The Commstock Report

WHEAT RECCO UPDATE: On 4/23 we advised SRW and HRS producers to sell remaining '23 wheat but for HRW producers to sell just another 20% (to 85% sold) to squeeze a bit more from KC wheat on this rally. We got that, and today advice HRW producers to complete '23 sales as well. FUEL NEEDS RECCO UPDATE: On 11/16/23, we had advised covering 50% of fuel needs through spring. With ULSD futures now at last fall's lows, we advise covering fuel needs through summer with local retailers, but if yours are not offering bids contact your Commstock broker for ways to do so via hedging in futures. On the Grains Grains are steady to soft in overnight trade. Even wheat is mixed at best. Rainy weather is moving in to slow planting through the weekend and into next week, but planters have been rolling aggressively through the early part of this week. The reality is that it's too soon to threaten any serious delays and the rain is still welcome for replenishing soil reserves in most of the country. Ethanol data wasn't helpful yesterday. Weekly production was down again and the 2nd lowest in more than a year and stocks declined only slightly. Yet there's…

My family wrapped up the 23/24 soybean harvest on our farm in Brazil.  Yields came in at about 59 bpa, which is around 10% below APH.    Yields started out promising at the start of harvest but the later planted fields were disappointing.  Considering the ultra-dry start to the season, we came out ok.  When I was at the farm in mid-December, things looked rather bleak.  By the third week of December the rainfall started to pick up again and the crops got caught back up.  We are more of a seed farm than a grain farm and so the quality of the seed means as much or more to us than the quantity of grain produced.  It rained a lot in March as harvest was progressing, which tends to damage germination levels.   Safrinha corn stages are quickly approaching 80% in the pollination to grain fill stage.  Earlier planted corn is "saved" at this point as they are at the ending stage of the crop cycle.  Meanwhile later planted corn is left extremely exposed to the start of the dry season.  The ten-day European forecast shows a giant donut hole forming over Central Brazil, encompassing major second crop corn production…

NEW WHEAT RECCOS DAY 2: On prior advice SRW producers are 80% sold on '23 wheat and 15% hedged on '24 wheat. HRW and HRS producers are 65% sold on '23 wheat and nothing sold on new crop. SRW and HRS producers are advised to use this rally to sell all remaining old crop, while HRW producers are advised to sell another 20% (to get to 85% sold) but hang on to the last 15% to squeeze a little more out of this rally with HRW crop ratings declining. On the Grains Grains are steady-to-mixed in overnight trade after a strong start to the week and hints that funds are becoming more inclined to lighten up on huge net short positions than add to them. The weather outlook is turning wet again for much of the Midwest and central Plains from tomorrow through the weekend, which will likely slow the planting pace reported in Monday's Crop Progress report. Ukraine's Ag Ministry predicts about a 10% decline in grain output this year dry weather is beginning to tone down Russian prospects as well. Further, in response to the new major financing for Ukraine moving through the Senate and to Biden's desk, Russia is expected…

There is not a neighboring European or country in Asia which has had any interaction with Russia and Russians in their long histories which has not come to regret ever trusting their motives, intentions or words. Russians are about as close today to being the ruthless Vikings of old as exists. They will lie, cheat, steal, kill without aversion to getting whatever their want of the moment turns out to be. What they want is whatever others have that is convenient for them to take. Fins, Poles, Latvians, Georgians, or Ukrainians harbor no illusions over who and what Russians are. They are carrying forth a legacy of empire in which they see themselves as the high caste and the rest of the world their vassals. There is no such thing as an agreement, treaty, armistice or détente that is anything more than a chess move to allow Russia to seek out the next weakness in opponents to exploit. To Russians everyone is an opponent, every breath is taken toward conquest. The collapse of the Soviet Union represented the limits of extension of Russian hegemony in Eastern Europe. The Russian Federation under Putin is an attempt at a secondary rally in…

NEW WHEAT RECCOS DAY 1: On prior advice SRW producers are 80% sold on '23 wheat and 15% hedged on '24 wheat. HRW and HRS producers are 65% sold on '23 wheat and nothing sold on new crop. SRW and HRS producers are advised to use this rally to sell all remaining old crop, while HRW producers are advised to sell another 20% (to get to 85% sold) but hang on to the last 15% to squeeze a little more out of this rally with HRW crop ratings declining. On the Grains Grains are firm in overnight trade as of 6am, with wheat the clear leader as it was yesterday before traders had even seen the big hit to HRW wheat ratings released after the close (more on that later). As for weekly export inspections, corn was the only big winner. At 1.624 million tonnes it easily beat the top end of expectations at 1.5 million. Beans and wheat were within the range, but towards the lower end. After the close, we got the weekly Crop Progress Report. It showed corn planting at 12%. That met expectations, was on par with last year and 2 points ahead of average. On a state by…

Typically, most watch the US drought monitor but NOAA releases a North American version every two weeks. One can see that while drought has been completely mitigated in the Western US there are still lingering patches of drought in the Heartland. The drought has not been mitigated in Canada while the severe concentrated drought still covers Mexico with no sign of relenting. Where we live in Northwest IA the drought here is gone. Our soil moisture reserves have been fully recharged by late fall, winter and now spring rains so that we are starting the season out with a full tank of subsoil moisture. We got nearly 2 inches of rain last week and for the first time we had excess water standing in fields. More rain is forecast this week so planting will not be as super-early as thought. Additional rain now could actually delay planting and be a negative thing. There are other regions such as in the ECB or Delta where too much rain is a problem. Then there is still Kansas that can be counted upon for drought.   The primary characteristic of the climate setup for 2024 is the transition from El Nino to La…

On the Grains Grains were mixed in overnight trade with corn and beans on the soft side but wheat prices firming as of 6am. Weekend news was dominated by both events and non-events in both DC and the geopolitical arena: The major event was House passage of $95 billion in 3 separate aid packages for Ukraine, Israel and Taiwan. It's likely to clear the Senate easily but it happened only through Dem support that offset GOP opposition because the bills lacked any funding for U.S. border control and have Speaker Mike Johnson still facing criticism within the party. The major non-events making news are seemingly lessened risks of widening regional war with few signs either Israel or Iran want to trade blows again for reasons discussed below. That has oil prices quiet along with ideas OPEC+ has enough unused capacity to mitigate disruption of Iranian supplies. The Commitments of Traders report out after markets closed was somber news for those of us hoping this market will need to build in some weather risk and perhaps trigger more short covering by funds. It showed that through last Tuesday, those funds had actually been adding to already-large net short positions in all…

Follow-through interest will be tested after the grains posted a firm close on Friday. The overall tone of the grain trade is likely to largely depend on which directions oil and the dollar index are heading. In the Headlines A strong close on Friday limited the weekly loss for May corn futures to 2 cents. May beans were down 23 1/2 cents last week. May Chicago wheat was down 5 3/4 cents while May Kansas City wheat dropped 8 1/4. April cattle were up $2.57 and April feeders gained $3.72. June hogs were up $2.75 for the week. The House of Representatives voted on Saturday to pass a spending package worth $95.5 billion that includes $61 billion for Ukraine, $26.4 billion for Israel, and $8.1 billion "to counter China's actions in the Indo-Pacific" (protection for Taiwan). As the federal government is taking on new debt at relatively higher interest rates, the total cost of servicing the deficit amounts to 36 percent of annual tax receipts – the highest level in 27 years. Interest costs could increase by almost another 50 percent by the end of the year if the central bank does not reduce rates. The Environmental Protection Agency issued…

Grain basis levels have taken on a heightened level of variability this year, showcasing a notable disparity between the country's western and eastern regions. While corn basis remains notably stronger in the West, soybean basis displays relative strength in the East. These discrepancies cannot be solely attributed to supply differentials, given the robust crops witnessed on both sides of the Mississippi River last season. Instead, the driving forces behind the basis differences lie within the dynamics of demand. In the West, firm corn basis is supported by robust ethanol usage, elevated export demand from the Pacific Northwest, and stiff competition within the rail market that draws corn into the Southwest. In the East, soybean basis is bolstered in large part by a wide network of processors that serve a consistent draw from the southeastern poultry sector.   Differences between Illinois and Iowa show the nature of basis being split by region. Country elevators across much of Iowa are posting corn bids against basis that is relatively strong for this point of the season, with a statewide average of 2 cents over the May futures price. At 24 cents under the board, Corn basis in Illinois is closer to its modern…

On the Grains Grains are all still firm in overnight trade as of 6am, but well off overnight highs on word that Israel had attacked some sites in Iran in promised retribution for the weekend barrage. Oil and wheat prices initially spiked much higher but have since given most of the gains back. Why? Because despite promising they would counter even the slightest attack on their territory with a devastating second-wave, Tehran instead declared that the Israeli attack had "failed" (just as theirs had). It's an unfolding drama that could change again by the time you read this. Supportive news for corn comes from continued cuts in Argentina's corn outlook from both the Buenos Aires Grain Exchange and the U.S. Ag attache down there. It also appears EPA will agree today to "temporarily waive" summer restrictions on E15 sales through September 15 after repeated pleas from several senators to do so in light of ongoing energy security risks stemming from war in the Middle East and Ukraine. The most important news this morning is a host of updates on the long-term weather outlook released yesterday by the Climate Prediction Center. The new forecast for May through July calls for above-normal…