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 Wants MORE Direct Farm Payments AND Year-Round E15 Ethanol
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🌾 Farm Aid Boost 💰 Trump is requesting $11B+ in new farm aid on top of $30.5B already expected this year, including $10B for 2026 crop support and $1.1B for Southeast freeze losses. This would stack on top of the $12B Farmer Bridge Assistance Program already rolling out to producers.
⛽ Year-Round E15 Push 🌽 The White House just made its first formal request for Congress to legalize year-round E15 ethanol sales, framing it as a way to ease gas prices amid Middle East tensions. Unlike the House bill that already passed, Trump's version strips out the controversial Small Refinery Exemption (SRE) provisions.
🏭 Illinois Soybean Crush Plant 🌱 Incobrasa Industries opened a massive new 170,000 sq ft crush facility in Gilman, IL, doubling capacity and creating 40 new jobs while securing demand for 7,000 local farms. The plant even includes a 50-acre solar array to help power operations sustainably.
📉 Grains Under Pressure 🌾 Corn and soybeans extended their losing streak Wednesday, with Dec26 corn near $4.35/bu and Nov26 soybeans at $11.35/bu, pressured by a stronger dollar and weak crude. Wheat also slid for a fourth straight session as bearish momentum builds across the complex.
🛢️ Oil Prices Sink 📉 WTI crude tumbled nearly 4% to $70.34/barrel as Strait of Hormuz traffic normalizes post-ceasefire, even as Trump calls for a DOJ probe into oil companies over retail prices. Gas prices are already down nearly 60 cents/gallon over the past month, though they typically lag crude moves.
🚢 Fertilizer Flows Rebound 🌍 Crop nutrient shipments through the Strait of Hormuz are surging back, with at least 16 vessels transiting since the Iran peace deal and volumes nearing pre-war levels. Urea prices are already easing as fears of prolonged disruption fade.
⚗️ Ethanol Update 📊 US ethanol output dipped slightly last week to 1.09M barrels/day while stocks climbed to 24.59M barrels. Despite the soft production, Corn Belt margins remain strong, running 30–50 cents positive, per Reuters data.
More Direct Payments
SPEAKER_01Morning guys. It's Thursday, June 25th, 5 23 a.m. Central Time. Grain markets are mixed to higher this morning. December corn futures up a half cent at 435 and a quarter. November soybeans up three at 1138. July Chicago wheat up three quarters of a cent at 586 and a half. July Kansas City wheat up one and a half at 618 and three quarters. September spring wheat unchanged at 616 and three quarters. The president has requested more farm aid. Why don't we start there?
SPEAKER_00So President Trump is asking Congress to approve more than $11 billion in additional farm aid. The proposal includes $10 billion in temporary economic support for 2026 row and specialty crops, along with another $1.1 billion for producers impacted by freeze losses from severe winter storms in the southeast. This funding would be in addition to the $12 billion the USDA is already distributing through the Farmer Bridge Assistance Program. Congressional approval approval is still needed for the funds. Before this latest request, the Trump administration was expected to deliver about $30.5 billion in farm aid this year.
SPEAKER_01More direct payments to farmers. I believe this will happen. And I think it was inevitable. And I don't think this should be a surprise to anybody. Direct payments to farmers, especially in recent years, this has always happened historically, but they they've increased in recent years. The ECAP program, which was approved under the Biden administration in 2024, provided $10 billion to U.S. farmers. Last year's Farmer Bridge Assistant Program was another $11 to $12 billion. If you go back to the coronavirus days, the CFAT program, a coronavirus food assistance program, provided $31 billion in direct payments to farmers in 2020 and 2021. So this is something that's been happening on basically an annual basis. The reason for this is that we've got massive inflation with regard to farm input costs and prices of the actual commodities that farmers sell are very low. This chart is actually not updated. And that red line, which is uh corn production cost per acre, is actually like $935 expected for 2027, whereas corn prices are still sitting, you know, in the mid $4 range or below that for uh 27. So it's it's a very ugly economic situation for the farmer. And there are a lot of differing uh thoughts and opinions on this. And I wrote down a little list, and this is not in any particular order. Uh the midterms, Mackenzie. The president is trying to buy votes ahead of the midterms. Uh Trump would be the first president ever to try to do that, right?
SPEAKER_00Oh, of course. Yeah, he's the first one. Yeah.
SPEAKER_01Yeah. So I if if that's your thought, I'd I agree with you. Um, here's another point. Trump caused these problems. He's got this these tariffs and this trade war with China. And that that is true to some extent. Um, U.S. soybean export sales, and we rely heavily on exports and soybeans. U.S. soybean export sales are the worst they've been in in more than 10 years, largely because China bought less than half of what they would typically buy. Um, there are other and and bigger problems, just the general like money printing, money creation post-COVID, all the supply chain stuff associated with COVID and more recently with the straight of hormones, it's all resulted in massive input inflation. Um, another thing I wrote down is the taxpayer. I'm the taxpayer and I don't like this. Yeah, that's palpable, understandable. On the flip side, um direct payments, they they do help farmers. They do help farmers, but I think that they help input suppliers more so. If you think that the government is doing this uh just because they want to help the farmer and the farmer alone, you are very naive to the situation. The reality of the situation is that these payments are being pushed more so by big uh like conglomerates and publicly traded companies. This benefit, these payments, they they flow through the farmer. The farmer is a flow-through mechanism. They flow through the farmer back to the fertilizer companies, the seed dealers, the banks, the equipment dealers. Those are the people who push for these payments. And those are the people who are really uh the big time beneficiaries. So if you think that the government is here just to only help the farmer and buy votes, you're very naive to the situation. This is all about big companies and profits, and and that's more so the situation than keeping the farmer in business. But hey, you got to keep the farmer in business to keep these big business, these big uh conglomerates in business, right? Um, the problem for me, and and I don't want to see any of you guys go out of business, of course. Um, the problem for me with all this, as I've mentioned in the past, is that when you provide farmers money and incentivize farmers to grow crops that don't make money, it disrupts the natural flow of the marketplace. Commodity markets in general, um, the the function would be hey, we're oversupplied, we've got to get prices low to discourage production. And that's where we're at right now in the cycle. Everything that we watch, the stuff we talk about every day, corn soybeats, weed, it's all well below production cost. And the function of the market right now should be, hey, discourage production, discourage production, discourage production until the supply and demand situation comes back into balance. But we're not gonna do that because we're gonna continue to incentivize farmers to grow crops that don't make money. And it's just a very vicious cycle. And uh, Mackenzie, when we had Brooke Rollins on, we asked her about this and we were,
Year-Round E15 Push
SPEAKER_01I think we asked, like, hey, how do we get out of this? And she didn't have a good answer. I don't have a good answer either. It's um, it's a big problem.
SPEAKER_00The White House has asked Congress to pass a law allowing year-round sales of E-15 ethanol. This is Trump's first formal push of year-round E-15, despite his ongoing support. A new law, if allowed, uh, could help to tame gas prices in the midst of in the midst of the conflict in the Middle East. E-15 has been officially banned in the summer due to smog concerns, although temporary measures have been taken to allow year-round sales in recent years. Legislation to allow permanent year-round E-15 sales passed the House earlier this year, but we'll face a tough battle in the Senate.
SPEAKER_01Okay, year-round E-15. We need it to help uh corn demand, right? I don't know if it's gonna help corn demand. That's a different discussion. With regard to the policy, all this on the policy front, and I'm not a policy expert, but we had a bill that that got through the House and now is going to face a tough time in the Senate. The main difference between Trump's request here, which is a supplemental budget request and the bill that passed the House, is that the Trump request is stripped of what they're calling toxic toxic SRE provisions, the small refinery exemption stuff. So I would venture to say that Trump's uh little request here has probably a better chance of actually uh coming to fruition than the bill that's currently basically stalled and has a small chance of passing in the Senate. So I think that this is good news. I just don't think that um if it goes through and if year round E-15 becomes permanent, year round E15 becomes a reality. I don't think it's like an immediate shot in the arm for corn demand. I think it's something that could work out over the long term if we're able to um allow consumers that choice to buy year round E-15 permanently. And if if it's if it's permanent, then you'll perhaps see some investment into it. We've been allowing year-round E-15 for years, but it's always on these like temporary waivers and measures. And for that reason, there hasn't been
New Soy Plant in Illinois
SPEAKER_01the investment in it. But if it's permanent, you'll see some more investment and perhaps ultimately some greater demand for uh U.S. corn and U.S. ethanol.
SPEAKER_00A new soybean processing facility in Illinois is set to boost soybean demand. Incobrasa industries uh recently opened a 170,000 square foot crush plant in Gilman, creating 40 new full-time jobs while retaining another 200. The plant is located next to the company's existing facility, and the expansion doubles the company's processing capacity. The new facility will require roughly 300,000 bushels of soybeans per day, providing a reliable market for about 7,000 local farms. The project also includes a 50-acre solar array capable of supplying power directly to the facility or feeding electricity back into the grid.
SPEAKER_01Shout out to Iroquois County, Illinois. I've spent quite a bit of time there. Uh, this should be a big positive for corn and soybean growers in that area with regard to basis and cash markets and all of that stuff. Uh, you're gonna see quite a bit of this as we move forward. Uh, soybean crush margins are absolutely fantastic. $3.23 per bushel of profit for processors based on the board crush margin. Cash crush margins are actually better than that in some areas of the country. And a lot of this has to do with new government uh mandates, essentially, that say you have to blend you know things like soybean oil into your renewable diesel and biodiesel. And uh we've seen a big surge in soybean oil prices and it's helped the crush margins. As it relates to uh demand for U.S. soybeans, this is how it's it's supposed to look uh next year, according to the USDA numbers. Domestic crush is now going to account for 61.2% of all demand for U.S. soybeans. Exports going to fall to 36.3%. And this used to be more of like a 50-50-ish split between crush and exports. And uh in the last few years, we're moving toward a situation where we are crushing way more beans domestically than we are exporting. And that's a big positive because, you know, I know we've got trade wars and stuff going on with China, but trade war or not, you don't want to have to rely on China for your uh soybean market to be healthy. And it would be much better and much more predictable if domestic crush was the big piece of your demand base. And we are headed in that direction. You know what? That's part of the reason that the soybean market is held up perhaps um a little bit better
Poor Grain Price Action
SPEAKER_01than some people had expected, is just yeah, the export piece we struggled with, but this uh domestic demand um via the crusher or processor is just absolutely fantastic.
SPEAKER_00Corn and soybean futures extended losses on Wednesday. The December 26th corn contract slipped nearly three cents to settle near 435 per bushel, while the November 26 soybean contract dropped roughly seven cents to close at 1135 per bushel. Futures were pressured by traders' rolling positions, continued weakness in crude oil prices, and a firmer US dollar. Corn has now posted losses for four straight sessions, while soybeans have declined in three of the last four. Meanwhile, wheat futures reversed early gains, ending lower for a fourth consecutive session.
SPEAKER_01Here's a free piece of grain marketing advice for you guys, which I don't do on this show almost ever. Um, if you do basis contracts, you have a basis contract, please, please, please don't wait until you get a phone call from your grain buyer that says, hey, you have to price that or roll that. You got to be more aggressive than that. We did a video with Ryan Moe a couple months ago and we talked, we're talking about basis contracts. And he said, like, Joe, did you know that like 80% of basis contracts don't get priced or rolled until the farmer gets a phone call from the buyer and says you have to do something like in the last three days? This is part of the reason that the corn market's weak right now. The market is aware that these uh basis contracts need to be priced or rolled. I'm sure there's a whole bunch of them out there. There always are, especially when you have a big crop like we did last year. So for the next couple of days through like, I don't know, early in the day, Monday, it's gonna be hard to um sustain any sort of rally in the corn market until we get all this basis contract stuff out of the way. So um July corn futures posted fresh multi-month lows overnight. 403 and three-quarters was the low. And I think they're gonna struggle for perhaps another couple of days. It's gonna be tough to rally during this period. Uh Dece Corn also posted fresh lows overnight down to 431 and a half. Uh Rain Makes Grain is the name of the game now. And we talked about the weather situation at length yesterday. We've had a bunch of rain. We've got some rain in the forecast, but then perhaps a dry and hot period around July 4th. Uh, the fund lemmings, there is, according to Pete Meyer and I agree, there is very little independent thought uh going on in the fund community. It seems like they are lemmings and they just kind of follow each other around. And the uh the pace at which they move is much quicker than it used to be. I think they're trading different things. I think they're trading momentum in a lot of situations. And right now, the momentum sucks. Uh, here's soybeans, and they've acted a little bit better than corn by comparison. We're still holding above that March low at 1118, and I hope we can continue to do that. The HRW wheat market uh has been poor, and that's despite the fact that USDA is projecting a 38% decline in year over year uh HRW wheat production in the United States. That 609 and three-quarter area down to 598 and three-quarter should be a support zone.
SPEAKER_00If 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_01Brian Split is the best in the business as it relates to grain technical analysis. Uh Brian reads the charts and explains them better than anybody. Now, when when you watch or listen to this stuff, you got to pay attention because he runs through a lot of very specific information, and uh you've got to be kind of locked in to really make heads or tails of what he's saying. But it's it's super useful. There's there's a lot of noise out there, and our show, of course, contributes to the noise, you know, the headlines, the headlines, the headlines. Um, a lot of times looking at the charts is is a better approach, and Brian does a fantastic job of that. Uh, I did a video earlier this week on what happens when China buys U.S. corn. It is my opinion that China will buy U.S. corn uh sometime soon, and it is a possible bull wildcard. I ran through what's happened in the past when China buys U.S. corn, we had some really great charts uh overlaying Chinese corn purchases of uh and uh price action, and it's pretty interesting stuff. I think it's one thing to be positive about. How to start a conversation about transition planning. All you guys are dealing with this to some extent. Uh, if you are the younger generation, you're in your 20s, 30s, 40s, you're trying to uh kind of you know take take the reins here in your farm operation, but you're having trouble. You're getting some pushback from from dad, from uncle, from whoever from the uh older generation. There's a right way to go about starting these conversations. And Chris and Shay uh talked about this at length. This is like a 45-minute video um earlier this week. 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. You can cancel at any time. No other fee, no other obligation, nobody will try to sell you anything else. We do have a new feature here. Not only can you watch the videos on your computer or on your phone, we have an audio only option so that uh
Oil Prices Fall
SPEAKER_01you just click a button play and you can listen to it while you're driving the truck or tractor combine, whatever. Um, give that deal a shot this morning, guys.
SPEAKER_00Oil prices tumbled to their lowest level since the start of the US-Iran War on Wednesday. WTI crude dropped nearly 4% to settle at $70.34 per barrel as traffic through the Strait of Hormuz continued to normalize. Meanwhile, in a social media post, President Trump directed the DOJ to investigate oil companies for failing to pass along lower crude prices to consumers. Retail fuel prices, however, typically lag, crude declines by several weeks. According to AAA, the average price for a gallon of regular unleaded gasoline was $3.93 as of Wednesday, as of Wednesday, down nearly 60 cents from a month earlier.
SPEAKER_01Yeah, gas prices have dropped. They're not dropping um as fast as crude oil prices, and that's pretty normal. I mean, when crude spikes, gas prices go up the next day. When crude drops, yeah, as McKenzie mentioned, it takes, it takes like weeks. Uh the August WTI contracts trading $69.5 this morning. We've essentially erased almost all of the premium associated with the conflict in the Middle East. Oil flows through the Strait of Hormuz
Strait of Hormuz Fertilizer Shipments
SPEAKER_01have accelerated and fairly rapidly uh since the beginning of the week. And uh the market is looking forward into the future because it's a futures market.
SPEAKER_00Fertilizer shipments through the Strait of Hormuz are rebounding since the U.S. and Iran reached an interim peace deal last week. At least 16 vessels carrying crop nutrients have transited the waterway. Additional vessels have likely passed through undetected after going dark to transit the strait safely. Last week, export volume surged back to roughly 530,000 tons. Nearing pre-war levels, most vessels are headed to Asia, with some also making their way to Brazil. While it will take time for supply chains to fully normalize and shipments to reach end users, urea prices have already dropped sharply as fears of a prolonged disruption continue to fade.
SPEAKER_01So when Mackenzie says urea prices have dropped, they've dropped at the Gulf, the wholesale prices. The retail prices to you, yeah, they've come down a little bit, but just like gas prices, it's gonna take a minute. You know, you see, you see the um the prices at the Gulf spike on the initial conflict and retail spikes right away, or they just they go no bid and there's nothing for sale, right?
Ethanol Production
SPEAKER_01Uh when they come down, they're gonna come down a hell of a lot slower. But hopefully, uh this is the beginning of some significant relief on the fertilizer front, at least for some products.
SPEAKER_00U.S. ethanol production declined last week. Weekly output was reported at 1.09 million barrels per day, down 1.1% compared to the prior week and down 1.7% versus the same week last year. Ethanol stocks, ethanol stocks climbed to 24.59 million barrels. The print was up slightly compared to the previous week and up 1.9% versus the same week last year. According to Reuters data, U.S. ethanol margins currently range from 30 to 50 cents positive across the corn belt.
SPEAKER_01Yep, margins are good. Production is strong. Everything is uh very positive here. What did cattle do yesterday?
SPEAKER_00Cattle futures were higher yesterday. Live cattle were 73.73 cents to a buck 58 higher, with the exception of the two back month contracts, which saw modest losses. Feeder saw gains ranging from 260 up to 525. Box beef prices were lower. Choice was down a buck 37 at 398.94, and select was down 292 at 378.14.
SPEAKER_01The SP 500 is up 56 points this morning. That's about seven tenths of a percentage point. Treasury's about flat. US dollar's about flat, but has been strong. Crude oil down 76 cents in the August WTI at 69.57 last trade. Have a great day, guys. Back on Friday.