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
Oklahoma Wheat DISASTER + Crude Selloff and Weaker Grains
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Oklahoma's winter wheat crop is on track for a historically poor season, with crop tour estimates coming in at 47.8 million bushels — nearly half the 10-year average and down 55% from last year, despite farmers planting 6% more acres. Dry conditions continue to grip the region, with 84% of the state experiencing some level of drought. The Kansas wheat tour is up next, where similarly disappointing numbers are expected. Meanwhile, the Texas wheat crop is battling both drought and a widespread disease outbreak tied to the wheat curl mite, with 56% of the crop rated poor to very poor.
In Europe, corn futures surged to a near two-year high amid supply concerns, with French acreage expected to fall ~15% and Romania's crop projected to be its smallest in over a decade. High fertilizer costs linked to the Strait of Hormuz closure are a major driver. Back in the US, corn and soybean futures pulled back Tuesday on farmer selling and lower crude prices, while wheat futures slipped on forecasted Plains rainfall — though it's unlikely to make a meaningful dent in drought damage.
Gas prices are surging, with the national average hitting $4.48/gallon — up $1.32 from a year ago — and diesel sitting at $5.66. Crude remains above $100/barrel with no resolution in sight on the US-Iran front. Farmer sentiment dipped in April per the Purdue/CME Ag Barometer, with input costs and availability remaining top concerns. And ADM raised its 2026 outlook, citing biofuel policy tailwinds and expectations of China returning to normal soybean buying in Q4.
Iran Truce? Trump/Iran/Crude
SPEAKER_00Morning guys. It's Wednesday, May 6th, 5 24 a.m. Central Time. Grain markets are lower to sharply lower this morning. December corn futures down 10 cents at 4.90 and a half. November soybeans down 9.25 at 11.80 and a quarter. July Chicago wheat down 16 cents at 6.11 and 3 quarters. July Kansas City wheat down 16 and 3 quarters at 673 and a quarter. September spring wheat down 7.5 at 7. I'm sorry, down 10.5 at 7.03.5. Before we get into the news this morning, the the big story is the crude oil market, which is down$10 per barrel in the June WTI. The headline is that Trump and the White House have reportedly paused project freedom in the Strait of Hormuz and that some sort of deal is close. The U.S. and Iran are closing in on a one-page memo to end the war. So that is probably the reason for your big sell-off in the grain markets this morning. The stock market is sharply higher. The SP's up 60 points into some fresh all-time highs in the futures. We're going to circle back to the grain markets or a price action, but we want to start with this Oklahoma crop tour.
SPEAKER_01So Oklahoma's winter wheat crop is expected to be extremely poor, with crop experts on an annual tour estimating production at 47.8 million bushels. The projection is down sharply from 106.4 million last year and the 10-year average of 94.5 million. Dry conditions have widely impacted the crop, with 84% of the state currently experiencing some level of drought. As of Sunday, 49% of the crop was rated poor to very poor. The annual Kansas wheat tour is scheduled for next week, where similarly poor crop estimates are expected.
SPEAKER_00Let's roll right into the Texas story and then we'll kind of uh combine both of them here.
SPEAKER_01All righty. So in addition to drought, the Texas wheat crop is dealing with widespread disease. Severe outbreaks have been reported across multiple regions, including the Panhandle, South Plains, and Central Texas. Many fields are being impacted by multiple diseases. These infections are significantly reducing yield potential, prompting some farmers to shift production toward hay silage or grazing. Damage from drought and freezes has made the crop more vulnerable to disease. As of Sunday, 56% of the state's wheat crop was rated poor to very poor.
Europe Corn Prices
SPEAKER_00Okay, let's look at some stuff here. Oklahoma has been drought stricken and for a long time. The production estimate from this uh wheat tour, 47.8 million bushels. If that's realized, it would be a 55% decline from last year's production number. That's an absolute disaster. And the crop ratings in Oklahoma, 16% good to excellent. They're the same as Texas, also 16% good to excellent. They're actually better than Nebraska, which is 11% good to excellent, better than Colorado, which is 5% good to excellent, and only slightly worse than Kansas, which is 22% good to excellent. So this HRW crop is just it's in bad shape. You look at the Texas drought monitor, it's very similar. Um, these HRW wheat areas in the dark green on this map are uh very much problematic. Now, which state matters the most in terms of HRW wheat? It's uh Kansas, and by a wide margin. Still, you've got to assume that when they run this Kansas wheat tour, uh you said next week. Yep, it's also gonna be a disaster, and the yield number is going to be very poor. Um, we're gonna get into price action here in a second. The wheat market, I'll just start with this. The wheat market has backed off. We posted some highs in all three classes of exchange traded U.S. wheat last week, and we backed off. The one thing to remember about markets is that they are very efficient and they do tend to price in or discount this sort of thing very, very quickly. If you think back to um, think back to 2012 when we had the big corn belt drought, uh, absolute disaster over crop. The corn market topped in August that year. It was well before harvest ever started. And I'm not saying that that's what's going to happen with wheat this year, but it's something that you should keep in mind. Like the market does not have to continue to rally um through drought and and through harvest of that drought-stricken crop. It doesn't have to work that way. Uh, let's switch gears and go to uh corn in Europe of all places.
SPEAKER_01Yep. European corn futures surged to a near two-year high yesterday. The rally was driven by supply current concerns outside of the U.S., which uh were linked to adverse weather and rising input costs stemming from the closure of the Strait of Hormuz. Elevated fertilizer costs and drought are expected to reduce corn acreage in France by about 15% compared to last season, while Romania's crop is projected to be the smallest in more than a decade. There are also concerns about dry conditions impacting Brazil's Safrina corn crop, strong U.S. export demand and increased ethanol usage, supported by higher, uh higher oil prices, are also providing support to the market.
Corn/Soybean/Wheat Selloff
SPEAKER_00Bloomberg had a chart of uh the Paris corn contract, which I don't watch and never watch. It doesn't matter for us here in the United States. If you farm in Europe, yeah, it matters. Um, the the CME corn contract that we talk about every single day is the global benchmark. Um, this isn't like from a supply and demand standpoint, you're gonna see reduced production in Europe. Does it matter like big picture? Maybe a little bit. But I think the theme here that hey, acreage is being reduced, and and in part because of the fertilizer situation, that is something that you might see more of. And maybe that's a sign of things to come. Yesterday I said, hey, there's not really like a ton of tangible evidence that the fertilizer situation and the Iran situation that it's really like caused massive production losses. But maybe that's something that you're gonna start to see. And even if the the war in Iran ends today, and maybe it does, maybe it doesn't. I don't know. We've been back and forth so many times. It's gonna be a while till we can get this fertilizer thing straightened out. It's gonna, it's gonna be months and months and months.
SPEAKER_01Corn futures moved lower yesterday with the December 26th contract falling four cents to settle near 501 per bushel. Futures came under pressure from farmers selling as farmers took advantage of Monday's rally. Lower crude oil prices also weighed on the market. Soybean futures followed suit, also pressured by farmer selling and lower crude. Meanwhile, forecasted rainfall across the U.S. plains pushed wheat futures lower, although the precipitation is likely insufficient to reverse drought-related yield losses.
Gas Prices, Diesel, Inflation, Fed
SPEAKER_00I think the big sell-off from yesterday into this morning in WTI crude futures or just global crude futures is probably the big story. I mean, WTI peaked above 105 yesterday and we're trading closer to 92 this morning. That's a big move in a period of less than 24 hours. Um, so in your DC corn contract, we peaked at 505 and three quarters yesterday. We're down into like the 490 area this morning. Um, here's the question for me the funds have a big time net long position in the corn market. Will they come to the defense of that big net long on a setback? Uh setbacks even in bull markets are inevitable. Will there be dip buyers? Will the large speculators buy the dips in this thing? Or if crude just continues to track lowers, is that it? And the rally's over? Um, I don't know, but that's I think the big question for me, or one of them. Uh no beans, we posted highs on Monday prior to a setback, same thing. Will the funds uh defend this big net long that they've got in the soybean market? I don't know. You've got some trend support uh near 1156, 1156, which feels like a long ways away after you peaked just above$12, but uh 50 cents really ain't much in soybeans. HRW wheat, uh we peaked last week. Traders are worried about, I think, perhaps some uh wheat imports into the U.S. and the the idea that these higher prices relative to the rest of the world are just going to kill our export program. And then there's the idea that, hey, maybe the U.S. drought story is already old news. Um, I talked about the 2012 comparison uh with corn. You know, when you have a big crop disaster, things get priced in very quickly. I'm not telling you the highs are in. I'm just saying that that's uh one possibility or things to consider.
SPEAKER_01Gasoline prices continue to surge. The national average price for a gallon of regular unleaded gasoline rose to 448 on Tuesday, up 31 cents over the past week and a buck 32 higher than a year ago. Meanwhile, the national average for diesel stands at 566 per gallon, an increase of 213 from last year. Crude oil prices remain above$100 per barrel, with little relief in sight as the US and Iran cannot seem to reach any kind of a deal. The rise in fuel prices is expected to contribute to inflationary pressures in the coming months.
SPEAKER_00Yeah, this is getting pretty crazy. So gas buddy live data as of this morning says the national average is about uh$455 per gallon, and that would be up a dollar and 41 cents versus the average last year. You look at those uh states in the red, and those are prices anywhere from 480 up to 615. Um, high-tax states are really a uh not a good thing, but it's it's unbelievable the disparity between some states and and others. Uh, we are approaching all-time highs in gasoline and in diesel prices. So, in just regular unleaded uh 454, you're 48 cents away from the all-time high that was posted in 2022, I believe. And in diesel prices, you're only 14 cents away from the all-time high that was posted in 2022. Uh, 577 national average diesel price. There are states that are approaching like$7 or north of there, but uh it's getting awfully messy. Now, the Fed has another meeting coming up on June 17th, and interest rate markets right now project a 94% chance that left that rates are left unchanged. They're not gonna hike um despite what appears to be rising inflationary pressures. But um, everybody in the White House, you know, Scott Besson, Trump, everybody, oh, these fuel prices, they're gonna come right back down. I I hope they're right. I I do.
SPEAKER_01Uh, if you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about some of our recent premium videos?
Farmer Sentiment (Mind Boggling)
SPEAKER_00The funds were probably net long 300,000 contracts of corn at Monday's close. And this is something that doesn't happen very often. I had a whole bunch of charts uh that kind of created some historical context and told you what to look for. This is important stuff the way that I view it. And I went into kind of a deeper dive in this video. There was a PDF download where you could uh view all the charts, and uh it was some stuff that I pay attention to and uh I kind of wanted to do a deeper dive for myself, and I created some kind of like matrix charts that I had never seen before, so I figured I'd make them. Uh, we had a lot of positive feedback on this one. Pete Meyer talked about uh$5 corn and um a whole bunch of other things in our uh discussion that we do twice a month. Pete's fantastic. He's an industry veteran. He was a trader on the floor, he was an analyst at SP. Um, you should listen to what he has to say. Lewis Stearns was on Friday, talked about early soybean planting and yields and how um actually it's a generational fight. The older crowd wants to plant corn first, the younger crowd's like notebook of the data, gotta plant beans first. Lewis uh put some numbers on this. Ryan Moe talked about uh the basis situation, the big difference between the Eastern Corn Belt, the Western Corn Belt. We talked about accumulators, cash spreads, um, this July Nov bean spread and some of the implications for the Brazilian commercial, which is super interesting. And he's gonna do a follow-up for us on that uh Thursday this week because we had a ton of questions. 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. This is the best grain market information on the planet, and it's$50 a month. Um, every day we're blasting out a ton of stuff to our crowd, which is is mostly farmers, although we've got all sorts of industry people, whether they're commodity brokers or people sitting at commercial grain desks. We've got farmers in Brazil and farmers in Argentina and grain buyers in China that buy this thing. Um, you should really watch it because if if if you're not getting our stuff, you're you're kind of you're kind of out of the loop. So sign up this morning. It takes like 30 seconds to do. You can do it on your phone. I know you're busy, but it'll take you 30 seconds. The videos are one quick to play in the emails. Uh, super easy PCK. Give that deal a shot this morning, guys.
SPEAKER_01US US farmer sentiment declined in April amid concerns over input costs and the availability of inputs. Purdue University CME Group Ag Economy Barometer Index fell to 121 in April, down six points from March, and well below the 148 recorded in April of 2025. 46% of respondents cited high input costs as their main concern. That was unchanged from the prior month. Uh, 14% of respondents noted that the availability of inputs was their top concern, up from 11% in March. Meanwhile, 57% of respondents said the U.S. is heading in the right direction, down from 65%.
ADM Earnings
SPEAKER_00Some of these charts and data sets from this particular report are absolutely mind-boggling to me. What impact do you think the Iran conflict will have on your farm's net income in 2026? Who are these people that said positive impact or very positive impact? Like, did they have all of their fertilizer and fuel booked prior to all this? Like, I don't, I don't understand it. If you guys understand it, let me know. I just I feel like some of these people they survey are just like, I don't know if they they do they own a television or like a do they watch the markets at all? I I don't know if they actually farm, uh, put it that way. What impact do you think the Iran conflict will have on break-even prices for corn in 2026? And I guess that the numbers was to be like percent increase. Like, are we gonna rise 0 to 3%, 3% to 6%, 69%, 10% or more? This one makes a little bit more sense to me. Uh, 37% of respondents said their uh uh break-even price will will rise 10% or more as a result. And that that does make sense to me. I guess that one does. And then this one is the one I I consider to be like the uh presidential approval rating. I think that that's what they imply this to mean without actually saying that. Would you say that things in the US today are generally headed in the right direction or on the wrong track? And that 57% in the right direction, that's like the lowest it's been um in a long time. So uh people are not thrilled, farmers are not thrilled with the high fuel prices, the high fertilizer prices, some of the tariff stuff. Um, I don't think that should be a surprise.
SPEAKER_01ADM raised its 2026 outlook yesterday on biofuel strength and improving trade prospects. The company expects a more profitable year ahead as clearer and more aggressive U.S. biofuels policies support ethanol margins and strengthen its processing business. ADM also anticipates China will return to a more typical soybean buying pattern in the fourth quarter. Rising fuel prices tied to uh the Middle East conflict are prompting countries to increase biofuel usage, which is supporting U.S. exports. ADM stock has risen roughly 40% year to date and is trading at its highest level since 2023.
SPEAKER_00Okay, so you mentioned the China thing, and they they talked in the article here about Trump and G and this meeting that's going to happen here in a few days. Our assumption is that China will continue to buy its normal volume in Q4, but that's to be watched. So when China buys beans from the US for new crop delivery, usually they're we're shipping them to China like immediately post-harvest, October, November, December into January. They're usually buying those new crop soybeans uh much earlier than that. Usually, if they're gonna buy 25 million metric tons, as the White House is advertised, those purchases should have probably started already for new crop delivery, and they haven't started yet. So we hope that uh Trump can kind of push this thing over the finish line to some degree when he uh gets to Beijing here. I believe that's next week. Uh back to ADM, they're doing just fine. The stock's up almost 38% year to date, as McKenzie mentioned, uh way outperforming the broader stock market, which is up only 6% in the SP. Uh ADM is up 65.5% over the last year, uh, broader stock market up only 30%. So they are doing just fine. And this biofuel stuff has a lot to do with it. What did cattle do yesterday?
SPEAKER_01Cattle futures bounced back. Live cattle were buck 47 to 292 higher. Feeders saw gains ranging from 425 up to 570. Box beef prices were also higher. Choice was up 78 cents at 392.34, and select was up 164 at 392.24.
SPEAKER_00The outside markets are active this morning on the idea again that the US-Iran conflict is coming to an end. I have no idea if that's reality or not, but the SP 500 is up 65 points. That's almost a full percentage point. Treasuries are higher, the US dollar is sharply lower. Crude oil is now down$10.29 in the GWTI$91.94 last. Uh, that's the big uh story here this morning. Have a great day, guys. Back on Thursday.