The Commstock Report

December has a seasonal history of being a bullish month for soybean futures, but buyers did not gain much traction this week. Bearish technical traders were still in control as they attempted to break the contract lows. Meanwhile, fundamental views continued to lean negative around inputs including fresh tariff threats, growing pessimism about the direction of biofuels policy, and record-large crop potential in South America. Are these headwinds so stiff as to negate the usual end-of-year price bump that market participants have come to expect out of soybeans and many other commodities?   Seasonal data from Moore Research highlights a strategy for buying January soybean futures that was profitable from December 1 - 18 in the past 13 out of 15 years. Zooming out for the whole month, soybean futures have trended higher throughout December in all of the previous 5-, 15-, and 30-year timeframes. While not as historically robust as for soybeans, the December patterns also lean friendly for corn and wheat futures.   One unique feature of the present December is that there are virtually no major weather concerns in South America to keep track of. Growing conditions are widely favorable in Brazil and Argentina at the moment,…

On the Grains Two of the greatest sporting events were on TV last night, the Green Bay Packers and the start of the National Finals Rodeo. Unfortunately, the Packers did not pull it off, but all is not lost, it is Friday after all.   Yesterday’s Export weekly sales of corn were 68.2 million bushels (mbu) well above last week’s 41.8 mbu and the previous year’s same week of 50.7 mbu. Total commitment of 1.34 billion bushels are up 33% year-over-year while USDA has this year’s sales projected at 1.4% increase. The balance of year (BOY) needs to average 22.5 mbu/wk which would be down from LY 33.3 mbu. The bottom line is that corn exports are on fire, we won’t know until January 20th if this is front-loading or if we have seen price drive additional demand to the U.S. I foresee the USDA slow playing the balance sheet next week, we will see somewhat of an increase, but I wouldn’t expect a huge jump until more is known. This content is for members only.Register Already a member? Log in here

Mexico needs to celebrate its participation in the USMCA and needs to hurry as it is likely coming to an end soon. DJT has had it in for Mexico having expressed no interest in building a resort and golf course there. He has effectively used Mexico as the fall-guy to advance his political agenda. In most ways Mexico is guilty as charged. Once upon a time Mexico was bleeding its citizens northward across our southern border who were funding the home country by sending remittances home each month. "2024: Remittances are estimated to reach over $65 billion by the end of the year. The average amount of each remittance is around $390, and the average recipient receives money from relatives abroad about seven times per year. 99% of remittances in Mexico are delivered digitally." As time passed, Mexico became an auxiliary to US supply chains who began relocating to Mexico rather than entice Mexicans into coming to the US. As job opportunities grew in Mexico, the flow of Mexican workers northward first slowed and then that changed and changed again. Now they have been replaced in border apprehensions by immigrants from other Central American countries seeking asylum and the dream here. Mexico…

On the Grains Welcome to the Thursday edition of the markets that chop around. Yesterday’s news was limited as no flash sales were reported on corn or soybeans. We did have the weekly EIA report out showing ethanol production slightly lower, this is not a concern as that is common for the week after Thanksgiving. Currently, the EIA numbers have ethanol production at 7.9% above the 4-week average and looking forward we only need to average .8% below where our current grind pace is to meet the USDA’s 5.4-billion-bushel grind. I would be surprised if we did not see an upward revision in the grind and exports next week in the December 10th Crop Production report. The overhanging question remains, are these sales just front loading or are we going to keep pace all year? We should have some the average trade guesses out tomorrow for Tuesdays report. This content is for members only.Register Already a member? Log in here

I am back in Brazil. I haven't had a proper crop tour yet but what I saw from the drive from the airport looked fantastic. The soybeans were ankle high already, and very uniform. If anything, they looked a bit starved for sunlight. I see traders and analysts looking for any possible sign of dry weather to put a dent in the crop, when in fact a week of sunlight might actually do it some good. Southern Brazil and Argentina are drier going into this week but that appears to be short-lived. It will give them a chance to dry out and set their roots while allowing planting to get wrapped up. Mato Grosso do Sul and Parana see solid rainfall the middle of this week and that continues to spill over into neighboring states to the North. The Northern tier of Brazil should see 2" – 3" this week. Heavy rainfall comes back to RGDS and parts of Argentina this weekend with many areas seeing up to 6".   Long term weather anomalies still show wetter than average weather through the first week of December, but we do notice that a pattern of below average rain begins to expand…

On the Grains Good morning, after some technical difficulties, we’re up and running since we are on a schedule, I will keep it brief this morning. Yesterday, corn attempted to follow crude higher as the OPEC meeting that is scheduled for later in the week will establish production guidelines for 2025. Most traders expect OPEC to delay production increases as they fear flooding the market and what the newly elected President Trump will do on the domestic front. This content is for members only.Register Already a member? Log in here

DJTs tariff threat is just another brick laid on Canadians who are already struggling under the weight of 907.185 kilos (ton) of them. US consumers responded to inflation as the top concern in our election and Canadians have responded similarly. Prime Minister Justin Trudeau has just a 33% approval rating which is worse than Biden's at 36%. We frequently talk to Canadians and their ire toward Trudeau is something that they all agree on. Things Canadians are worried about are not much different than what concerns Americans. They are focused on high rents and food prices. Canadian food prices have gone up 37% more than US food prices. They have a national health care system and yet 45% of Canadians express strong concerns over it. The average Canadian makes $22,000 less annually than the average US income. That makes labor costs cheaper in Canada. Home purchases and rent in Canada is twice as unaffordable as ours. The average Canadian income would not cover the cost of buying a home. More Canadians then are forced to rent, forcing rents higher. In 2023, the total value of trade between the United States and Canada was $774 billion, with the U.S. importing $421.1 billion…

On the Grains Good morning and welcome to our regularly scheduled programming of, “The Grain Markets Chopping Around.” March corn is still trying to pick a direction lacking conviction to move on either side of the 50-day moving average (DMA) and the 38.2% retracement. Last night the Commitment of Traders (COT) had the funds as net sellers of 17,186 contracts putting the total long at 97,442. Some strength in the crude oil and wheat markets is providing support today, we will see if that lasts all day. While we are in a range that is seemingly impossible to break out of, we will at some point, in which direction? time will tell.   While I am behind on my 2025 marketing, as I am reluctant to do much with prices at or below breakeven, I did do a small sale yesterday and sold a call on top of it, the idea is that I can wrangle something close to $4.25 next fall isn’t attractive, but it is something to start with. While corn seems less likely to crash, with all the input dollars on the table it felt like I needed to be responsible and do something. A while ago I wrote about…

PLEASE REFER TO THE HEDGE AND TRADE STRATEGY PAGE FOR UPDATES!! Corn Basis versus CBOT. Since March corn tested its Oct high and corrected the corn basis where we live has since lost 20 cents bushel, now 10 cents over. Commercials pushed bids past harvest until they got their inventory, they needed to cover cash needs to get them into the new year. Farmers tend to shut the bin door post-harvest and not open it again until the next calendar year. That gets them into the next tax year but taxes may not be an issue given short net income. Most like to take the holidays off so commercial grain activity slows during December. On the export side, many foreign buyers, concerned over 2025 trade uncertainty, made US purchases to get transactions on the books to get ahead of threatened tariffs and other risks. That flurry of domestic and export trade has likely been consummated in the cash market as shown in the weakening basis. The dollar shot up during Oct-Nov so that a currency premium to be paid for US grain/soy was created for export purchases. Dollar strength put a lid on the CBOT price recovery from the August…

On the Grains Last night on the TV series Yellowstone, Kayce got his “Counting Coup” on the man who arranged and killed his father, I didn’t know what this meant on a deeper level, so I hit the old Google and found that it was the Plains Indian warrior tradition to show intimidation towards an enemy without killing them. If that doesn’t describe the soybean market of the last 6 months, I don’t know what else does, it has been intimidating and makes me wonder who will attempt to grow beans next year. Sure, beans will be planted next spring but after last year’s disappointing yield and revenue, it will be difficult for me to get excited about them. With the corn/bean ratio at 2.34 and plenty of fieldwork completed this fall, we could be setting ourselves up for a bang-up corn planting intention number. This content is for members only.Register Already a member? Log in here