"But China Didn't Sign Anything!" - Traders Buy Grains Now, Will Ask Questions Later

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Grain and soybean futures surged Monday after a White House fact sheet revealed China committed to purchasing $17 billion in US agricultural products annually for the next three years — though key details and formal Chinese confirmation are still pending. Corn, soybeans, and wheat all rallied sharply as funds bought aggressively across the board.

US winter wheat conditions continued to slide, with good-excellent ratings hitting their lowest level since 1996. The top five HRW-producing states are averaging just 9.6% good-to-excellent and 62.6% poor-to-very-poor, with the USDA pegging the HRW crop at 515 million bushels—down 36% from last year. Corn and soybean planting are both running ahead of average, and the forecast favors additional Corn Belt rainfall over the next five days.

Brazil's inflation outlook is worsening, now projected at 4.5% by year-end—well above the central bank's 3% target—largely driven by higher oil prices tied to the Iran conflict. Brazilian farmers continue to face steep borrowing costs, with private loan rates exceeding 17%.

US corn export inspections dipped last week but remain strong on the season. Soybean inspections were up 115% year-over-year, with China accounting for roughly 42% of the week's total. Wheat shipments fell below expectations.

President Trump delayed a planned strike on Iran following requests from Persian Gulf allies, though WTI crude still settled up ~3% at $108.66/barrel. The administration extended a sanctions waiver on Russian oil sales for another 30 days amid ongoing pressure heading into the midterms.

Transcript

"China Didn't Sign Anything"

SPEAKER_01 0:08

Morning guys. It's Tuesday, May 19th, 5 25 a.m. Central Time. Grain market's mostly higher this morning. December corn features up three quarters of a cent at 498 and three-quarters. November soybeans up a half cent at 12.01 and a half. July Chicago wheat up seven and a quarter at 671 and three quarters. July Kansas City wheat up seven at seven ten and three quarters. September spring wheat up nine and a half at 733 and a half. We had a hell of a rally in the grain markets yesterday. Let's start there.

SPEAKER_00 0:35

We sure did. And the rally was driven by a White House fact sheet released Sunday stating that China committed to purchasing$17 billion of U.S. agricultural products annually over the next three years. The December 26th corn contract rose 17 cents to close at 498 per bushel, while the November 26 soybean contract gained roughly 30 cents to settle at 1201 per bushel. Wheat futures were also sharply higher. The deal was reached during President Trump's meeting with Xi Jinping last week. However, key details of the agreement have yet to be released, and China has not yet formally confirmed the commitment.

TERRIBLE Winter Wheat Conditions

SPEAKER_01 1:13

China has not yet formally confirmed the commitment. That was the same thing that happened in the last most recent go-around. So when the White House posted that fact sheet on November 1st that said China's going to buy 12 million metric tons of beans, China never really confirmed it. They never really signed anything. People were asking yesterday, did China actually sign something as if a Chinese signature means anything? But in any case, the last go-around, China didn't sign or really confirm it, but they still bought the soybeans. So I think the trade is like, you know, they're buying now, they're going to ask questions later. Let's look at the corn market. It um, as I mentioned yesterday, we we held trend support almost perfectly on Friday and this December contract. We rallied yesterday. Old crop corn futures actually led the way yesterday. The the trade, if if you're a corn trader, and it was estimated yesterday that the funds bought 46,000 contracts of corn in net. That's a big day for them. They're looking at this, and I showed you guys this yesterday, but what they're looking at with regard to corn is this okay, if China buys$17 billion in non-soybean ag products, the last time that that happened, 2022 and 2021, those years were associated with large Chinese purchases of US corn. And if that happens again, it could be an absolute game changer for the corn market. So if you're a speculator in the corn market, you know, speculators are going to speculate, as we say, they're speculating that the same thing could happen this go-around. There's a lot of kind of ins and outs that you can discuss. Oh, it's the tariff rate quota. Maybe they don't need the corn. I don't know. It's tough to tell what China's appetite is. You can make a million different arguments, but there's there's very little clarity and very few details. So it's just, hey, let's buy now, let's ask questions later. With regard to soybeans, I feel like we're to some extent trading a recycled headline because they told us basically, hey, the soybean commitment is the same now as it was back in November. It's 25 million metric tons a year for the next three years. Maybe just the I don't wouldn't even call it a confirmation, but the idea that that number was reinforced by the White House was enough to spur the rally. I still don't think China's coming in for old crop U.S. soybeans. I think the idea is that, hey, maybe sometime soon they start to buy new crop U.S. soybeans. And that would be a positive. It it does feel though like we've traded that headline several times. With regard to wheat, I feel like it was more of a follower, but we did have um some bad crop ratings out again yesterday that we'll get to in a second. So a lot remains to be seen here. You know, the the big thing for me ultimately will be hey, do we see export sales reported? Do we see flash sales of corn, soybeans, wheat, anything else to China? Do we see it show up in the export sales report? And if so, when? Um, I remember back uh phase one trade deal was signed in January of 2020, and then like COVID happened, and China didn't buy anything for like months after that trade deal was signed initially. So it doesn't have to start right away, but there's no COVID going on right now. I mean, we do have an inflation situation and a lot of stuff going on in the world with Iran and the Strait of Hormuz and all that. But um, this could go in a million different directions. But for now, it's it's by now ask questions later, you know.

SPEAKER_00 4:24

U.S. winter wheat conditions continued to deteriorate last week as of Sunday. 27% of the crop was rated good to excellent, down from 28% the previous previous week. Uh, the rating was the lowest for the week since 1996. 43% of the crop was rated poor to very poor, up three percentage points from the prior week and well above the five-year average of 27%. U.S. corn planting was 76% complete through Sunday, up from 57% the prior week and ahead of 70% on average. Soybean planting reached 67% complete, up from 49% the prior week, and well above 53% on average. And then the U.S. spring wheat crop was 73% planted compared with 53% the previous week and 66% on average.

SPEAKER_01 5:09

The winter wheat ratings are bad at 27%, good to excellent. And that's a national rating, which includes all of your winter wheat crops to zero in on the HRW wheat crop. I've ran these statistics for you guys the last few weeks. I'll do it again. Uh, the top five HRW producers are Kansas, Oklahoma, Texas, Colorado, and Nebraska. On average, those five states are rated just 9.6% good to excellent, and a whopping 62.6% port of very poor. The port-averry poor ratings have increased drastically the last couple of weeks. Kansas, the largest uh winter wheat producer, 58% port-averry poor. Oklahoma is 48% port-avery poor. Texas is 65% port-averry poor, Colorado, 58% poor-to-very poor winter wheat, and Nebraska, Mackenzie is 84% poor-to-very poor. Tell us how dry it is in Nebraska.

SPEAKER_00 6:03

It is dry as a bone. There have been some, there has been rainfall in the past few days, but folks like us, we haven't gotten anything. So yeah, it's just, it's ridiculously dry.

US Weather, Active Radar

SPEAKER_01 6:12

To go to um corn planting, there are only two states of the uh major corn growing states that are behind their respective five-year averages. The two states are Kansas, 63% planted in Kansas versus 68% on average, and Michigan has also been slow, 47% versus 52 on average. If you are in Kansas or Michigan and you have an update for us on the state of planting and what's going on, let us know. Soybean planting, there is only one state, I believe, that is behind the five-year average. And I believe that state is Michigan. If we can get my uh physical pages to turn here, I'm very old. Uh, 37% planted soybeans in Michigan versus uh 46 on average. So we're moving along fine with regard to row crop planting, spring wheat planting, uh doing all right also.

SPEAKER_00 6:59

The radar is active over some parts of the U.S. Corn belt early this morning. A large system is sitting over Missouri and will work its way east later today. More scattered activity is being observed in northern Illinois and southern Wisconsin. Rainfall over the last 72 hours favored southern Iowa, northern Missouri, southeast Nebraska, southern Illinois, and southern Indiana. Pockets of southern Wisconsin, southern Minnesota, North Dakota, and South Dakota also saw rain. The forecast favors additional corn belt rainfall, rainfall over the next five days.

Brazil Inflation and Farmers

SPEAKER_01 7:30

So it looks like the mid-south is going to be wet over the next five days. Iowa's going to catch some more rain, parts of Illinois, and then a lot of the eastern cornbelt, like um southern, the southern half of Indiana, depending on which model you look at, maybe more of Indiana, uh, most of Ohio, uh, West Tennessee, Kentucky, up into southern Minnesota. So there's quite a bit of rain. It's not, it's not everywhere, but this is not the um the drought pattern that some people had been talking about. There's been a lot of talk that, oh, this drought that's in the southern plains and in the southeast part of the country, it's gonna move into the corn belt. And when you got this much rain that's falling actually this morning and has fell over the last uh week or so, plus the stuff that's in the forecast, it's uh becoming a little bit more difficult to make that argument. Not that that couldn't change and it couldn't shut off here in June or July, but that doesn't appear to be the way that we're headed right now.

SPEAKER_00 8:20

Uh the conflict over in the Middle East is fueling inflation down in Brazil. According to the nation's finance ministry, inflation is projected to reach 4.5% by December, up from the previous forecast of 3.7%, and well above the central bank's 3% target. The increase has largely been driven by higher oil prices stemming from the Middle East conflict, which have raised fuel transportation and industrial input costs. The government also lifted its 2026 average oil price forecast by 25% to 91.25 per barrel. Despite the worsening inflation outlook, the central bank lowered its benchmark interest rate by a quarter point in April to 14.5%.

SPEAKER_01 9:01

Uh, premium subs. There is a very good uh premium video that we did with Ryan Moe a week or two ago about the uh the problems that Brazilian soybean growers are experiencing. And the link to that is in the first section of the email this morning. Make sure you watch that if you haven't already. Um, one of the things that's going on with farmers in Brazil is um inflation and interest rates are especially problematic. This is the uh Brazil, I believe it's pronounced SELIC rate, which is like their Fed fund rate. It's at 14.5%. The U.S. Fed fund rate is three and a half to three and three quarters percent. So Brazilian farmers are borrowing money. I believe there are some government subsidized farm operating loans in Brazil that are like anywhere from eight and a half to 14%. The private loans, which are used more by, I think the larger farmers, can be in excess of 17%. So um, if you guys think you have it bad here with regard to interest rates, Brazil is much worse. And they they could get even worse than this because they can't seem to get the inflation situation under control. I believe it was like two weeks ago. I couldn't find the article. Reuters printed an article, and it was it was a take from one of the uh ag groups in Brazil, and they were actually talking about um expansion and acreage moving forward. And Soybean acreage, they believe uh this year there might be some expansion, but it's gonna be limited. What this is gonna do if they run into a real farm crisis there, it's not gonna reduce acreage, it's gonna result in consolidation. The big farms are gonna get bigger and a lot of the small guys are gonna go away, similar to what we've seen in the United States. But another thing that the article mentioned, if I if I remember correctly, is that there are some people who believe that corn acreage expansion is what you could see next in Brazil, more so than soybean acreage expansion, partly because of their big ethanol initiatives. So uh maybe the Brazilian farmer is coming for you guys next with regard to corn. They already got you beaten soybeans. Uh, maybe, maybe corn is coming next. It's it's gonna take a while to get there, though, if that's the route they're going.

SPEAKER_00 10:53

If you guys have not checked out our premium content, you sure need to do so. Joe, can you tell our viewers about yesterday's premium video?

Grain Shipments

SPEAKER_01 10:59

Uh Ryan Bennis was on yesterday, talk crop insurance. We started off with winter wheat claims and how this is all gonna work. So you're in Kansas, you've got half a wheat crop or less. Uh, what's the situation gonna be? The prices have risen, which means your harvest price option could look a lot better. It could actually end up working out well for a lot of you guys. And then we talked about Ark and PLC, and uh Ryan made a cool, it was like a calculator slash heat map available, and you guys could kind of figure out what your own numbers were gonna be. This was uh super interesting stuff. And crop insurance, I mean, it's always mattered, but I feel like it's it's mattering even more because of the increased government safety nets that are out there. Lewis Stearns is going to be on today to talk about cover crops and some of the best practices and things that he sees there as an agronomist and consultant. If you guys 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 it anytime. No other fee, no other obligation, nobody tried to sell you anything else. If you guys only watch on YouTube or you listen on the podcast, we love you, but you're a freeloader. We don't make any money off you at all. We are uh here to sell premium subscriptions. That's why I'm here. I'm not gonna we've always been very transparent about this. This is this is a free show. We do the news, but we get into real details and like real actionable stuff in the premium content. So if you're a farmer, you make the decisions, you do the marketing, you buy the crop insurance, you uh borrow the money from the bank, you got to sign up for this because if you're not watching it, your neighbor is and he's gonna be 10 steps ahead of you on everything. So uh give that deal a shot this morning, guys.

SPEAKER_00 12:24

U.S. corn shipments declined last week but remained strong. USDA reported that 54 million bushels of corn were inspected for export during the week ending May 14th. The print was down 19% compared to the prior week and down 22% versus the same week last year. Soybean shipments were near the lower end of pre-report expectations at 18 million bushels. The print was down 27% compared to the previous week, but up a whopping 115% versus the same week last year. And then wheat shipments, they fell below expectations at 8 million bushels, down 56% from the previous week, and down 48% versus the same week last year.

Iran Update and Crude

SPEAKER_01 13:00

Here is uh that's corn chips. I want to do soybeans. Here's soybeans. Um, of those, it's the actual number of soybeans sold to China for this current marketing year, I believe stands at 11.9 million metric tons. So very close to that 12 million. There's probably some stuff that'll get switched to China from unknown or whatever. It'll end up being 12 or more. We've already shipped, I believe, almost 11 of that 12. So it's not that they not China didn't just buy the beans, we actually shipped them. And we're hoping that the same thing happens with new crop beans. We need China to come in and start buying these new crop beans pretty soon. The process is that, um, if for those of you guys who don't understand this, if China's gonna buy beans for the bean, they're gonna buy the beans that are currently being planted in the United States. They're gonna start buying them now for delivery post-harvest. And they'll continue to buy, you know, into harvest and sometimes uh during harvest. But a lot of those purchases will be made in advance and then shipped later. So we're hoping to see those uh start pretty soon.

SPEAKER_00 13:59

President Trump delayed a planned strike on Iran that had been scheduled for today. The decision followed requests from Persian Gulf allies to allow more time for negotiations aimed at ending the conflict. However, there has been no confirmation from Tehran that talks have resumed. Trump reiterated that the U.S. is prepared to resume attacks on Iran if if an acceptable agreement is not reached, though he did not set a timeline despite the delay. WTI crude oil prices rose about 3% yesterday to settle at 108.66 per barrel. High oil prices continue to pressure the Trump administration ahead of the midterms, prompting it to extend a sanctions waiver allowing Russian oil sales for another 30 days.

SPEAKER_01 14:41

So the July WTI, I'm sorry, June WTI futures expire today and they're trading about 108. On this chart that's on the screen is a uh continuation chart. July will take over and July's trading about 103. So we've kind of been just been hovering around this$100 range as this situation continues and you see see some escalation, you see some de-escalation. We're kind of waiting around. They really got to get this thing fixed, though. They've got to get the straight reopened. Gas prices are too high, diesel prices are too high. It's just not it's not really good for anybody. What did cattle do yesterday?

SPEAKER_00 15:12

Cattle futures were lower, live cattle were 52 cents to a buck 15 lower. Feeders saw losses ranging from a buck 40 down to 315, with the exception of the front month contract, which gained 12 cents. Box beef prices were higher. Choice was up 289 at 392.14, and select was up 98 cents at 390.23.

SPEAKER_01 15:28

Was the cash cattle market still as strong as ever last week, or have we backed off a little bit?

SPEAKER_00 15:32

Strong as ever. And uh yeah, set all-time highs last week. And I'm thinking that, well, what I've heard is I feel like the Packers might uh up their bids again this week.

SPEAKER_01 15:42

We'll see. Uh outside markets, the SP is down about four tenths of a percentage point. Treasury is about flat. Crude oil again is down a dollar twenty eight at one oh three ten in the uh July WTI futures. Have a great day, guys. We'll be back on Wednesday.