AG Squawk | Davis Michaelsen & Brian Grete | Report Day Tension In Grain Markets

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We launch our first AG Squawk afternoon show with Brian Grete of Commstock and map the day’s selloff across grains and livestock while traders position ahead of major USDA releases. We connect fund flows, weather risk, and report history so you can think clearly about what could set the tone for the rest of the summer. 
• Our new afternoon format and what Brian does at Commstock 
• Why funds exiting agricultural commodities can outweigh supportive headlines 
• Corn, soybean, and wheat closes and what stood out intraday 
• How Midwest moisture and timing shape weather-driven price risk 
• Wheat seasonals, harvest pressure, and fund shorts 
• Cattle futures versus cash cattle and why discounts matter 
• Hog market weakness, the Hogs and Pigs report, and record pigs per litter 
• June acreage expectations and what would surprise the trade 
• Why grain stocks can be the bigger shock for corn 
• How June report-day history differs for corn versus soybeans 
If you're watching on YouTube, don't forget to like, subscribe, and share this puppy around. Email, Davism@nezvik.com. Go to agbull.com. Take the markets by the horns with AgBull. Call 1-855-737-Farm for details.

Futures Trading involves risk of loss and is not suitable for everyone. Past profits are not necessarily indicative of future results/profits. 

Transcript

Welcome To The First Show

SPEAKER_01 0:00

As the heat dome intensifies over the Midwest, you being here with me right now is so cool. It's kind of like air conditioning, unfortunately. Grains decided to completely fall out of bed today with cattle right behind. Big reports out tomorrow. And that'll be our focus today. Perhaps those reports had something to do with today's price pressure. It was a rough day in the grains, but a big day here at AgBull for me and my whole crew. Thanks for being here with us, everyone. It's June 29. This is show numero uno, our first podcast here in the afternoon. I really hope you enjoy it. I'm very excited. I've got Brian Grady from Comstock. He'll be with us in just a moment to talk with us. AgBull.com is where you can get more. We Smeyer's over there. I'm over there. We've got all kinds of great stuff for you there. But I just want to take a moment right here at the top of our program, number one, to say thank you for being along. If you're watching on YouTube, don't forget to like, subscribe, share this puppy around. We want to get out to as many people as possible because it's important for us to inform, enlighten, and perhaps even from time to time entertain the good folks of agriculture here to help me do that on our very first show. Brian Grady, an old friend of mine. We used to work together from Comstock. Let's bring him in. Brian Grady from Comstock, brother. It's been a long time and uh super great to have you here with us. Thank you for taking time to be with us today. We're going to talk reports, we're going to talk markets, but let's catch up. How are you doing, buddy boy?

SPEAKER_00 1:49

I'm great. And you know, Davis, the first uh the maiden voyage here, the first uh episode. This is this is awesome. Thanks for having me. I'm not sure if it's you know, start with the best or let's only go up from here, but uh, whatever the case may be, thanks for having me on.

SPEAKER_01 2:03

Well, I may be setting the bar really, really high here on the on the first show, but I I just had to have you. You know, you and I worked together for a good long time. It's kind of like we were in different lanes on the same interstate, and and somehow we we both wound up here together. You're over at Comstock now. Just take a moment right off the top here. Tell us about Comstock. What do you do over there? What do you what are you up to?

SPEAKER_00 2:26

Yeah, so we're a full service brokerage. I do the one of the written reports per day. We do two of those, and and I do the morning version of that. There's an afternoon version too. So we we kind of have two different uh branches, the brokerage branch and then the information report branch. And and so I work on that, do informative videos that we put out on YouTube, and just try to get all the information out to farmers and anyone else who's interested in the agricultural markets.

SPEAKER_01 2:54

That's com stock with two M's, if I'm not mistaken, Brian.

SPEAKER_00 2:58

Correct. So com as in commodity and stock as in the stock market.

SPEAKER_01 3:02

And is that in Royal Iowa or is it Royale?

SPEAKER_00 3:06

It's yeah, no, Royal. Nothing real, nothing real fancy with the pronunciation there. So it started in Northwest Iowa. We have uh brokerages around the Midwest. And so while the home office is technically in Royal, that it's it's small, both the community and the office there.

SPEAKER_01 3:23

Yeah, excellent, excellent. Well, let's get right into it. The first thing I want to do is just kind of run through some of today's markets,

Grains Slide As Funds Sell

SPEAKER_01 3:30

where the where the closes were. We can just kind of bullet point those. We don't need to get too deep in the weeds, and then I want to get into report expectations and and your thoughts. Tomorrow we've got some pretty significant reports coming out. We've got the June acreage, we've got grain stocks coming out. And I I know what some people are expecting. I'm just curious, you know, how how much impact these reports are going to have on the markets themselves, your your general thoughts on that. We I want to talk specifics about those reports later. But right now, I I guess I just kind of have a question to get the conversation started. The temperature with Iran is heating up again. It seems like there's this sort of cycle of talks and treaties and broken treaties, and the president, you know, wanting to flatten Iran and then we'd sort of start all over again. And we're kind of hung up in that cycle. Crude was moderately higher today, and yet corn, soybeans, and wheat were all down pretty hard. Did we see pre-report positioning outweigh a war premium in crude today? Or am I just reading too much into the whole thing right now, Brian?

SPEAKER_00 4:40

Well, I think what we saw is the funds continuing to get out of the grain and soy markets. Uh, they built net short positions in corn and the winter wheat markets. Uh, they've dramatically trimmed their length in the soy complex. And and the story is the money is flowing out of ag commodities at the moment.

SPEAKER_01 4:57

Okay. Very good. Well, I'm calling it sharp price pressure on corn futures overnight. That continued through the day session. Nearby is around 12 cents lower at lunchtime. Uh, export inspections of corn nearly 22% above year ago at a sporty one point seven eight million metric tons. Let's get to the closes from plus 500. We use plus 500 T4 software every day for real-time quotes and more. That's plus 500, plus 500. By the end of the day, September corn was 13 cents lower, Brian, at 408.3 quarters. December corn down 12 and three-quarter cents, 428 and three-quarters. Fund activity have have the have the most to do with that pressure today, you're saying?

SPEAKER_00 5:40

Yeah, absolutely. And we saw the July, and now it goes into delivery tomorrow, but it ticked below four dollars for the first time on the continuation chart since last September. So that's notable. We didn't find additional selling at those levels and kind of came off of them into the close. But uh, yeah, the the funds just continue to sell here.

SPEAKER_01 6:00

All right. Well, we had a daily sale to unknown destinations for the 26-27 marketing year. 136,000 metric tons of soybeans today. After moderate price pressure on soybeans in the overnight, by the noon hour, futures were nearing 20 cents lower. Export inspections of beans more than double last week's tally at 419,000 metric tons, and still Novi beans down 18 and three quarters, 1137 and a half at the close, and jan beans off 18 to close at 1152 and a half. The same deal as the corn here, Brian.

SPEAKER_00 6:33

Yeah, pretty much. Keep in mind we also have end a quarter and end a month coming up tomorrow along with the reports. And so the funds just don't see any reason to be buyers right now, and so they're shedding length in the soybean market, along with soymeal and soy oil as well.

SPEAKER_01 6:49

And with corn and soybeans kind of in focus here, the weather's just been too darn good. And yeah, we've got some heat going right now, but uh the weather just doesn't seem quite scary enough to rally the either of these markets, in my mind.

SPEAKER_00 7:04

Yeah, uh too much moisture in some of the areas, not uh traders aren't concerned. They see it as non-threatening because we have that excess moisture, the the heat isn't expected to be a problem. Uh, you know, it's 91 degrees right now here in Cedar Falls. So that's a summer day to me. We can withstand that from a crop perspective. Now, if we're a month or two from now and and we're talking about the extreme heat type of deal, it's probably a bigger deal to the market, uh, in all honesty. It's some of its timing. You have to keep that in mind.

SPEAKER_01 7:36

Sure, sure. So just give us a little crop report outside your windshield there. How do the corn, corn, and beans look in in the Cedar Falls area?

SPEAKER_00 7:44

You know, what we've been pretty blessed around here. We've had really good rainfall throughout the spring and and now into the early portion of summer here. You don't have to go too far to the north of us and too far to the east of us, though. And there are some fields there showing signs of the excessive wetness and and so a little bit of yellowing and that type of thing. I don't think it's a major concern at this point in time, but it's not all picture perfect. But here locally, boy, we've we've had a really good growing season again, and we're going on multiple years in a row now.

SPEAKER_01 8:15

Well, and speaking of multiple years in a row, you've been out behind the rows touring crops year after year after year, Brian. How much faith do you have in modern seed genetics in times like these?

SPEAKER_00 8:29

Pretty strong, Davis. Uh, you know, they're they're not perfect by any means. And weather, you know, it ultimately comes down to weather. But I think weather in July is most important for the corn crop. And then after that, uh, you know, as we get through pollination, then in through the grain fill. And then August for soybeans with being the right make or break month there. And so we shall see. The next couple months still have a lot at risk, I think, from the the corn crop and the soybean crop, both to the upside and to the downside. So a lot is untold yet as we sit here at the end of June. But I think when the traders

Weather Reality Check In Iowa

SPEAKER_00 9:05

look at it, they they see that roughly two-thirds of the corn and soybean crops are rated good to excellent right now, and there just isn't much concern.

SPEAKER_01 9:14

Well, let's move on to the wheat quickly. September wheat futures were mixed with Chicago down slightly early. KC and Minneapolis wheat each up around a nickel at the open. Chicago futures continued lower through mid-morning as KC and Minneapolis wheat reversed course into negative territory. Wheat inspections nearly 10% lower than the previous week, well below year ago. September Chicago wheat off 11 and three-quarter cents to 578. KC wheat down six and three quarters on the day to six, twelve and three quarters. And September Minneapolis wheat rejected the five handled, but just by a little bit though, down four and a half cents to six dollars and three quarters. Close call, folks. Have the seasonals gotten us here or is there fund movement here in the in the wheat as well?

SPEAKER_00 10:00

Well, both. The funds are are sellers and they built net short positions, like I mentioned previously in the winter wheat markets, but uh seasonal pressure. You know, we're we're seeing harvest activity pick up. And keep in mind, this is all happening in the face of Europe burning up, and and they've had extreme temperatures there for a week plus now, and that's expected to continue again this week. And and so you're just seeing that the the seasonalities really come into play and and be a force in in terms of forcing the funds to sell and and build a short position in both of the winter wheat markets.

SPEAKER_01 10:37

All right, very good. Let's let's move on to one of your favorite markets. The cattle futures were lower at the jump today. Pressure continued on both fats and feeders through the noon hour, all the way through the closing bell. September feeders down $2.22 and a half to $365. 45 October fat cattle fell a buck eighty-seven and a half to two thirty-seven thirty-two and a half. Brian, let's let's start the discussion on cattle here. Futures priced at pretty impressive levels, but it really does feel like the real story is the cash cattle market. Your thoughts?

SPEAKER_00 11:10

Yeah, so we you know, we've strengthened strengthened the last couple of weeks in the cash. It was basically flat, but we stopped the the downturn that we had seen the previous weeks. The futures uh we had contract highs in live cattle last week, so pulling back from those levels. The feeder cattle led us to the upside last last week, and now pulling back from those

Wheat Weakness Meets Harvest Season

SPEAKER_00 11:30

levels. And and so I think that you know the real story is that the cattle futures continue to trade below the cash market for the fats and below the cash index for the feeders, and traders aren't going to shift that stance. That's pretty clear right now. We saw the upside moves last week, and and all they did is narrow up those discounts.

SPEAKER_01 11:50

Have you got the entire Grady crew assembled at your home for uh for summertime now, or is your is your beef consumption off a little bit?

SPEAKER_00 11:59

Our our beef can we're doing everything we can on the beef consumption side of things, yes. I have both my boys home for the summer, and uh it is in heavy consumption mode right now.

SPEAKER_01 12:09

Excellent, excellent. Well, I know the uh the beef producers of the USA really appreciate your efforts, Brian. Let's move on to the hogs. Lean hogs opened the session with price softness by midday. Nearby futures, including the August contract. We're trading around 40 cents higher. August hogs ended the day up 70 cents to 97.27 and a half, and October hogs down 40 cents to 81.55. I gotta go back to last week's HP report, Brian. It was called mildly friendly, but I think the real nugget in there is pigs per litter, 11.87 pigs per litter. And that number just keeps going up. It's got my attention.

SPEAKER_00 12:46

Yeah, it just keeps it's a record. Every quarter is a new record, and and so just extreme efficiency within the ferrowing houses. So that's offsetting some of the lower breeding numbers that we're seeing. You know, the real story, I think, in the report was that the market expected that we would see a little bit of an expansion, and it was actually down just marginally from year ago on the uh herd size as of June 1. And so we shall see. But really, when you look at the what's happened since early March, we've been nothing but down in price, and that is very contra-seasonal. Typically, we would be making our seasonal high at this time as we would be talking here in late June. Definitely not the case right now. The funds just continue to sell that market.

SPEAKER_01 13:35

All right, very good. Well, let's let's move on to that data dump from USDA June acreage. We got grain stocks coming up. I'd like to start with the acreage report, Brian, if we could. Trade expectations kind of uh point to only small changes, perhaps, to the corn soybean acreage mix in the June acreage report.

Cattle Cash Leads And Hogs Efficiency

SPEAKER_01 13:55

I've heard sort of whispers, rumors around the campfire, as much as 500,000 acres and another million acres of beans. Expectations on corn, according to my little table here, range from 94 to 97 million acres of corn at a 95.1 start us out with off with corn acreage.

SPEAKER_00 14:14

Well, I think that since March, the expectation has been that uh that was the high water mark for corn acres. Then we go through the whole Iran situation and the fertilizer uncertainty and all that. And so if we print a bigger number than we had for March intentions on Tuesday, it's negative for corn. Now, that may fully be baked into the market because, like we've mentioned and talked about, the corn market has been under some pretty heavy pressure here. But I think that, you know, if it is a bigger number, definitely not bullish. Now, if it comes down more than expected on the corn acreage, then I think that we could turn it around. But uh really the report for corn, in my opinion, is grain stocks, but we'll get to that later. On the soybean side of things, I think the expectation since March is that that was the low water mark and that we will see higher acreage. And so now it's a matter of how much it increased. And you know, you talked about the corn soybean mix. Uh, it was about 180 million acres, uh, which is normal for the March intentions. I just don't think we're into a year with the ag economics that we're going to see a whole lot above 180 million acres combined between corn and soybean acres. Uh that that just doesn't make sense. If if we print that type of number, boy, that's negative in my opinion, just because you're you're adding acres to corn and soybeans. Now, how could that happen? Well, some of the minor crops uh down in the south and up in the northern plains and those types of things could have really lost a bunch of acres compared to March intentions. But I, you know, I don't think that we're going to see a big acreage shift through the central corn belt. But I also don't think, like I said, that we'll see corn and soybean combined acres more than 180 million or so.

SPEAKER_01 15:54

Well, those March planting intentions, when you when you talk about switching to crops, I I think at least a little bit of cotton would have the power to to shave off a few uh corn acres, at least in the southern region. March put it at 9.6. The average average uh estimate here is 9.6, unchanged from March planting intentions. Would that would that count as as maybe tossing a little bit of uh acreage left to corn and beans?

SPEAKER_00 16:18

Yeah, potentially. I think other crops, maybe like uh peanuts, rice, some of the really minor crops that that don't really factor in other than the the principal crop acres. I think that we could lose some there. Sorghum will be one to watch, you know, that that's one that can shift pretty easily. And then obviously, we know what winter wheat acreage is for the most part. Spring wheat acreage will be and Durham included in that. So other spring wheat and Durham, that those numbers will be new to the market, and we'll see what happens with any shifts there.

SPEAKER_01 16:50

Brian, somebody told me, and let me just bounce this off of you. Somebody told me that when spring planting weather is favorable, which it wasn't for everybody, obviously, but for a lot of folks it was. They're in corn country. When you get favorable spring weather and they get to planting corn, they want to keep planting corn. Any chance of a surprise there at all?

SPEAKER_00 17:12

Uh generally, that is your statement is true. You know, we've seen a little bit less of that, I think, here in recent years, just because we've shifted more to planting soybeans earlier than what we did in the past. It used to be we'd plant all our corn acres, and then when we were done planting corn, we'd shift to soybeans and that type of thing. Now we got guys that some in some cases will go soybeans first and then feather in the corn and that type. So I I don't think that your statement holds true as much as it used to per se. Boy, I I think that soybean acres are going to be up. It's a matter of how much they're up from March intentions.

SPEAKER_01 17:49

All right, very good. If you're ready, let's move on to the grain stocks report because I got a feeling there there could be some some greater surprises in the stocks report as opposed to the acreage report.

SPEAKER_00 18:00

Yeah, so historically the corn market has really responded in a big way to the quarterly grain stocks numbers, and that's because analysts have missed by several

USDA Acreage And Grain Stocks Preview

SPEAKER_00 18:10

hundred million bushels on a pretty consistent basis. And so that's been a hard one to peg. It's that feed and residual category that are lumped together that really give analysts, you know, a little bit of a problem there. And so if there's a surprise on the corn side of things on Tuesday, in all likelihood it might come from the grain stocks number. If there's a surprise on the soybean side, it might come from the acreage. And so I think that those two reports for those particular markets are the ones that we need to watch.

SPEAKER_01 18:39

All right, very good. Level of impact here. I know it's it's hard to hard hard to call from from the day before, but just in general, what's the level of impact potential here for us, Brian?

SPEAKER_00 18:51

Oh, huge. The June reports, this is one of the biggest report days of the year, and it's because we have two impactful reports, both the acreage and the grain stocks reports can have major market moving implications. And so the history is that over the past 10 years, we've had five years of up moves in the corn market and five years of down moves. So that tells us it's a crapshoot. But I can tell you that the down moves, the years where we've we've traded lower initially after the report that first day has been bigger to the downside than what what it has been to the upside. So basically the June reports favor a bearish reaction in the corn market, just the opposite in soybeans. So seven out of ten years, we've had a bullish price response the the day of the reports, and the moves to the upside have been huge on average, and the moves to the downside have been minuscule. And so I guess if you just bottom line everything there, it's that corn typically has a bearish reaction to the June reports, and soybeans usually have a bullish reaction.

SPEAKER_01 19:57

There was a gap, and I haven't thought about this in a in about a week, week and a half, a gap in the continuation chart in corn, right around was it 405 to 409 or something like that? And I know we dipped into it but didn't fully close it.

SPEAKER_00 20:11

Is that gap still open? Do you know? No, it it has been filled, and and so that objective has been met by bears. And and so we shall see. I think you know the big huge sell-offs in these markets lend themselves to everybody's leaning bearish going into the report. So if we get any kind of a bullish twist to the the the news and the data, we should see a bullish reaction. If you don't, you have some problems because the market should respond bullishly to bullish data. Now, the flip side is if it's bearish, boy, that gives the funds no reason to flip the switch and they may just continue to be sellers here.

SPEAKER_01 20:48

Yeah. You know, a good friend of both of ours used to talk about everybody getting on the same side of the canoe, and you'll you'll flip that puppy over if you're not careful.

SPEAKER_00 20:57

Absolutely. And you know, if you look back, this all started in early May. The funds built a near record long position across the grain and soy markets combined, and they've done nothing but liquidate since. And so now, like I said, they're they're short corn, they're short the winter wheat markets, they've dramatically reduced their length in the soy complex. And is that enough or do they want to continue to get more bearish?

SPEAKER_01 21:22

Very good. Final thoughts on the reports coming out tomorrow, Brian.

SPEAKER_00 21:26

Well, I they should set the price tone as we move forward through summer. Obviously, I talked about weather in July being so critical for the corn crop and its development. So that'll come into play as well. And the key question is how long does this extreme heat last as we move forward? You know, if it's a short burst, probably not too much of a market factor. If we get into mid to late July when we go through pollination and start the grain fill process, uh then it becomes a bigger deal. And so I think that we need to watch those six to 10 day and eight to 14 day forecasts. And see how long this extreme heat lasts. Right now, it's expected to be relatively short-lived, and so we shouldn't see a major lasting impact. But if the forecast changes and we continue to see that extreme heat, then the corn market, I think, starts to react at that point in time.

SPEAKER_01 22:17

Well, let's do talk about that. And I know you're talking a little bit longer term, but uh as far as the short term goes, the uh National Weather Service forecasts dangerous to record-breaking heat to build across the center of the nation and slowly build eastward. That's just this week. Wildfire conditions remain critical for the southwest and portions of the Great Basin through Monday. For the northern plains and upper Midwest, severe thunderstorms with the potential for large to very large hail and severe winds, primary hazards there. Brian, with that, let's move on to a segment that I like to call items of mild interest. Are you ready to be mildly interested? Absolutely. All right, on this date, uh, what is it, June 29th? On this date in 1863, the very first, first

Heat Forecast, Odd Facts, And Signoff

SPEAKER_01 23:05

national bank opened right in Davenport, Iowa. I always wondered why why do how are there so many banks that say first national bank, first, first bank, whatever. Apparently, that there was a first first national bank opened up in Davenport, Iowa. In 1939 on this day, Ford introduced the revolutionary Ford Ferguson 9N tractor, incorporating the Ferguson three-point hitch system. We had a Ferguson on the farm when I was a kid. I think it was a mid-50s. Um, not a super old one like that, not a not a 39 for sure. And finally, here, actor Gary Busey. Uh, it's his birthday today in 1944. A quote from Gary Busey: Fear is the dark room where the devil develops his negatives. And here, take that picture down. I gotta show you something. I actually this raises the question with me, this quote about the devil developing pictures. I have an autographed picture of Gary Busey and Keanu Reeves and uh that other guy from Point Break. It's got my name right there. You know, if he's talking about the dark room where the devil develops his negatives, I wonder where this picture was developed. And uh, do I really want to have it hanging on my wall from now on? That's I guess just a little bit of food for thought. Huge thank you to you, Brian Grady from Comstock. Go to Comstock.com. That's Comstock with two M's for more from Brian and his team, Comstock. Tomorrow afternoon, I'll be talking reports with Mike Castle from Stonex Brian. Thank you so much. I really, really appreciate you taking the time to be here with us on Ag Squat this afternoon on our very first show, brother. This was perfect. Excellent job today.

SPEAKER_00 24:49

Well, thank you, Davis. Thanks for thinking of me on the first show, and I wish you nothing but huge success moving forward.

SPEAKER_01 24:55

I appreciate that. And just one more thing for you, beloved viewer. If you've made it this far, gold star, it's our first show. What do you like? What did you not like? Email me, Davism at nezvik.com. Help us in our quest for the perfect ag podcast. Go to agbol.com. Take the markets by the horns with Ag Bull or call 855-737 Farm for details for Brian Grady and all of my people here at AgSquawk. It's Davis Michelson saying thanks for joining us. We'll see you tomorrow.