LIMIT-UP Wheat Following USDA Crop Estimates + China to Buy US Corn for the First Time in Years??

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🌾 US wheat production is headed for its lowest level since 1972 — the USDA's May WASDE pegged the 2026/27 crop at 1.56 billion bushels, down 21% from last year and 10% below trade expectations. HRW wheat is forecast at just 515 million bushels, the lowest since 1957, as severe drought continues to devastate the Plains—and wheat futures hit their daily trading limits following the report.

🫘 US soybean production is projected at 4.44 billion bushels — the second-highest on record — even as soaring input costs tied to the Middle East conflict weigh on farmers. Both US and global new-crop soybean carryout came in smaller than expected, giving bulls something to hold onto.

🌽 Corn production is forecast at 16 billion bushels, down 6% year-over-year but slightly above trade guesses. Both corn and soybean futures closed higher on the day despite the broadly mixed USDA data.

🤝 US and Chinese officials are deep in talks over Chinese purchases of American corn, soybeans, sorghum, and DDGs — with timing and volume still unresolved ahead of the Trump-Xi summit in Beijing tonight. Farmers want binding commitments, not social media posts, after recent informal announcements proved unreliable.

🏛️ Senator John Hoeven is pushing for $17 billion in additional farm aid, including $3 billion for specialty crops, likely as a supplemental disaster relief package. The support is aimed at keeping current producers afloat and bringing the next generation back to the farm.

📈 Inflation hit a 3-year high in April, with the CPI up 3.8% year-over-year—driven largely by energy costs surging nearly 18% annually amid the Iran war. The national average for regular unleaded now sits at $4.50 per gallon.

Transcript

Wheat Disater Confirmed

SPEAKER_01 0:08

Morning guys, it's Wednesday, May 13th, 5 24 a.m. Central Time. Train markets are higher this morning. December corn features up two and a quarter at 5.04 and a quarter. November soybeans up four cents at 12.09. July Chicago wheat up two and a half cents at 681 and a half. July Kansas City wheat up 17.5 cents at 748 and three quarters. And that's following a limit up performance yesterday. September spring wheat up four and a quarter at 749. Let's talk about this USDA report and the wheat numbers in particular.

SPEAKER_00 0:39

So U.S. wheat production is projected to fall to its lowest level since 1972, with the USDA estimating the 26-27 crop at 1.56 billion bushels, down 21% from last year, and 10% below the average trade estimate. The decline was driven primarily by a sharp reduction in the winter wheat outlook, which the agency pegged at 1.05 billion bushels, down 25% year over year, and 13% below expectations. HRW wheat production is forecast at 515 million bushels, the lowest since 1957, and down 18% from last year and 36% below the average trade estimate. Severe drought across the U.S. plains continues to significantly damage the HRW wheat crop. Wheat futures surged following the report, with both with both the July 26 Chicago and Kansas City wheat contracts climbing to their daily trading limits.

SPEAKER_01 1:34

Mackenzie, we've been talking for weeks, if not for months, about the drought in the Southern Plains and how bad the U.S. wheat crop is. USDA confirmed all that, and then some with yesterday's numbers. And the reason that the market was surprised by all of this is because of where the numbers came in versus expectations. As an example, um, last year's U.S. HRW wheat crop was 804 million bushels. The average trade guess based on a Reuters poll of analysts ahead of yesterday's report was 629 million. So they were looking for a big decline. USDA came in at 515, more than 100 million bushels below the average trade guess for the HRW crop. Even the SRW crop, which we um was rated much, much better, came in at 301 million. That was down from 353 last year and well below the average trade guess of 336. These are not final production numbers, these are initial production estimates, but still the numbers were shocking to the trade. If you look at the HRW production statistics dating back to 1990, this is the smallest crop in basically forever. 515 million bushels, if confirmed, we would be down 36% from last year. Um, you guys can go back and watch yesterday's video or anything that we've done over the last couple of weeks if you're looking for like why this is happening, like the drought maps, the weather, all of that stuff. When it comes to supply and demand, the the projections are not necessarily very dire. Um, this is U.S. wheat ending stocks to use ratio. This is the projections um as of yesterday. So for new crop, that number 40.66%, just under 41%, that implies that it implies that at the end of the new crop marketing year, there will be basically 41 bushels of wheat left over for every 100 that we've used. That's not a tight situation at all. What USDA did on the wheat balance sheet was they cut uh production year over year in total, this is all wheat, by 424 million bushels. They cut use by 156 million bushels, their demand projections. So the carryout estimate uh went from 935 million last year to 762 this year. So USDA is saying, hey, yeah, we've got a light crop, but we're gonna use less. And I think the market's job right now is to make sure that we don't use a lot of wheat. It's to make sure that we don't export any HRW wheat that uh we just kind of uh we're not we're not gonna have the the crop to do it. With regard to world wheat, still not a tight situation. Um ending stocks to use ratio about 34%. That's it's not tight historically. It doesn't mean the market can't rally, it's just not very tight historically. Um, premium subs, you guys have ending stocks to use ratio charts updated for uh corn soybeans, wheat, global, and domestic in your email this morning. Um, let's look at price action. So Kansas City wheat futures traded limit up yesterday, finished limit up yesterday, and we are higher again this morning. Smallest US HRW crop basically in forever. And I think the market's job right now is to eliminate demand uh through exports in particular. And we are drastically overvalued on the export market and uh export sales of wheat and and any HRW sales in particular should just grind to a halt. So uh very bullish

Corn/Soybean Estimates

SPEAKER_01 4:44

report. The uh market is higher and Kansas City wheat features leading the way, but the SRW market and spring wheat futures um also acted very well. Let's do corn and soybeans.

SPEAKER_00 4:53

U.S. soybean production is forecast to reach its second highest level on record. According to the USDA, this season's crop is estimated at 4.44 billion bushels, up 4.2% from last year, though slightly below the average trade estimate. The higher soybean production outlook comes as input costs have soared, largely due to the conflict over in the Middle East. Corn production is projected at 16 billion bushels, down 6% year over year, but marginally above expectations. Both corn and soybean futures closed higher yesterday.

SPEAKER_01 5:24

I wouldn't read too much into any of this. The corn numbers in particular, I mean, they gave us the Fab Ag Outlook Forum yield number. They gave us the marked acreage estimate, and then they basically like kind of backward uh mathed it and tried to arrive at a 2 billion bushel carry-out ballpark, and that's what we got. The soybean number was tighter than expected, a 310 carryout projection for new crop, the average trade guess was 364. This was supportive to the market. It's not reality. We don't know what the acres are, we don't know what the yield is. It's it's just a starting point. Um, global ending stocks, a little bit tighter than expected for corn, um, also for soybeans, also for wheat. So it was generally speaking a constructive report. I just I think that the wheat number and those U.S. wheat production numbers, that was the big deal yesterday. This corn and soybean stuff is just kind of like take it or leave it. I mean, they're they're just guessing for new crop. Um, here's a decent corn chart. So the strength in the wheat market has absolutely helped. We're creeping up on the previous highs above $5 this morning. The funds, the funds, are probably 91% of max net long as of yesterday's close. What does that mean? It means that um in our, we have a daily fund tracker chart in our email uh that the premium subs get every day. We're estimating that the funds were net long 371,000 contracts of corn at yesterday's close, and that's 91% of the previous record, which was 409,000 from 200 from uh 2011 rather. Uh Chinese purchases possible. We're gonna get to that in a second. There was a headline yesterday, and we've got Trump and G uh meeting this week. Here's soybeans. So the Trump G meeting is considered to be maybe a positive. That's what we're hoping for. Smaller than expected carry out estimates, and then you've got bean oil strong, crude oil strong. RVOs are positive news. Um,

Trump/Xi Meeting Tonight

SPEAKER_01 7:05

USDA predicted a big crush number for the new crop marketing year. So that market acting very well, also up into fresh highs yesterday.

SPEAKER_00 7:14

Uh, US and Chinese officials are negotiating potential Chinese purchases of American crops, including corn, soybeans, sorghum, and dried distillers grains. Key details, including the timing and volume of purchases, have yet to be finalized. The talks coincide with the Trump Xi summit uh this week in Beijing, where trade and other sensitive issues will be discussed. While farmers are expecting some form of trade agreement to be reached, confidence remains low that it will be large enough to meaningfully improve the markets. Farmers are also pushing for formal binding commitments rather than rather than informal announcements, such as social media posts that have uh recently proven unreliable.

SPEAKER_01 7:56

Trump was uh truth socialing from Air Force One like a few hours ago, and he's got like a bunch of US CEOs on the plane with him, and one of them is the CEO of Cargill. So perhaps, perhaps that means we're gonna see some fireworks with regard to uh corn soybeans. I don't know. I I hope so. China hasn't bought really any US corn. I mean, nothing for this year, next to nothing for last year. 2223 was the the last big year for U.S. corn sales to China. We did 7.6 million metric tons. And then you had uh 2021 was the biggest we've ever seen. It was like uh 23 million uh thereabouts, 21-22 was also very big. So you've only had like really three years ever that China bought a lot of U.S. corn. So maybe they maybe maybe they do come in and buy something. I I don't know. I don't know what they're gonna do. Um, this is the agenda. So the Trump G meeting is at 10 15 a.m. Central Time, or I'm sorry, 10 15 a.m. Beijing time tomorrow, which is 8 15 p.m. Central time, United States time tonight. So this meeting's actually happening tonight, um, as far as uh our schedule goes. So uh maybe some news out of that, maybe not. Uh we we hope for some uh commitments, purchase language, corn soybeans being discussed. I mean, that's what we're hoping for.

SPEAKER_00 9:12

If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers why uh report day is a great day to be a subscriber?

SPEAKER_01 9:20

I was busy yesterday, two premium uh videos and uh of course our normal daily show. I did a USDA snapshot as I always do after uh the report. And basically what I do is I throw the balance sheets up on the screen. I say, hey, these are the changes, these are the noteworthy changes, this is the stuff you need to be aware of. It's like a three-minute video, but I make you aware of everything that the government said that was important that day so that you can kind of leave it behind and say, okay, now I know, now I can go back to work, right? It's a big time saver. Um, cash sales explain, corn and soybeans. What have I done for new crop? What have I done for 2027? I offer a very simple blueprint of a marketing plan to our premium subscribers. Hey, here's what I would advise for my normal, what I consider to be my average subscriber, which is somebody that has some storage, probably can't store everything. I talk about, hey, if you have no storage, maybe you should be more aggressive than me. If you have a ton of storage, maybe you should be a little bit less aggressive than me. But in any case, I kind of laid out what I've done and it's super simple. It's just um percentages, uh dates, and weighted averages and uh no futures or options or um fancy strategies. It's just it's super, super simple. You guys should check that out. And uh this video that I did earlier, or was it last week, I think, uh is becoming a lot more relevant. The funds are net long 300,000 contracts, of course, closer to 400 in real time. What's next? This is kind of a historical back study on the funds and uh what they tend to do when they hit this uh benchmark. If you guys want to see the premium stuff, go to standardgrain.com. You should you should sign up this morning. This is a $50 per month subscription. You can cancel at any time. Brian Split's gonna be on today to talk charts, and it's gonna be incredibly interesting because the charts are starting to look very good. The corn chart looks good, the soybean chart looks good, the week chart looks very good. And I'm assuming I know that he'll have like some upside targets in mind, some things to be aware of. Brian is the best in the business

More Farm Aid?

SPEAKER_01 11:03

when it comes to technical analysis of the grain markets, and uh you should listen to what he has to say today. Uh, it takes like 30 seconds to sign up today, guys. Do it on your phone, piece of cake, um, give that deal a shot.

SPEAKER_00 11:13

U.S. Senator John Hovind is pushing for additional farmer assistance as producers continue to deal with the struggling farm economy. The increased aid would likely include the expansion of the USDA's farmer bridge assistance program. Lawmakers are considering $17 billion in additional relief, including $3 billion for specialty crops. The assistance was originally planned for reconciliation, but is now likely to be prioritized as a supplemental spending package tied to natural disaster relief. Hoven added that the support is needed not only to sustain current producers, but also encourage the next generation to return to the farm.

SPEAKER_01 11:50

This guy, I mean, he just he just won't shut up about farm aid. This is all he talks about, I think. We need more farm aid. We need more farm aid. I don't know that you can make a case for aid right now given like the prices. I know things are still tough, but you've seen some price improvement, you've seen some probably some margin improvement given the recent move here. Uh, this fertilizer thing is the big X factor, though, because because the situation is so variable from farm to farm. Like a lot of guys in the Central Corn Belt had all their fertilizer needs locked up prior to planting, but a lot of guys outside of the central corn belt did not. And the fertilizer thing is is it stings pretty bad. So you could make a case either way. I know people are sick of hearing about uh direct farm payments. The skeptic in me says that, you know, somebody's pushing this guy to talk this way, and it's probably not corn and soybean growers, it's probably the banks and the seed companies and the fertilizer dealers and all the people who

Inflation Spike

SPEAKER_01 12:43

sell things to farmers because they're the ones that really benefit from this sort of thing. Uh, big picture. But um, in any case, it's on the table. We'll see if anything comes of it.

SPEAKER_00 12:51

Inflation reached a three-year high in April. The April consumer price index rose 3.8% year over year, the largest annual increase since May 2023 and above economists' expectations of 3.7%. On a monthly basis, prices rose 0.6% from March. That was in line with expectations, but it was the largest monthly gain since 2022. The uptick in inflation, of course, coincides with the Iran war, which has pushed energy prices uh sharply higher. Energy costs climbed 3.8% month over month and were up 17.9% compared to April 2025. The gasoline index rose 28.4% on a yearly basis, according to AAA. The national average price for regular unleaded gasoline currently stands at 450 per gallon.

SPEAKER_01 13:37

Here's Heather Long on X Justin. U.S. inflation jumped to 3.8% in April, the highest in three years. This is painful for Americans, especially moderate income households. Inflation rose 0.6% in the month of April due to soaring gas prices that accounted for over 40% of the increase. Rising shelter and food prices also pushed up inflation. Core inflation, which excludes food and energy, came in at 2.8%. Here is Kevin Gordon, and he said this about food inflation. CPI food at home, essentially grocery prices, jumped by 0.68% month over month in April, the largest increase since August of 2022. And I think this is interesting to our crowd because people are going to jump in and say, oh, this is because of higher commodity prices, like higher corn and soybean and wheat prices. I don't think that's it. I think that this is higher transportation costs being reflected at the grocery store. This this spike, and then you can call it a spike, a surge. It's like a parabolic move in diesel prices. I mean, everything moves on a truck and it it translates eventually. And the more weeks you go with these higher diesel prices, the more expensive you're going to see everything, not just not just food at the grocery store, but everything that you buy because it all moves on a truck. Um, here's a quick chart of CPI percent annualized change. So 3.8% were the highest in May of 2023, back in June of 22 in your post-COVID uh money printing fiasco inflation event. Uh, we got up to 9.1%. I don't think we're going back there, but you know, the longer that this uh Iran thing continues and the longer gas prices stay high, the the more possible it is. I don't think I'd make that bet though. What did cattle do yesterday?

SPEAKER_00 15:11

Cattle futures were lower, live cattle were buck 70 to 280 lower. Feeders really took a hit with losses ranging from 250 all the way down to 730. Box beef prices were marginally lower. Choice was down 49 cents at 390.73, and select was down 22 cents at 391.27.

SPEAKER_01 15:26

Outside markets pretty tame this morning. The SP is up 15 points. Treasuries are flat. Crude oil is basically unchanged, down three cents in the June WTI, 102.14, but sticking above 100. Everybody have a wonderful day today. Back on Thursday.