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Jun 11 | Commodity Week · Commodity Week

• cw260611 The June 11, 2026 edition of Commodity Week, hosted by Todd Gleason, evaluated the contrasting environmental and structural shifts altering the global agricultural landscape. Ellen Dearden highlighted severe weather disparities across the US Midwest, where central Illinois recently faced excessive rain and wind damage, while portions of South Dakota and Nebraska continue to suffer from severe drought and expanding wildfires. Ted Seifried analyzed the subtle domestic demand adjustments and global production updates in the June USDA WASDE report, noting that while US ending stocks remained relatively flat, surprise production increases for corn crops in Brazil and Argentina present long-term competitive threats to US exports. The panelists further scrutinized fund flows and international demand dynamics, emphasizing that the recent market slide is heavily driven by index funds liquidating historic long positions as previous alternative energy and fertilizer supply narratives lose momentum. This speculative exit coincides with stagnant buying activity from China, which continues to meet its immediate processing needs through cheaper, high-volume South American soybean supplies rather than turning to the US. Consequently, Matt Darragh projected that the US may only realize about half of the USDA's targeted 25 million metric ton export volume to China for the 2026–2027 marketing year, reflecting the global pricing edge and storage advantages held by Brazil and Argentina. Additionally, the panel briefly addressed the risk of the New World screwworm, noting that its spread is primarily a hazard tied to livestock transportation patterns rather than simple fly migration. On the global front, Darragh shared insights from Kpler regarding the softening wheat and fertilizer sectors. Global wheat contracts continue to face downward pressure from high carryover stocks and intense export competition out of Russia, Ukraine, and Europe, though looming El Niño conditions could severely penalize Australian crop yields later in the season. Meanwhile, critical supply chain vulnerabilities persist in the fertilizer sector, where 37 vessels laden with roughly 2 million tons of fertilizer products remain bottlenecked in the Middle East Gulf near the Strait of Hormuz. While down from a peak of 50 vessels in May, these ongoing logistical constraints and export limits from major producers threaten to trigger a delayed, severe impact on global crop production extending into the 2027–2028 marketing year. Panelists - Matt Darragh, Kpler - Birmingham, UK - Ellen Dearden, AgReview - Morton, IL - Ted Seifried, Zaner Ag Hedge - Chicago, IL Todd Gleason: This is the June 11 edition of Commodity Week. announce: Todd Gleason’s services are made available to WILL by University of Illinois Extension. Todd Gleason: Welcome to Commodity Week. I am Todd Gleason. Our panelists for the day are Matt Darragh. He is with Kpler, that’s in Birmingham, or at least he is in Birmingham, the United Kingdom. Ellen Dearden is here from Ag Review in Morton, Illinois, and Ted Seifried joins us from Zaner Ag Hedge out of Chicago, Illinois. Commodity Week is a production of Illinois Public Media. It is public radio for the farming world online, on demand at willag.org. Our theme music is written, performed, produced, and courtesy of Logan County, Illinois farmer, Tim Gleason. Now let’s turn our attention to the marketplace. We’ll get a list of items that maybe we should discuss for the day. I think I’d like to start with you, Ellen Dearden in Morton, Illinois at Ag Review. What’s on your list? Ellen Dearden: On my list is, if you’re living in central Illinois and you’re a farmer, you’re worrying about how much rain we’ve gotten all at once and whether there was wind damage to any standing wheat. If you are in some other areas like South Dakota and northern parts of Nebraska, you’re still worrying about not having enough moisture to get a crop up and going. I think we need to consider that the US Midwest looks very different from one area to another. Todd Gleason: Ted Seifried from Zaner Ag Hedge, on your list? Ted Seifried: First of all, Ellen’s got some great points about weather and the drought monitor, too wet versus too dry in some areas. I’d love that conversation. Also, we had a USDA WASDE report today. While the June report is not usually much of a big deal, and this one really wasn’t different from that, there were some subtle changes here that I think we should look into a little bit too. Todd Gleason: And finally, Matt Darragh in the United Kingdom, tell me about your list. Matt Darragh: As well as the WASDE and weather across the Midwest, it would be great to just look at how we’re seeing fertilizer trade move out of the Strait of Hormuz. At Kpler, we’re a leading provider of global physical seaborne trade, so we have great access and visibility of how the ships are moving around within the Middle East Gulf and out into the Gulf of Oman. It would be great to share some insights as to what we’re seeing there. Todd Gleason: Okay, great. We will come back to that fertilizer trade, particularly once it is loosened up and if we get those ships beginning to move, how long it might actually take them to transit and what that really means. 02:51 Changes in the monthly USDA WASDE report for June Todd Gleason: Let’s start with the WASDE, Ted. USDA released numbers in June earlier on Thursday. As you said, not many changes, though there were some, I think, that meant a great deal to the corn market in particular. Did those come out of the global side of the WASDE figures as opposed to the domestic United States numbers? Ted Seifried: I think the ones that mattered at the end of the day came from the global numbers, and in particular, the South American production numbers. But I do think there were some interesting changes on the domestic balance sheets, even though ending stocks numbers didn’t really change. You can say corn changed because it changed 3 million bushels based on imports, but in both corn and soybeans, there was some flip-flopping in the demand categories. That is interesting and gives us insight into not only the end of this marketing year, but maybe into the next marketing year. What I’m talking about there is for corn, they lowered ethanol as I think they should have, but maybe they might need to do it even further before the end of the marketing year. But the lower ethanol number was offset by a higher export number, which again, I think was fairly justified, especially at these now lower prices that we have. For soybeans, they increased the crush as I think was justified and lowered exports. So another flip-flop in the domestic balance sheet there and leaving ending stocks unchanged. I think they get missed by a lot of the market followers because they just look at the ending stocks by themselves. When you look into the individual changes, it gives you an idea of what the trend might be between now and the end of the marketing year, and into the new crop marketing year as well. To your point, the numbers that had the biggest impact on the trade today were the South American numbers. The USDA raised the Argentinian corn crop by a significant amount, 2 million metric tons. They went from 59 million metric tons to 61 million metric tons. That is a number that has been echoed by some of the South American reporting agencies, it’s not the highest number that we’ve seen. But 61 has been talked about a lot. It’s good to see that the USDA is finally agreeing with a lot of Argentina’s own analysts or reporting agencies. The surprise was Brazil. They increased Brazil’s corn crop production by 3 million metric tons. The trade was only looking for a very slight increase there, and when you put the two together, that’s an extra 5 million metric tons of corn that’s in the world. Argentina in particular is the concerning one because that crop is now 12 million metric tons higher than it was last year, and Argentina is the one that’s going to compete with us more on the global export stage. While the USDA did not adjust our new crop exports lower yet, I think that’s a bit of a red flag for us to watch for. If we were to see our new crop exports slow down a little bit or not keep the pace that we’ve had during this marketing year, part of that reason or rationale might be because of the extra corn to be exported from Argentina. Todd Gleason: Ellen Dearden, I’d like you to follow up, particularly as you look at the charts and the trade for corn, maybe wheat as well, and think about what those numbers meant to you today and what it means for producers in Illinois, Iowa, Indiana, across the Midwest. Ellen Dearden: Just to double back first on Ted’s comment about USDA lowering the corn use for ethanol and raising the export number on corn, I noticed in the Peoria Pekin market, which is a river market on the Illinois River, we have seen the ethanol basis drop and we’ve seen the river basis increase. The flat price or the basis comparison right in this little area favors export business, and that’s very much out of sync with a typical mid-summer time period. Looking at the charts, we really had an ugly day in the corn market on Thursday, and we’ve had a pretty ugly deal going on for quite a long time. December corn fell well under that $4.62 February insurance price during this break, and we’re now down and took out last late summer/mid-August low on the December corn futures at $4.40. That is a rocky boat. That had been hoped for solid support, never going to go under it again in this calendar year, and we did it rather easily. Funds are still covering long positions in the corn, still covering longs in the wheat, but I think they remain long the bean side of things and haven’t been quite so aggressive this week in covering those long futures. This $4.40 level, now $4.60 area, is going to be a lot of resistance in this new crop corn. On the wheat side, we rolled over from a seasonal standpoint and are heading lower. We did take nearby July Chicago wheat up above $6 very briefly on Wednesday, but we certainly couldn’t hold there, and we’re sitting down almost 15 cents below that. It’s going to be a tough go, I think, on wheat as we get into the soft red winter wheat harvest, even if the hard red winter wheat harvest looks pretty puny. 09:13 Kpler’s Perspective on the Global Wheat Market Todd Gleason: Matt Darragh, from your perspective in Europe, when you see a 50-cent change in the season’s average cash price for wheat in the United States, which is what USDA’s World Agricultural Outlook Board presented today, from $6.50 to $6, what does that tell you about the global marketplace or what does that tell you that you need to know? Matt Darragh: Yeah, it’s a pretty sizable movement for sure. Of course, when we’re looking at the European market, we tend to keep an eye on how MATIF, the French milling wheat contract, is moving as well. Those two contracts haven’t necessarily been moving in perfect correlation recently due to the varied conditions that we’ve seen across France and then also what we’ve seen in the US too. But we have seen that pressure. We saw a lot of selling with the US wheat contracts, and we’re also seeing that sell-off pressure in the French wheat contracts too. That pressure is being seen on the other side of the Atlantic. I think it’s in light of that strong carryover stock that we’re seeing. If I may add a little bit of additional context on what we’ve been looking at at the WASDE report too, is that we are looking at the carryover stock for 2025–2026, which is leading to that pressure on the market. Some of the revisions in the 2025–2026 across those major exporters that we saw in the June WASDE report were a little bit interesting. The two that I’d like to pick up is the revisions to the EU wheat export campaign and the Russian wheat export campaign. For Russia, we saw exports increase from 46 to 48 million tons, and also for the EU, we saw an increase from 0.5 million tons. Obviously, this is both common wheat and durum wheat, so we’re looking at both of those different grades. But we’re almost midway through June now, so we have a relatively good idea as to how those campaigns are wrapping up. It seems interesting that they increased the estimates for either of those export campaigns. Year-to-date, we’ve got Russia wheat at around 43 million tons—that’s July to May. Given current monthly pace, it doesn’t seem too likely to see another 5 million tons into June given current monthly export pace. And for the EU, if we compare our numbers and also looking at what the European Commission numbers are producing as well, I think the European Commission are about 28 million tons for the 2025–2026 wheat export campaign. With the USDA WASDE report at 31 million tons, I do wonder whether the June WASDE report is reflecting somewhat lighter ending stocks for the 2025–2026 marketing year than perhaps we should see later on. Maybe when customs data confirms June export figures for either of those export destinations, maybe we’ll have a little bit of a heavier carryover stock, which will impact the weight of the 2026–2027 supply. That’s one thing we’re noticing. But of course, that pressure that we’re seeing in the US market is spilling over into the EU. Of course, they do have varied key export destinations, so that pressure that we see with regards to the likes of the US export campaign typically sorts of Central, South America, but also filtering across the Pacific into Southeast Asia. That does impact, but it’d be more of an indirect impact that we would see. The EU or Europe as a whole is having its own fierce export competition at the moment. We’ve got seriously high stocks in Ukraine due to logistical challenges, which they will have to carry over into the next marketing year. We’re going to see continued competitiveness across the EU too. If we look back twelve months ago, the competitiveness of US wheat was very fierce, and we’re not seeing that this year for reasons that are obvious, but it’s just a very different market where we are twelve months later in the sense of US competitiveness and also where we are with stocks across Europe too. We’re expecting to see a continuation of export competitiveness across the EU and also the Black Sea. It’s also worth noting just that a perhaps smaller Southern Hemisphere crop will also be a key watch point going forward. I know they’re in the midst of planting across Australia and Argentina, and I don’t want to go down a rabbit hole here with regards to the balance in 2026–2027, but that’s definitely another angle that we’re keeping an eye on on how that could influence the Northern Hemisphere export campaign across those majors, whether we see a little bit more Black Sea grain going to the likes of South Asia and Southeast Asia too. Ted Seifried: Matt, do you think that the US could be more competitive in wheat going forward once we digest the problems that we’re having with our winter wheat crop? Because even though we’re talking about almost a 200 million bushel decrease in ending stocks domestically from one year, the last marketing year that just ended eleven days ago into the next marketing year, it’s still a 40% stocks to usage ratio. We still have a ton of room to see exports increase if we wanted to. Matt Darragh: Yeah, I absolutely think the US will still have a key role to play on the global market for sure. We’ve got spring wheat planting obviously underway in Canada. I think one of the key measures of how the US export campaign will perform is how that Canadian spring crop looks. Obviously, they’re quite competitive across the likes of Central America and South America too. If we were to see that US export campaign be a little bit softer in those markets, then that’s to the benefit of Canada. But also, as we were having initial conversations, Ted, we’re facing El Nino, and I think that can impact that Australian wheat crop. I do wonder, the Australia and the US typically compete in the likes of Southeast Asia and also some of those East Asian markets too. So I wonder whether, if we do see that punishment on yield from the dry conditions across the eastern coastline of Australia, which has been seen before caused by or influenced by the El Nino conditions, whether that does sort support the US export campaign. But where our bar is at the moment, their recent quarterly report did acknowledge the pressure that the El Nino weather event can have on Australian wheat yield and also production and therefore exportable surplus. I think there’s a few moving parts in the sense of how production shapes up in the likes of Canada and Australia, which will be a big influence on how US exports perform at the moment. As it stands at the moment, we don’t see them nearly as competitive as they had been previously. On our balance sheets, we’ve got definitely lesser exports from the US in 2026–2027 as we had seen in 2025–2026. Ted Seifried: Sorry Todd, if you don’t mind a follow-up question to Matt. I mean, to your point, the USDA is somewhat reflecting the El Nino situation for Australia here today, lowering the Australian crop by 2 million metric tons from 30 million down to 28, and that compares to their crop last year which was virtually 36 million metric tons. Do you think that’s enough at 28 million, a full 8 million metric tons lower than their last marketing year, or could that go a lot lower with the El Nino conditions? Matt Darragh: It’s a good question because it’s so difficult to draw—when we go back through the Australian wheat production, you can’t really use five-year averages against yield because it tends to push either one way or the other. With regards to a very low yield, very low production, or it goes the other end of the spectrum and you have a plus 30 million ton crop which becomes very impactful on the export market within East Asia, Southeast Asia, South Asia, and also Sub-Saharan Africa too. We’re in line with where our bar is at the moment. We agree that yield could come close to around 2.5. We ran some quantitative analysis looking at, if you saw an El Nino index of around 1.5, which is sort of that strong El Nino which is being forecast during that September, October, November period when that Australian wheat crop is in that reproductive phase, more influential on yield, we did push and see yield close to sort of 2.5, 2.6. So that’s kind of that key influence there. We acknowledge that the USDA has factored in that ABARIS update in the report, so we think that production estimate is fair at around sort of 28 million tons. We just think that it’s a watch point at the moment, and we do think that we’re not expecting to see the US quite as competitive as they had been previously. Given the sizable supply that we’ve seen in the Black Sea, it won’t be as easy for the US to tap into sort of Southeast Asia, South Asia, due to a strong competitiveness out of Russia and Ukraine. We’re looking at perhaps Russian estimates around 90 million tons if not a little bit higher, assuming that crop of that size is realized, and we do see somewhat softer production out of Australia, it’s likely that it’s not going to be an easy grab for the US to tap into those subcontinents. Ted Seifried: Yeah, that Black Sea production really gets in our way. Massively, yes, unfortunately. Todd Gleason: So Ellen Dearden, taking all of that into perspective and I think the bottom line you can tell me for sure is that there’s just a lot of wheat around the world at the moment, it could change, but there’s a lot of wheat around the world at the moment, and I’m wondering how much pressure you think Ellen that will have on the marketplace at this point, and then we can talk too with you just a bit about the rain we’ve had in our part of the world. Ellen Dearden: Yes, wheat is still working lower, and we may still have another 50 cents downside move in the soft red winter wheat and maybe 40 or 50 in the hard red winter wheat. A lot of it, we’re going to see the basis all over the place for wheat, because there will be areas that the yields are 20 bushels to the acre in Kansas and there’s going to be guys in Northeast Kansas in zero lot territory that have 50 bushel wheat. So it’s going to be all over the place. Todd Gleason: And as it relates to those topics you wanted to discuss, the lack of moisture out west in the Corn Belt and so much rain and wind in our part of the world, do you think that the wind will have that much of an extensive of an issue? Ellen Dearden: Well, it certainly is going to be an issue, probably not so much on wheat in the central part of Illinois because you don’t have that much wheat grown here, but as you go further south where the wheat is really ready to be cut, yes, I think that wind situation will be problematic. I am very interested in how much water we’ve had in the central part of the Midwest, because we went through the month of May with an inchish kind of rainfall for the entire 31 days and we’ve had about four inches of rain this week. So that’s a big have and have not. The people that have missed rain this week are really crying. A lot of those fellows in the southern part of the Dakotas and eastern part of Nebraska are really crying for rain. I don’t know if you’ve noticed, but there’s big wildfires out in the western part of the northwest portion of Nebraska this week around Fort Robinson where just whole towns are evacuated. It’s not a big cropping area, but that little corner does grow corn and beans as well. So I think that’s really problematic. I think it was also interesting, one of my clients in Oklahoma told me that during the month of March they had rain, May they had almost four inches of rain, and now here we are catching up with them. 21:47 Thoughts on the New World Screwworm Todd Gleason: Ellen, I want to stay with you for just a second because I know you follow the cattle market closely. What are your opinions on screwworm and its impacts? Ellen Dearden: I really don’t know Todd. It just seems to me that USDA is trying to smooth a lot of feathers with announcements on what they’re going to do and what they’re not going to do. But this is a parasite that affects open wounds, so any animal that’s been ripped with barbed wire or something along that line is very susceptible should these screwworms make their way further north. We move livestock all over the place, so we need to keep that in mind, it’s not just bugs flying, but it is heavy movement of cattle. Notice this week that Mexico has limited the amount of livestock that can move out of the US south, and you know we’ve put the kibosh on cattle moving out of Mexico into the US for now a year, so I don’t know that there’s a quick answer to any of this. Todd Gleason: Yeah, the fly itself doesn’t move very far very fast, it is about transportation of animals, domestic and wild both. Wild on their own I suppose, but domestic animals can be moved very far, and it would behoove producers in the Midwest not to move animals from Texas northward I would believe. 23:42 Index Funds Playing an Outsized Role Todd Gleason: So let’s continue on with the conversation about the commodity markets, corn, soybeans, and wheat specifically. Ted, when you think about what producers need to know today, did it change very much this week for you at all? Ted Seifried: You know Todd, I’m not really sure a whole lot has actually changed in the last couple of weeks while we’ve had this massive slide. It’s really been money flow driven. It’s been the funds. I’ve been kind of concerned for some time now that the funds had gotten really very long in grains and oilseeds for the wrong reasons. Alternative energies, sure, yes, we have ethanol for corn and we have biodiesel for soybeans. We use a portion of the balance sheet for corn and soybeans for energy, but you can’t put raw corn or raw soybeans in a gas tank and make a car run. There’s a process there, we have to have the infrastructure to do that, and we can’t just flip a switch and double that infrastructure overnight, it takes a lot of time and a lot of investment. I think the funds finally realized that, oh well, these aren’t actual energy contracts, these are agricultural contracts that have an energy component. And so they lost a little of their taste to be long in a big, big way. I mean, they had been, when you combine all the grains and oilseeds together, they had been longer than they ever have been before. So that reason kind of went away. Then it was, “well we’re never going to get any fertilizer.” You look at the price of urea, and it’s below, at the Gulf at least, it’s below the price of where it was before the war started. And then it was, “China’s going to buy 17 billion additional on top of the soybean commitments that they’ve made of US agricultural goods and ag-related products.” But that hasn’t happened. So the funds, I think, have just gotten tired of chasing headlines and using the grain and oilseeds markets to do that, and so you had this mass exodus that has happened here over the last couple weeks that continued into today. The question is, will they get long for the right reason? Ellen talked a lot about weather, and you look at a drought monitor, and there are a whole lot of fancy colors on that drought monitor. One of the most colorful drought monitors we’ve seen. But you look at the area where corn and soybeans are grown, only 27% of the corn area is under any sort of drought conditions and only 28% of the soybean area is under drought conditions, which is why we have crop conditions that are actually all right. They’re a little bit below our five-year average, but they’re all right. With all the rain that’s moving through northern Illinois and southern Wisconsin and Indiana, some of those areas are going to get taken off that drought monitor, I think, for next week. So the question is really, is there a weather reason for the funds to get long or not? And I think the biggest question is, is China going to live up to that commitment, that 17 billion of US ag products aside from the soybean commitments that they already made? Because that would mean a whole lot of corn, a whole lot of sorghum, a whole lot of wheat, a whole lot of a lot of things. If we start to get the feeling that they are doing that, that completely changes the game in these markets, but for the moment it’s just been disappointment for the lack of any sort of indication that they’re doing that. We haven’t seen them really buy anything of note to make us feel like they are going to live up to that commitment. 26:35 WILL China Buy U.S. Soybeans Todd Gleason: Matt Darragh, from your perspective, will China be in the marketplace to purchase US commodities? Matt Darragh: Yeah, it’s interesting to see. We had conversations with clients who were asking us very similar questions, because we saw obviously what happened back end of October last year. China came in, said they would agree to buy soybeans, and there was a bit of a delay, but soon enough we began to see that activity in the market within the next few weeks. What’s interesting is there’s been this kind of, we’ve had a shake of hands supposedly, and we were expecting to see these sales arrive, and it’s been very quiet. In our balance sheets, we are expecting to see some US exports to China, and if we talk about soybeans, we’re not expecting to see that 25 million tons be realized in 2026–2027. We’re closer to half that volume, unfortunately for the US balance sheet. Ted Seifried: Oh my. Matt Darragh: Yeah, it’s just because the supply that we have from South America is just so strong. A consecutive record crop from Brazil, Argentina—I appreciate they’re more on the crushing game, but they still have a good supply that they can use for export of the actual beans themselves too. So we’ve still got Q4 2026, we still got a good amount of supply in Brazil. Although it is looking very different from a political point of view year-on-year for Q4, the supply is still there, and we saw what Brazil was able to achieve in 2025 Q4, and there’s nothing to suggest they can’t do that again if not a little bit stronger given they produced maybe eight million tons more beans. Ted Seifried: Matt, I can’t disagree with you. I mean, the supply is in Brazil, and from a dollars and cents perspective, it makes a lot of sense that they would prefer South American soybeans. But if they’re politically motivated, if they’re trying to win favor with the administration or whatever, then they’re going to do it. But I don’t know, politics change with the wind here, it’s definitely tough to compare for sure. Matt Darragh: One tweet to the next by the way. Yeah, definitely. It is so challenging, and I think that’s what the hesitancy has been. We’ve had meetings before where certain agreements have been made, or supposedly have been made, and then you haven’t seen the activity. There were rumors, once they reached the 12 million ton purchase agreement, there were rumors about getting an additional 8 million tons of Chinese demand for the 2025–2026 marketing year, of soybean demand. And that doesn’t appear to have materialized really. That delay, that hesitancy there, is factored into the market. If you’re trading beans, you’re a little bit more cautious when you’re making those trade executions because sometimes it doesn’t materialize the way that it has supposedly been said. We’ve also got another meeting between the US and China, I believe as it stands at the moment there’s meant to be a meeting in September, and in our opinion, we’re not expecting to see much activity between Chinese sales of US agriculture goods up until then. Ted Seifried: So where is your US domestic balance sheet if you have only half of those 25 million? It gets a bit heavy. Do you care to share what that number might be? Matt Darragh: I’d need to double-check the balance sheets, but it’s looking a bit heavy. The challenge is that we obviously are a little bit more optimistic on crush. We were at 2.650 for 2025–2026, now we’re at 2.77 for 2026–2027. Ted Seifried: That’s 20 million bushels over the USDA. That doesn’t offset the 12.5 million metric tons. Matt Darragh: Yeah, it is still leaving a bit of a hole. This isn’t to say our balance sheets are fixed in stone; we won’t leave them for 12 months and then adjust them accordingly. It’s just under current fundamentals and at current prices, if we look at FOB offers coming out of Brazil, and more so for the near term as opposed to looking to new crop US soybeans. Ted Seifried: Well, and you would expect that if we only do 12 and a half million metric tons to China, that the rest of the world business would pick up some of that. Matt Darragh: Yeah, that’s the angle there. There is a little bit of inelastic demand, some crushers like Egypt might want to pick up US beans due to quality, so there is a little bit of demand there that the US can rely upon. But it goes without saying, it’ll be a huge miss if they can’t pick it up. The challenge in the US bean market at the moment is that it’s somewhat pricing in anticipation of Chinese demand. Ted Seifried: The USDA obviously has that factored into their balance sheet, right? They have the 25 million metric tons. Todd Gleason: Well, USDA goes by policy in place, and they are instructed that that is the policy in place, so it has to be part of their balance sheet right now. Ted Seifried: The 25 million metric tons, nothing else, correct, is written down as a policy anywhere. I’m not even sure the 25 is actually—we never signed that deal, did we? Matt Darragh: The pricing is very different as well. If we look at how the US was pricing to Brazil back in the back end of October, US beans had a huge discount to Brazil because they were trying to tap into every other market other than China to at least come out with a balance sheet that’s a little bit tighter than it could have been without Chinese demand. So when China came in and said, “yeah we’re going to buy some US soybeans,” you had US beans pricing very competitively on the export market, albeit with a little bit of a different tariff to Brazilian or South American beans. But when they’ve come in and made an agreement, now you’ve got US beans at a premium to Brazil. US beans aren’t quite as attractive on the global FOB market as they had been back in October. So it goes to your point, Ted, we do think there is a political motivation there. As much as China has supposedly committed to these purchases, the US will also have some things to uphold on their end too, so if they don’t really uphold their end of the deal, China doesn’t necessarily need to get these US beans. The US has to play ball as well. Ted Seifried: Todd, I’m really sorry to be hijacking the conversation, but Matt, I think we have some sales on the books to China in the form of unknown destinations that happened in the last two weeks for new crop. Because the 132,000 metric tons or derivations of that, we had a 264,000 metric ton on June 8th, those are very China-specific numbers generally. So I think they are buying, but to your point of dollars and cents versus political. If it were political, I think they would be outwardly stating they’d want it known that it was China making these purchases. If they’re doing it for concerns about El Nino and the following crop and so on and so forth, they’re going to do it under the wraps of unknown destinations. I would like to believe that 25 million metric tons is going to happen, I’d like to believe 17 billion in US agricultural and ag-related products is going to happen. But I don’t know if we can take that for proof anymore, and that might be part of the reason why the funds have been running for the doors here the last couple weeks. Todd Gleason: Ellen Dearden, you have been listening to this conversation, I know you have some thoughts on it. What are you thinking at this point? Ellen Dearden: My head is exploding. Matt’s lucky he’s across the pond, he can’t have everybody chasing him down. Matt Darragh: This is true. Ellen Dearden: We need to keep in mind that there’s a huge pool of all these grains and oilseeds out there, and buyers just go to whoever’s got the best deal at the time that they need them for the slot that they want. To Matt’s comment about Egypt liking US beans because of the quality, I think the ace in the hole for the US in the export market is whenever high-quality beans are needed, they may come to the US. But otherwise, they’ll look for whoever’s got the best deal, and certainly Argentina and Brazil have the best deals right now on corn, and probably on beans as well. Ted Seifried: South America, Brazil in particular, wins on quality. American soybeans win on storability. It kind of depends on what you’re using and what facility you’re using which one is preferred, but if you’re talking about something to go into storage, for China in particular, that’s the American soybean. Something to be crushed immediately, your protein content and oil content, Brazil usually has the edge on us there. Ellen Dearden: Which is why China has been buying so actively out of Brazil, because crushers need the beans for immediate crush or for short-term storage. And now that China has their reserves full again of beans, there’s not a big reason to come to the US unless it’s political. 36:50 Fertilizer Laden Ships Stuck in the Persian Gulf Todd Gleason: Matt, speaking of political, we wanted to talk about fertilizer. How many ships are laden with fertilizer and stuck in the Persian Gulf? Matt Darragh: It’s been on the downslope. According to our terminal and current live data, we’ve got around 37 vessels which are laden with fertilizer products. That could be urea, but of course it could be sulfur, a feedstock of phosphorus fertilizer. All in all, 37 vessels, we’re looking at a deadweight tonnage of around 2 million tons. We’ve got a lot bottled up in the Middle East Gulf at the moment. It peaked in May. Since the conflict broke out on the 28th of February, we had a quite steep increase in the number of vessels, it peaked at around 50 vessels there. And then since mid-May we’ve gone down, so we’re around the levels that we saw mid-March. Still historically high, if we look at where we would be this time last year or the last five years, we would usually only have five to ten vessels laden with fertilizer. Typically these are because they’ve just loaded and they’re about to leave the strait. Whereas now we’ve got 37 that are sat there, just off the western coast of the UAE, ready to go as soon as they can get the all clear. Todd Gleason: Am I to understand 37 are laden and setting, 10 exited? Matt Darragh: 10 have exited, yes. So they’re still 37 in the Middle East Gulf at the moment. Before we got into June, so by the end of May, we had 47 vessels. So we’ve had 10 that have since exited. Todd Gleason: Continuing on with the logistics, and I think you and I had this conversation before as well. There is a point at which, even if the ship moves, by the time it gets to the destination, it’ll be too late for the crop year. I’m wondering, for Brazil, for India, for the places that these might be headed, when do those dates kind of come and go? Matt Darragh: There would be a lot to unpack in that question. I think the initial shock here is that for those major fertilizer importers, we did see a good amount of coverage ahead of the higher prices that we’ve seen. For us at the moment, we’re expecting almost a lagged effect. If fertilizer prices stay as high as they are, we might not see as strong of an impact on production in the 2026–2027 marketing year, but it’d be more the 2027–2028 marketing year where we could see even stronger impacts. If we can’t see this release of fertilizer-laden vessels within the Middle East Gulf, and we continue to see other major fertilizer exporters like Russia, like China, reduce their own exports of fertilizer products due to global tightness, we would expect to see a stronger impact on the upcoming marketing year, but the one after that, just due to the supply constraints at the moment. 43:05 Final Thoughts from the Commodity Week Panelists Todd Gleason: Let’s turn our attention to some final words from each of you now. Ellen Dearden from Ag Review in Morton, Illinois, what are your final words for the day? Ellen Dearden: Just keep watching the money flow, because that’s really what’s been driving this market. The commodities market is all about being an investment for something that’s not stocks and it’s not bonds, so keep that in mind that when money comes into this market, it moves. Todd Gleason: Ted Seifried from Zaner Ag Hedge, your final thoughts for the day? Ted Seifried: Ellen hit it on the head, it is money flow right now. As I had mentioned earlier, I think the funds had gotten long for the wrong reasons. The question now is going to be, will the funds get long for the right reasons, whether it be weather, or China finally starts to step in and buy that 17 billion in US ag and ag-related products. Todd Gleason: And Matt Darragh out of Birmingham in Britain, your final words? Matt Darragh: I would echo the same thoughts as Ellen and Ted. I think for us, we’re keeping quite a close eye on those US export sales, be it flash sales or weekly export sales. If we do see any sign of labeled Chinese purchases of US agricultural commodities, that could get things turning pretty fast. announce: Commodity Week, of course, is a production of Illinois Public Media. It is public radio for the farming world. You may listen to the whole of the program anytime you’d like on our website at willag.org, or search Commodity Week out by name in your favorite podcast applications. Our thanks go to our panelists today, including Matt Darragh of Kpler, Ellen Dearden from Ag Review, and Ted Seifried of Zaner Ag Hedge. I’m University of Illinois Extension’s Todd Gleason.