CommStock Reports

It will be another Monday where active planting progress over the weekend is weighed against a wet forecast for the rest of the week. It should ultimately lean bullish for the grains that the latest trader positions report showed there still being a considerable amount of short positions that could still be covered by the speculators. In the Headlines Corn futures finished lower last week with the July contract down 17 1/4 cents. July beans managed to hold onto gains of 9 cents for the week. July Chicago wheat futures dropped 12 1/4 cents last week and KC July was lower by 11 1/2. June live cattle finished last week up $4.90 while May feeders were up $7.92. June lean hogs were $1.40. Wheat futures faced pressure on Friday following the finish of the Kansas wheat tour, which led to the state's yield being predicted at 46.5 bushel per acre versus USDA at 38. The yield estimate is harder to peg than usual this year because of wider variability in expectations for harvested acreage. Tensions are on the rise again with China after President Xi Jinping welcomed Vladimir Putin to Beijing last week for a meeting that produced agreements on economic cooperation. An additional strain on relations with China was initiated earlier by President Biden raising tariffs on electric vehicles, solar cells, computer chips, and battery components. In retaliation for the tariff action, Chinese officials on Sunday announced that they would investigate certain chemical imports from the U.S. for violating anti-dumping laws. The Dow Jones ...

Market participants were eagerly awaiting the next trader positions report due out after the closing bell today. Hedge funds are now expected to be nearly neutral in their holdings after having held record net-short positions as recently as February. Last week's commitments of traders report showed the biggest round of net-buying in corn since 2019 while it was the largest one-week swing ever for soybeans.   Prices were rallying while the speculators were rushing to cover their bearish bets; July corn futures gained 20 cents over the last position reporting period and July beans jumped 83 cents. The move for corn may have been relatively muted because more of the short-covering by speculators was matched against fresh selling by farmers. Stronger prices encouraged catch up selling of old-crop corn and triggered first sales of new-crop so that the commercial net-short position grew to its largest level since just before last harvest. Farmers did not have as much of the last soybean crop to let go of and there is currently less incentive to price the fall crop since November futures are trading at a discount to the nearby contracts.   Direction for the futures market now depends on whether money managers continue buying grains so that significant net-long positions are established. Even with a large wave of short-covering already accomplished, fresh buying from here could lead to accelerated price strength if funds are buying at a faster rate than farmers want to sell. With each round of old-crop sales, there will be less left ...

NEW WHEAT RECCO DAY 2: On prior advice all should be sold out of old crop and 15% hedged on new crop. Yesterday we advised hedging another 20% to take you to 35% hedged. We advised using the September contracts at your appropriate exchanges as these are at premiums to the July contracts and won't require any need to roll if July delivery approaches and we want to stay hedged. On the Grains When spring began early starting in February this year and fieldwork progressed in March, one would have thought that we would not be fighting to get crops in as we are yet in mid-May. We have gone from drought last fall to waterlogged this spring. We have gotten half of our crop here planted in April and are still waiting on the opportunity to plant the second half. We hear of isolated instances where farmers have planted nothing yet. Random planting progress is being made wherever conditions allow. Assuming that we get the second half of our crops planted soon, we will essentially have two very different crops given the time lapse between them. Pollination will get spread out during the summer. We have not had good drying days in between rains. Planting conditions have actually deteriorated from April into May. What this means for the crop is too soon to entirely say but it no longer feels like a positive start. We had intended to get soybeans in early and as that has not happened, it won’t. There is ...

My wife Jane and I just returned from our second time attending the annual Westminster Dog Show in New York. The Westminster, held annually since 1877, is the second oldest sporting event behind the Kentucky Derby in the US. The first trip was to watch some acquaintances of ours show. This time my wife wanted to see the Masters Agility Competition and I wanted to see the finals for the King Charles Spaniel breed which is the breed of our dog that we have named Lucy. She is our second Lucy King Charles. We love Lucy and she loves everyone. It was great going to the show covered by the Fox Sports network.   "Nimble" won the Final Master Agility Competition where 50 dogs competed in the finals. They are divided into 5 groups by height. "Nimble" was an 'American Dog' breed which is a mixed mutt of American Breeds accepted by the Westminster show for the agility competition. One mutt against 49 purebreds and the mutt won. It moved like greased lightning having the obstacle course imprinted in its brain winning by such a margin there was no close second. Border Collie, Australian Shephard and Papillon breeds performed well in this competition. "Nimble" is a Border Collie/Papillon cross.   You have until July 12th if we want to enter your dog into the American Farm Bureau's Dog of the Year contest. Lucy is not a farm dog though. When I take her to the farm if I let her run free, I do ...

On the Grains Beans are soft but corn and wheat are firm in overnight trade. Wheat is bouncing back some after yesterday's negative technical action. The weather outlook hasn't changed a lot for planting progress. There's a break at hand putting planters back into the fields in most of the Corn Belt but rains return Sunday that are likely to put the eastern Corn Belt even further behind when we see the next progress report after Monday's close. Weekly ethanol production was above expectations and a 5 week high, keeping us on track to meet or beat USDA's current corn for ethanol forecast.   The much lower than expected April crush data weighed on the soybean complex yesterday, ending a 7 month string of taking out prior records. While it cooled ideas that USDA's current crush forecast might be too low, there's enough lead built up that it's not seriously threatened.  

South American weather appears to be a repeat of last week.  While flooding in RGDS has not gotten worse, it has not gotten a whole lot better either.  Heavy rainfall continues to blanket most of the state with some areas to receive an additional 8" in the ten-day forecast.  That is on top of the estimated 25+ inches received in some areas since April 1st.   Growers are still trying to determine the damage but will not be fully known for some time yet.  We do know it has affected most major ag industries from dairy to edible beans to rice…but none more so than soybeans.   EMATER gave one estimate that of the areas remaining to be harvested, 22% will have significant damage varying anywhere from 20% loss to 100% loss.  This amounts to as much as 1.5 MMT loss.  Fields have been left exposed to moisture damage far too long and will no longer be acceptable to some elevators even with quality discounts.   In other words, the USDA crop estimate reduction last Friday of 1 MMT, didn't really make any other concessions other than making partial accommodations for the flooding happening in the South.   CONAB's May estimates released yesterday saw a modest increase for their soybean production pegged at 147.6 MMT up from 146.5 MMT last month.  While CONAB reduced yield estimates by 0.1 bpa, they found a whole lot of acres.  They added 1.23 million acres from last month, taking total production area to 113 million.  Acreage growth was spread fairly evenly ...

On the Grains Markets are firm in overnight trade and that includes wheat despite much-improved yields on Day 1 of the Kansas wheat tour discussed below. Even beans are bouncing back despite pressure yesterday from two factors: 1) No higher levies on used cooking oil (UCO) from China to claim biofuels credit despite charges they're spiking it with vegetable oils and 2) a surprise increase in CONAB's Brazilian soy crop due to a surprise boost in their acreage estimate.

Last year I shared some recommended reading with subscribers. The response was positive. One subscriber told me that he did not like to read books but took the advice to buy "With the Old Breed" and said that his wife read it to him. Sounds like a candidate for the audio version. He agreed that it was the most accurate word-smithed description of combat that he had ever been exposed to and thanked me for the heads up. If you like this kind of book, I would suggest "Ghosts of Honolulu" by Mark Harmon. Yeah, that Mark Harmon. The subject is a true story about a Japanese Spy, Japanese American spy hunter and an untold story of Pearl Harbor. I think myself to be a pretty good student of history but what you learn is that history is too immense to know much of it. This has added an interesting saga.   First off, I read non-fiction. Have you ever been reading a book and the author seems to be getting it right…but then the subject matter changes to something that you specifically know about, may even be an expert on, and the author doesn't know what he is talking about. That makes you wonder if the author was wrong about the rest too. I read the book "White Rural Rage" and was unimpressed with the authors, Tom Schaller and Paul Waldman, depiction of our Ag industry. They seemed to think that the seed corn signs posted in fence lines denote owners ...

On the Grains Grain prices are mixed in overnight trade. Russian wheat suffered another round of freezing temperatures over the weekend and quality issues are a growing worry in Europe. But today's early trade will mostly be factoring in the planting progress reports and latest condition ratings for wheat. The KS wheat tour gets underway today and reports from that will be closely watched all week.   After the close, we got the planting progress report and corn came in at 49%. That was about what was expected but now 5 points behind normal and 11 points slower than last year that was at 60% by now. The eastern states are most responsible for the slippage from normal. Missouri leads the Corn Belt at 72% while Indiana leads the laggard states at only 20% planted.

I am starting to feel like I might have gotten duped. Long time subscribers might recall how several years ago I signed up for carbon programs that would pay me for transitioning my crop production techniques. Technically, I didn't change anything I wasn't already planning on making the change. I am shifting to a more minimum tillage system where I rotate each year between no-till beans and strip-till corn versus conventional tillage. The timing was right as carbon programs were chasing down every farmer trying to get them to implement minimum tillage along with cover crops and other "carbon-friendly" practices. I didn't see any downside in my case. They were, after all, going to pay me for something I was already planning on doing.   After three years, I have the financial results of all my hard work. Forty Bucks! That is right. Now I do not mean $40 acre…I mean $40 in total for my 230 acres. Despite all the promises of how all the carbon credits I was going to be creating that would eventually lead me to making a 5-figure side hustle down the road, my first year I got $40 dollars. I wasn't exactly counting on this money, but I had taken the time to fill out all of my production practices meticulously through Indigo's carbon program. If I add up all the hours I worked giving them my data for free, I am pretty sure I was working far below minimum wage on behalf of Indigo and ...

On the Grains Grains are weaker in overnight trade thus far, giving back some of Friday's strong gains but still looking positive from a chart perspective. Trader reaction to Friday's WASDE netted solid gains for corn and wheat but only modest gains for beans on the coattails. That stems mostly from USDA once again coming in with only a "token" reduction of 1 million tonnes for Brazil's soybean crop to 154 MMT against an average trade estimate of 152.5 and private estimates down there still closer to 147. Tomorrow we'll get the latest CONAB report (their USDA equivalent) and, if anything, that's expected to be even lower due to disastrous flooding in southern Brazil.  

Happy Mother's Day. A mostly steady open is expected for the grains as more active planting progress over the weekend is weighed against technical bullishness following from a strong close on Friday. In the Headlines Corn futures finished higher for a third week in a row with the July contract up 9 1/2 cents over the last five sessions. July beans managed to hold onto gains of 4 cents for the week. July Chicago wheat futures rallied 41 cents last week and KC July was up 23. June live cattle finished last week lower by 52 cents while May feeders dropped $4.50. June lean hogs were down 57 cents. The largest solar storm in more than 20 years occurred over the weekend. The geomagnetic flaring provided a widespread display of the Northern Lights while it also disrupted satellites, some of which farmers were trying to rely on for GPS guidance while planting. The government's Space Weather Prediction Center noted that "the source has mostly been a large, complex sunspot cluster that is 17 times the diameter of the Earth." The initial new-crop estimates were reported on Friday and now the market will reflect changes in opinions about acreage, yields, and demand. The planted acreage debate draws in the influence of weather relative to the March survey findings that predicted 90 million acres of corn and 86.5 million acres of soybeans. Traders will assess where we are at on yield potential relative to the "weather-adjusted trend" estimates of 181 bushels per acre ...

The crop report released today was widely anticipated for its inclusion of initial U.S. new-crop estimates as well as for its updated look at the South American production numbers. The outcome was decidedly more bullish for corn and wheat than it was for soybeans. For corn, the 2025 U.S. ending stocks estimate came in well below the average trade guess while the production estimates for Brazil also fell further than most had anticipated. It was the opposite for soybeans, with U.S. carryout rising by more than expected while numbers for South America were not lowered by as much as was thought to be necessary.   There were not many major surprises to come out of the U.S. supply and demand estimates. Sticking with convention, the USDA started by plugging in the trend yield estimates already published in February along with the acreage estimates from the March Prospective Plantings survey. Relative to the February Outlook Forum Estimates, the USDA turned a bit more optimistic about both corn exports and ethanol usage. What helped pad the soybean ending stocks for next year was that the government analysts were down 50 million bushels of soybean exports compared to what they previously predicted, which more than offset a soybean crush estimate that was 25 million bushels better than it was in February.   It should not have come as a surprise that the USDA stayed stubborn on moving the Brazilian production estimates lower. The Brazilian bean crop was left unchanged for last year and cut by only 1 ...

On the Grains Grains are all higher in overnight trade with wheat leading the gains. That freeze on already drought stressed wheat in Russia has caused three of its key wheat districts to declare a "state of emergency" and that's led to more short covering by funds. In supportive news for corn, the Rosario Grain exchange just reduced its estimate for Argentina's crop another 2 million tonnes, to 47.5 million versus USDA's April WASDE at 55 MMT. The trade may also already be responding to yesterday's confirmation from NOAA that we'll likely see an earlier shift to La Nina conditions known for bringing hotter and drier summers to the central part of the country.

2024 started out the year with high expectations for interest rate cuts with some forecasting as many as 7 rate cuts this calendar year. There was absolutely no precedent for such a thing and they were goofy if thinking that the inflation dragon had been slain. More likely is 1 or 2 rate cuts…only 1 pre-election. The Fed tightening did trim the rate of inflation significantly but it remains near 3.5% and appears to linger stubbornly above the Fed target of 2%. While the Fed has engaged in deflationary monetary policy, fiscal policy the world over remains inflationary to counter it. Western economies are ramping up spending to build arsenals that they once thought was unnecessary before Putin's aggression. Supply chains are not going back to pre-covid structures as the US in particular re-shores a significant portion of its manufacturing capacity that it previously off-shored during globalization. The Biden administration has also engaged in infrastructure spending that feeds new demand for raw materials and labor into the economy. With all of this happening, getting back down to 2% inflation anytime soon is unlikely without a significant slowdown/hard landing. Fed patience will be required. As both consumers and businesses are likely to "pull back" into the election season they are likely to get the slowdown in the economy anticipated for cover to lower rates.   The election outcome will likely have a significant impact on inflation. If Trump wins… his tariff, immigration and tax policies are all inflationary. Placing tariffs on all US ...

On the Grains Grains are higher in overnight trading with wheat up double digits after two days of losses. Weather forecasts are becoming scrambled as to impact on planting pace through the weekend and into next week. Some parts of the Midwest are expected to dry out enough for planting to resume, while intermittent showers will return to others just about the time planters might have resumed. Most importantly, this week and next week are the two where planting typically makes its biggest gains and Monday's planting progress report is likely to show corn planting has fallen even further behind normal, which should prove supportive.

Farmers have been anxiously awaiting some sort of market rally of substance since last harvest, only to be disappointed time and time again.  It is typical for those who are optimistic to want to point to the next seasonal, but so far none seem to be working.  Harvest lows, January contract expiration, March acreage reports have done nothing to persuade managed money from exiting their short positions.    We may have to temper our expectations this season as to what a rally is, but we continue to remain stubbornly optimistic waiting for any type of rally that would produce a profit.  My local bid is currently offering $4.50 cash corn for new crop.  Even with a decent yield, I am breaking even.  While I might not have the lowest cost of production, I doubt it is that different for most others.  Some may even be in a worse situation.   I have a hard time wanting to lock in a break-even price.  But I also have to keep in mind that the market does not care what my break-even price is.  We have identified profitable targets to begin making new crop corn sales but we need the corn market to break out of its sideways lull.  It has been trading in a twenty cent range for over 2 months now.  Spring or summer rallies are not the most reliable but they have been known to provide enough of a boost that if they were to happen again, we need to be ready to ...

On the Grains Grains were narrowly mixed but leaning weak as of 6 am in overnight trade. The trade is absorbing trade estimates now out for all the key metrics in Friday's May WASDE report. It will feature both tweaks to the 2023-24 balance sheets and the first "official" USDA projections for the 2024-25 season. So far, all the trade has had to go on were the preliminary "guesstimates" from the USDA Outlook Forum in February, before USDA even had the March Prospective Plantings to go on. Looking at the wide ranges of estimates, there are extremes either bulls or bears can focus on that set up potential for significant market reaction if USDA numbers come out near either end of those ranges!

It ain't over 'til it's over.  The market had already begun moving on from Brazil's soybean harvest as it was nearly 95% complete.  Rio Grande do Sul, the second largest state for soybean production, was the last major area to wrap up harvest.  RGDS was about to have one of their best seasons in a long time.  With roughly 25% of the state remaining to be harvested, massive rains have begun causing apocalyptic type damage to cities and farms, with a reported death toll at 80 people and rising.  We see images of what appears to be lakes where an unharvested soybean field sat ready to be cut just days earlier.  Grain storage facilities are also submerged underwater.  As many as ten meatpacking plants have suspended operations.  RGDS historically averages as much as 6 inches in the April/early May time frame.  So far, they have received over 20 inches in that same amount of time with as much as 10 inches or more expected in some areas into next week.  It is reportedly the worst flooding in 85 years!   Yield damage is prevalent across the entire state but weighing slightly more to the western side where it shares a border with Argentina.  It is important to remember that RGDS experienced extreme drought the last 3 seasons due to La Nińa.  RGDS was finally going to make a comeback with an expected production of 21.8 MMT.  There is as much as 6.0 MMT sitting in the field yet waiting for conditions to ...

On the Grains Overnight grains are soft after yesterday's strong gains as traders take stock of the drivers behind it. Top on the list was a wave of fund short covering as ongoing flood problems in southern Brazil shrink crop estimates even further and wet weather slows planting here. It's the strongest signal yet that funds may finally be abandoning a long-standing bearish bias and it could feed on itself if positive chart action unfolds further.   Yesterday started out with so-so weekly export inspections. Corn loadings were in the upper end of the expected range, wheat loadings mid-range and soybeans near the low end. However, it didn't matter when new short covering by funds kicked in for all the grains, beans, oil and meal. SBM was smoking hot on word that those southern Brazilian floods have not only stalled harvest but also idled some major crushing plants indefinitely. Wheat is getting support from ongoing issues threatening quality in EU wheat and production in both Russia and eastern Ukraine. With Australia's 2023/24 crop and export prospects down sharply as well, fundamentals are slowly improving.

Given the record short winter and unprecedented amount of crop preparation that had been done this spring, I was expecting that this year may have been the first when both my corn and soybeans entirely got planted here in April. About half of the family's corn got in and no soybeans. 39% of the corn and 25% of soybeans were planted in April in Iowa. April was cold and wet with only a few days where planters could run. Northern tier states…the Dakotas, Minnesota, Wisconsin and Michigan were all single digits for planting progress in April. The problem is that not much may be going to get planted in the first half of May either and the conditions of what gets planted may be poor as they are mudded in. We are now wet. Our soil profile is full and rain is left standing to drain by tiles, creeks and rivers. The drought has been drowned here in NW IA. Probably shouldn't complain about standing water here when they got up to two feet in TX, OK and AR which caused real flooding. Again…Dr. Elwynn Taylor says that Iowa moisture in May is determined by precip conditions in AR. Air coming north from the Gulf picks up more moisture when they are wet down there. After the current system spins through the corn-belt early this week, there should be a better possibility of another planting window opening at least for portions of the corn-belt.   The first two weeks of May are ...

On the Grains Grains are weak in overnight trade wheat down double digits on some welcome rain in the parched western half of southern Plains states. There is little doubt this afternoon's crop progress report will show the lead in planting progress for corn and beans with "normal" is gone if not a little behind. But models are conflicted with one suggesting a drier pattern developing by midweek and into the following week that will allow planting to pick up again while another sees the wet pattern less widespread but still problematic from Iowa eastward well into mid-month.   What hasn't changed over the weekend is the increasingly grim flooding in southern Brazil that's caught half their crop (and `10% of Brazil's total crop) unharvested and much of it in standing water. We've got the May WASDE due Friday. USDA's Brazilian crop estimates for both corn and beans have already been regarded as far too high for months and now another 2-5 million tonnes may be lost altogether according to Brazilian sources.  

Planting delays are likely to be extended early in the week before a forecast that looks more conducive to progress, which could help lean on grain prices at the open. In the Headlines July corn futures rallied 10 1/4 cents last week while July soybeans jumped 37 3/4. The most active Chicago wheat contract managed to hold a gain of 1/4-cent but July KC wheat gave back 4 cents. June live cattle finished lower by $1.90 but settled within the top half of the week's range. May feeders were down $5.40. May hogs fell $1.85. The crude oil market continues to be closely watched for its influence on the broader commodities space. WTI crude futures dropped $5.75 last week to help weigh on soybean oil prices. U.S. production remains high and there had been a slight easing of tensions related to conflict in the Middle East. Domestic gasoline demand should start to ramp up considerably as Memorial Day approaches to kick off summer vacation season. Israel's war on terrorism could be poised to escalate this week as it looks like Gaza ceasefire talks in Egypt are not going to wrap up with any agreement this weekend. Weather in South America was a more supportive influence late last week as severe flooding in southern Brazil continued while the advancing harvest in Argentina showed the damaging impact of a corn stunt disease that was spread around by leafhopper insects. The flooding in Brazil occurred where there were still soybeans left to be harvested, so there are ...

For corn, RJO technician Dave Toth identifies the current price strength as being still only a "bear market correction" that would mark out a C-Wave on the Elliott count, but he says the alternative is for this rally to be a "dramatic 3rd-Wave of a major reversal higher." The possibility of broader trend change needs to see July corn futures sustain a move above $4.75, which would complete a 50-percent retracement of the slide from the October high. July soybeans have to first clear their March high at $12.40 before they can reach the 50-percent retracement level at $12.81.   On the way higher, old-crop corn and soybean futures could possibly face pushback from heavier farmer selling. At $4.75, many farmers across the country are getting close to or above $4.50 cash values while a rally toward the $12.81 futures target would likely bring the average cash soybean bid near $12. It is also notable that a rally for July corn to $4.75 should be expected to poke the new-crop December contract into the $4.90's. More farmers are expected to make their first sales or hedges for the new-crop if the December contract gets close to $5, which is not only an important psychological level, but also a key technical point because of its location just under the down gap from the first day of the year that extends up to $5.03.   If the corn and soybean futures fail to stall out at their nearest major technical targets and if the board rallies ...

On the Grains Grains are up again in overnight trade. Concern that a prolonged bout of soggy weather for much of the Midwest will greatly slow planting progress remains the driving force. Yesterday's weekly export sales were at least mid-range vs. expectations for beans but at the low end for corn and wheat and didn't even make the low end for SBM. Yesterday's announcement of a looming rail strike in Canada could halt their grain shipping if prolonged and potentially shift more business to the U.S. (More on other Ag implications below.)   Even though Brazil is down to its last 10% of the crop to harvest, rains have been so severe in the southern tip that 2-5 million tonnes of beans and corn might actually be lost and their crop estimates were already well below USDA's. We've set a target for selling more old-crop and the first 10% of new crop beans based on the July contract. It shows first resistance at 1225.