The Commstock Report

On the Grains Finally, after how many months, days, and weeks of typing about the resistance in corn, the market broke through, all-be-it on the back of soybeans, but a win is a win, and who would have thought beans led the way? While holiday weeks can get a little squirrelly, the dryness in Argentina was enough to bring some short covering in the soybean meal market, and rightfully so, with funds at near record short in the meal pits. We will now test the adage, “A meal rally is a real rally.”  Technically, January, which is getting short on time, targets $9.91 50-DMA and, with continued dryness, could prompt the funds to cover additional shorts. This content is for members only.Register Already a member? Log in here

No White House Pardon for Me President Biden reportedly pardoned 1500 Americans in one day which was a record. I am not one of them. I was back to Washington DC in the White House earlier this month after being invited to attend the Christmas Decoration Tour. 300 volunteers work together to decorate the White House before Christmas. I noted that I do not make political contributions with the exception of a small one to the Mayor of Madison, South Dakota. Mayors run on a non-partisan basis in South Dakota which I think is a good idea. Mayor Lindsay and his wife are college friends of ours and he had worked with the White House on a water project, the Lewis and Clark Regional Water System begun in 2003, to provide clean water to 20 communities in SD, MN and IA. The completion was funded by the Infrastructure Act. The Lindsays were invited to tour the White House Christmas display and my wife and I were allowed to tag along. It was fun. I thought about asking for a pre-pardon while I was there just in case, that I have ever said anything to garner past or future animus. Curious…

On the Grains The first day of the week and the last full trading day until Friday started off stronger than expected, early calls yesterday were slightly lower. Brazilian 1st crop of corn was essentially done two weeks ago, and we now wait and see the weather. World balance sheets are not all that burdensome on corn, that 2nd crop of corn will be vital to setting the pace for US exports into July/Aug/Sep, plenty of risk remains unpriced in this market yet. Our range on March corn seems to be tightening up again as the resistance is $4.52 and support at $4.40. Low trade volume for the rest of the year could produce a breakout for either side. Other potential “black swans” remain if the Biden administration fails to produce the 45z. A repeal of the Inflation Reduction Act will take an act of Congress, but the House and Senate are on the same team, so it is possible. This might not be all that bad if they would allow for ethanol without meeting the 50 kg of carbon per million BTU or reworking the scoring system. I would expect that would be a brutal battle. This content is for…

Fresh news is limited for the grains, so a quiet open is expected. A mostly firmer finish on Friday may produce light follow-through buying if the outside financial market conditions are stable enough. In the Headlines March corn futures finished higher by 4 1/4 cents last week. March beans were down 15 3/4. Chicago wheat dropped 19 1/4 while KC wheat lost 12 1/4. February hog futures were up 32 cents last week while February live cattle gave back $3.62 and January feeders were down $2.05. The government funding can was kicked down the road to March 14 with a bill signed by President Biden on Saturday. Government services were otherwise set to start shutting down on Monday. The extension includes $100 billion for disaster assistance and $10 billion in economic aid for farmers. Part of the cuts to the continuing resolution that Congress ultimately passed included the proposal for year-round E15 ethanol blend allowances in all states. Industry observers suggest that the legislation is favored to resurface next year. Also left up in the air last week were the existing blending credits that are set to expire at the end of the year. All indications were that the Biden…

Commodity Market Year-End Review The last full trading week of the year wraps up today before both of the next two Wednesdays will have markets closed on Christmas and New Year’s Day. Markets are open for shortened sessions on Christmas Eve, but full sessions on New Year’s Eve. The short sessions will produce the rare occurrence of grains closing at 12:05 central before the livestock finish at 12:15. With the caveat of knowing that a lot can still happen during the half of a dozen trading sessions left in 2024, it is the time of the year for looking back at where markets stand on the basis of relative performance. It would seem to have played out that many of this year’s trends were carried forward from the previous year, 2023. There are countless reasons why to expect that 2025 will break off on a much different course than the last two years, which could be a favorable outcome for farmers who grow the commodities at the bottom of the price performance list as well as for consumers who purchase the products tied to the biggest gains this year.  This content is for members only.Register Already a member? Log in…

New Reco Day 1- Sell the remaining 15% of 2024 soybeans crop at the market. New Reco Day 1- Hedge 15% of 2024 corn at $4.44 March futures. Above you will find today's installment of Morning Market Talk. Hedge Recommendations Included You can click on the picture above to take you to this morning's episode. On the Grains A common saying, old support becomes new resistance. Good morning: overnight, the soybeans are working on that new resistance as January is up 7 ¼ at $9.70. Was Wednesday's sharp downward move a blowoff bottom? It’s starting to look that way for now. While we will likely have a new weekly low on the January chart, we have seen a nice recovery in the last two trading sessions and we are taking advantage of that, sweeping the bin on old crop beans. We do recognize that a close above the $9.73 level could open the door for another leg higher. However, we are not sticking around to see. The weather is just too good in Brazil to bet on the river card. We will gladly price some 2025 November production if we get a rally. We are cautiously optimistic that the market…

When speaking at the December Farm News outlook meeting in Fort Dodge a subscriber came up to me to share his financial calculation on a farm that had just sold for $18,000 acre. He owns land and has cash in CDs so could buy more. 80 acres at that price costs $1,440,000. He thought that he could get $350 acre cash rent which would be $28,000. I would expect cash rents will reset lower soon as well. CD rates have come down a little but using 4.5%, the principle spent on that farm would earn $64,800 in interest. That means that given cash rent, taxes and insurance… cash in the bank would earn twice the return of a farm at current values. Farm operations are currently unprofitable so there is nothing to pick up to add there either. I would not bet on cash rent staying at current levels but think that interest rates will stay up. The subscriber was in no hurry to buy more farmland at this time, content to collect interest. He also owns stocks but was in the Warren Buffet camp on that investment class too. If you have to borrow money to buy a farm…

On the Grains Well, have we done enough damage will be the front and center question on traders’ minds as we look to close out the last full trading week of 2024? Let’s look back at 2024, the weekly continuous corn chart went from a high on 1/3/2024 at $4.70 down to a low of $3.60 on 8/26/2024 in other words, we dropped revenue per acre by $200. Only one week in May did we challenge that high and printed a higher tick for the week, May 13th the board put a high in at $4.73. This morning, we sit at $4.37 unchanged overnight, resting right at the 20-DMA, with support on the 50-DMA down another four cents at $4.33 ¾, and the 100-DMA is resting at $4.29. Without the soybeans falling like a meteorite yesterday, I believe we would have found some additional buying. For producers looking to re-own something, options are very reasonable to cover you through the January report. Yesterday’s EIA report had ethanol production increased slightly to 1.103 million barrels per day. Since the start of the marketing year, September, ethanol production has averaged 1.072 million barrels per day (mbpd) vs. last year’s 1.034 mbpd. This content…

I got a better look at the crops in our region of Brazil last Friday.  We held our annual Christmas party at the farm for over 200 people including staff and family.  While obviously we represent a tiny sliver of Brazil’s soybean crop, I have to say that it was one of the best crops I have ever seen at this point.  Last year at this time the crop looked very rough as consistent rainfall didn’t really kick in until late December.  And it still produced well.  This year is not only lush green, it is perfectly uniform.  Anything can happen yet, but the crop is now well established and will be very difficult to kill at this point. The bulk of Brazil’s soybean harvest won’t begin until late January/early February, however I did receive a video of a farm harvesting soybeans this week in Mato Grosso.  There were some courageous growers who planted short season varieties in early September.  This is not widespread, but it is also not uncommon.  January will still be a critical month for soybean development, but considering that December weather forecasts remain mostly positive, time is running out for the bulls to spur a rally. …

On the Grains Overnight soybeans finally made a new low even after robust flash export sales yesterday morning. Spain, a country we don’t often hear much about on buying soybeans, came to the market and procured 187,000 MT. While this is likely an olive branch and an effort to keep off the US tariffs radar, I wouldn’t expect them to become “regulars.” If we remember back to Trump tariff 1.0, we picked up something like 28 additional countries that purchased soybeans replacing China. While in a perfect world, we would like to believe that we would keep those additional countries as customers and China it’s not likely to work that way, especially with a 170 MMT crop in Brazil staring us down the gun sights. We need to see soybean oil or meal make a recovery or this cat isn’t even going to bounce. Soybean oil overnight took out the psychological support of $40.00, next up is the support at $38.74 (I may look at buying that if we get there). We do have a weather risk forming in Argentina on the extended forecast, something to keep an eye on but nothing to get overly excited about. This content is…