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
Imported US Fertilizer is TOO CHEAP... It's Being Re-Routed Overseas
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🌍 US Fertilizer Diverted Overseas — Traders are snapping up imported urea at the Port of New Orleans and flipping it to global markets as soaring international prices create a massive arbitrage opportunity. CME Gulf Urea peaked at $720/ton last week, and domestic farmers are feeling the squeeze with no relief in sight.
⚔️ Middle East Tensions Escalate—The US Navy fired on and boarded an Iranian container ship in the Gulf of Oman over the weekend, throwing the fragile ceasefire into chaos despite Trump's claims of a near-finalized deal. WTI crude surged ~$5/bbl this morning to $89/bbl, though that's still well off last week's $106 peak.
🌧️ Planting Disruptions Across the Corn Belt—Heavy weekend rains soaked Missouri, Illinois, Iowa, Wisconsin, and Indiana—with some pockets seeing over 4" in 72 hours—throwing a wrench in corn and soybean planting progress. Meanwhile, HRW wheat country stayed bone dry and dealt with a brief freeze, adding more stress to an already strained crop outlook.
📊 Funds Selling Corn in Size — Large money managers dumped 58k corn contracts in the week ending April 14, bringing total selling since the late-March peak to 127k contracts. They still hold a net long of 153k contracts, with modest selling also seen in soybeans and SRW wheat.
🐄 Cattle Markets Rattled by Border Rumors — Cattle futures hit limit-down on speculation that Ag Secretary Brooke Rollins would announce a reopening of the US-Mexico feeder cattle border — but no announcement came, with screwworm confirmed just 200 miles from the line. The April 1 Cattle on Feed report came in neutral-to-friendly, with placements down 7% and heifers still at 37% of inventory—signaling no serious herd rebuilding just yet.
Fertilizer Imports - Exports
SPEAKER_01Morning guys, it's Monday, April 20th, 524 a.m. Central Time. Gray markets are mixed this morning. May corn futures down three quarters of a cent at 448. May soybeans down a quarter cent at 11.67. May Chicago wheat up five and a half cents at 596 and three quarters. May Kansas City wheat up eight and three quarters at 645.5. May Spring wheat up three and a quarter at 656.5. Some fertilizer news to start off this morning.
SPEAKER_00So U.S. fertilizer shipments are being rerouted to overseas markets. Traders are purchasing imported urea at U.S. ports, specifically the port of New Orleans, and reselling it abroad. The shift comes as global fertilizer prices have soared due to the conflict in the Middle East, disrupting supply flows through the Strait of Hormuz. In contrast, U.S. prices remain at a discount to global markets, creating a strong financial incentive to divert supply away from domestic use. Meanwhile, the DOJ is investigating the fertilizer industry for potential price collusion.
Iran Back and Forth
SPEAKER_01Some good old-fashioned arbitrage going on here. This is a quote from the article. While global fertilizer prices have soared, U.S. prices at New Orleans have remained about$170 per short ton cheaper, providing buyers an opportunity to profit from the price difference. It's pretty incredible to think that despite the high prices in the U.S., we're actually cheap relative to the rest of the world. You got to think about the implications here as it relates to production in the United States and maybe even more so abroad. You know, it sounds like, I don't know, the statistics are over all over the place, but a lot of farmers in the United States had their uh 2026 fertilizer needs booked prior to this uh Iran situation. But um it wasn't everybody, and and we don't know what the exact percentage is. We saw the polls from uh the Farm Bureau last week, but farmers overseas maybe even at greater risk, maybe farmers in Brazil, maybe farmers growing wheat um elsewhere are gonna have big problems. So um, as uh our friend, my friend, we've done videos with Steven Nicholson from uh Rabobank in the past. He said in the article, there could be a very long tail to this. And I think he's right, there could be a very long tail, and this is something that could persist. So it's um it's it's pretty shocking to think that, you know, prices at the Gulf, which I think the futures were 720 uh ton on Friday, and cash might even be above that. That that's too cheap. The article does mention that it was not immediately clear who was reselling the uh U.S. imports. It's a very opaque market, as they mentioned. Let's go to uh weekend geopolitics.
SPEAKER_00Tensions in the Middle East escalated over the weekend. On Sunday, the U.S. Navy fired at an at an Iranian container ship in the Gulf of Oman. The Marines later uh boarded and took control of the ship. The U.S. continues to enforce its blockade of the Strait of Hormuz, a move Iran claims violates the previously agreed two-week ceasefire. Iran briefly signaled on Friday that it would reopen the waterway, but quickly reversed course as tensions with the U.S. intensified. Also on Friday, President Trump announced that a deal with Iran was nearly finalized, although weekend developments suggest otherwise. Then on Sunday, Trump warned that if Iran does not accept U.S. terms to end the conflict, he will blow up every power plant and bridge in the country.
Corn Belt Rains, HRW Freeze
SPEAKER_01Yeah, so a lot of back and forth. We went home on Friday as it relates to the markets, thinking that things had eased and agreements reached, the straits going to be reopened, and then uh Iran decided to fire bullets yesterday, as Trump said on Truth Social. I guess the U.S. um destroyed the engine room at least of one Iranian-flagged cargo ship. Crude oil sold off last week to end the week. And it's higher this morning, but it's up, we're up$4.60 in the May WTI. And I know I know we're getting close to expiration there, but it's our our lead contract. That thing traded as high as I think$106 or very close to it last week. So despite the increased tensions, crude oil is still a lot cheaper than it was uh at last week's peak. The grain market relationship as it relates to crude oil and this whole situation in the Middle East appears to have completely evaporated. I just don't think we're trading that relationship anymore. I don't think the corn market's trading it. I don't think soybeans are trading it. I don't think wheat's trading it. It's like we're just kind of back to doing our own thing, which is really kind of what I would prefer, I think. Um the back and forth makes makes the grains very difficult to navigate. But yeah, it looks like that relationship is very much gone.
SPEAKER_00Some areas of the U.S. corn belt saw rainfall over the weekend. The heaviest amounts were seen in Missouri, Illinois, eastern Iowa, south, southern Wisconsin, and northern Indiana. One small pocket of southern Wisconsin and northern Illinois reportedly saw more than four inches of rain during the last 72 hours. Disruptions to corn and soybean planting have been noted in many of these areas. The vast majority of U.S. HRW wheat areas were completely dry and also saw freezing temperatures for a brief period.
SPEAKER_01Let's go back to the corn belt. Uh, a lot of Missouri caught a lot of rain. Western part, a lot of Illinois caught rain, I guess, a little bit of eastern Iowa. That uh Wisconsin-Illinois border saw some rain. Um, and then looking at the forecast here to jump forward for the corn belt. I think if you guys are in Missouri, give us a shout out in the YouTube comments, let us know what's going on because you've had a ton of rain. You had a lot of rain over the weekend, and you've got more rain coming. So, in terms of uh we're calling them planting disruptions for the time being, maybe that's gonna be kind of your hot spot. Uh, the next seven days are gonna there's gonna be a window here for a lot of areas of the corn belt. A lot of Illinois should be a little bit drier, um, but there's there's it's gonna be a kind of a mixed bag. You look at this extended period, 8 to 15, and there's rain everywhere. But again, that's the extended forecast, not necessarily totally reliable. To go back to HRW wheat country, uh, there was a freeze event over the weekend. I don't know how many hours it lasted. I don't think it was extraordinarily long. If you guys have an update on that, let us know. But uh, we do know that there was very little, little to no precipitation in um central and western HRW wheat areas of the United States. And the way the forecast looks, maybe we've got some rain coming into these western HRW wheat areas during the five to seven day period. Maybe we don't. Um, the extended period offers maybe just slightly more rain, but I think the majority is going to be, if it happens at all, will be in the five to seven day period. And that's not even a guarantee. So um, I don't know if this is gonna turn into a too little, too late situation. I don't know what kind of damage that freeze had. Um, there's a lot of problems with the crop. And I would imagine that uh we see crop conditions deteriorate again when USDA releases its uh crop progress report this afternoon.
SPEAKER_00If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of last week's premium videos?
The Funds
SPEAKER_01July 27 corn is$5. It's uh closer to$5.02 this morning. Why not sell? I did a five-minute Friday video on that on Friday and talked about um some of the things you should consider if you're thinking about taking advantage of this July 27$5 corn price. You know, guys have been looking for$5 for three years now, and you got it in July 27. But there are some things to consider, um, cost to carry, um, different option strategies. I ran through kind of a number of different ideas. Ben Craker from the Egg Data Coalition was on Thursday. Take control of your farm data. This uh interview came about because of my thoughts regarding farmer responses to USDA surveys. And I talked about this one following the last USDA report. The survey response rate was like 37%. Farmers are terrified to give their data to USDA, but you've got these big ag companies, your machinery, your fertilizer companies, all of them. They've got all your data and they've got way more than USDA will ever have. And uh it was it was kind of that um contradiction that led me to interview Ben, and he was fantastic. He's got some really cool info. Guys, we know that um most of the money that you spend on your farm operation ends up in the pockets of a handful of very large and massive publicly traded corporations, and there's nothing you can do about that. But by supporting us through the premium subscription, you have a say and maybe like, you know, a very tiny percentage of what you spend with something that you actually like and use. If you guys listen to us every morning, uh, we don't make a dime doing the podcast, we make like almost nothing doing YouTube, but uh the premium subscription is what allows us to do this every day. So um, you know, where you spend your money kind of tells a tale about how you feel and what you support. So if you like what we're doing here, um help us out. The premium stuff's fantastic. Today's video is going to be very um important and timely. Ryan Bennis is gonna be on and uh he did a very popular video with us a couple months ago about the new crop insurance safety nest safety nets as it relates to corn and how it's a total game changer when it comes to marketing. Today, we're gonna run through examples. We're gonna be like, hey, this guy's got nothing sold. This guy's got half sold. We're gonna run through yield scenarios and see exactly how this program, these new programs are gonna play out in real time. So that's um some that that's a video that'll pay for probably five years worth of a subscription in one day. Um go to standardgrain.com, guys, check this deal out. It's 50 bucks a month. You can sign up on your phone. I know you're busy. Um, it'll take you 30 seconds on your phone, and you can listen to um and watch the videos on your phone. All the emails are accessible on your phone. Uh, give that deal a shot today.
SPEAKER_00The CFTC released its weekly commitment of traders report on Friday for the weekending Tuesday, April 14th. Large money managers were net sellers of 58,000 corn contracts since peaking in late March. The funds have sold 127,000 corn contracts. However, they still hold a sizable net long position of 153,000 contracts. The funds were also net sellers of 13,000 soybean contracts and 1,000 SRW wheat contracts on the week.
Cattle Selloff and Rumors
SPEAKER_01Premium subs, you guys have the full versions of the fund tracker charts in your email this morning that provides historical context. And you've also got our new uh daily fund tracker chart, which provides updated uh real-time info, like as of Friday's close. So during the last two weeks, when you combine corn soybeans and SRW wheat funds have been net sellers of 119,000 contracts, still sitting with a fairly hefty net long position. Um, and it and it's all in corn soybeans because they're short wheat to a very small degree. Um, this is not, it's it's not severe or extreme territory, but it's interesting that despite everything that's going on, the funds are long. And it's even more interesting, I think, that you know, the funds are long corn to a substantial degree, and we're still sitting here at four and a half bucks, um, which is kind of disappointing, I think.
SPEAKER_00Cattle futures moved lower on Friday with several live and feeder cattle contracts falling to limit down levels during the session. The sell-off was driven by expectations that U.S. Ag Secretary Brooke Rollins would announce plans to reopen the border at an event down in Texas. However, no such announcement was made. Instead, Rollins emphasized that recent cases of New World screw worm have been confirmed roughly 200 miles south of the border, noting that the outbreak would need to be pushed farther south before imports could resume down in Texas. Rollins is scheduled to visit a port in Douglas, Arizona on Friday, which the USDA has identified as presenting the lowest risk for resuming cattle imports. So we might see some kind of announcement here at the end of the week.
SPEAKER_01So somebody thought that they knew an announcement was coming. I was getting all sorts of text messages on Friday, like, was there an announcement about Mexico?
SPEAKER_00And I was like, no, there wasn't, but yeah, someone someone thought something was going down.
SPEAKER_01And I think somebody or somebody knows it's coming this week. I don't know.
SPEAKER_00Yeah, I would say it's it's more likely to happen this week.
Cattle on Feed
SPEAKER_01Okay. Um, here I pulled some longer-term cattle charts. It's still extraordinarily strong. I mean, the multi-year uptrend remains intact. Yeah, Friday got kind of messy for a second. I'll tell you, I think feeder cattle are really interesting because you look at this monthly chart, and I mean, you could correct this thing. You you could have an$80 sell-off, and you could still be in bull market territory based on like the trend that comes up off of the 2020 lows or the COVID lows. It's uh it's really, it's it's gotten awfully lofty here. And I had to redraw that upper channel line because we've been trading above it now for like four or five months, my previous channel and we so still uh still very, very strong despite the volatility on Friday.
SPEAKER_00We had a Catalon Feed report come out on Friday as of April 1st. Catalon feed totaled 11.58 million head, down 1% from a year ago and slightly lower than pre-report expectations. March placements were reported at 1.71 million head, 7% lower than last year and marginally lower than expected. Marketings last month came in at 1.63 million head, down 6% from last year and steady with expectations. Friday's report also included a breakdown of steers and heifers on feed. The total number of heifers on feed as of April 1st totaled 4.32 million head, accounting for 37% of the overall cattle inventory and down less than 1% from a year ago. This suggests that the industry has not yet initiated any meaningful herd rebuilding. Um, I'd say the the report overall was neutral to slightly friendly.
SPEAKER_01Tell us what you know about the herd rebuilding or lack thereof. Is drought still an issue? What is preventing this?
SPEAKER_00Yes, I would say drought is the biggest issue and it's becoming more of an issue every day here in cattle country. It is so darn dry. Um, I I can't see us have, I mean, there are places that have had rain, obviously, no doubt about it. But to have actual meaningful herd rebuilding, we're gonna have to see some rain.
SPEAKER_01Outside markets this morning, the SP is down 33 points. It posted a fresh all-time high on Friday, and it's that's only a uh we're only down half a percentage point. So despite the uh increased escalations in the Middle East, it's it's not a bad sell off at all. Treasuries are off a little bit, US dollars up, crude oil again up four dollars and seventy one cents in the May WTI at 88.56 last trade, uh closer to the low of the day than the high of the day. Have a uh great week, guys. We'll be back on Tuesday.