The Commstock Report

PLEASE REFER TO THE HEDGE AND TRADE STRATEGY PAGE FOR UPDATES!! President-elect DJT has been on the ball naming officials that he would like to have confirmed by the Senate into his administration. Some, such as Marco Rubio for Secretary of State and Scott Bessant as Secretary of the Treasury are non-controversial. Rubio has friends in the Senate and Bessent has friends on Wall Street. Bessent is a gay man with children so he is Trumps Buttigieg. He got the job by advocating for Trumps America First agenda. He once made a $billion shorting the British Pound which impresses his new boss. Trump tapped Mike Waltz as his National Security Advisor who is seen as a strong pick. Most all nominees have the primary quality of having a strong allegiance to Trump over having expertise in the department or agency that they will oversee. Both Waltz and Bessent have both. Nominees have proven that they will follow orders and he makes the major calls anyway. Other positions have nominees of more dubious competence. Matt Gaetz proved to be over the limit of how much bat-shit crazy that the GOP Senators were willing to accept for Attorney General. When it became…

On the Grains Corn remains range bound as we await fresh news to provide direction for this year’s balance and into the January final crop production numbers. A close above $4.52 would give the bulls some fresh feed and would likely have to come on some weather market in Argentina which is always possible, so it’s a game of hurry up and wait. Until proven different, that level will provide an area for producers to make sales or buy some puts under the market. March $4.50’s are trading at 14 cents, and May $4.50’s are at 18 cents this morning and would provide some time to see the January crop report numbers. I like May’s better as it does protect the planting intentions that will be reported at the end of March. This content is for members only.Register Already a member? Log in here

There was a time last summer when funds imagined that corn demand was so weak and anticipated yields were so high that a 3 bln bushel carryover was not out of the question. Thank goodness that did not happen. I think that you could have taken a lot of bets that the 2024/2025 corn carryover would not be smaller than the 2023/2024 carryover but that is where the USDA went in the December WASDE report. 1.738 bln versus 1.76 bln bushels. They will still likely print a record yield but have understated demand for a long time. USDA is typically quick to tell bad news and slow to release good news. In my opinion they should have adjusted supply lower in the September stocks report but then again reducing the carryover as they did in the December WASDE report was early by their standards. I would have expected that they would have waited until the January annual report. From our perspective in NW IA, we have believed that corn stocks were overstated for some time. Our basis had run 30+ CBOT and we only touched par for the basis at the peak of harvest. The stocks were short in this…

On the Grains Good morning, welcome to the last full week of trading for the year. The NOPA report is out today with traders expecting 196.7 million bushels (MB), the trading range is 191-207 vs the October final at 200 MB. The average trade guess would be 4.1% above last year’s 189 MB. The market needs to see increased crushing numbers as the Nov-Aug balance-of-year needs to average 5.1% above the previous year if we’re going to hit that 2.41 billion-bushel estimate, a number that feels attainable. The NOPA number could be enough to get the soybeans out of the range-bound trade we have seen the last 6 weeks, but the number would have to be sizable, surprising traders on either side. Technical support on soybeans hasn’t changed as the contract low of $9.73 ½ remains support and resistance of $10.01 ½, although $10.00 sociological resistance is probably just as much of a player as anything else. The U.S. Climate Prediction Center came out late last week with a 59% chance of a weak La Nina by the end of January, while it is early and no soybeans are at risk yet, it at least isn’t a bearish price headline. …

A slightly softer Sunday night open is expected for the grains in follow up of the weak finish on Friday. Crude oil and soy oil futures being higher could possibly spark a bullish attitude shift. Fresh news was limited over the weekend, but several political developments look set to make headlines early on in the new week. In the Headlines It was a struggle towards the finish, but March corn futures held onto a gain of 2 cents last week. March beans were down 4 1/4. Chicago wheat lost a nickel but KC was up 3 1/4. February hog futures fell $1.72 last week while February live cattle jumped $5.85 and January feeders were up $1.82. There was at least some movement by Congress on addressing the farm bill last week, but lawmakers looked to be far apart on whether there should be new funds added to the program if it is extended. Republicans and democrats are arguing about the amount of money allocated for natural disaster payments as well as other types of economic aid for farmers. Another major source of contention are the proposals to use funds from the Inflation Reduction Act, which some politicians are aiming to…

Corn futures ran into a wall of resistance this week after the post-report rally to $4.50 produced heavy selling from speculators and farmers alike. Bearish technical traders seized on the momentum failure that started on Wednesday, when March corn futures stopped a penny short of their recent high and then finished the session lower with what looked like the beginning of a 'shooting star' candlestick reversal. The poke above the upper volatility band and the inability for the relative strength index to make a new high added to the suspicions that corn was overbought. Farmers also rewarded the recent price strength with cash corn sales that increased short pressure in the futures market.   Speculators leave this week with decisions still to make about how to be positioned when the calendar turns over to 2025. The lack of follow-through for corn futures after being on the verge of a major technical breakout now poses the risk of convincing hedge funds to flip back net-short on corn like they remain for soybeans and wheat. Farmers too will make choices on what to sell and what to carry over into next year. The latest round of farmer selling that occurred this week…

On the Grains Good morning, now this overnight market is more like what we are used to, minimal action as the euphoria of Tuesday’s report has worn off. March corn continues to struggle at $4.50 and we need to find a way to break that open to the topside. Today would be ideal and we would have a good-looking weekly chart also. Prices remain range bound and with such a big cut in carryout the burden of continuing to feed the bulls will move to South American weather, and that just hasn’t proven to be an issue yet. Argentina’s corn planting is sitting at 66% complete vs. 54% last week and 62% on the 5-year average.   This content is for members only.Register Already a member? Log in here

PLEASE REFER TO THE HEDGE AND TRADE STRATEGY PAGE FOR UPDATES!! I suspect that some of our subscribers own or have owned Polaris products. They make ATVs for civilian and military use, snowmobiles, motorcycles and recreational vehicles. I passed a Polaris RZR on to one of our kids. We have a Polaris manufacturing plant located in our resident town of Spirit Lake, Iowa that makes Indian Motorcycles. It has been an excellent employer and good company for the community. Polaris has plants in MN, IA, AL and IN in the US. It also has factories in China, Poland, France and Mexico. Its largest plant is located in Monterrey, MX. One thing that is consistent is that they like to make things near where they can sell them. The WSJ says that Polaris employs more people in the US than in Mexico. Like any other major US manufacturing company, they look for the cheapest place to make their products. Pure Fishing, which produces fishing tackle, also has a manufacturing plant here in Spirit Lake. It now has operations in 19 countries and a dedicated workforce conversant in 28 languages. It is the largest fishing tackle company in the world. I have…

On the Grains Good morning, yesterday’s attempt to take out the resistance on corn proved to be unsuccessful, and more ammunition is needed at this time to get the job done. Yesterday’s EIA report supports the ethanol grind as the total production was 1.08 million barrels a day (MBD) or up two million gallons for the week. While we hope the ethanol number works higher and the carryout lower, the last two weeks have been essentially unchanged from last year. Margins will need to improve to see that gain any momentum. Bottom line, we may have just seen the highest usage number in print this week and any increases from the ethanol industry might be a slow go. Sure, there is always the possibility of lower total U.S. production in January, but I wouldn’t bet the farm on a huge cut as the yield was surprisingly good for the rain we received. Funds are estimated to be long 135,000 contracts of corn, bulls need to be fed.   This content is for members only.Register Already a member? Log in here

Brazilian farmers are in the thick of the 24/25 growing season.  Planting is virtually over and now they focus on top dressing potassium while scouting fields for insect pressure.  My Brazilian uncle who farms across the road from us says his crop is off to a good start.  He said it has leaned a bit drier this past week but that is not a bad thing.  He said last year there was a week or two of dryness after planting that helped the beans establish their roots, sending them deeper into the soil.  He believed this helped give him one of the best crops they have ever had last year.  That is why he looks at any short-term dryness as a good thing.  The forecast shows rainfall returning later this week in our region of Minas Gerais.   Rainfall forecasts show plenty of precipitation in Southern Brazil, especially in the state of Parana where they could see up to 6" this week.  Mato Grosso do Sul, Goiás and Minas Gerais will see scattered showers of 2" to 3".  Our attention is drawn to the northern half of Mato Grosso which leans drier for the next week or two.  There will…