Katie Geerdes

Grain Exports Have to Improve From Here   Export demand has to pick up considerably from here if grain prices are going to have a chance at finding their seasonal lows anytime soon. This week featured another widely disappointing export sales report with new commitments for corn, soybeans, and wheat all near the bottom end of expectations.  Looking at the factors for why exports have been so sluggish, it is also possible to see the reasons for believing that trade demand will flip more bullish over the coming several months.   First, to see just how bad it has been, compare new-crop export sales with where they were at this point a year ago. Even after more than two months of daily export sales announcements popping up regularly, soybean commitments are down 34 percent from a year ago while the USDA’s projection for the marketing year pegs them lower by 10 percent. Wheat sales are down 17 percent from last year versus the government forecast for them to drop about 8 percent. Cumulative corn sales are relatively better off being down only 6 percent from last year, but USDA sees corn exports rising 26 percent this year.   The most…

The debate over CO2 carbon sequestration pipelines includes a re-evaluation of eminent domain law. This is the just of how it works. Some entities plan to build something that requires use of or crossing private property. That can be the state building a highway, city an airport or utility building power lines or pipelines. In the state of Iowa, the entity wishing to acquire an easement must seek a private agreement with the landowner and go through a regulatory process. The companies seeking the easements are required to get as many voluntary easements as possible and then the IUB decides on whether granting them eminent domain power to secure the rest is warranted. There is no statutory number of voluntary easements required but precedent set from the Dakota Access pipeline suggests that 75% of easements must be voluntary to gain IUB approval. The Rock Island powerline only secured 18% voluntary easements and was denied IUB approval. That is the benchmark that we have to work with. Summit Carbon Solutions has near 75% voluntary easements to give them a shot at gaining IUB approval. While that appears to suggest that 25% oppose the pipeline, there is a substantial number of landowners…

Typically, trade is one of the issues debated during the presidential primary season here in Iowa but trade, free or otherwise, is not on anyone’s front burner this time. Topics to do with “wokeness”, which is essentially a backlash from the right against expanding diversity, have been elevated to the status of something significant. The trade issue that does get discussed has more to do with national security rather than commerce. The previous president was highly focused on trade, globally, but mostly focused on China. We are now collecting $Blns in tariffs from China and though a trade deal was made with China, where they were supposed to buy $200 bln in US products, it has never been mentioned in current context let alone gotten enforced. Farmers lost out on what was promised. The agreement intended for China to buy more US purchases but in the end, they have not bought enough to even reach the import levels from prior to the trade war. There was an assumption that China would favor the purchase of US Ag products in order to better balance our trade and that notion was quickly dispelled. Chinese commercial interests buy from where and from whom…

“I know some of you would be like, I get It, but remember we are in the midst of the greatest reindustrialization process in the United States history.  We are building out industrial infrastructure and factories and refineries and pipelines and roads and all that faster than we did during WWII.  There’s a lot of things in play here so let me start with kind of the legacy factors and then we will go into the issues of the now.   1st the legacies.  The United States has the most highly skilled labor force in the world by a significant margin.  There are a few countries like Singapore where the overall education level might be higher but you know Singapore is a country of 5 million people.  The United States is a country of 332 million.  You could say the Germans or the French which might have a little bit more productivity per hour than the United States.  You know we’re talking about a labor force in the United States that is 4 or 5 or 6 times as much and that means that there is not a lot that the US can’t do if it puts its mind to…

Harvest has begun here. The earliest planted corn on light ground was combined to get an early harvest premium at the ethanol plant. The family intends to start the earlage harvest next Monday. I expect there will be an early soybean field missing here soon as well. While cool temps and some moisture may have stabilized the deteriorating soybean condition none of the crops will be adding bushels. My partner says that the top clusters are missing and is worried about small beans. We were expecting 68-73 bpa and now we have revised that lower to 58-63 bpa. When both yield and price go lower the impact on gross revenue is sobering. We think USDA at 50.1 bpa is still too high. Hope that we are too pessimistic but it was an unfavorable end to the growing season that should negatively impact soybeans most. I am binning our soybeans in the hope that sometime the soybean market better reflects reality. We hope that the weak soybean market doesn’t know something that we don’t. Both corn and soybeans will have extreme yield variability driven by the luck of rain, soil type and planting dates. While my silage appraisal was 261 bpa…

Some people like to read abstracts of farms. I think that they are fascinating. There is a lot of history in them. They used to put in lots of historical details that get omitted today. One of the farms that I farm and is owned by an aunt that was first purchased by my great-great grandfather Frederick Kruse in 1896. That means I am harvesting the families 127th crop from this farm in Clay County Iowa. He was born in Bad Doberan Mecklenburg province Germany in 1832 and immigrated to the US in 1865. I have mentioned that we are friends with a German family from Dresden that we meet with every two years somewhere in the world (Alaska this summer). When in Germany a number of years ago they took us up to Mechlenburg province in NE Germany to a bed and breakfast in the forest. You walk down a path through the woods and suddenly you emerge on the coast looking at spectacular view of the Baltic Sea. I spent a very pleasant day there on the beach. The place was Heiligendamm. It is a German seaside resort founded in 1793. It is the oldest seaside spa in…

Nearly Unprecedented Harvest Rush Coming   This may be the year when farmers get really tired of switching back and forth between soybean and corn heads. Both crops may be harvestable at the same time. Two weekends ago a nephew came home from a trip out west to a wedding. He said that he was shocked to see 2 weeks of maturity occur in the 3 days that he was gone. Crops took a real hit from what was the last blast furnace of the summer. He drove by my soybeans to see how soon he would need to get the combine ready and was relieved that ours are still pretty green. I traveled across northern and central IA this weekend and leaves are dropping off soybeans like they were hit by a frost. I saw no corn that would be helped by rain anymore nor would many but the greenest soybeans yet benefit. We are experiencing a materially abbreviated fill period with whatever impact it will have on final yields. Whatever yield that USDA enumerators come up with tomorrow in the September production report, the final yield will be lower. It will take harvest to uncover where yields stand…

The shortened holiday week produced a mostly very quiet grain trade and it seemed evident that market participants were just marking time until they could see the outcome of next week’s crop report. Speculators were likely only making minor adjustments to their positions and hedgers kept their marketing efforts on hold while preparing for the approaching harvest, so trading volumes were much lighter than normal this week. Take a look at where the different types of traders are positioned heading into the crop report and consider what could change to trigger bigger moves for the market.   The managed money category of traders includes discretionary hedge funds that can choose to be long or short and they can shift positions rather quickly. The two-sided nature of speculators has been on display with a corn position that has flipped from net-long to short and back several times over the last six months. Their indecision came after holding a net-long position in corn for more than two years straight. Now, the funds are net-short corn again by an estimated 87,000 contracts. It should be noted that hedge funds have not turned net-short on soybeans this year, making it nearly three years in…

A long-time subscriber paid close attention to my current comments on soybean growing conditions and remembered the similarity to comments that I wrote describing conditions in September 2003. The reason that he remembered it is that he still has a chart on his door showing soybean prices responded by rallying from $5.32 in July 2003 to $10.34 by the following April. That was a $5 rally in just a few months. We went back in the records and pulled the CommStock Report comments from this corresponding week in 2003 and were struck by the close comparison of conditions described then to todays.   “September 8, 2003 Whatever kind of soybean crop we harvest is limited to the subsoil moisture reserves that existed. According to the state climatologist, IA had its driest Aug in 137 years of weather history. Crop condition is collapsing under hot weekend temps as plants exhausted their ability to stay alive. Bears say that will accelerate harvest. The soybean harvest is going to be short work in the WCB. Rain in the forecast is still just a forecast and too late if it materializes.   September 9, 2003 The USDA will likely lower its usage projection with…

It was not an easy thing to build a US ethanol industry from scratch. As with anything worthwhile there will be naysayers, dissidents and opposition to it. That was certainly the way it was with building the ethanol industry. It requires a group of committed individuals with determination, vision and tenacity to absorb sticks, stones and arrows that are inherently part of the grueling process where green shoots eventually grow into something meaningful. Thus was the process of building an ethanol industry. I have a lot of respect for people who build things and disdain for those who by nature put their energy into tearing them down. Building an ethanol industry delivered on the vision of adding a value-added component to corn-belt agriculture. It was worth all that had to be gone through to get it done. The demand created for over 5 bln bushels of corn by the ethanol industry was the greatest wealth creator for the corn-belt economy since the green revolution. This ethanol contributed to US energy independence. That was the prime motivation as to why George W Bush pushed the Renewable Fuels Standard (RFS) as part of his energy agenda despite being an oilman. Prior to…