Grains Rally AGAIN, Trump Says Ceasefire is OVER, Heat Wave Continues

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Futures and options trading involves risk of loss and is not suitable for everyone.

🌽 Corn futures rallied to their highest close since early June as scorching heat threatens the Corn Belt. 📈 Renewed optimism over Chinese soybean demand also lifted beans and wheat higher.

🔥 A brutal heat dome is building across the western US and will spread into the Northern Plains and Corn Belt through next week. 🌡️ Triple-digit temps are expected in the Dakotas, Wyoming, and Montana, with little relief in sight through early August.

🛢️ Oil prices spiked after Iran attacked commercial vessels in the Strait of Hormuz, with WTI jumping over 2.8% before extending gains after hours. ⚠️ Trump declared the Iran ceasefire "over" in fiery comments at the NATO summit in Ankara.

📉 US farmer sentiment fell for a third straight month in June, with Purdue's Ag Economy Barometer dropping to 113. 💸 High input costs remain the top concern as confidence in the next five years continues to slide.

🇨🇴 USDA confirmed a flash sale of 105,000mt of soybean cake and meal to Colombia. 🌱 The sale adds to recent bullish demand signals in the soy complex.

🥩 Cattle groups are pushing the Trump administration to scrap a proposed tariff exemption for Brazilian beef. 🇧🇷 Brazilian beef imports have surged 41% this year, fueling tension over a possible 25% tariff and threats of retaliation.

Transcript

Grain Rally, "Buy the Dip"

SPEAKER_01 0:08

Morning guys. It's Wednesday, July 8th, 5 22 a.m. Central Time. Grain markets are mixed this morning. December corn futures down three quarters of a cent at 463 and a half. November soybeans up two and a quarter at $12 even. September Chicago wheat up three and three quarters at $6.22 and a quarter. September Kansas City wheat up six and a quarter at $6.59. September Spring wheat up four and a quarter at 637.5. Grain markets rallied again yesterday. Let's start there.

SPEAKER_00 0:34

So corn futures extended their rally yesterday with the December 26th contract gaining nearly seven cents to close around 464 per bushel. The rally was driven by ongoing weather concerns with excessive heat forecast across much of the corn belt through the end of the month. Additional support stemmed from renewed optimism over Chinese demand for U.S. grains, which also lifted soybean futures. The November soybean contract climbed six cents, six cents to settle near $11.98 per bushel. Wheat futures followed corn and soybeans higher, finishing the session in positive territory.

SPEAKER_01 1:05

We'll do the charts here in a second. Let's look at this first. Reuters reporting overnight that China bought more U.S. soybean cargoes for new crop delivery, I believe. If this is correct and they bought another five cargoes, it probably pushes total Chinese purchases of new crop U.S. soybeans up to we'll call it 800,000 metric tons ballpark. And this is all hearsay. These are usually very good sources that Reuters cited. We should see a flash sale confirmed today. If we're up to 800,000, that would represent 3.2% of the 25 million metric ton gold that the White House has outlined. So they've got a long ways to go, but it appears as if China has been active in buying soybeans for uh post-harvest delivery. Let's look at the charts. Yesterday's price action was very interesting to me in corn and in soybeans and in week. But um I had a phone call yesterday in the morning from one of my old brokerage customers, and I don't do brokerage anymore, but he wanted to talk price action and just markets. He said, Joe, what's corn gonna do today? And I don't know. I told him I don't know. But I said, you know, if if this is a real crop scare event, if we're in the midst of it and this is day two of a crop scare event, they are gonna come in and buy the dip today. And that's exactly what happened. It wasn't much of a dip. Um, we traded basically mixed to lower for a good chunk of the session, and then we saw this big kind of late day surge. That's a telltale sign of a crop scare event and of a market in which sentiment is shifting very quickly. So corn trading mixed this morning. Um, I wouldn't be surprised if they came in and bought this little dip again here uh today, if there really is some concern about weather, and I think that there should be. We'll get to weather here in a second. That 469 and a quarter above the dece corn contract, that's a level you could hit today. That's an old low from back in April that um could be of interest. November soybeans look really good. Nothing is ever inevitable or inevitable or guaranteed, but to go take a look at that 1214 high from May uh would seem reasonable to me at this point. There's really nothing stopping it uh on the charts at least. Now, maybe you get some farmers to step in and cap this rally with farmers selling. I I could see that a little bit more in soybeans than in corn. Soybeans, you're getting close to the highs, where in corn you're still 40 cents from the highs. Farmers want to sell the high, McKenzie. They don't want to sell 40 cents before the high. Um, HRW wheat and also SRW wheat went up to some chart resistance uh overnight. 664 and a

Ceasfire is Over

SPEAKER_01 3:28

half would be a big line in the sand for me for this uh September HRW wheat contract. And if you could get above that, I feel like these technicals would look a little bit better.

SPEAKER_00 3:36

Oil prices jumped on Tuesday after Iran attacked commercial vessels transiting the Strait of Hormuz. WTI crude climbed 2.8% to settle at $70.44 per barrel before extending gains in after hours trading, rising another 5.4% to $72.25 per barrel. Iran's attack renewed concerns over the stability of the 60-day interim peace deal between the US and Iran. Analysts believe the market is pricing in geopolitical risk rather than a real threat to oil supplies, as neither side benefits from a prolonged conflict or higher oil prices. Even after yesterday's rally, WTI remains about 36% below its early April peak.

SPEAKER_01 4:17

Overnight or early this morning, Trump was in Turkey at this NATO summit, and he basically said that the ceasefire is over. Uh, Donald Trump, of course, president of the United States, is one of the most skilled orators to ever hold public office. Eloquent and beautiful is the way that he speaks. This is what Trump Trump said in Turkey. For me, I think it's over. Um, I don't want to deal with them, but they're scum. You know what scum is? They're scum. They're sick people, they're led by sick people, and they're vicious, violent people. And if they had a nuclear weapon, they'd use it. Um, he doesn't mince words when he talks, you know. So crude oil is up $4 this morning in the uh August WTI. It looks a little bit better. We went down and traded down to 6704 was the low in this particular contract. There's a gap above the market on the daily chart at 81.68. Um, maybe that's some sort of upside target. I don't know exactly what's going to happen with oil flows through the straight or flows of anything else. This is all very new here within the last 24 hours. So we'll see what happens on a weekly basis. Uh crude oil went down on the weekly continuation chart, filled the gap at 67.83. You've now got another gap at about 83.20 above the market. Maybe that's an upside target possibly on the um on the weekly chart. So the escalation there has resulted in higher crude

Heat Continues

SPEAKER_01 5:34

prices, stock market sharply lower this morning. And this is it's a roundabout, probably helpful item for the grain markets.

SPEAKER_00 5:42

A heat dome is building across the western U.S. and is expected to expand into the plains this weekend before spreading across much of the Corn Belt next week. The Northern Plains are forecast to experience their hottest weather of the year with triple digit temperatures expect expected across the Dakotas, Wyoming, and Montana. The Corn Belt is also expected to see its hottest weather of the year with temperatures running 10 to 20 degrees above normal. The prolonged heat is likely to increase crop stress, particularly in areas that have recently missed out on rainfall.

SPEAKER_01 6:13

Let's start off with the heat. Here are a couple of cool graphics from our friends at Crop Profit. If you are somebody who sits on a commercial grain desk or you're at a fun desk and you're trading grains, you should buy crop profit. It's fantastic. In any case, um, over the next 14 days, U.S. uh corn areas are going to run on average four and a half degrees above normal, and every single day is going to be above normal. The GFS is the exact same way, except the GFS says we're going to be 5.4 degrees above normal on average over the next 14 days. Uh, one to seven uh day forecast, this is the Euro, 2.6 degrees above normal. And a lot of the heat is it's gonna be in the central corn belt, but the the hottest areas of the country are gonna be out west, as that uh article suggested. When you get into the 8 to 14, this is when the heat really ramps up again. U.S. corn areas expected to run 5.7 degrees above normal. You get into week three, which is July 21st through the 27th, 4.1 degrees above normal, expected for U.S. corn areas. And week four, which is July 28th to August 3rd, you're 3.9 degrees above normal. This is just it's non-stop heat in the forecast. And um, I showed you guys the the average temperatures, but uh they have some maps also, and I can't pull everything every day. They have some stuff similar for overnight temperatures, and overnight temperatures are going to run similarly warm through the next month and above average. And I understand the argument, which we talked about it yesterday. Joe, it's July, it's hot. Yeah, but if the entire month of July is like five degrees above normal, both overnight and during the day, that is statistically hugely and massively significant and has got to have some sort of impact on the corn crop. I don't know what, but it's gonna have an impact. Um, precipitation over the next seven days, we're gonna see 70% of normal rainfall across the corn belt. I don't think lack of rainfall is gonna be the problem here. I think the heat, if anything, is gonna be the problem. Uh eight to 14 days, even drier, only 48% of normal rainfall expected during that time frame. If you look at the the placement of potential rains, there's a little bit of uh difference between the Euro and the GFS, but a lot of the rain is gonna stay south of uh major U.S. corn areas. For those of you guys in Kentucky and Tennessee, you're gonna see some more rain, maybe southern Indiana, maybe southern Illinois over the next five days. You get out to the uh 10-day maps and it's a little bit wetter, but still a lot of it is is south of major U.S. corn growing areas. And then you get to like the 11 to 15 and it gets kind of messy. Nobody really knows what's gonna happen out that far. But um, I'm just I'm not seeing anything in the forecast to suggest any significant or real relief uh from this heat. And I think that that continues to be a big issue here.

SPEAKER_00 8:46

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?

SPEAKER_01 8:52

Understanding crop scare events and the corn market in particular, how long does a crop scare event last? What should what should you do with it? I ran a number of uh historical examples of crop scare events. I talked about how long they last, I talked about why they happen, I talked about the trades kind of mentality and thinking during these events and and what ultimately happens. I think there's a lot of misunderstanding here. And I went through bit two like really big concepts that I think you as a farmer or just as a market participant need to understand when it comes to crop scare events. I can't give away any more than that, but you guys should absolutely watch this video, and it's as timely as it comes uh right now. In today's video, Brian's split will be on to do charts, and the charts have become very, very interesting during the last two or three days. The soybean chart in particular is hugely interesting to me. I'll be very curious to see what Brian has in terms of uh you know upside targets, possible stopping points, possible areas to make uh grain sales, that sort of thing. 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 it anytime. No other fee, no other obligation, nobody will try to sell you anything else. If you are the decision maker in your farm operation, this is just something that you have to buy. If you're not buying it, your neighbor's

Farmer Sentiment

SPEAKER_01 10:04

buying it, and he's gonna have a competitive advantage because the information is so damn good. Our guests are fantastic. Give this deal a shot this morning, guys.

SPEAKER_00 10:12

U.S. farmer sentiment decline for the third consecutive month in June. Purdue University CME Group Ag Economy Barometer Index fell to 113 last month, down six points from May and well below the 146 recorded in June of last year. The decline in sentiment reflected weaker readings in both the current conditions index and the future expectations index. High input costs remain a top concern, top concern, cited by 47% of respondents as their biggest issue and by 42% as the main barrier to improving their farm's financial health. Meanwhile, 53% of respondents said the U.S. is heading in the right direction, up 1% from May, but still the second lowest reading since the question was first asked in July of last year.

SPEAKER_01 10:58

Yeah, this is the the take home for me here. What is the main thing limiting improvement in your farm's financial situation? 41.5% said high input cost, and round of applause for that. That is the correct answer, I believe. That should be the biggest concern for you guys. Commodity prices are low ish, but input prices go up every single year. It's just like it's just like normal inflation. Everything continues to get more expensive. So farmers in this situation where their input costs are acting like um, you know, CPI. They go up two, three, four, or five percent every year, whatever it is. In some years it's it's a hell of a lot more than that. But the price of the thing that they sell, corn soy means wheat, they're trading, generally speaking, in like the same areas they were trading 10 years ago. So that's the problem for the farmer right now. That's the big problem. And they've got it right. Uh, love this one. Thinking about AI or other data-driven tools and ag, what do you see as their main benefit in your operation? And 52% said no meaningful benefit. And um, I'm a big I've turned into a little bit of an AI hater, McKenzie. I just I haven't really seen the impact yet. What I'm seeing is that everybody's stuff looks the same. Everybody who puts together like PowerPoint presentations, they all look the same now because they're all made by Claude. And uh it seems like it's it's making everything, it's making everything out there like generic. Everybody's spreadsheets are generic, everybody's presentations are generic. We do things the old-fashioned way here, and uh that's why our stuff is better than everybody else's. Um, this is over the next five years, do you think ag exports are more likely to increase, decrease, or remain about the same? 43% said increase. I don't love the phrasing of this question. I think they need to be more specific. Like it should be what do you think about soybean exports? Or what do you think about corn exports? Because I think those would be two different answers. But in any case, I mean, I I don't love that one. Uh, this is kind of our we've I view this as the presidential approval rating. Would you say that things in the U.S. today are generally headed in the right direction or on the wrong track? And 53% say right direction. So I don't know. I don't know what's going to happen in the midterms, but um, I don't know if it looks as good for the Republicans as it once did amid

Cattle/Beef Imports

SPEAKER_01 13:05

this uh Iran situation, high gas prices. I know they've come down, but um, that's what the uh the sentiment poll would tell you, anyways.

SPEAKER_00 13:13

Cattle groups are urging the Trump administration to remove a proposed tariff exemption for Brazilian beef. They argue the exemption undermines the Section 301 investigation into Brazil's trade practices. The groups also contend that rising imports are hurting domestic cattle producers and discouraging herd expansion. Meanwhile, the administration is trying to balance protecting U.S. ranchers with keeping beef prices affordable for consumers. A final decision is still pending, but if the exemption is removed, President Trump would have the authority to impose a 25% tariff on Brazilian beef and other covered products.

SPEAKER_01 13:46

Okay, so Mackenzie, we've seen a surge in Brazilian beef imports. Is it is it a material amount? Like is it enough to really move the needle in terms of prices of anything?

SPEAKER_00 13:56

No, I don't. I and it no, and it's mostly trimmings. Um, it's mixed with our beef. It hasn't moved the price of beef by any means. I do believe, I think this article said through the first uh four months of this year uh imports from Brazil are up about 40%, I believe, something along those lines. So yeah, I mean, we've definitely seen a huge increase in imports, which I know we have to import a certain level of beef. I don't want to just open our doors to uh all kinds of imports because I think when things flip and our cattle herd does build again, it's hard to shut that door when the imports start coming in. And that will just drown out our US production and it will hurt U.S. ranchers. So there's a limit, I believe. I don't think, I personally don't think we can import enough beef at this time to really make an impact on the high beef prices that our uh consumers are dealing with.

SPEAKER_01 14:50

The government's probably trying to consider the consumer here, I would imagine. For sure. I just don't know that this makes any difference to the consumer.

SPEAKER_00 14:57

No, I don't think so. And I honestly think if the consumer knew how much imported beef that they are consuming, they would love to purchase US products. And that's a whole other conversation for another time. But yeah.

SPEAKER_01 15:09

Outside markets this morning, guys. Uh, the SP is off almost nine tenths of a percentage point on these renewed or escalating uh situation in the Middle East. Call it that. Uh, crude oil is up $3.64 at $74.08 in August WTI. Have a great day, guys. We'll be back on Thursday.