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03/18/24 Is a Lion Still Coming?

By The Commstock Report
The month of March weather came in like the nicest cutest little lamb we have ever enjoyed. The adage is that when that happens the month's weather usually goes out like a lion. I doubt that winter is over but the winter in its nastiest form should be. Our ground frost is gone, many fields have been worked that farmers would prefer a little frost returns temporarily. Whatever form of moisture we get, even if snow, should soak in unimpeded and be welcomed. If the lion brings moisture, then rather than something that would prolong winter, it would be a good thing. I was down to Des Moines and back late last week again and there are many fields prepared that are ready to plant. They will likely only wait until the crop insurance authorized date of April 10th to roll around. It is rather difficult to see right now where planting delays in the primary Corn Belt would come from. The central plains are under a rain shadow cast by the Rockies, the ECB is better watered than the WCB, soil moisture reserves are much less than desired, rain systems are rolling through the delta and mid-south and up…
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03/15/24 Grain Price Outlook Spit Among Technical, Seasonal, and Cyclical Factors

By The Commstock Report
Our customers and subscribers ask us every day to predict where prices are headed and lately the answers have seemed to take extra time to explain. It has been more necessary than ever to start any discussion about the price outlook with a clarification about the timeframe, whether it is short-run, intermediate, or long-term. For the grains, my answer about price direction is currently something like "down and then up, and then probably down a little bit again."   In the short-term, technical influences are a primary driver for bearish price action in the grain market. Corn and soybean futures found pushback on the chart this week after rebounding up toward tests of their descending channel tops, while wheat slid lower along the bottom end of its downtrend. For the mid-range outlook, seasonal trends paint a friendlier picture of grain price potential leading up to summer. More weather-related risk premium is usually injected into the market at this time of the year when there is such an intense focus on both how crops in South America are going to finish and on how the new U.S. planting season will start. Seasonal price strength could extend further than normal into the…
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03/15/24 Geopolitical Risks Rise With Reports Houthis Have Hypersonic Missiles.

By The Commstock Report
On the Grains Grains are mixed again in overnight trade. As of 6am corn was mostly steady, soybeans weaker and wheat prices firmer. The International Grains Council (IGC) is first out of the chute with 2024-25 projections and they see record total grain and oilseeds production in the cards. They also see higher global ending stocks for corn and beans, but not for wheat. USDA won't put out its own first global balance sheets until May. (IGC also revised their global forecasts for the current crop year and see lower corn and soybean crops and higher global consumption for total grains than USDA. We've detailed all those in the "Other Ag Headlines" section below.)   The Climate Prediction Center updated its Drought Monitor yesterday and the map shows drought conditions stubbornly persist over quite a large area of the western Corn Belt and Plains states. NE Iowa jumps out in bright red as the epicenter of the worst conditions.   Some areas saw a little shrinkage in the "footprint" and intensity of drought, but drought actually expanded enough in MN, IA and MO for a net gain in major crop areas still experiencing drought. For corn it's back up to 36%…
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03/14/24 Wednesdays China Report Requires a Conclusion – The Warning

By The Commstock Report
Chinese officials implement policy but have no say in what the policy is, tasked with only implementing it. They all know what they are supposed to do and the picture they are supposed to maintain both internally and internationally of domestic tranquility and strength. All power and policy in China derive from Xi Jinping, said to be the most powerful tyrant in existence challenging historical comparisons. He used to have a small number of his former classmates and colleagues that shared some responsibility with him but most if not all such subordinates have literally disappeared. The annual Communist Party Congress has become fully "pretense without substance." The members perform to script. They used to have a press conference afterwards and this year they did away with that too. It was Kabuki Theater anyway so no one has really missed it. Their problem is that the story they are selling at the annual gathering and from ministries every day in China no longer reflects reality. The Chinese economy is no longer growing as it was nor are the people getting richer. It has gotten late in the economic cycle and the energy has been spent. Kind of like Goebbels spinning NAZI…
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03/14/24 Early Spring and Warming Soils Promise Rapid Planting Once it Starts

By The Commstock Report
UPDATED WHEAT RECCO DAY 1: Based on prior advice, SRW producers are 80% sold on '23 crop and 15% hedged on '24 crop. However, pending targets for HRW and HRS producers to advance '23 sales beyond 50% in increments were never hit. With only 10 weeks left in the marketing year, HRW and HRS producers should take advantage of what's left of the recent rally and sell another 15% from the bin now to get 65% sold. (Regardless of class, plan to be sold out no later than June 1.)   On the Grains Grains are mixed in overnight trade as of 6am corn was steady, beans firm, but wheat lower. Further strength in crude oil tied to an unexpected drop in U.S. crude oil stocks and stepped-up Ukrainian attacks on Russian oil refineries has helped push SBO above February highs and poised to take out January highs as well.   Beans may also be getting support from yesterday's release of a private firm's survey results putting bean acreage 1.7 million acres lower than USDA's Ag Forum estimate, though that would still be up 2.2 million from last year. The early spring and rapidly warming soils promise rapid planting that…
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03/13/24 Lesson on China

By The Commstock Report
One is Most Vulnerable When at the Pinnacle of Great Success China's economy has been a juggernaut of growth for so long and had gotten so strong that many had come to believe that their state version of a managed economy had become immune to capitalist economic cycles and that the party could go on forever. Unfortunately, the delusion of forever eventually exhausts itself and what was always the reality, that delusion has an expiration date and is manifesting itself at the present in China. China's economic growth was the product of demographics and state manipulation. It was the greatest manifestation of state sponsored marination of economic manipulation in modern history. It has inflated into an unparalleled unprecedented economic bubble. The CCP state sponsored manipulation appeared to be so successful that Chinese techno-bureaucrats temporarily fooled the world into believing that they were invulnerable to the rules that the rest of the world economic managers are forced to adhere to. The CCP has many advantages as it controls all of the institutions of the Chinese state. They have all of the means necessary at their disposal to perpetuate an illusion long after it has become apparent to many in the world…
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03/12/24 At Some Point in Each Mania Somebody Gets Really Rich Just Before it all Ends in Tears

By The Commstock Report
Market manias are common occurring random events throughout history. One of the most historical was the Tulip bulb mania in Holland in the early 1600's because it was so well-documented. It has been studied ever since as a physiological event. They created tulip futures as a trading entity and the public eventually rushed in to produce exponential speculation. When the last fool buys in, there is no one left to sell to.   I thought this chart depicted the stages of mania well. The current example of a speculative bubble building in my opinion is cryptocurrencies. My read is that it has recently reached the point where the public comes in. That could leave room for blow-off speculation yet. My bet is that the recent surge in speculative energy is the result of the approval of cryptocurrency ETFs. I see that as the trigger to the public conclusion that if the government regulators allowed ETFs, then it must be real… and investing is even "safe."  The chart below shows the anticipation of the approval of ETFs in Bitcoin followed by the subsequent surge of investing thereafter. Every dollar put into bitcoin is speculation. There is no other reason to ever…
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03/12/24 Focus Turing to Planting Intentions for 2024 Season

By The Commstock Report
On the Grains Grains are mostly weaker in overnight trade, particularly in wheat. Yesterday's weekly export inspections for corn were near the upper end of the range of expectations, but numbers for wheat and soybeans were closer to the lower end. Another cancellation of an SRW sale to China hurt early on yesterday, but wheat still managed another comeback day.   STATS Canada put out their planting intentions yesterday, showing only a very slight increase in corn and total wheat, but a 5.1% increase for durum wheat and nearly a 22% increase in oats. However, planned acreage for winter wheat, spring wheat, canola, soybeans and barley are lower.   This morning we'll get latest estimates on soybean and corn crop sizes from Brazil's CONAB that will likely be supportive since they are already well below USDA's March WASDE estimates.   Beyond that, traders are rapidly becoming more focused on what our own planting intentions will be among major crops in the March Prospective Plantings later this month. Several private firms are already taking their own surveys and should have results ahead of the USDA report.   On the Hogs: We started the week with futures firm and the July contract…
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03/11/24 Turn Your Phone Ringer Volume Up

By The Commstock Report
Last December, when we made our incremental cash corn sale taking us to 75% sold, the local bid at our ethanol plant briefly topped $5 bushel. That was the last time the cash price of corn traded $5 bushel here. Their bid dropped to near $4 bushel with some local markets briefly falling sub-$4 bushel on the John Deere lows made late last month. Last week the ethanol plant texted out a flash cash bid of $4.50 bushel for FH March delivery and about 2 ½ hours later a second text said they had covered their needs pulling the bid. They quickly acquired inventory as broken farmer psychology had set up their sale. The commercial strategy is to first break the market, crush farmer psychology and then bin doors fly open when they bid up. They will buy more corn when they break the market again too as farmers are worried that they missed the rebound. Even with the late week CBOT strength their cash bid recovered to 4.50 for a second chance.  Better not have your phone set on vibrate and miss these calls if you have corn for sale. Would not be surprised to see a good retest…
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03/11/24 Huge Net Short Positions Held By Funds Still the Elephant in the Room

By The Commstock Report
On the Grains Grains are slightly weaker in overnight trade as of 6am after Friday's surprising firmness on a mostly yawner WASDE. The only big surprise relative to trade expectations was USDA cutting Brazil's soybean crop by only 1 million tonnes to 155 MMT with the trade expecting a cut four times that big. Even Brazil's own CONAB is already down to 149.4 and several private forecasters (ourselves included) at 145 million.   Yet soybeans had the strongest close on Friday as traders concluded USDA is being unreasonably "conservative" until harvest is closer to completion and paid more attention to some "sleeper" elements in the WASDE regarding China. Recall in January they blindsided the soybean market by boosting last year's Brazilian ending stocks nearly 2 MMT? On Friday they revisited last year's data again, only this time it was for China and price friendly. They boosted China's 2022-23 soybean imports 3.65 MMT and also boosted their estimate for this year's imports by 3 MMT.   Weakness overnight may stem in part from the Commitments of Traders report that came out after the close. It showed that through last Tuesday, the funds had continued to sell grains aggressively with the exception…
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