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03/15/23 Sharing My Corn Sales Decision Process With You

By The Commstock Report

Recently, I have come to feel like it is harder to get clients to act upon our market recommendations than it has been to call the market. Up until August 2020 we had been very bearish the corn market. I recognized an upside chart gap as a breakaway gap that would lead to an extended gain. It was tough getting subscribers to make the change as they get psychologically locked into a mindset, which we had fed, and I repeatedly advised “time to change horses” as the trend turned higher. Since August 2020 we were very bullish until last December. I am going to walk through the chart and try to give you more clarity as to how I make these determinations. While I do grasp fundamentals believing them important, most of my major decisions are derived from technical chart analysis. As this is my 50-year crop anniversary I have learned a little something along the way. I have been looking at Elliot Wave chart patterns for a few decades now. I can’t tell you what the wave count for every market is all of the time but every so often something in the pattern does stand out and has…

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03/15/23 Grains Stabilize, but Still in Limbo as Uncertainty Abounds

By The Commstock Report

On the Grains: Grains are firm in overnight trade as fund long liquidation finally subsides a bit in corn and beans while short-covering in wheat continues. Crude oil is soft and still below the $72/barrel threshold where President Biden said last October the U.S. would begin to replenish the Strategic Petroleum Reserve. Not a peep about that lately, but it does act as a potential “floor” at this level. The Dow is down hard again as this goes to press. Uncertainty in the wake of the unfolding banking crisis; what the Fed will do on interest rates and what Congress will do on banking regulations still abounds.   Funds had actually doubled-down on their short bets against Chicago wheat and found themselves still short nearly 100,000 contracts with crop condition ratings actually worsening for HRW country and heavy snowpack up north threatening fieldwork prep for spring wheat. As a result we saw double-digit gains in wheat actually leading the way higher for a change instead of a dragging corn back like a ball-and-chain.   Yesterday’s highlight for corn was the 675,000 old-crop sale to China. It finally confirmed rumors we’d been hearing for weeks that China was going to take…

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03/14/23 Tuesday March 14th is pi-day

By The Commstock Report

Let’s take a break from the serious and talk about something mundane today. The pi that I am talking about is not apple, cherry or chocolate pie but the kind of pi that mathematicians like. 3.14 or March 03/14 is pi-day. Scientists see today as a holiday of sorts. The symbol, used by mathematicians to represent the ratio of a circle’s circumference to its diameter, is the lowercase Greek letter π, sometimes spelled out as pi. It is a number rounded off at 3.14 that goes on ad Infinium. It is coincidently Albert Einstein’s birthday. It has become an international holiday celebrated by physicists and mathematicians giving them a good as any excuse to enjoy a pie of their favorite pie. My favorites are rhubarb and sour crème raisin or any other kind of pie that is available.   The Scientific American explains the history of pi. “The importance of pi has been recognized for at least 4,000 years. A History of pi notes that by 2000 B.C., “the Babylonians and the Egyptians (at least) were aware of the existence and significance of the constant π,” recognizing that every circle has the same ratio of circumference to diameter. Both the Babylonians and Egyptians had rough…

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03/14/23 Grains Soft Again as Bank Crisis Fallout Worries Persist

By The Commstock Report

On The Grains: Overnight grains tried to mount a modest rebound but as this goes to press they are weaker again. Lower prices in palm oil and crude are again pressuring soy oil on macro-economic worries. (Natural gas is a notable exception in the energy complex, moving higher yesterday and again overnight.)   Weekly export inspections were uneventful for corn and beans, both well within the range of expectations. Wheat was sour, falling just under the very lowest of expectations. Ironically, wheat was the only one of the three that managed to close in the green yesterday, even with Russia agreeing to extend the safe corridor deal out of Ukraine for another 60 days. (In overnight news, Ukraine disputes that new limit and says it will operate on current language extending the deal for 120 days unless Russia specifically halts it.)   Credit fund short-covering in Chicago wheat for yesterday’s gains in wheat.  The COT report showed funds extremely short Chicago wheat while only modestly long KC and MGE wheat. In other news, there are already some worries developing about delays in spring fieldwork for the northern Plains where snow depths up to 20 inches are widespread.   Stock markets…

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03/13/23 Yes…. This Is a BIG Deal

By The Commstock Report

The US Treasury, FDIC, and the Fed came together quickly with the blessing of the White House to jam a finger into the hole in the dyke that was the Silicon Valley Bank (SVB) leak. They did not even get through the weekend before another bank, Signature Bank with $89 bln in deposits also collapsed from some of the same issues as SVB. A quarter of Signature Banks deposits reportedly came from cryptocurrency. The Banking industry is finding out that cryptocurrency is not real money so should not be considered to be actual dollars on deposit. Every dollar on deposit that is in cryptocurrency is essentially just a loan on a dubious asset that bears its own risk parameter. If a real bank is lending real money against fake cryptocurrency deposits, then they are undercapitalized. The whole cryptocurrency thing is a fool’s illusion and it can now be seen how even banks have become party to the fools. How can that be? It can be. The Fed is making it clear that it doesn’t want cryptocurrency held in banks.   The action taken by the government Sunday to essentially insure the uninsured FDIC deposits in SVB and Signature, were unprecedented….

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03/13/23 Grains Soft as Fed Announces Plan to Keep Banking Crisis from Spreading

By The Commstock Report

On the Grains: Grains tried to mount a recovery in early evening trade, but are mostly back in the red as this goes to press. Fundamentally, the reality of major gains for both bean harvest and 2nd crop corn planting in Brazil is countering further decline in Argentine crop estimates. The Black Sea “safe corridor deal” will still likely automatically renew six days from now, but there are still questions as Russia is only now joining the discussions between U.N. officials and Turkey and still insisting on sanctions relief.   But it’s still the “macro environment” for the U.S. banking system and economic outlook that has traders most unsettled this morning. Precious metals are stronger while energies and the dollar are weaker. To prevent the SVB collapse addressed in our Sunday Preview and yesterday’s Special Report from spreading further shockwaves throughout the economy, the Federal Reserve Board announced last evening the creation of a new Bank Term Funding Program (BTFP). It came from Treasury Secretary Janet Yellen, after consultation with President Biden, approved the plan for this new BTFP to offer FDIC loans up to one year to California’s SVB, New York’s Signature Bank and any other institutions that protect…

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03/12/23 Special Edition CommStock Report on The Silicon Valley Bank Collapse

By The Commstock Report

Jim Acosta, a CNN host and reporter, made one of the most uninformed statements that I have ever heard on air this weekend when he said that runs on bank deposits were irrational. He was discussing the Silicon Valley Bank (SVB) collapse caused by what may have been the first bank run on deposits ever in ‘digital banking’ history. Money now moves with the flick of a computer key. People are told “not to panic”. I have always argued that it is often smart to panic as long as it is before everyone else does. I panicked and sold all of my 2022 corn last December and “so far so good”. When pundits tell you not to panic, what they are often really saying is that you should have panicked some time before that. As in the case of SVB, those that panicked first got their money wired out of SVB before the FDIC stepped in and shut it down. There are companies in that category that will make payroll because they panicked and got their funds transferred to safety.   It seems to be a common assumption that all bank deposits are insured by the FDIC. They are not….

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03/10/23 The Good and Bad News about the Economy

By The Commstock Report

Ahead of this morning’s monthly jobs report, it was feared that good news would be bad news for markets in the sense that investors would interpret strength in the labor data to mean more interest rate hikes from the Federal Reserve Bank, which pressure stock prices but support the dollar. Even though the jobs report turned out solid enough with higher than expected payroll additions, stock futures were initially able to stage a small rebound, likely because of help from a smaller than expected rise in wage inflation. Stock market strength struggled to stick, but it was helpful for the grains that the dollar broke down and interest rates eased following the report.   Bond prices were up – and yields down – after the jobs report and in follow up from nervousness over that economy that developed from news about financial trouble at the Silicon Valley Bank. The headlines were a source of bad news that ended up being good news for those betting on interest rates topping out sooner. Market-based bets on the trajectory of the federal funds rate were moving the expected target sharply lower at the end of the week.   As for the jobs report…

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03/10/23 Grains Weak Again As “Storm Clouds” Define the Macro-Environment

By The Commstock Report

On the Grains: Overnight markets are weaker again. One of the most time-honored axioms in trading is to beware markets that cannot move higher on bullish news. We’re witnessing a classic example of that in the grains since Tuesday’s WASDE showed far greater cuts in Argentina’s corn and soybean crops than the average trade estimates, followed Wednesday by the Rosario Grain Exchange pegging crops far lower still.   Then yesterday before markets even opened Brazil’s CONAB dropped the Brazilian crop to 151 MMT, 2 million lower than USDA’s figure and not far from Matthew’s estimate of only 150 MMT in this week’s Brazilian Operations Update. It was followed by weekly corn export sales of 1.41 MMT that blew the lid off expectations that ranged from 600k to 1.2 million. Didn’t matter. Corn tumbled anyway. It got caught in the downdraft of a horrendous net decline in weekly soybean sales (due to cancellations) of 23,000 tonnes against expectations for new net sales ranging from 200K to 700,000 tonnes.   What the heck is going on? The macro environment for both the U.S. and global economy is looking grimmer and grimmer and it’s feeding the bears in commodities. Stocks are down again…

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03/09/23 When is a CO2 Pipeline Project More than Hot Air?

By The Commstock Report

Not unsurprisingly, my recent report on ‘CO2 Pipeline Project Differences’ rankled the public relations department at Navigator with what they described as an “incredibly inaccurate mischaracterization of our project.” They are not going to like this one either. That report was a loop of information stemming from conversations with subscribers and farmers dealing with the CO2 pipelines. In a subsequent conference call with Navigator, we sorted through all of the line items and at the end of the conversation my conclusion was that I got it right. It cannot be an easy job of being given the task of spinning a silk purse from the proverbial sow’s ear and I have empathy for those whose job that it is to accomplish that. Probably the biggest point of contention was my word “paid”, saying that Navigator’s model pays ethanol plants more than Summit. Technically, Navigator says that they do not pay ethanol plants anything. Summit makes the investment for their ethanol plants for the carbon capture infrastructure, which can be $25 million per plant, and splits the revenue with them. Most plants tied up with Navigator cover the cost of the carbon capture infrastructure themselves and then pay Navigator to transport…

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