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
Trump Says Iran Will Buy US Ag Products with Frozen Funds
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🇮🇷🌾 US-Iran talks could open the door to new ag demand, with Trump saying unfrozen Iranian funds would go toward purchases of US corn, soybeans, and wheat. Iran's negotiator claims a $12 billion unfreeze deal, though the US hasn't confirmed it, and recent Iranian crop demand has been minimal since a 2018 soybean buy.
🛢️📉 Crude oil kept sliding, with WTI falling over 2% to settle near $75/barrel, its lowest since early March. Progress in US-Iran talks and reports of Iran getting approval to sell petroleum products pressured the market, with traders looking ahead to a potentially reopened Strait of Hormuz.
🌽🌱 Corn and soybeans moved lower Monday, with Dec26 corn down ~4 cents to $4.40 and Nov26 soybeans down a penny to $11.42. Falling crude, a firmer dollar, and favorable Corn Belt conditions weighed on prices, though excess rain in some areas is raising minor concern.
🌧️🚜 Weekend storms brought rain to Nebraska but also hail and wind damage in spots. Coverage was uneven across the state, and despite the moisture, much of Nebraska remains in drought with more rain and cooler temps expected this week.
✅📊 Crop conditions held mostly steady, with corn at 68% good/excellent and soybeans at 66%, both above their averages. Winter wheat slipped to 26% good/excellent (well below average) while harvest is moving at its fastest pace since 2012.
💰📑 The CFTC's COT report showed funds turning more bearish on corn and soybeans last week. Managed money grew its corn net short to 49k contracts (largest since early Feb) and cut soybean net longs to 54k (smallest since early Feb), while adding modestly to SRW wheat longs.
🇧🇷🌱 Brazilian soybean acreage is set to hit a record high, per AgRural, up 0.9% to 121.09 million acres. It'd be the 20th straight annual increase but the smallest gain in two decades, as high input costs and tighter credit slow expansion.
Iran and Farm Purchases
SPEAKER_00Good morning, everybody. It's Tuesday, June 23rd, 5 23 a.m. Central Time. Grain markets are mixed to higher this morning. December corn futures up two and a quarter at 441 and three quarters. November soybeans up seven and three quarters at 11.49 and a quarter. July Chicago wheat up three and a half cents at 601. July Kansas City wheat up a half cent at 634. September spring wheat down one and a quarter at 637 and a quarter. We've got some news regarding potential purchases of U.S. farm products.
SPEAKER_02So President Trump announced yesterday that unfrozen Iranian funds would go toward purchases of U.S. agricultural goods, such as corn, soybeans, and wheat, to help feed Iran's population. Iran holds billions in frozen funds worldwide. And the proposal would also allow the country to direct some of those funds toward medical purchases. U.S. agricultural trade with Iran has been limited in recent years. The most recent activity came in 2018 when Iran purchased more than $300 million worth of U.S. soybeans during the height of the US-China trade war. Since then, Iranian purchases of U.S. agricultural goods have been limited.
SPEAKER_00Let's listen to Trump's comments on this matter very briefly. Okay, that's what Trump said. Iran's top negotiator said that an agreement has been made with the U.S. to release $12 billion in frozen funds, although that number has not been confirmed by the U.S. Total frozen Iranian assets globally may total as much as $100 billion. Iran's central bank governor, however, said that there is no actual obligation for its country to buy U.S. ag products specifically. It's not in writing or hasn't really been discussed, despite what Trump said. Iran is projected to account for 4.8% of global corn imports this year, 1% of global soybean imports, and less than 1% of global wheat imports. So even if they do come in and buy, I don't know, $12 billion worth of U.S. ag products, I don't see that as being a needle mover.
Crude Prices Drop
SPEAKER_00I think as it relates to trade and trade agreements and trade deals and uh deals to buy U.S. farm products, China is still the deal that we're looking for. And uh we have comments about it, we have fact sheets about it, we have nothing signed, but that's that's the one that's going to be the needle mover. This one, I don't really think so.
SPEAKER_02Crude oil extended its downward slide on Monday with WTI uh with WTI falling more than 2% to settle near $75 per barrel. Its lowest level since early March. The move followed comments from Vice President J.D. Vance signaling progress in U.S. Iran talks, along with reports that Iran has been granted approval to sell petroleum products for at least the next 60 days. Increased tanker traffic through the Strait of Hormuz also pressured the market. Although most of the vessels uh have been Iranian, raising questions about whether the whether the waterway is fully open to all traffic. Analysts expect WTI crew to remain range-bound between $70 and $80 per barrel as negotiations continue.
SPEAKER_00I wouldn't make too much of the analyst expectations because a lot of them have been very wrong. Uh crude never went to $150 or $200, as some people had predicted. Crude inventories in the United States are very low and have been rapidly depleted based on this Reuters chart. And that's because of the war. That's what happened in the past. As we as we look forward, the market is looking forward into the future. And the future tells you that, hey, the strait is reopening and uh therefore oil supplies are going to flow and prices are moving lower. And that's what's happening. We're we've we've almost erased entirely the uh premium associated with this war in the Middle East. We're down to six 73 bucks in change in WTI futures this morning after peaking above 119 back in uh would have been March. And there's a gap on the weekly chart at 67 to 83. That seems like a logical target. There's also a gap above the market, I think at $82 in change. Maybe you go back
Grain Price Action
SPEAKER_00up and fill that on some sort of re-escalation. But uh the crude market has fallen and that I don't think, I don't think it's helped the uh grain markets necessarily either.
SPEAKER_02Corn and soybean futures moved lower yesterday. The December 26th corn contract lost roughly four cents to settle near 440 per bushel, while the November 26th soybean contract edged about a penny lower to close near 1142 per bushel. Futures were pressured by weakening crude and a firmer U.S. dollar. Additional pressure stemmed from favorable growing conditions across the U.S. corn belt. However, pockets of excessive rainfall are beginning to raise concerns about potential impacts on crop development. Wheat futures also moved lower, weighed down by a rapidly advancing winter wheat harvest and favorable crop prospects in Russia and Ukraine.
SPEAKER_00Okay, let's look at some charts. We didn't do charts yesterday. We'll do them today. So D's corn futures got beat up yesterday. They finished last week strong. Um, rain makes grain. I mean, that's it. Is it really that simple as it relates to futures prices this time of year? Yeah, it's that simple. Um in reality, is it will it be that simple at the end of the day? No, I think there could there could be some problems with too much rainfall uh in some areas. We're gonna get to that here in a second. Fund selling, we're also gonna get to in a second, but the funds have totally liquidated what was once a very large net long position in the corn market. The lower crude prices, again, have not helped. Uh, and soybeans, you've had fund selling or liquidation. We'll get to that in a minute. Uh, it hasn't been as aggressive as in the corn market. China has started new crop uh U.S. soybean purchases, and that's a positive. So the bean market's just acted a lot better than the corn market or the wheat market on a relative basis. Uh, soybean demand via domestic crushers or processors in the U.S. is very strong. Uh, wheat, HRW looks okay. We were at least able to hold above that gap and above that April low. The uh spring wheat market looks very poor amid or an improvement in crop conditions. So it's kind of a mixed bag. But all in all, you know, this is this is typically, especially as it relates to corn prices,
Excessive Rain
SPEAKER_00this is a time of year where corn prices start to move lower in a lot of years, and it's it's really not anything abnormal from a seasonal standpoint.
SPEAKER_02Severe storms over the weekend brought much needed rainfall to parts of Nebraska, although totals varied widely across the state. Central, eastern, and some southern areas picked up significant moisture, while much of western and northern Nebraska saw little to no rainfall. The storms also caused significant damage with reports of hail and strong winds destroying crops and buildings in some areas. Despite the rain, much of Nebraska remains in drought with conditions still severe in several regions. Additional rainfall is forecast for a large portion of the state this week, along with cooler temperatures.
SPEAKER_00Let's look at a bunch of detailed past rainfall maps. So this is um like Kansas, Nebraska, Oklahoma, places like that. There were some of these pockets. If it's if it's that like yellow, it's above four or five inches of rain over the last seven days, and some areas got even more than that. You get into that like dark yellow and you're talking like eight, nine, ten inches of rain. There was there were some areas that really got swamped here. Um you look at the Corn Belt and same D, like there's there's a band that goes across uh that part of east central Iowa into uh like west central Illinois, and then there's some stuff in southern Indiana where they just got hammered with rainfall. Um you look at the Dakotas, not not as wet, but there was some stuff um that was a couple inches at least. Um, this is like the Ohio River River Valley, I guess. Uh parts like western Tennessee got hammered, and then you go down to like the Gulf Coast or some of the Delta areas, and they've been very wet as well. So um, yeah, rain makes grain, but if you got seven inches of rain or eight inches of rain or 12 inches of rain in the last seven days, that is uh obviously not helpful. And if you're in one of those situations, uh drop us a comment in the YouTube comment section, let us know where you're located and exactly how much rain you caught. Looking at the forecast as we move forward, again, rain makes grain, and that's why the market's under pressure, right? That's the general concept that the trade is working with. U.S. corn areas expected to see 112% of normal rainfall over the next seven days. It looks like Iowa and northern Illinois, northern Indiana are going to be a little bit drier than normal, and that may be welcome in some of those areas, depending. Um, temperatures over the next seven days, pretty much normal. 8 to 14, you got a little bit less rainfall than normal, but still very close to normal, 96%. Excellent stuff from our friends at Crop
Crop Conditions are Above Average
SPEAKER_00Profit. Temperatures during that 8 to 14 day period are expected to be well above normal based on the forecast this morning, although the market doesn't seem overly concerned.
SPEAKER_02U.S. corn and soybean conditions held steady last week. The corn crop was rated, excuse me, the corn crop was rated 68% good to excellent nationally as of Sunday, unchanged from the prior week and above the 64% average. The soybean crop was rated 66% good to excellent nationally, excuse me, also steady with the previous week and higher than 62% on average. The spring wheat crop declined slightly to 54% good to excellent, down from last week's 55%, but above 51% on average. Winter wheat conditions dropped back to 26% good to excellent, down from 27% the prior week and well below 44% on average. Meanwhile, harvest progress is advancing rapidly with 40% of the winter wheat crop now harvested, the fastest pace for the week since 2012.
SPEAKER_00Nothing to see here. I mean, ratings for U.S. corn on average nationally are above average. U.S. oil beans nationally, above average. U.S. spring wheat above average. So this is just not anything that's going to get the market excited. I understand crop ratings are a beauty contest. They're not an end-all be-all by any stretch of the imagination. But as far as the trade is concerned, as far as those managing lots of money is concerned, uh, they look at this and they say this is this is either bearish or it's a non-issue, but it's not uh it's not a reason to buy.
SPEAKER_02If 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_00Before I do, before I talk about our videos, I'm gonna vent for a second about um our premium subscribers. I love 99% of our premium subscribers, but this is an email that I got you yesterday. This is this is an email I received. I got it overnight. Joe, thanks for all of the info. I followed your advice and have been an aggressive forward seller of new crop corn bushels. Congratulations. The crop insurance info was also extremely valuable. Seasonal info was fantastic. Please cancel my subscription. I think I have all the info I need for now. Um, this business that we're involved in, McKenzie, is incredibly frustrating to me sometimes. Like we put out, especially over the last call it six weeks, like the best information you could possibly put out. Um, I don't, I'm I very rarely ever talk about like, oh, I did really good on my grain sales. We nailed it this year. I mean, we finished old crop corn sales like in April before this thing fell apart. We're 60% forward priced in new crop cash corn. Um, and people are canceling subscriptions because they feel like, oh, we got we got what we needed, you know, out of that. And it's very frustrating. I mean, I maybe this is my own like flaw in how I run the business. I make it super easy to sign up. I also make it super easy to cancel. But I mean, consider these facts. Seed costs more every year, fertilizer costs more every year, equipment costs more every year. The company selling it to you, they don't care about you, they care about their shareholders. They're here to rake you over the coals. Our subscription at $50 a month, it's the same price it's been since I started selling it in 2017. It's never gone up in price. There's no inflation here. The ROI is fantastic. We get emails, we get emails every day about how great the ROI is. I got an email from a guy yesterday. Joe, I'm a small farmer, I'm under 500 acres, but uh your forward sales advice paid for my stuff for multiple years. Okay, so why are people canceling? I don't know. That's me. Uh that's me venting this morning. And most of you guys, like I said, 99% of premium subs. We absolutely love you to death. You walk on water as far as we are concerned, as I've said in the past. But uh, that's me venting my frustration this morning. Maybe I need a new business model. I don't know. Maybe we should just stop doing this show for free and this should all be paid. I don't know. People piss me off, you know. In any case, uh, we had a fantastic video yesterday on navigating farm transition conversations, how to start a conversation. This is Chris Barron and Shea Folk from Ag V Solutions, and this is what they do. They deal with farm transition planning and uh they do a fantastic job. And uh, we had tons of positive feedback on this one. This is like a 45-minute conversation. Uh, one thing that I should mention is that we have a new offering as far as the subscription goes. The videos used to be just videos, and now we're also offering an audio only version of all the videos so you can listen to it in the truck, in the tractor, in the combine, whatever, and you don't have to actually sit and watch it. And that's a feature that a lot of people have asked for. It is now available with all the premium videos. Ryan Bennis was on um last week and talked about the ECO safety net with regard to corn prices. This right here is a massive ROI item because from what I've been told, the uh a lot of the crop insurance agents did a very poor job of explaining the the increase in government subsidies and uh everything that's changed uh as that was that was tied into the Trump tax bill of crop insurance. It's really been a it's a big positive, but you have to know how to use it. If you guys want to see the premium stuff, uh go to standardgrain.com this morning. You can sign up. This is a $50 per month subscription. You can cancel at any time. Cancel at any time, even if your reasons are stupid, whatever. I don't care. It doesn't bother me that much. And I never talk about it, but I I felt the need to vent this
The Funds and Selling
SPEAKER_00morning. Um, give that deal a shot, guys. We'll send you uh a copy of this morning's email. Just click to play, click to listen, absolute piece of cake. Uh, give that deal a shot.
SPEAKER_02The CFTC released its weekly commitment of traders report yesterday for the weekending Tuesday, June 16th. Large money managers were net sellers of 48,000 corn contracts. The net short position of 49,000 contracts is the largest since early uh February. The funds were also net sellers of 43,000 soybean contracts. And lastly, the funds were net buyers of 9,000 SRW wheat contracts on the week.
SPEAKER_00Yeah. So you look at um, first of all, premium subs. You guys have the real-time uh fund tracker daily tool in your email this morning. You also have the full versions of the fund tracker charts for corn soybeans and wheat. But you look at this version, corn plus soybeans plus SRW wheat combined net fund position. The funds have been net sellers of 613,000 contracts of corn soybeans and SRW wheat since May 5th. That's pretty crazy. We got up to a peak net long of those three contracts combined of 549,000 contracts, uh, just shy of the record net long of 626,000 from 2012. And now they're net short across the board. The implication here to me is that the big liquidation event is over, especially as it relates to corn. Like there's no more, no more corn to liquidate necessarily. That doesn't mean that they couldn't start to build a big net short position if they believe that we're going to be oversupplied. So uh that's this is this is kind of what's happened
Brazil Acres
SPEAKER_00in the past. I I feel like I feel like the most aggressive selling, especially in the corn market, is behind us because of this data. Um, but I don't I could be I could be wrong about that, I guess.
SPEAKER_02Brazilian soybean acreage is expected to climb to a record high this year, according to well-followed private group Ag Rural. Acreage is projected to reach a record 121.09 million acres this season, up 0.9 from last year, up 0.9% from last year. This would mark the 20th consecutive annual increase, but also the smallest year-over-year gain in two decades. The slower growth is attributed to a multitude of factors, including elevated input costs, rising farmer debt, and tighter credit conditions. Agrioral also reported that Brazil's second corn harvest reached 16% complete as of last Thursday, up from 8% the previous week, and ahead of the 13% pace recorded during the same week last year.
SPEAKER_00Lost my camera again. My new camera hasn't shown up yet. I don't know. Um, but I'm still here. In any case, so they're talking reduced expansion in Brazilian soybean acres, but there's still gonna be expansion. 123, 124 million acres of soybeans expected to be harvested in Brazil next year. Um, there's gonna be consolidation in Brazil. If you guys think you have it tough in the United States with regard to farm finances and uh the farm economy, it's it's much worse in Brazil. High interest rates, um, it's it's pretty nasty. There's gonna be big farms that get bigger and small farms that go away. What did uh cattle do yesterday?
SPEAKER_02Cattle futures were sharply higher. Live cattle were 73 cents to 218 higher, feeders saw gains ranging from 278 up to 435. Box beef prices were also higher. Choice was up a buck 69 at 396.06, and select was up 351 at 375.59.
SPEAKER_00Outside markets, uh crude oil is like totally flat this morning, not really doing anything, just below 74 bucks in the August WTI. So uh that's not the uh bullish price input that it once was. Have a great day, guys. We'll be back on Wednesday.