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03/25/2024 Trade Estimates for Prospective Plantings and Mar. 1 Stocks Vary Widely

By The Commstock Report
On the Grains Grains are mostly firm in overnight trade to start the week. Weekend rains and snow are welcome in the northern stretches of the country and the market is ignoring fierce Russian attacks on Ukraine's energy grid and weekend reports of manpower strains on Ukraine's struggling military. Focus this week will be on trade positioning ahead of Thursday's Prospective Plantings Report and the March 1 Grain Stocks. Trade estimates are out. The guesstimates put forth at USDA's Outlook Forum last month are presumed to be what's "in the market", so of most interest is how the trade estimates compare to those. For corn, the average is 91.8 million acres, up 800K from the Forum numbers. Estimates range, however from 90 to 93.8 million. For soybeans, the trade average is 85.7 million, down 800K from the Forum number. The range of estimates, are even wider for beans from as low as 84.3 million to as high as 89 million.  For wheat, all wheat is put at 47.3 million acres up 300,000 from the Forum estimate. There was no Forum estimate for spring wheat, but the trade estimate is down 300,000 acres from last year. Turning to Mar. 1 Grain…
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03/24/2024 Sunday Market Preview

By The Commstock Report
Grains may have room to bounce at the start of the week if outside financial markets stabilize to allow the dollar to level off. In the Headlines Global security has been tested by the Friday night attack on a concert hall in Moscow that reportedly killed at least 133 civilians. The Islamic State group claimed responsibility for the act, likely as a form of revenge against Russia's targeting of ISIS in Syria. Vladimir Putin alleged that Ukraine was involved, something that Ukraine denies. There was a favorable shift in the forecast for South America that helped weigh on corn and soybean prices late last week. Rain was on tap for Mato Grosso and other key corn growing states in Brazil. It was expected to turn drier over the next few weeks in Argentina, where excessive rainfall had been threatening the quality of the soybean crop and delaying the start of harvest in some areas. It hurt the U.S. export outlook that the Chinese yuan fell to a four-month low against the dollar on Friday. China's state-owned banks reportedly had to step in and support their currency. The yuan has weakened in response to growing concern over the Chinese economy and…
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03/22/24 News of the Day

By The Commstock Report
News of the Day   A bearish tone developed for the grains on Friday morning as traders watched moisture move across the radar. Whether rain or snow, coverage was wide and spanned across most of the Dakotas, Minnesota, Iowa, and Wisconsin. The system was staying mostly intact as it crossed the Mississippi River. Another round of showers was expected to start up late in the weekend. The forecast was also shifting favorably for South America.   Futures volume looked to remain on the lighter side as some traders were probably preoccupied with the March Madness tournament. In actuality, corn and soybean volumes have been on a general decline since prices put in their lows on February 26th, the Monday following the expiration of March options. Open interest dropped off briefly as March futures went into the delivery period, but the numbers have since rebounded, which fits with the idea that the shorts bought back by speculators have been new contracts sold by the farmer.   After building up a record net-short position on corn in February, hedge funds quickly reduced that bearish bet by about 25 percent. Over the same timeframe, commercial hedgers flipped net-short in corn for the first…
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03/22/2024 Latest Long-term Weather Forecasts Show Some Potential Trouble Spots

By The Commstock Report
On the Grains Grains and soybeans are soft in overnight trade with soybeans down double-digits at 6am. Yesterday's weekly export sales were mixed. Corn sales were in the upper half of the range of expectations while soybean sales were midrange. Wheat cancellations exceeded new sales by 110,000 tonnes. On a year-to-date basis, sales for corn and beans now lag the pace needed to justify USDA's current forecast for the year. Ironically, YTD wheat sales built up enough "cushion" on stronger sales earlier in the year that with just two months left in the marketing year they are still on pace to meet or beat USDA's current forecast. Speculation about what next Friday's Prospective Plantings report will show for the '24 "acreage mix" continues to mount. We should see some more private survey results over the weekend and will likely have the averages and ranges of expectations early next week as well. At issue will be how they vary from USDA's Outlook Forum forecast for corn at 91 million acres (down from 94.6 this year) and for beans at 86 million (up from 83.6 million this year.) There will also be a quarterly Grain Stocks report next Friday and we should…
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03/21/24 All Meat Sold in the US is not a Product of the US

By The Commstock Report
Why Label it So?   It took a while but mandatory "Country-of-Origin labeling" has now become voluntary "Product-of-America labeling." This rule, finally finalized by USDA, addresses a loophole created by the repeal of mandatory country-of-origin labeling in 2015 after which multinational meatpacking corporations began placing a "Product of U.S.A." label on imported meat packaged in the U.S. I was an active promoter of mandatory Country-of-Origin labeling which split the livestock/meat industries down the middle. It seemed to me that other countries were allowed to identify their product origin with labeling but somehow it was a restriction for us to do likewise. If mandatory, there was a cost to it but consumers said that they were willing to pay to know where the meat they purchased came from. This was back in the time when BSE in other countries threatened US consumer confidence here. Our meat import competitors saw this labeling as a trade violation and were willing to take a complaint to the WTO. Again, it was difficult to differentiate how our labeling products failed to comply with trade rules while theirs did. The playing field did not feel level. Mandatory Country of Origin labeling was taken under complaint in…
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03/21/2024 Soybeans Show the Most Promising Chart Action in Months

By The Commstock Report
On the Grains Overnight grains are all on the firm side as of 6am. Yesterday’s action in soybeans was especially impressive. Rising palm oil prices are boosting SBO and even though China has been focusing on buying Brazilian beans, their demand has been surprisingly strong. Prices in Dalian have rallied past the U.S. equivalent of 1450 and the highest in two months. On the May chart, we broke the downtrend early last week, tested the point of breakout by Friday, but have now taken out the prior high to form a fledgling uptrend line. Even more importantly, it closed above the 50-day moving average, which could trigger more short covering by funds. This content is for members only.Log In Register
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03/20/24 Biodiesel versus Renewable Diesel

By The Commstock Report
One Clear Winner   Brazilian soybean production expansion appears to be hitting the wall. Every year they have planted more area and expected higher yields. CommStock estimates this year's Brazilian production will be 145 mmts compared to 154.6 mmts last year. Remember they started out looking for larger production this crop season so the turnaround has been dramatic. Profitability has been lost so the trend to grow more acres each year has potentially hit a wall.   The US has essentially conceded soybean export growth to Brazil. However, Brazilian soybean exports are likely to get curtailed below projections by less supply which could be made up by the US or Argentina. In the US the soybean industry has turned to domestic consumption for its demand growth. There has been a lot of hype and a lot of forecasts for expanding the domestic crush using soy oil as the feedstock for biofuel. Domestic soybean demand growth has been driven by a desire to reduce petroleum dependency transitioning to low-carbon renewable fuels.   The National Oilseed Processors Association (NOPA) released February crush data last Friday.  NOPA members processed 186.2 million bushels of soybeans in February, up 0.2% from January and 12.6% from…
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03/20/2024 New Trade Skirmishes Erupting Here and Abroad Over Unfair Trade Practices

By The Commstock Report
On the Grains Grains are mixed in overnight trade with corn mostly steady, beans firm but wheat soft. The latest 2-week forecast calls for above-normal rain over the whole country with heaviest amounts forecast for where it’s needed most, the Pacific Northwest and Western Corn Belt. Temps are forecasted to be cooler than normal for most of the country as well, which means late season snow for some. This content is for members only.Log In Register
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03/19/24 Election Year Lows in Natural Gas

By The Commstock Report
How and Why   The US is the world's largest exporter of natural gas, with supply growth unleashed by the technology of fracking as the co-product of shale oil production. While there have been NG supply reductions in Europe primarily caused by geopolitical conflict with Russia which had been their main supplier, the US has the capacity, given time to build the LNG export infrastructure, to mitigate such shortages. US LNG exports to Europe tripled and they would take more if available to them. If we do not displace Russian NG supplies in the world market someone else will or it gives Russia additional black-market opportunities. It will push China and Russia closer together. The laws of supply and demand and a global free market were in process of responding to these market forces as it should until…interrupted by US government intervention through regulation, with a pause in issuing permits to build said LNG export infrastructure. To build an LNG export facility the company needs permits from the US government to export the stuff. They have to have commitments from NG buyers approved by the Feds. If the buyers are from a country that has a free-trade agreement with the…
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03/19/2024 Host of Uncertainties on Acreage, Weather and Geopolitics Net Stalemate between Bulls and Bears for Now

By The Commstock Report
On the Grains Grain markets are steady-to-mixed in overnight trade. Uncertainty over the acreage swings we’ll see between corn and soybeans and how they vary from those put out in USDA’s Outlook Forum last month has both bulls and bears in a bit of stalemate awaiting the next hints from private surveys that have been underway.   The Allendale survey projecting more corn acres and fewer bean acres than USDA’s Forum numbers has been dialed in. Market impact was somewhat muted by the reality of continued strong corn export inspections and firm cash basis while the support for soybeans offset by the reality of soft exports amidst surging shipments and price advantage out of South America. Now the SBO rally is looking toppy as Malaysian palm oil production starts rising seasonally about now.   Wheat remains under constant pressure from fierce export price competition and improving winter wheat condition ratings, but expanding attacks by Russia on Ukraine’s port of Odesa while Ukraine’s successful attacks on Russian oil facilities and naval operations even include a threat to Russia’s own Black Sea grain ports. Further, Russia’s wheat prices actually moved higher last week for the first time since January and this latest…
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