Winter Wheat SHOCKER in May WASDE Sends Futures Soaring

Added: 2026-05-12

[00:00:00]The views and opinions of this program are those of the hosts, guests, and callers. There is substantial risk of loss in trading futures and options, which you should carefully consider prior to trading.

[00:00:10]Well, we saw big gains in the wheat complex on Tuesday after the release of the May was report. Did USDA start to confirm some of the problems that are being reported in parts of the plains when it comes to the HRW wheat crop?

[00:00:27]Want to talk about that, get some analysis postreport and talk markets and big picture with Matt Bennett from aarket.net.

[00:00:36]Matt, good to talk with you again, my friend. Hope all is well there in your neck of the woods in central Illinois.

[00:00:42]Still wet. Uh can't get in the field. Uh yeah, we we had a nice little start there uh in April and then uh the the crazy thing, Jesse, as you know, we we were bone dry for six months. I mean, didn't have a tile run for months and then all of a sudden u you know, Eric Snodgrass, you know, came to our conference and he said, "Now, listen, the you may have some uh some windows this spring, but I we think it's going to be pretty wet." And I'm like, "Whatever." You know, uh I didn't want to believe that, of course, because well, when you're that dry, it's just hard to break out of it, you know. Uh but we broke out of it. And so, uh, we're not even done planting corn. May have to replant some corn actually that, uh, two Mondays ago we had that big weather event, you know, three to five inches of rain, and that's not what you want on corn that was planted in the last 48 hours. So, um, yeah, hopefully we'll get done here soon, but they're talking rain, uh, potentially quite a bit of rain next week. So, u, yeah, it's problematic to say the least.

[00:01:48]>> Well, and since you brought it up, I I'm curious. It really feels like outside of the wheat complex, and we'll get to that in a second, but it really feels like weather, which is normally the biggest driver in the markets this time of year, almost feels secondary to everything else going on in the world, and USDA's reports and geopolitics, etc., it almost feels like the weather conversation secondary right now, Matt.

[00:02:14]>> Yeah, agree with you. Uh and and to be fair, I mean, corn is running on par, you know, a little bit ahead of the 5-year average, about what we were last year, a shade behind. Uh you look at soybeans, well ahead of the 5-year average. So, overall, we're in pretty good shape. I think what the market has tried to maybe look at a little bit when it comes to weather is what are the areas that were having issues, of course, eastern Iowa really caught up, I believe, in the last several days. Uh parts of northern Illinois, same type of thing. But yeah, when you talk about geopolitical, you know, people were asking me, "What do you think about the report today?" I said, "I just don't know that they're going to be able to tell us anything that we're not kind of expecting to see on the corn and bean front." And we've got a big meeting this week. I mean, you know, I saw a wire this morning that said Trump might try to get Xi to agree to 40 million tons of beans a year, you know, with the thoughts that they'll settle on 30 instead of 25.

[00:03:11]Who knows, Jesse? I I really don't know.

[00:03:13]when someone calls me right now and says, you know, what do you think is going to happen here? Man, I wish I knew. Uh, and the problem in our world is, you know, you know, whatever we go to bed knowing tonight, Jesse, when we wake up in the morning, it might be a totally different story. So, you you have to try to filter through the noise as much as possible. uh look at a good situation that we've got and and at least uh acknowledge that maybe with some risk management because uh last year we didn't get a shot I mean we didn't have a shot at doing anything last year ahead of harvest or even after until later on a while uh this year we've actually got some pretty nice opportunities right here >> I think to that point since we're on this topic I'm going to stay here for a second you know all bets are off it seems later this week with the Trump meeting. Who knows what's going to happen, what impact it's going to have on these markets. But to your point about risk management, I look after Tuesday's trade. Here we are again, $5 dorn, $12 nove beans, we're testing that psychological resistance area. And you know, five and 12 traditionally pretty solid number. may not mean the same thing today as it, you know, used to necessarily with everything else with input costs and more going on, but it's still kind of those psychological numbers. So, your thoughts on that and and you know, maybe managing some risk here at these levels. I mean, you do a good job of putting perspective on this when it comes to thinking about break evens and Morris. I mean, what's your take on, you know, five and 12 right now?

[00:04:50]>> Yeah, that's a good question. And the just to be real fair, uh it doesn't matter what prices we're talking about, but we're talking five and 12 here. It means something different to everyone.

[00:04:59]You know, uh uh my dad just retired this last year, but $5 corn for him was a you know, as a as a money maker. You know, he doesn't know on any ground. Um he's he wasn't cash renting any ground. He didn't have any equipment that he needed to pay for. Conversely speaking, a lot of us are in a little different situation than that. I have ground that I'm paying on. I have some equipment that I'm paying on. And so bottom line, it's something a little different to everyone. But I would say, you know, an average break even that we were looking at this year as far as cash corn was concerned in that 440 area was pretty common, you know, and so if you're in the eye states, for instance, you can kind of bank on a 30 under basis. uh being just a benchmark, you know, you're going to get better than that at times, a little less than that at times. With that being the case, you know, if you've got $5 corn and you're at 470, 30 cents a bushel, you know, uh hey, if you have 250 bushel corn or 200 bushel corn, you know, uh that's a winner. You know, it's not a grand slam. It's maybe not even a home run, but I'll tell you what, it's probably an extra base hit, especially compared to what we've seen the last couple three years. And so we've been telling people if nothing else, let's lock in some worst case scenarios and live to play another day because uh you know I've I've heard a lot of folks say here lately, well I maybe sold a little more than what I wanted to at this stage. And I go back to something I've said my whole career. your first sale is your worst sale and is profitable, you're gonna have a pretty good year, you know, and so uh incrementally rewarding a market that is profitable for you uh to me makes a heck of a lot of sense.

[00:06:44]>> I think to add in here as well, uh soybean oil, there was some there's been a lot of talk about soybean oil for instance, but the WASDY numbers out Tuesday, I mean, strong demand was reflected there again. We saw good price action in bean oil on the day. You know, we got this E15 vote this week in the House. Maybe that gives a shot in the arm to corn. Who knows what's going to happen there, though. But just on on the ethanol front in general, you know, that's another area in particular that it's getting a lot of talk right now in this market trade, Matt.

[00:07:17]>> Yeah. Yeah, for sure. Um, what it boils right down to is, you know, year round E15. Not it's not that we're going to go to an E-15 blend everywhere. It's it's that we can sell it year round and it's definitely looked at as a very positive deal for corn uh ethanol demand which you and I both know it's a fairly uh mature industry if you will and this is a nice little boost for for the ethanol industry. If you look at soy oil uh last week, multi-year highs, you know, and then you come in here this week and you say, "Hey, we've had phenomenal crush every month." Well, USDA says, "Guys, it's going to keep getting better." I mean, another 120 million bushel for crush. I mean, that's impressive to say the least. And that's after, you know, they bumped this year up 20. And so, bottom line is domestic consumption.

[00:08:14]It's something you and I have talked about many times. It's of utmost importance for the US grower. Uh considering the fact that we really struggle on the world export front particularly with soybeans. Uh it's uh if we didn't have any trade deal so to speak with China this year our exports would have been pathetic and and that's that's putting it pretty pretty nicely.

[00:08:34]The reason I say that we've been out of the market all year. I mean we just have not been in the market. Um, more times than not, we've seen Brazil a dollar cheaper than US beans. And, uh, clearly it's pretty tough for anyone in the world, no matter how good they feel about the US, to come in and say, "Hey, we'll we'll go ahead and pay premium for your beans." Now, uh, a lot of times from a quality standpoint, US beans do have uh, some authenticity there, but is it a dollar's worth? you know, and for a buyer, you and I both know, uh, everybody's always looking for a good deal, you know, and so it's going to be tough. Uh, domestic consumption though, it's going to be a big big topic for us moving forward. Uh, the US growers going to need to see uh, you know, that we're doing everything we can to consume our products here at home. uh especially as we continue in this globalized market where uh especially with currencies and you name it, it's really tough for us to compete at times.

[00:09:32]>> Cor and beanwise on the balance sheets I mean anything else as we kind of we'll use this now as kind of the lens to look through things over the next several months ahead I would say Matt.

[00:09:43]>> Yeah I mean the thing on the corn balance sheet okay you come in here and you're you're a shade under two billion for new crop. Okay. Um, not a whole lot of changes on old crop. We kind of knew that was going to be the case. But, you know, what the assumptions there are are important though. The the assumptions, you know, are that you're going to see the 183 yield from outlook for them and that you're going to use 953 from planning intentions. And that's that's their normal protocol. There's really no reason to adjust that. Uh, I believe in 2019 they did when we were excessively late uh as far as getting planted. But here's the deal. Um most people would suggest that corn acres uh will move a little bit lower uh end of June. It's not because oh this is this massively late planning situation. It's there are a handful of producers that don't have fertilizer bought did not have fertilizer bought coming into this. And if you were in a position where you were cool and or wet and let's face it a ton of growers have been in that position.

[00:10:42]That's part of our problem here in central Illinois. Every morning you walk outside and if you don't have a sweatshirt on, you're freezing your rear end off right here. Uh, you know, almost midday. I mean, it's uh it's been cool, you know, so you don't have a whole lot of push there. But the problem is if you're cool and or wet and you don't have your fertilizer bought and you look over at uh November beans and they're 12 bucks or above, I don't know. A lot of folks are saying, "Hey, maybe I'll save some bucks here, you know, and just plant some $12 beans." $5 corn looks great. Don't Don't get me wrong. I mean, it's way better than we've seen the last couple years, but what are you going to spend to put that crop in the ground, you know? And so, you tighten that balance sheet up on acres, uh, you better hope that you're looking at a yield like last year, and I I don't feel confident, uh, with the way that this spring has started. You know, we've talked to a lot of growers this week that have said, I'm walking fields trying to figure out whether I'm going to have to replant or not, you know, and so what what would the true planting number be? because a lot of acres got planted before those big storms two weeks ago. I'll tell you what, if if you have to replant a bunch of corn, you know, this crop definitely will go in a little bit later. It it's awfully early to talk about reduction in yield, but I'll tell you, uh this this is a more challenging atmosphere to produce a big yield than what we saw a year ago.

[00:12:02]>> All right, Matt, I had intended to talk wheat at the start of our conversation, but we we ventured down the other rabbit hole here, talk cine. So let's shift to wheat and again so much has been made about conditions in the plains and the dry weather and you see the social media talk and you know reports from Oklahoma Kansas wheat tour happening this week etc etc. Guess where I'm going with this is did USDA seemingly confirm all of that concern on the report on Tuesday?

[00:12:35]Yeah, I mean they did to an extent. At the same time, Jesse, um you know, you take yield down to 475 and I'm not sure they've done enough yet to be honest with you. I mean, when you're when you're uh looking at now, when you have an abandonment, I think Texas was showing 70% abandonment, which is just incredible number. Um I believe last year was in the 50s. So it's not like it's uh just wildly larger than anything we've ever seen. It's just a big abandonment number. And then of course Oklahoma's wheat tour just atrocious uh wheat compared to what they'd like to see there. Uh Kansas this week. I don't think you're looking anything better in the especially in the western twothirds of the state. And so I'll tell you what, it's been uh it's been interesting to see how this has played out. So what are they doing? Well, they're they're tightening that balance sheet up. But if you look at production, production down year-over-year due to the reduction in acres, first of all, and second of all, the reduction in yield over 400 million bushels, you know, and so what they're saying is they think demand's going to back off somewhat. Now, people might question that why is US here's the deal.

[00:13:47]when you lower production, typical protocol for the USD is they're going to lower demand uh by a factor, you know, so it'll it'll come down some as well.

[00:13:56]Uh these are all moving targets that we're going to kind of see how they play out. Uh but do I expect that we will stay at less than 200 um less than last year's carry out? I'm not sure. You know, to be honest with you, Jesse, I could see carry out coming in under 700 at some point. you know, and if that's the case, certainly from a domestic situation, it's a lot tighter than we've seen in quite some time. Now, you look over at the world balance sheet and yes, you tighten it up some, but at the same time, world balance sheets still pretty healthy, you know, and so you got to understand as a grower, uh the US, yes, we live here, yes, we think, uh, you know, a lot of us have grown up thinking we're the end all beall, but as far as wheat goes, we're not a huge player in the world export business. So, uh, at some point in here, if if you do have a good wheat crop, respecting this rally is probably a pretty smart move, at least on on percentages. You know, I again, I don't want to get super carried away here. These markets have shown uh funds continue to buy. How much do they want to buy? You know, whenever it comes to corn and soybeans, you know, and now obviously it looks like they're kind of coming into wheat with a vengeance. Uh, if they want to get super long wheat, this thing could get pretty interesting.

[00:15:09]>> We're going to have to watch this closely. And it's a it's a tough deal I know for the folks who don't have the crop. I mean, you know, smallest wheat crop and we're talking 50 plus years is what the projection is. I mean, and I even think too, I've said this a few times on the show, I feel like all the dryness concerns in wheat, you could extend that down to cotton country, too.

[00:15:28]I mean, I think we're seeing some of the same challenges there. We've had some price rally in cotton in the last several days. I just think that, you know, wheat, cotton country is where the weather concern is showing up in the markets right now. Yeah, absolutely it is. And you know, another thing, a year ago, a lot of people asked, "How can how can we have a 186 and a half yield?" And time will tell if that was true, but we know it was a big crop. How can we have such a huge crop when Illinois and Iowa were so far off of like for instance the August estimates? You know, Illinois and Iowa were still big crops. They just weren't near as big as what we originally thought. Well, how? Because a lot of growers in Kansas raised their best corn crop ever, you know, by a margin. And so you had we are clicking on all cylinders in a lot of places other than the bread basket of growing area and and that's that's part of how you got to these types of yields. What does that look like for this year with the western cornbt still mired in a pretty serious drought situation? You know, I think that that's a little tougher conversation whether you can get to those types of yields without just an absolute mammoth crop in Illinois and Iowa. We know both Illinois and Iowa have had some issues getting this crop in the ground. So, there's going to be a lot that we're going to be looking at later on that could potentially really move this market.

[00:16:46]>> All right, we got to talk livestock cattle in particular and seeing a down day across futures again on Tuesday. And you know, this story that broke Monday about the tariff rate quotas and and relaxing it to bring in more imported beef to attack the price of beef at the meat counter for consumers. And I talked about this on on Tuesday's episode of Agriculture of America, how that seems to be the focus of the Trump administration. It's about the consumer perception of the price of beef. and ranchers can get upset about it and lawmakers from farm states can get upset about it. But, you know, this whole story and then Tuesday coming back and reports saying, "Well, we haven't finalized the plans yet." And this and that kind of like putting a you know, a hold on this, so to speak. But again, here it is. Another case of new story volatility impacting this cattle market at high levels, Matt.

[00:17:43]>> Yeah, for sure. Uh obviously from a fundamental standpoint, uh all things equal, it's pretty tough to hold this cattle market back. It's been like trying to hold a beach ball underwater.

[00:17:54]Um you come in here and you say, "Hey, uh we're going to essentially try to limit beef price uh moving forward." You know, uh there's no question, Jesse, from I don't like talking politics, but any politician, uh any president in charge is going to want food inflation to be under control, especially in this situation. It's been talked about and talked about and talked about. So, they've shown there's several different measures they'd like to take uh to get beef prices under control, if you will, that that where that's really tough to navigate, Jesse, is for uh the guy that's trying to fill a feed lot with excessively high price feeders, not knowing uh whether he can make money.

[00:18:37]Now, in some cases, you can go ahead and lock it in, especially if they're feeding like what they're growing on the farm. There's a lot of instances where you can still ink uh some black there.

[00:18:46]you have some black ink, but the problem is if you're buying for instance feed, you're buying feeders and then you're selling the deferreds on the fats, that's a really tough thing to make money on right now. So this is a tough situation and I and I would highly suggest that uh any anybody that has a vested interest in in cattle whether it's cow calf anything there's no doubt that you've got some risk uh by not doing something whether it's LRP u you know setting a floor into the market because there's no doubt this administration really wants to see these beef prices back off and I think that they're willing to to go to some measures and tick a lot of people off in doing So, if they have to.

[00:19:28]>> Yeah. Couldn't agree more. Couldn't agree more. Matt, any final thoughts? We close out our conversation today.

[00:19:33]Anything else you'd mention or reiterate to folks on the show?

[00:19:36]>> Yeah, I think one one thing I'd like to mention is especially if your crops in the ground and it's looking good, remember, we haven't had these opportunities for a while. Uh, incremental sales at profitable levels.

[00:19:48]I'll say it again, it's it's just good business. You know, I I don't want to snub my nose at the best prices we've seen in three years. I I think that we at least need to respect them to a degree and and and and sell more later if it goes on up.

[00:20:01]>> No, excellent, excellent thoughts.

[00:20:03]Always got to remember to manage that risk and we remember the risk of trading futures and options can be substantial.

[00:20:09]Folks can learn more aarket.net.

[00:20:12]Matt Bennett, always good to hear from you, my friend. Thanks for joining us on Market Talk. We appreciate it.

[00:20:17]>> Yep. Thanks for having me, bud.

[00:20:20]>> Make sure to subscribe to the Market Talk YouTube channel. You can watch our latest interviews with top market analysts in the country, find bonus content, and much more. It's easy. Just go to youtube.com/market talk egg and hit the subscribe button.

[00:20:32]Or you can search for Market Talk Egg on YouTube.