The Commstock Report

Grains look toward a firmer open in follow up from a positive finish on Friday. Possible disruptions could come from any major changes in the situation with President Trump deploying the National Guard as immigration policy protests erupt in Los Angeles. Traders will otherwise have some optimism over the trade meeting with China. Positions will be prepared for the Thursday crop report. In the Headlines Trade negotiations with China resume on Monday with a meeting in London. The U.S. side will include the Treasury Secretary, Commerce Secretary, and the Trade Representative Ambassador, with China represented by its Vice Premier. This group was previously reported to have reached an impasse, but talks were advanced by a phone call between President Trump and Xi Jingping last week. Trump indicated that the phone call included Xi's assurance that imports of rare earth materials and magnets could continue. It was another record week for the cattle market last week, with futures working up toward fresh all-time highs in the cash trade again. Monday opens up the delivery period for June live cattle futures, which still have the rest of the month to converge with the price. Cash deals jumped by as much as $10…

Livestock producers are facing ongoing challenges with disease prevention and the triple threat posed for poultry, hogs, and cattle from avian influenza, porcine reproductive and respiratory syndrome (PRRS), and the New World Screwworm. The latest outbreaks have been felt by meat prices responding to a poultry import ban against Brazil, lowered hog production estimates for the U.S., and the resumed suspension of cattle imports from Mexico.   Reacting most dramatically to the screwworm headlines have been feeder cattle futures, which were almost limit lower at one point last month when traders were picking up on rumors about the pest being discovered on U.S. soil (Missouri). Cattle futures rebounded quickly following a statement from the USDA clarifying that there have been no confirmed or suspected screwworm cases identified in the country. USDA has estimated that more than 60 percent of U.S. cattle imports come from Mexico, amounting to about 1.25 million head per year in 2023 and 2024.   The screwworm is a fly larvae that digs into an animal's flesh and causes deadly wounds. A case of screwworm infection in a southern Mexico cattle herd led to the USDA closing the border to livestock imports in November. After a few…

On the Grains The International Trade Report showed that the US trade deficit in April decreased by 55% from March to $61.6 billion. This marked the smallest trade deficit in 19 months. While some of that was expected, as companies had front-loaded imports ahead of the tariffs. China still accounted for a deficit of $19.7 billion, more on that below. The drop in the trade deficit in April has led economists to expect a boost to second-quarter GDP. However, caution is warranted as unemployment applications unexpectedly rose last week to the highest since October.   This content is for members only.Register Already a member? Log in here

And they thought that Howard Hughes was eccentric. He was the first really wealthy American icon. Remember the Spruce Goose? They made a movie, The Aviator, about him starring Leonardo DiCaprio. Hughes was a genius with idiosyncrasies that collimated in obsessive/compulsive disorder. Wonder how long it will take until they make a movie about Elon Musk? Will it be as interesting? Musk has his idiosyncrasies, some of which should make his investors/partners obsessive/compulsive. He is Brilliant in some ways and absolutely clueless in others. His eccentricity has to do with the expanded number of his progeny produced with a plethora of partners and some alleged degree of chemical stimulants so that he can be everywhere doing everything all of the time. He has more fires going than any human can possibly have enough irons to poke into. He has managed to become known as the richest man in the world but that depends on the market. He has lost a lot of money in a lot of things but the winners outweigh the losers so he has been able to afford the losses. There is a lot of personal indulgence in some adventures such as in X.   Musk got…

On the Grains Good morning. Let’s get right to it. Yesterday, we observed the weekly EIA numbers, which were supportive of corn, as the ethanol grind jumped to 1.105 million barrels per day (MBPD). This figure was well ahead of expectations, the highest in 11 weeks, and 3.1% above last year’s same week. With the crushing report behind us, showing that more Milo has made its way into the grind and ethanol yields are increasing, we now need to average +2.0% above last year’s levels to meet the USDA estimates. While it would be preferable not to need to see an increase in the balance of the year, 2.0% certainly isn’t beyond the realm of possibilities. Even if we lose slightly, say 1%, that will amount to 55 million bushels of corn, which we have already easily sold in the export market. Ethanol stocks rose last week to 24.44 million barrels, which is up 6% from last year. Gasoline demand fell 7.6% vs the previous year’s same week, while the demand over the last 4 weeks has been down 3.1%. Ethanol exports were excellent this week at 150,000 barrels, up from 66,000 barrels last week and 91,000 on the 3-week…

I am pretty sure I just won a free steak dinner.  I was bet that December corn would rally back to at least $4.70 by the end of July.  I much rather prefer the $4.70 corn.  But when someone offers you a free steak dinner - you take it.  We have to face the music that there is limited news for the bulls to chew on.  Tariff talk with China has stalled as they did not take well the news of increasing steel tariffs combined with singling out Chinese students at US universities by having their visas revoked.  Managed money is still net short 103,000 contracts going into last week and that has continued to work in their favor.  Bulls would argue that they will take their profits and run.  When have you known managed money to be so altruistic?  My bet is they will continue to stick with their winning hand.  We will also get another acreage report the end of the month will I am expecting will see added corn acres and reduced soybeans acres.  The market will likely have that digested by the release of the report, and so if those increase in acres do not materialize,…

On the Grains We often do not spend much time on wheat other than noting it as a competitor to corn on the world-feed grain platforms. However, yesterday was all about Ukraine going after the Crimea Bridge, trying to take that out and disrupting Russian shipments. About one-third of all Russian wheat travels under that bridge to access the export market, and if that bridge collapses, it could cause some extended shipping delays. Now, had that gone down, a couple of secondary effects could have taken place. The first is that buyers would be forced to source wheat from elsewhere, the second is that Russia could retaliate and attack the Port of Odessa, thereby closing shipping from that location as well. The bridge is also a landmark project for Putin and would likely give him the green light to escalate the war. However, the attack was unsuccessful, and the channel is expected to be reopened today or early tomorrow. Now, moving to domestic wheat, reports are starting to pour in about the amount of rust that has started in the lower portion of the United States. Depending on how far along the rust is and how much additional rain falls,…

Prior to WWI becoming a world war, there were smaller conflicts in Europe that were on-going as pretenses for what became the big one, as other nations were drawn into it. It was the competition between two rival peer powers, England then dominant and Germany the challenger, that grew into military conflict and expanded to include colonies. I guess that the US could be construed as one of those drawn in. There were three regional wars going on before WWII. Japan had invaded Manchuria/China, Italy sought an empire in Africa and Germany annexed Austria, Czechoslovakia, and eventually invaded Poland. The latter was the trigger that pulled England and France into the conflict like leaves falling into a fire. Japan, Italy and Germany became allies as the Axis powers. Japan attacked us and the rest is history. All were rising powers competing for peer dominance. Technological advancement determined the winner of WWII and the dominant American hegemony that followed.   Today we have two regional wars going with a third waiting in the wings. The war in Ukraine looks far from settled. Russia is declining as a global power both economically and demographically against NATO which was strengthened by the addition…

Above you will find today's installment of Morning Market Talk. Rain Makes Grain You can click on the picture above to take you to this morning's episode. On the Grains The Planting Progress report, released yesterday, indicates that the US corn crop is 93% planted, with approximately 7.1 million acres remaining. While that may seem like a lot of acres—especially if those are your acres left to be planted, it’s hard to imagine not getting most of them planted, whatever the “bulk” of that may end up being at the end of June. With the Eastern Corn Belt continuing to be the problematic area, we could see a better-than-expected export basis this fall if those sales eventually come to the US. Currently, Argentina's FOB offers for corn are running about 13 cents higher than those in the Gulf. While Brazil has just started exporting corn, it remains priced out of the game, noted yesterday at a 6-cent premium to the Gulf, for now. From July to December, Brazilian corn is offered at levels below those in the Gulf, and the only factor that could change this is if the crop in SAM somehow decreases in size between now and then,…

It is not US drought that is currently costing us acres and yield but flooding in the Delta region. States including TN, KY, AR, MO, and MS are most impacted. None of them are major corn growing states. In the case of MO, the northern part of the state, where most of that states corn is grown is dry. There will be some prevent plant from this flooding but the crops impacted will more likely be rice, cotton and some soybeans. None of these markets has acted much like they care if acreage is lost. The cotton industry is in dire financial straits, so much so that prevent plant will generate more revenue for farmers than planting the crop.   Another of Dr. Elwynn Taylor's observations was that the moisture conditions seen in the Mississippi Delta region often portend what moisture that we will see in the corn-belt later. That is because the air pushed up from the Gulf by the Bermuda high into the US heartland travels over the Delta region to get here. If it is dry there, the air we get carries less moisture. When it is wet, such as it is now in AR, with some…