The Commstock Report

Corn and soybean futures have strengthened over the last month, but basis has generally weakened. Higher board values offer an additional incentive for farmers to let go of more old-crop grain during a month that normally already features some of the year's heaviest selling activity outside of harvest. Grain merchandisers are also in a window of relative comfort given that there is carry in the price curve and still almost a month and half to go before March futures enter the delivery period. Marketing decisions being made following the latest futures rally should include particular consideration of your outlook for basis and whether or not it can improve before the grain will be delivered. Look at the futures spreads as well and run the math on whether carry premiums plus the potential basis gain will be enough compensation to offset your storage costs.   If you think that futures are nearing a top, that basis will not firm up again, and that the futures spreads are not wide enough to make deferred delivery pay off, then you should be selling cash grain at the current spot price. You should do nothing and wait if you believe that basis and board…

On the Grains Good Friday morning: enjoy the 3-day weekend and mourn the death of the greatest baseball announcer, Bob Uecker voice of the Milwaukee Brewers. Many of you remember him from the movie Major League, while I happen to remember listening to him growing up riding (sleeping) in the hay cutter as my dad cut hay after chores in the summer.   Here we go. We have talked about the July/Dec spread inverting with carryout falling, which is justified by the latest USDA report. From a 10,000-foot view, it looks like we will plant 95 million acres, maybe more (puke). So, the real question is can we rally the 2025 December corn? Well, there are several factors that could play a vital role in that. Yes, I will admit the $10 billion in government handouts will help shore up balance sheets and, most importantly, cash flows; there is no debate there. The spreads failed to address just what trendline yields will be on 95 million acres. This content is for members only.Register Already a member? Log in here

PLEASE REFER TO THE BROKER COMMENTARY PAGE FOR UPDATES!! Canada (third in a series) A lot of Americans, unhappy over the November election of President Trump, looked at possible new countries of residence. Web Searches for moving to Canada rose 45%. I think the more they research moving to Canada what they will find is that they are far better off here in the states. Canada is a mess. There is a reason why its dollar is worth 30% less than ours. For every problem that we have with affordable housing and affordability in general, there is more reason for Canadians to move to the US than the other way around. Investment capital has been pouring out of Canada, mostly to the US, coinciding with the election of Pierre Trudeau as Prime Minster in 2015. They pay high taxes and get free education and health care but the cost is eating them up. They spend so much on their socialist structure they have nothing left to fund a modern military with, which means they depend on us for defense. They are at the bottom of GDP spending percentage on NATO. President Trump has said that he would not come to aid of NATO…

esterday, soybean crush numbers were released by NOPA, and yes, we had another record bean crush. We outlined the details in yesterday afternoon’s “broker comments” section if you want to look. The Des Moines Register reported that two Iowa Biodiesel plants have shut down due to the Biden administration’s lack of 45z guidance. The $1.00-per-gallon blender tax credit expired on December 31st. Plants shutting down is never a good sign, yet how can one blame them? The 45z guidance had been promised for over a year, and we have no more ideas than we did back then on what will qualify. Now, fast forward to later yesterday afternoon. The USDA did, in fact, release some preliminary guidance. Honestly, what is the point? We have a new administration coming in on Monday, and we really have no idea what he will do with the entire Inflation Reduction Act. The agency has released a calculator to calculate their own carbon intensity score based on your county. The idea is that the Treasury Department will take the hints from USDA when releasing their final rules.    This content is for members only.Register Already a member? Log in here

The same weather pattern in Brazil will continue this week with above average precipitation in the North and below average to the South. We do see rainfall beginning to return around January 20th and building into the end of the month but to what degree is uncertain. Everyday stress damage builds, especially in Argentina where temperatures remain elevated. While most of the dry pattern has fallen on RGDS, parts of western Parana and Mato Grosso do Sul have also been affected. We do see 2+ inches falling early next week in many areas but until then farmers will be on edge. It should improve conditions in Parana and Mato Grosso do Sul but showers do not appear to be as widespread in RGDS and Argentina.  While we typically rely more on the European model, it is important to note that the GFS model is much more generous, seeing widespread rainfall by January 27th.   The dry weather in RGDS will undoubtedly have an impact on soybeans yields, however they still have time to recover. It will likely have a greater impact on first crop corn yields that find themselves in the critical ear fill stage. Nearly 10% of the first…

Overnight, we did get a fill on our reco selling $4.90 corn. The gaps in production estimates between USDA and CONAB continue to haunt us. Last year it was the beans. CONAB continued to reduce the size of the Brazilian crop while USDA came down some, they never did meet. This year, the corn production number caught my eye. USDA held steady the last report at 127 MMT, while CONAB released 119.6 MMT yesterday. World balance sheets are the tightest we have been in 10 years, and every bushel matters. Our contacts in Brazil continue to stress that the country’s corn demand is underestimated. Here in the U.S., we fear planting 95 million acres and overproducing. Judging by the July/Dec corn spread, that is everybody’s opinion, long-foreseen problems seldom arise. The bottom line is that the 2025 crops have not even been delivered to the seed shed, and we have a long way to go before we have a corn stocks problem. While we are dipping our toes in the water to make some new crop corn sales, we are only dipping for now. I must deliver all my corn in the fall with no storage; without forward sales, I…

Greenland (second in a series) Now when President Trump throws out buying Greenland what he means is acquiring control of what is necessary to protect for national security interest rather than specifically statehood. Greenland would be suited for becoming a territory of the US. He is also forward-looking addressing problems that may not be problems today but actually positioning for the future. China almost always appears to come up in the mix as they are looking ahead. As China is always positioning for the future it becomes compelling that we do likewise. China has led the world in researching the Arctic as ice lingers there less each year or it opens completely. The Arctic Ocean would provide the shortest trade route to Europe for Asia. It would provide alternative relief for China from many of the other choke points such as the Suez or Panama canals that it faces connecting to Europe. In 2007 the Northwest Passage opened part of the year to ships without an icebreaker. In 2016 a passenger ship with 1500 tourists transited the passage for the first time. In 2018 two freighters rounded eastern Greenland and used Russia's Northern Sea route going to Asia. There are plans…

On the Grains One day doesn’t make a market. If I’ve heard it once, I’ve heard it 1,000 times. Yet Friday’s USDA report may have made the market for 2025. Last night, while having dinner with many producers from around the country, the topic of “acres mix” was running rampant at all tables. The cut in carryout was justified and welcomed, we now have the bulk of the producers hoping beans rally so that the corn acreage stays somewhat in check. Yet all producers admitted that beans just don’t work at these prices and will more than likely push the corn. If you are switching acres this spring, I would look at some Put options, and we surely could see 95 million acres. Whether that is in the March planting intentions report or not till the actual June acres, I don’t know, but I would be defensive in nature. It will be interesting to note the attitude of the market at Commodity Classic after we have established the insurance prices.   This content is for members only.Register Already a member? Log in here

Panama Canal (first in a series) President Trump has been throwing out ideas for the territorial expansion of the US. The Panama Canal now connects the Gulf of America to the Pacific Oceans according to newly named Trump nomenclature. He says that we need to reacquire the Panama Canal by force, if necessary, purchase Greenland and add Canada to our list of states as being a strategic necessity for us. While his comments have been taken as threats by those they were directed at and discounted as whims by others, I believe that there is a solid rationale behind all of them and they need to be taken seriously and further examined. DJT desires to leave a historical legacy of being a consequential president that Made America Great. That is not just a slogan. First of all, changing borders or adding territories of influence can be accomplished by negotiation and deal making and that is what our new President relishes doing. This is by no means the first time we have negotiated such real estate expansions from the purchase of Alaska from Russia in 1867, known as Seward’s Folly at the time, to the use as the 49th parallel as our border with…

On the Grains Good morning. Now we finally have something to discuss as the USDA came in with back-to-back bullish reports. We did release a special update on Saturday detailing the report and the implications, but now the question remains: what do I do with it now? We still have a bearish acre situation for 2025. Yes, we could get into a little bidding war, but beans still have some ground to move higher if we hope not to plant 95+ million acres of corn.  The November/December ratio did work a little wider on Friday, 2.29. This content is for members only.Register Already a member? Log in here