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06/13/24 Afternoon CommStock Report – How GOP Senate Farm Bill Framework Differs From Dem’s Version

By The Commstock Report
We've already detailed the GOP House version in prior issues. This week we finally saw the GOP Senate version and how it compares to the Senate Democrats' version. The GOP version proposes a $1.51 trillion total cost over the 5-year life of the bill that includes a 15% average increase in crop reference prices that contrasts sharply with Senate Democrats' plan, which includes only a 5% increase in those prices. These reference prices are crucial for determining USDA subsidy payouts under programs like price loss coverage, and Ranking Member John Boozman (R-AR) expressed hope for bipartisan negotiations to pass the bill.   Another feature is that it increases crop insurance levels by boosting the government subsidy of "Supplemental Coverage" option to 80% from current 65% and the coverage level to 90% for more than 55 specialty crops and row crops. That could be a challenge, since the Dems control the Senate and will be the ones introducing the farm bill after these negotiations.   Here are some other features in the Senate GOP version: As in the GOP House version, the Senate version wants to tie food-aid benefits more closely to inflation and redirect climate change funds to general conservation.…
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06/12/24 Afternoon CommStock Report – June WASDE Kicks Can Down the Road toward Next Reports

By The Commstock Report
It was a dud of a crop report that had the USDA analysts looking lazy because of there being so few changes from last month. The U.S. corn balance sheet ended up not changing at all – estimates for supply, demand, and the prices for both old-crop and new-crop were all left untouched. A minor 10 million bushel cut to the old-crop crush estimate was the only change for the U.S. soybean crop. The June report seemed to be another punt to next month, when the domestic supply and demand estimates will be shaped by the stocks and acreage reports coming up on June 28th.   Waiting around for the stocks and acreage reports would not provide any excuse for the USDA continuing to seem stubborn in their views on crop sizes in South America. Predictions were for corn and soybean crops to be taken lower for both Brazil and Argentina. The report ended up only producing a 1 million metric ton cut for Brazilian bean output. The most significant adjustments to the global production numbers were for wheat. As was expected to be necessary coming into the report, wheat production estimates were lowered for Russia, Ukraine, and the European…
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06/11/24 Afternoon CommStock Report- How Much Higher Can the Cattle Really Move?

By The Commstock Report
Plenty has been made of the US cattle herd liquidation over the past couple of years, and most would be correct in assuming that fundamentals continue to lean bullish overall. The bigger question of late has been, are prices going to continue the upward trajectory we have seen the past two years? While no one truly knows the answer to that question, the limited supply and continued robust demand would initially make a person think so. However, there are always potential black swan events, particularly in the cattle market, that could arise from anywhere and negate that theology. Right now there appears to be too many feeders willing to "bet on the come", made evident by the extraordinarily high feeder cattle prices being paid.   Fed cattle cash trade has largely held within about a $10 range since making initial futures market highs last fall. Without a significant move in this cash market, there is little reason to believe that the futures can move very far either. Many have also pointed to boxed beef as the primary driver of late as select cuts have been able to hold above the $300 mark for the first time ever. While this is…
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06/10/24 Afternoon CommStock Report – Crop Condition Ratings Don’t Mean Much At This Point

By The Commstock Report
I had breakfast recently at our local café in Royal, IA, where a gentleman in his 80's described how our county in Northwest Iowa was pretty much swamp land back when it was settled.  It wasn't until they figured out how to drain it that the farmland was found to be productive.  There are limits to every drainage system and this year we are learning what those are.  There were at most, two days in the month of May that farmers could get in the field around here.  And even then, they were not ideal with many producers forced to muddy the crop in.  Planting capacity in general has been increasing over the years.  However, as fast as we can plant, two days is not enough.   On a drive through Western Iowa, it was not difficult to find fields that were just recently planted or had not yet been planted.  We know of at least half a dozen farmers that will take prevent plant in our immediate area which is almost unheard of.  Now it might not add up to much as a whole, but much of the Western Iowa I saw is well behind schedule.  Further more, fields…
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06/07/24 Afternoon CommStock Report -June Crop Report Should be Bullish

By The Commstock Report
Next week's crop report should reel in lofty expectations about new-crop production potential while it should also feature upward revisions for old-crop corn demand, as well as cuts for South American soybean production, and cuts for wheat supply in Europe and around the Black Sea.   The biggest wildcard on the June crop report is the U.S. corn yield estimate. While very rare for the USDA to tweak the "weather-adjusted trend" yield in June, it is not without historical precedence. It was because of delayed plantings that the June corn yield estimate was lowered in 2019, in that case by a whopping 10 bushels per acre. The USDA had previously included text in the June crop report explaining how its trend yield estimate was based on the assumption of "normal mid-May planting progress." Planting was delayed in mid-May this year, but not to the extent of 2019. Corn plantings were only 49 percent complete by May 19, 2019, while they were 70 percent planted by the same date this year. Still, plantings were slower than average for most of the month and the trend yield model should produce an adjustment lower to reflect the likely yield penalties for what was…
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06/06/24 Afternoon CommStock Report – Nursing Home Affordability Crisis

By The Commstock Report
I think it was Benjamin Franklin that said "Nothing is certain in life except death and taxes."  I could write and have written many reports on tax implications for farmers, but I don't know that I have written much on the topic of death.  And this isn't really about death, but rather on the potential need for long term care in a nursing home which more and more becomes less a place to rehabilitate and more and more, a place for acute care needs and a final home before we pass away.   My wife is on the board of an area senior living complex, so she occasionally brings me up to speed on costs, regulations and such that are impacting the business of providing good long term care for those in need when they are at their most vulnerable.   President Biden is proposing a plan to set minimum staffing levels for nursing homes. Under the proposal, nursing homes must provide 2.45 hours (2 hours and 27 minutes) per resident day of care from nurse aides, exceeding standards in all states. This means a nursing home would need roughly ten nurse aides per each 8-hour shift in a facility with 100…
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06/05/24 When (not if) China Stops Buying US Soybeans

By The Commstock Report
Brazil's second crop corn harvest continues to advance as the dry season is well established at this point.  It won't begin raining in Northern growing areas until sometime in September.  Mato Grosso was at 5% complete last Friday and so could be as much as 10% complete this weekend.  Corn crop conditions on our farm in Minas Gerais started out positive.  The crop was looking great through most of April, but as is often the case, the crop could have used an extended rainy season through late April and/or May.  That didn't happen.  The crop cycle shut down prematurely and yield potential will be severely impaired.  Our rainy season is a bit shorter and so this is somewhat expected.  It is worth trying some area each year, but our second crop corn area is limited to less than 20% of our soybean area.  Some producers opt for sorghum or some other small grain that has a shorter season or requires less moisture.  It might have less profit potential but also reduces your financial risk.   Brazilian farmers are now focusing on US weather to give them a potential rally.  While the US planting season has been setting rainfall records in…
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06/04/24 Pre-Emptive Tariffs on Chinese EVs Will Not Fix EV Mandate

By The Commstock Report
Trump, when President, imposed tariffs on $300 bln of Chinese products, roughly two-thirds of Chinese imports. Biden left them in place and just recently added tariffs under section 301 of a 1974 trade law on the sectors and products listed (chart below). Biden's tariffs are more strategic than blanketed. He uses a rifle while his predecessor uses a double-barreled shotgun.   Biden tariffs are more symbolic, currently amounting to another $18 bln, based on 2023 imports, but are different from the tariffs imposed by Trump as they are pre-emptive. China currently imports just $400 mln in vehicles to the US but has the excess production capacity to export far more. China has the production capacity to produce 40 mln autos but sells just 30 mln domestically. That means that there is capacity to boost auto exports by as much as 10 mln. Tesla's Elon Musk, who should know from his experience in China, says that there is a flood of cheap government subsidized Chinese EVs coming if trade measures are not taken preemptively. Biden wants to make sure that they do not come here. Europe will likely do the same so that it is developing nations where these cheap Chinese…
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06/03/24 CommStock Radio Report Being Refreshed into the Digital CommStock Channel With New Host Marlin Bohling

By The Commstock Report
In 1985, when I conversed with the owner of the inaugural radio station that first aired the CommStock Report years ago, I asked him how long such programs last. He seemed surprised by the question saying that if refreshed they would not wear out and could last a long time. When I first recorded the CommStock Report we used 8-track tape technology which certainly dates me. Then, we sent each recorded program to each station individually, which often took me several hours each afternoon. If I coughed, for example, I had to start all over. There was such a thing as digital editing. This technology dramatically improved, changing over the years and the format of the program did too.   In January of this year CommStock Investments inaugurated another significant change, creating our own digital network called the CommStock Channel. We produce a podcast each day aired with the daily digital CommStock Report. It is also posted on YouTube and social media platforms. Marlin Bohling, coming to us from RFD TV, is the director of the CommStock Channel with Breann Hendrickson as his producer. We have had an excellent initiation of the channel with contributions from our brokers, agents, guests…
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05/29/24 41% of Brazil’s Safrinha Crop Planted in High Risk Period

By The Commstock Report
Brazil's second crop corn harvest slowly advances while weather forecast finally shows a much-needed drying pattern in RGDS. Harvest in Mato Grosso, Mato Grosso do Sul, Goiás and Parana only register at around 2% overall. Progress will begin to pick up quickly in the month of June. Three different private groups came out with their Brazil corn crop estimates last week ranging between 114.3 MMT on the low end, followed by 117.1 MMT and 121 MMT on the high end. All three came in above CONAB (111.1 MMT) but below USDA (122 MT). CONAB may be forced to increase their estimate due to favorable weather in Mato Grosso, but we still see the USDA estimate as too high. The USDA has yet to take into consideration the flood damage in RGDS as well as the earlier end to the rainy season.   As much as 41% of the safrinha corn was planted in a period we deem as high risk. We define high risk as being anything planted after February 20th. That is not to say that the corn cannot still perform well if planted past that date, but the rainy season becomes increasingly unreliable beyond that point, and farmers…
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