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
HEAVY Rain in Illinois + Corn/Wheat RALLY!
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🌧️ Illinois Historic Rainfall — Severe thunderstorms dropped a record 3.6" in Springfield and 2.1" in Peoria Tuesday, the highest single-storm totals since 2002. Flooding concerns are mounting across the region, with some corn and soybean growers already discussing replant options.
🌾 Wheat Surges on Plains Drought — The May26 Chicago and Kansas City wheat contracts jumped 28 and 30 cents Tuesday to close at $6.49 and $6.97/bu, respectively, on intensifying drought stress across the U.S. Plains. Forecasted rainfall is expected to miss the hardest-hit western areas, where yield losses are likely already underway.
🌽 Corn Gains, Beans Slip — May26 corn gained roughly 5 cents to close near $4.65/bu — its highest since late March — supported by near-term Corn Belt rainfall, strong export demand, and a 3.7% surge in crude oil to near $100/barrel. Soybeans edged lower on technical selling and expectations of large South American supplies, while the Dec27 corn contract topped $5.00/bu for the first time.
🥩 Smithfield Margins Under Pressure — Rising diesel and packaging costs tied to the Middle East conflict are squeezing Smithfield's profitability, sending shares down roughly 8% Tuesday despite a Q1 earnings beat. The company plans to offset input cost headwinds through price increases and efficiency improvements, and also noted higher beef prices amid historically tight cattle supplies.
🌱 EU Rejects S. American Soy Shipments — Dutch authorities detected non-approved GMOs in four Argentine and two Brazilian soybean meal shipments, triggering withdrawals and potential disruption to the EU's largest soy suppliers. The situation could shift demand toward the U.S. and Ukraine as Europe enforces its strict GMO import regulations.
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SPEAKER_01Good morning, everybody. It's Wednesday, April 29th, 5 23 a.m. Central Time. Grain markets are higher again this morning. December corn futures up one and three quarters at 497 and a half. November soybeans up four and three quarters at 11.71 and three quarters. July Chicago wheat up three and a half cents at 661 and a quarter. July Kansas City wheat up five and three quarters at 708. September spring wheat up five and a quarter at 734 and a half. Welcome back to Grain Markets and Other Stuff. This is the best grain market show in existence in the universe. My name's Joe. Mackenzie Johnston is my co-host. McKenzie, say good morning to the people.
SPEAKER_00Good morning, everybody.
Heavy Rains
SPEAKER_01As I've mentioned, it's much it's very important that you say good morning because you're more delightful than I am. Yes. I'm not friendly or fun or interesting. Um let's start. Oh, hey, before we get into the show, uh, guys, we love you. We're here for you every day. You gotta love us back. Hit the subscribe button on YouTube. Um, the subscription, people don't subscribe as much on YouTube during planting season because our crowd is farmers and they're busy. But uh hit subscribe on YouTube. We'd love to get to 35,000 here over the next uh month or so. Okay, heavy rains in Illinois. Let's start there.
SPEAKER_00Severe thunderstorms dropped more than three and a half inches of rain in Springfield yesterday, marking the highest total from a single storm since 2002. Peoria also received more than two inches of rain, breaking its previous record from 2002. The storms were capable of producing tornadoes, hail, and damaging winds, raising concerns about flooding across the region. Some farmers may be forced to replant due to the storms. Illinois has experienced an active severe weather pattern this season, contributing to an unusually, unusually wet spring.
Wheat Rally
SPEAKER_01Yeah, the droughts, uh, when they go away, they don't go away like easily or smoothly. Sometimes it's kind of violent. Here's rainfall over the last 72 hours, and you've got this rather large pocket that goes through a lot of Missouri, a lot of uh Illinois, a lot of uh central and southern Indiana. And some of those areas, if you're looking at the yellow, that's like four or five inches of rain in a two-day period. And it was really like in a in a one-day or overnight period. So pretty heavy stuff. I've got some good maps from our friends at Crop Profit, and we're just kind of zooming in on some selected areas. There are several counties and call it central or west central Illinois that have seen more than double their normal rainfall over the last 30 days. Hancock, McDonough, Brown, Cass, Menard, Logan County. If you go up to uh the northern part of the state, also some wet areas there, Henry County, Whiteside Lee, Ogle DeCalb, Kane County with more than double their normal rainfall. Some other areas that have been very wet, eastern Iowa, and this is not as recent, but but still in the last 30 days, a lot of these areas in eastern, southeastern Iowa saw um more than double their normal rainfall. That's the same thing with a lot of northern Missouri and a lot of Missouri in general. And then you've got this pocket that's up like call it uh southern Michigan, north uh east Indiana, northwest Ohio have seen had seen some heavy rainfall. So I think there will absolutely be some replant in those areas of Illinois in particular that got soaked in a very short period of time. These other areas, I'm I'm not so sure. If you guys are in any of those areas and you have some commentary, drop us something in the YouTube comments, or you can email me info at standardgrain.com. There's a little bit of rain on the radar this morning, but it's pretty light. It's not gonna amount to much, very much scattered. The next seven days is pretty wide open for the corn belt. So, um, you know, anybody who's been delayed or hasn't been in the field, I think they're gonna get out there in the next uh week and you're gonna see a lot of corn and soybeans planted the way that it looks.
SPEAKER_00Wheat futures surged yesterday with the May 26th, with the May 26th Chicago wheat contract climbing nearly 28 cents to close at 649 per bushel. While the May Kansas City wheat contract gained roughly 30 cents to settle near 697 per bushel. The rally was fueled by ongoing drought conditions across the U.S. plains, where crops have been stressed by above average temperatures and little to no moisture. Upcoming rainfall may offer some relief to parts of the region. However, the hardest hit areas are likely already seeing yield losses. Forecasted rainfall over the next week is expected to miss western areas of the plains where the drought is most severe.
Corn Rally
SPEAKER_01I think the headline pretty much nails it here. Drought and fertilizer costs or concern or just general lack of lack of availability issues. And this is not just that's not a U.S. issue uh primarily. That's that's a global issue that's gonna affect everybody. But as far as the Southern Plains drought, this that it's any rain from here on out, I think is gonna be too little too eight. There's nothing in the cards for the next seven days. There is some rain in the extended forecast, but the extended forecast has failed over and over and over again with regard to uh rainfall prospects in the U.S. Southern Plains. So all three classes of exchange traded wheat in the United States posted fresh highs overnight. Highest trade since July, or I'm sorry, June of 2024 overnight in HRW wheat on a continuation basis. These charts, these weekly charts, are still tracking the May contract that will uh go off the board here fairly soon. Um SRW wheat, same thing. I'm sorry, this is spring wheat, highest trade since June 2024, up above seven bucks in your uh spot contract. And even SRW wheat playing along now, highest trade since June 2024 overnight, also into some fresh highs. So the market is acting very well. You've got some large speculators that are covering shorts, they're adding length, and uh the best prices we've seen in quite a while. Uh, corn market also acting well.
SPEAKER_00Yep. The May 26th contract gained roughly five cents yesterday to close near 465 per bushel, its highest level since late March. Gains were supported by rainfall prospects across the Corn Belt, although much of the region is expected to turn drier over the coming week. Additional support came from strong export demand and rising crude oil prices, with U.S. crude gaining 3.7% yesterday to settle around$100 per barrel. Meanwhile, soybean futures edged lower amid technical selling and expectations of large South American crops.
SPEAKER_01I know that the headline here from Reuters says corn on rallying on demand and weather concerns. I actually don't know that it's either of those. My take on the corn rally right now is this. I think it's twofold. I think we're following wheat. I think we're following wheat. That's something we've seen historically. You get a big rally in wheat, corn follows along uh very often. And secondly, I think it's the fertilizer story. I think it's concern regarding fertilizer availability and pricing and the prospect of reduced global output. You haven't seen reduced global output reflected in any of the production estimates yet, but uh that could be something that is in our future. Here's a weekly corn chart. We've still got a couple of big hurdles that we've got to get through. The peak from March in Spot Month Futures was 473 and three-quarters. We're about seven cents away from that this morning. That's your your first hurdle. And then if you really want to see this thing run away, you got to get through that February 2025 peak, Spot Month Futures, which was 504. Uh, there is opportunity on the board this morning. I see opportunity. Here is the corn futures price curve as of this morning for your new crop contracts. So December 26 futures, uh, close to 498. Not too bad. That's probably a level that's associated with some profitability or at least a break even for a lot of you guys if you can uh have normal-ish yields. But look at the deferred, look at March 27 at 510 and a half, May 27 at 517 and a half, July 27, corn futures at 520. There is some opportunity for you guys to make some money uh on the board. And I'm not advising anything, but uh consider some HTAs, consider uh some forward sales. There is a lot to be taken into consideration. Yeah, July 27 corn at 520 looks great, right? It looks great, but what does it cost you to get there? We've got two really good premium videos that we've done over the last several months on this. The first one is regarding new crop corn carry and targets. And this is more like uh focused on the Chicago Board of Trade spreads, full carry calculations, how all that stuff works. And then maybe the one that's more important to you is something we did more recently with Chris Barron on calculating your own farm's cost of carry, uh, in particular interest, but there are other things to consider as well. So don't just look at the 520 for July 27 and say, oh my gosh, I got to sell that because it the carry may not be enough, may not be enough to uh actually make sense, and it may make more sense to sell versus um like your nearby December contract. And I'm not advising any grain marketing here on this show, but uh that's some stuff to consider. Here's soybeans, and old crop beans have been very much sideways. Uh, we've been stuck in a range, whereas new crop soybeans look very good, and they're only a couple cents away from that peak, which I believe was 1174 and a quarter from uh last month. Soybeans are less of a fertilizer-intensive crop relative to, say, wheat or corn. Maybe that's part of the reason the bean market isn't acting as well. Maybe people think some acreage is going to shift into beans um in the US and elsewhere because of the fertilizer issues. I don't know, but uh beans are are not acting as well as uh the corn and wheat markets.
SPEAKER_00If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell uh our viewers about some recent videos of ours?
Smithfield Problems
SPEAKER_01Did a cash grain marketing review yesterday. All of the newest recommendations that I have explained, my grain marketing uh plan and recommendations are extremely simple. Anybody can follow them. I just advise sales, I give you the prices and the dates and the percentages and a breakdown. It's super simple. If you guys are paying somebody to do your grain marketing, first off, do you know what you're paying them? Do you have any idea what you're paying them like on an annual basis? And second off, are you paying them too much? Uh our subscription is 50 bucks a month, and um everybody pays the same thing, and uh it's very much transparent and super easy to follow. I neglected to include a slide this morning, but we had a really good video with Paul Nefer yesterday on SDRP. And uh we had a mailbag where our subscribers sent in a bunch of very, very good questions about SDRP and how it all works. There were some other policy-related questions too. Paul's great and he's a wealth of knowledge, and uh it was cool for him to join us. It was about a half an hour video on that whole thing. If you 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. No other fee, no other obligation, nobody tried to sell you anything else. It'll take you 30 seconds to sign up on your phone. I know you're busy, um, but you can sign up in the truck or in the tractor this morning. Um, we do Cash App, Google Pay, Apple Pay, all that stuff. Um, all the emails and videos are super easy to play on your phone. It's just open the email, hit the video, it plays. That's it. Uh give that deal a shot today, guys.
SPEAKER_00Rising energy costs tied to the Middle East conflict are pressuring Smithfield's margins. Higher diesel and packaging material costs are weighing on profitability in the company's packaged meat sector. Despite these headwinds, Smithfield exceeded first quarter expectations, supported by strong demand for packaged meats. However, Smithfield's shares fell roughly 8% on Tuesday as investors reacted to rising input costs and ongoing uncertainty surrounding the conflict. The company plans to mitigate rising input costs through price increases and efficiency improvements. Smithfield also noted an increase in its beef prices amid historically tight cattle supplies.
EU Rejects Argentina Meal
SPEAKER_01So this is just one story of one company that's being impacted by inflation in diesel and packaging materials and all sorts of stuff. But this is every this is every company. Every company is being impacted by higher fuel prices. And this is all very much inflationary moving forward. The longer that uh diesel and fuel prices stay elevated, the longer this straight of hormoose thing uh continues, the more inflationary it becomes. June crude con uh the June WTI crude contract is trading above 103 this morning, highest we've been in a while. So this is all um it's all inflationary.
SPEAKER_00The European Union has rejected South American soybean meal shipments due to GMO violations. Dutch authorities detected non-approved GMOs in four Argentine and two Brazilian shipments, leading to the withdrawal of at least three shipments. Argentina, meanwhile, has challenged the testing methods used, arguing they may produce false positives. The situation could disrupt soybean meal flows to the EU from Argentina and Brazil, its largest suppliers, and potentially shift demand toward the U.S. and Ukraine.
SPEAKER_01Yeah, we'd love to see some additional demand. Argentina is the world's largest soybean meal exporter, so it's very important for them to get this issue resolved. And I believe that I believe that they will. We're gonna have a lot of meal to export eventually because we're crushing so many soybeans. We're crushing for oil because we're using it for uh biofuel, but we actually get more meal out of a crushed soybean than we do oil, and we're gonna need something to do with it. So we will need in the US to see an expanded export market. What did cattle do yesterday?
SPEAKER_00Cattle had another impressive day yesterday. Live cattle were 215 to 462 higher. Feeder saw gains ranging from a buck 62 all the way up to 510. Box beef prices were mixed. Choice was down 66 cents at 388.90, and select was up 18 cents at 388.78.
SPEAKER_01And I don't know anything about cattle, but I heard the cash market was just on fire yesterday.
SPEAKER_00Yep, already took off and it was only Tuesday.
SPEAKER_01Um, and were those all-time highs in cash prices or coins?
SPEAKER_00Uh darn near it. I don't know if it's high, but um it darn near it. I bet we set highs by the end of the week.
SPEAKER_01All right. Outside markets, uh, the SP is up by nine points, pretty quiet. Treasury's off just a little bit. Crude oil, the big and important mover this morning, up 338 in the June WTI at 103 31. Have a great day, guys. We'll be back on Thursday.