's a very clear trend line that uh we've seen for a case of multiple lows, and I'm I'm watching that trend line for the idea of maybe breaking through that neckline and confirming a uh high is made because if it does. that would measure right back down to the gap of where this heating oil initially gapped higher. So uh I think that's gonna be uh pretty critical and that that heating oil market is the one that I think is really the the um the leading element uh that's your diesel fuel and that was the one that um you know showed gains more than than crude oil as this whole thing uh evolved. Mackenzie cattle were lower yesterday.

SPEAKER_00 22:23

Yeah live cattle were a buck 67 to 345 lower and feeder saw losses ranging from 42 cents all the way down to 462.

SPEAKER_01 22:30

Brian quick cattle market thoughts yeah new highs uh that was that was looking really good we're very overbought so we're due for a correction I would say that uh we probably should pull back and revisit some uptrends uh probably the 20-day moving average and the uptrend are going to be around the same spot in the June cattle so uh very reasonable to pull back but I don't know that we've done anything again to change the the overall picture of cattle and it's always going to be to me until we figure out the fundamentals of the market changing to the bear side which hasn't happened yet it's always going to be more the macro and what does demand look like because of going on uh in in the global economy but the the situation on cattle itself is still hasn't fixed itself.

SPEAKER_02 23:10

Stock markets higher again this morning the SP at least the future is closing in on 7100.

SPEAKER_01 23:14

Is this is that surprising to you Brian how how strong the stock market's been despite the higher gas higher diesel inflation prospects more all that stuff absolutely yeah I mean the market just uh shifted uh you know at the snap of a finger and uh we went from being concerned about the war and then it was like the last day of the quarter March 31st we had a big day of buying and these have been I I I believe pretty record gains in the period of time. And what do we've got uh we've got 12 hired Nasdaq sessions in a row working on 13 a day the record's 19 sessions from 1979. Uh so again very overbought uh but uh this market is has uh um you know been a lot stronger I think than a lot of people would have would have uh thought possible considering what's going on guys everybody have a wonderful weekend Brian thanks for joining us we will be back on Monday