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
Should We "Believe" the White House?? China Starts New Crop US Soybeans Purchases
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🌱 China made its first purchase of new-crop US soybeans, snapping up 132,000mt alongside additional flash sales of corn to Mexico and soybeans to unknown destinations. This comes after the White House announced China would buy 25mmt of US soybeans annually over the next 3 years.
⚖️ CME has filed a lawsuit against the CFTC over its approval of Kalshi's perpetual futures, arguing the products should be regulated as swaps under Dodd-Frank rather than futures. CME shares have dropped ~9% since the approval as the new contracts have already generated over $5 billion in trading activity.
🌧️ Widespread rain (and some flooding) improved drought conditions across much of the Corn Belt, with just 13% of the region now in drought versus 36% at the start of the year. The High Plains, however, remains largely dry and continues to struggle.
🛢️ US-Iran peace talks made progress over the weekend with a 60-day roadmap and a new direct communication line, even as Iran claimed the Strait of Hormuz was closed again. CENTCOM says the strait remains open, and WTI crude is trading lower near $75/bbl despite the back-and-forth.
🌾 Fertilizer prices are sliding as the Middle East war premium fades, with benchmark urea prices down ~50% from their April peak. Weak farmer demand and China's plan to resume exports are adding further pressure, though phosphate prices stay elevated on a sulfur shortage.
📦 Corn export sales rose 16% week-over-week with Spain as the top buyer, while soybean sales beat expectations at 424,900mt behind strong Egyptian demand. New-crop wheat sales came in softer, down 40% from the prior week, with Japan leading purchases.
🐄 Friday's Cattle on Feed report was largely neutral, with on-feed totals up 2% year-over-year even as placements and marketings ran below last year's levels. The bigger story remains the historically low US cattle herd, setting up for tighter supplies until rebuilding eventually kicks in.
Joe is Still Here
SPEAKER_00Good morning, everybody. It's Monday, June 22nd, 5 23 a.m. Central Time. Grain markets are mixed to start a new week. December corn futures down one and a quarter at 442 and three-quarters. November soybeans up one and a half at 1144 and a quarter. July Chicago wheat down four and three quarters at 601. July Kansas City wheat down six and three quarters at 637 and a quarter. September spring wheat down one and three quarters at 646. Hope you guys had a nice weekend and a nice Father's Day. McKenzie, I came back from vacation last week and we were above 35,000 subscribers on YouTube. So I'm still here. I'm still here. That's the that's the deal I made. If you guys have not hit the uh subscribe button on YouTube, do us a favor and hit subscribe. Okay, McKenzie,
Soybeans, China, White House
SPEAKER_00we are often accused of uh too much bad news. You got your show is so down, and it's we got good news today.
SPEAKER_01We sure do. USDA reported multiple flash sales on Thursday. U.S. exporters sold 5 million bushels of soybeans to China for delivery during the 26-27 marketing year, marking China's first purchase of new crop U.S. beans. Exporters also sold 11 million bushels of corn to Mexico for delivery during the 2627 marketing year. And lastly, exporters sold 4 million bushels of beans to unknown destinations for delivery during the next marketing year.
SPEAKER_00All right. So that is China's very first official purchase of new crop U.S. soybeans, although there were some sales to unknown destinations that could end up being China. So look at this 0.528%. That's the amount of the uh progress China has made toward the 25 million metric tons of U.S. soybean purchases that the White House said that it would make. With regard to the old crop purchases, we know that they're already almost done. So the question now moving forward is are we supposed to believe these White House fact sheets? It's not like Santa Claus or the Easter Bunny. I mean, you believe or you don't believe. It's like it's it's a little bit more nuanced than that. But the White House told us on November 1st that China would purchase at least 12 million metric tons of U.S. soybeans during the last two months of 2025. That part was fulfilled or completed largely. It didn't happen exactly uh during the last two months of 2025, but it was within a few weeks. So recent history would suggest that these fact sheets are, I'm not gonna say reality, but the China has lived up to what the White House has told us. Now, the second part of this is that China would purchase 25 million metric tons of US soybeans into each of 26, 27, and 28. And that would imply to me, I I know that the White House or whoever wrote this, they don't understand marketing years. It would under it would imply to me that China has agreed, and China hasn't said this, it would imply to me that China has said, yeah, for for new crop, we'll buy 25 million metric tons. So I think recent history would suggest that it's it's very probable that China does come in and buy 25 million metric tons of new crop U.S. weapons, which would be very supportive. You see the the the last part of this about sorghum, China's bought a lot of US sorghum. So um the White House fact sheets have been, I'd say, accurate to this point. Now, you want to go back and talk about past Trump trade deals, phase one. No, China didn't totally live up to that, it was kind of messy. Um, there was this fact sheet that was out in May, and this is the one that I think if you're uh a corn grower, and if you're a corn grower, you're probably also a soybean grower. But this fact sheet said that China was gonna buy $17 billion per year of basically non-soybean ag products. And if that's gonna happen, I think there's gonna have to be some corn purchases in there. In tomorrow's premium video, I'm gonna run through the history of Chinese purchases of U.S. corn and what it's done for the market. So uh whether you uh trust or don't trust the White House,
CME / Kalshi / 24-7 Trading
SPEAKER_00I will say this what they've told us in these fact sheets so far has largely come to fruition. So uh we hope for the sake of our crowd that that's the case as we move forward.
SPEAKER_01The CME has filed a lawsuit against the CFTC over its decision to allow Calci to list perpetual futures contracts. The CME argues that these products should be regulated as swaps under the stricter oversight of the Dodd-Frank Act, but the CFTC has instead classified them as futures, making them easier to list and trade. Perpetual futures, which never expire, trade 24-7, and allow for significant leverage, are widely seen as a potential disruptor to traditional derivatives markets. Since the approval, CME's shares have fallen roughly 9%, with the exchange citing competitive injury in its lawsuit. Calci, however, maintains that the products are appropriately regulated and represent a step forward in market innovation. Since launching since launching the product, perpetual futures have generated more than $5 billion in trading activity.
SPEAKER_00So CME believes that it is is, and I believe that the laws say as much. CME is like the keeper of swaps, whereas the futures contracts can be kind of everywhere. There can be a little bit more competition. Uh, from a functional standpoint, these perpetual futures contracts that Calci is offering, they they behave much more like a swap than a futures contract, which is what CME is arguing. Uh periodic funding payments between two sides, no expiration, no delivery obligation. They're tracking an index rather than settling. It's it's very much like the textbook description of a swap. But Calci is gonna uh fight this. And I don't know what what sort of stance CFTC is gonna take. I mean, CME is obviously uh suing them on this basis. This is gonna be, from what I'm told, this is gonna be like a knockdown drag out brawl. They're gonna fight over this. So this is what Calci is doing right now. This is this is their Bitcoin perpetual futures contracts. And since Calci started doing perpetual futures contracts, they've traded like five billion dollars in volume or something. And they're not even doing them on commodities yet, they're doing them just on crypto. And if you go to their website, um, some of the commodities have come back, like they've got oil prices. They used to have corn, soybean and wheat prices, but they don't anymore. But they're not perpetual futures. They're like what they have in commodities now is like a binary outcome contract. It's not a perpetual futures contract. Um, this all goes back to me, to the idea that I think eventually we move toward 24-7 grain trading and commodity trading, which I don't like at all. I'm too old and worn out for that. But uh, I think that that's where the future is. If you look, if you go to Calci's website and you look at you look at the way that they present this to the user, it's so much more user-friendly than what CME has. You go to CME, what is it? It's it's 15 minute delayed quotes. There's no like real-time charts like this. It's because CME makes a makes a fortune. They make a killing selling data, they make a killing selling selling their own data to the public. So they keep everything, you know, behind behind a paywall, basically. Whereas Calci, like, you know, everything's kind of wide open and um it's gonna be like it's gonna be like betting on sports. It's gonna be, you know, people sitting on their couch can sit there on their phone and make bets on crude oil or corn prices or whatever. But uh eventually that could turn into bigger money because if you're talking about a market like corner soybeans and you get, you know, a weekend headline out about the Strait of Hormuz or about there's a weekend weather change or you know, whatever it is, the big money is gonna be forced to trade it. And if the CME's not open on Saturday morning when the news breaks, where are they gonna go? They're gonna go trade it on Calci, I guess. So this the CME has right uh and should be concerned. Their stock would tell you as much. The CME stock is down almost 10% year to date, whereas the broader market, the SP is up almost 10%. Uh Terry Duffy said just a few days ago he's gonna step down. He's the CEO. I bet this has something to do with it. And uh the reason for the sell-off in the stock has something to do also with the threat of these perpetual futures contracts, which I
Drought, US Weather
SPEAKER_00don't really think they're futures contracts, but that's not up for me to decide. So uh very interesting things as in terms of markets and mechanisms and all that.
SPEAKER_01USDA released its weekly drought monitor data last Thursday. The Corn Belt saw another week of widespread rainfall, with some areas receiving excessive amounts, which led to localized flooding. As a result, uh drought conditions improved across much of the region, including Illinois, Indiana, Missouri, Wisconsin, and Iowa. The only areas that saw conditions deteriorate were eastern Kentucky, northern Iowa, and parts of north, central and southwest Minnesota. In contrast, the high plains remained largely dry, with the exception of some improvement in drought conditions in central Nebraska and eastern Nebraska. So when we look at the percentage of U.S. areas experiencing drought, corn country currently stands at 23%, soybeans also 23%, winter wheat 63%, spring wheat 23%, and cattle country 53%.
SPEAKER_00Okay, so you can see on the map the areas in red obviously problematic and have been too dry. Mackenzie, where you're at in Nebraska, has been very, very dry. Uh for the rest of you guys, if you're in the central corn belt, like you know, you look at part of those areas of northern Iowa, northern Illinois, uh, southern Minnesota. If you guys are in those areas and you feel as if dryness is becoming a problem for you, uh, drop us a comment in the uh YouTube comment section or you can email me info at standardgrain.com. I'd be curious to see your thoughts. But there are some dry areas. Um, they're they're drought by definition. I don't know if they're going to be a huge problem as far as the crops are concerned. There is some rain on the radar this morning, big system over parts of Oklahoma into southern Missouri, northern Arkansas, uh, western Tennessee, and then also some up in the uh kind of moving toward the northeast. Over the last 72 hours, this is weekend rainfall totals, whole bunch in Illinois, uh southern Iowa, some more rain from Missouri, uh Kansas, parts of Nebraska caught some rain. Pretty active weekend. Um, some areas missed though, like that pocket of northern Iowa, southern Minnesota they missed. Um certainly not rain everywhere. Over the last 14 days, uh, here's rainfall totals. This is from our friends at Crop Profit. There's a couple of those little red dots. Those are areas that caught more than eight inches of rain over the last 14 days. That's way too much. Uh, there's a pocket there in eastern Iowa. Uh, there's a pocket in what is that, southeast Kansas, and then some stuff down in the Delta. But a lot of like, you know, you look at a lot of Illinois, caught three, four inches of rain over the last two weeks. That might be a little bit excessive. So if you guys are in, you know, eastern Iowa, parts of Illinois, parts of Indiana, you feel like your rainfall has been excessive as of late, uh, we'd like to hear about that also. If you're to look at the last 30 days, this is the map from uh Iowa State. This is the last 30 days of precipitation, and they're ranked uh out of the last 134 years. So number one is wettest out of the last 134 years. 134 would be the driest of the last 134 years. And it's been kind of different. It's kind of split down the middle if you were to draw a line like diagonally from the uh lower left to the upper right of the corn belt. Like the uh the stuff on the on the right is more a little bit wet, a little bit normal in some areas, and then certainly drier when you get up into uh northern Iowa, northwest Iowa, southern Minnesota, Dakota's places like that. So it has been kind of a tail of maybe two different corn belts here. Over the next seven days, U.S. corn areas expected to see 138% of normal rainfall. So, as I've mentioned before, you know, if you don't get a hot and dry forecast this time of year, it's hard to rally the market. We've just got a lot of rain. Iowa's gonna be notably drier than a lot of other places. Um, eight to fourteen dry in like what I'd call the southern corn belt. And I'm not sure if that's gonna be good or bad. Temperature's gonna be cool over the next seven days, but then you've got some heat and potentially some reduced rainfall during that eight to fourteen day period. I can't help but wonder if maybe that turns into some sort of threat. That's your uh rainfall totals that's expected during the eight to fourteen day period, and you can see uh a lot of that, like kind of you know, southern,
Iran, Strait of Hormuz
SPEAKER_00I guess call it half or maybe two-thirds of the corn belt kind of stays a little bit drier. So maybe a threat to consider, but the markets are certainly not considering it this morning.
SPEAKER_01U.S. Iran peace talks advanced over the weekend despite ongoing tensions. Officials agreed on a roadmap aimed at reaching a final deal within 60 days, while also establishing a direct communication line to reduce the risk of misunderstandings. The discussions included efforts to ensure safe passage for ships through the Strait of Hormuz and to ease fighting in Lebanon. Negotiations are set to continue this week. Despite the progress, tensions remain high as President Trump threatened military action if Iran attempts to close the strait again. He also reiterated a previous threat that the U.S. could take control of the waterway and potentially impose tolls. Crude oil prices have eased in recent sessions, but remain highly volatile.
SPEAKER_00Okay, here's the latest. Commercial shipping through the strait successfully resumed late last week. On Thursday, traffic hit a two-month high with nearly 25 major commercial vessels safely transiting the waterway. The number climbed to 55 by Saturday. Iran declared on Sunday that the strait was completely closed once again, although CENTCOM says that it's still open and safe. Anecdotal information, what I was able to find this morning suggests that traffic has slowed drastically. Still, your crude oil futures trade lower. The uh nearby August contract is off like 45 cents this morning. We're trading about 75 bucks. So the uh the oil market would tell you that this thing is is very close to coming to an end. And I don't know if that's right or not, but uh it's either coming to an end or or it's over. I don't know.
SPEAKER_01If 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?
SPEAKER_00Ryan Bennis is the best in the business as far as I'm concerned at explaining crop insurance. He does an excellent job in our premium videos. He always comes prepared with charts and graphics and calculators and all sorts of things that makes crop insurance easy to visualize. Uh, where is the ECO safety net? This is one of the things that we talked about as it relates to corn prices. We we talked about the recent sell-off in new crop corn and where some of these safety nets uh will come in and how that will affect your marketing. This is extremely important stuff that could uh save you tens of thousands of untold fortunes. You need to understand this stuff because it's all changed and uh the subsidies have changed. And from what I understand, from what Ryan told me in the video, like a lot of people, a lot of people, which is very frustrating to me because we talked about this at length every day on the show, like a lot of people did not take advantage of the new crop insurance safety nets the way that they probably should have. And that's why, like, I think some of the stuff we put out is is so, so, so very important. Shea Folk did a uh land decision video last week, hold and rent or sell and invest. It's a great question because land's worth a fortune. And um, you know, if you sell it and do some other things free of some cash, is that is that a good idea? He made a calculator available, um, all sorts of cool stuff. Dave Whitcomb was on last week. Uh, record fund selling. So the funds are basically like flat the corn market right now-ish. Um, what happens after that? That's what Dave talked about, and he's absolutely fantastic. If you want to see the premium stuff, go to standardgrain.com this morning. You can sign up. This is a $50 per month subscription. We just send you a bunch of information, emails, text messages, premium videos every single business day. If you're the decision maker in your farm or agricultural operation, this is must-have stuff. Uh, sign up this morning. I will forward you a copy of this morning's email, which includes the six most recent premium videos. Um, all of the charts and graphics that we include here on YouTube are
Fertilizer Price Pullback
SPEAKER_00included as like downloadable image files that you can download um in the email every day. I also include all my cash grain marketing recommendations. Give that deal a shot this morning, guys.
SPEAKER_01Fertilizer prices have pulled back as demand has softened and the war premium has faded. Benchmark Middle East urea prices have dropped roughly 50% from their April peak, falling back below pre-conflict levels. The decline comes even as shipments through the Strait of Hormuz have yet to normalize. Traders are increasingly pricing in that the worst of the Middle East supply shock has passed. Weak demand has also weighed on the market as farmers as farmers have reduced fertilizer usage due to the surge in prices. Additional pressure has stemmed from China signaling it would resume fertilizer exports. Meanwhile, phosphate fertilizer prices remain elevated amid an ongoing uh sulfur shortage tied to uh disruptions through the strait.
SPEAKER_00So urea prices like at the Gulf have dropped drastically. Retail, they've dropped, but not as much. Uh, this is some stuff from DTN, uh weekended June 12th. We're back below 800, I think national uh retail average, which is still very expensive, but it has come down a little bit. Part of this is seasonal in terms of the demand structure, but also has a lot to do with the straight. And hopefully
Export Sales
SPEAKER_00this retail price follows the uh Gulf price lower, and it should do that, barring some big, you know, re-escalation of that situation.
SPEAKER_01U.S. corn export sales increased last week for the weekending June 11th. Net corn sales were reported at 46 million bushels. The print was up 16% from the previous week, but down 8% from the prior four-week average. Spain was the largest buyer for the week. Net soybean sales surpassed pre-report expectations at 16 million bushels. The print was up substantially from the previous week and up 49% from the prior four-week average. Egypt was the largest uh buyer for the second consecutive week. Wheat sales for the new marketing year that began on June 1st were reported at 400,800 metric tons, up 40% from the prior week, with Japan as the largest buyer for the week.
SPEAKER_00Okay, so US corn export sales for the current marketing year are the best on record, and USDA's balance sheet would uh support that idea. They're projecting exports for this current marketing year. We've only got a couple months left at 3.3 billion bushels. One of the um uh questions that uh people have, I think, is this USDA has a reduced export projection uh penciled in for the new crop marketing year. And some people have a problem with that given what's going what's going on currently. They'll adjust it if they need to, and it's not reality that it's it's not gospel that the market is trading necessarily. It's just a starting point. I mean, I don't know what new crop corn export sales are going to be, and I don't think anybody else does either. I'd probably go with a higher number personally for that new crop projection, but it's just it's a guess at this point. Soybean sales, uh, very bad for old crop. We're hoping that new crop will be better if uh China does, in fact, come in and buy 25 million metric tons, which is what 900 and
Cattle on Feed
SPEAKER_00something uh million bushels. That would be very helpful. Uh wheat, we're just getting started with new crop and it's uh close to average, I guess, probably a little bit below average.
SPEAKER_01We had a catalon feed report come out on Friday. Excuse me, that was Thursday. As of June 1st, Catalon feed totaled 11.68 million head, up 2% from a year ago and steady with pre-report expectations. May placements were reported at 1.7 million head, 10% below last year and lower than expected. May marketings came in at 1.55 million head, down 12% from last year and slightly below expectations. Despite placements coming in below expectations and well below year ago levels, the report was largely neutral. What stands out is that the total number of cattle on feed increased year over year, even as the U.S. cattle herd sits at a 75-year low. Looking ahead, when the cycle turns and herd rebuilding begins, even more cattle will be placed into feed lots, adding to supply and likely pressuring uh the cash market.
SPEAKER_00Really?
SPEAKER_01Yeah, that's the long-term outlook. It was bullish on the front end. You look at the placement deal, they were down year over year and then also below expectations. But if you look at the fact that we are still up year over year for cattle on feed, that's crazy considering how low our uh domestic cattle herd currently sits at.
SPEAKER_00So the evidence or lack thereof of herd rebuilding, what have you, what do you know?
SPEAKER_01Uh I mean, I don't I don't think there's a lot of herd rebuilding going out there, how uh going on out there. However, um there's a lot of places that are receiving rain, such as here in Nebraska. I know a lot of folks got rain over the past few uh days. We have a lot more moisture to get to really like get us back on our feet, but I don't think there's substantial herd rebuilding going on just quite yet.
SPEAKER_00Outside market's not overly exciting this morning. The SP is down about 12 points. Crude oil, as I mentioned, uh quiet, down 54 cents in the August WTI at 7531. Have a great week, guys. Back on Tuesday.