CommStock Reports

For some reason, many seem to think that winning a trade war with China will be easy. After all, Treasury Secretary Bessent says that Beijing is holding a pair of twos. There is also the old adage that if you do not know who the patsy is in a poker game, don’t be surprised if it turns out to be you. Secretary Bessent says that we do not intend to decouple from China. Fine…but what if China intends to decouple from us? There are some very smart people who have great experience in China who believe that Xi has been preparing his country and the Chinese economy for Liberation Day, April 2nd, 2025 for years. When China sells us something, they are paid in dollars. Up until a few years ago, they would invest those dollars back into the US, favoring buying Treasury Bonds. Over the course of decades, they had bought US Bonds with peak holdings of $1.3 trillion in 2013. They have been receiving more dollars as their trade deficit with the US grew, yet were investing fewer of those dollars back into the US. Chinese owned US Treasuries have declined to $760 bln and they are not adding to them, likely selling more off instead. In 2023 China held $860 bln in US Bonds so you can see the divestiture happening. Japan is the largest holder of US bonds today, $1 trln, because they continued buying, so surpassed China in Treasury holdings when China stopped.   It has been calculated ...

On the Grains As we move forward, we expect to be 90% planted by the expiration of the June short-dated options on May 23rd without weather delays, and we are protecting the downside of the corn market. If, for some reason, we end up with weather delays and the market rallies, we will have the top side open to re-evaluate at that time. If we get that 90% planted and pressure the market lower, we will exercise the 4.60 puts and have a hedge in place. Short-dated options might be relatively new to some producers, so feel free to call, and we can discuss the details. An alternative plan could be to buy the full December $4.70 put option that expires November 21st for 40 cents if you feel more comfortable covering the entire time. However, for tracking purposes, we will track the short-date options listed above in our report. We can cheapen it by selling calls if you want to discuss covering the entire calendar.  Remember that those sold calls could be marginable in a rally. In a year like this, which appears to be a year where stocks will increase, the funds will not be as willing to buy the deferred markets aggressively. Back-of-the-napkin math, we need to see somebody predicting a 175 BPA or less yield before we get overly excited. A national yield of 176 BPA, planted acres of 96 million, would likely net us a carryout of 1.8 billion bushels. A 95 million corn planting slightly improves the ...

Farmers got out ahead of the rain last week getting a good start to the season, planting nearly 20% of Iowa already. Going forward it appears we will be fighting scattered showers for the next week or more. Above average temperatures appear to be on our side which will help dry out wet fields and reduce any risk of potential frost. It would appear the greater part of the Corn Belt will receive an additional 1" to 2" in the next week. Looking out ahead into early May, regions that have seen heavy showers up until now, lean drier such as Central Missouri and much of the Eastern Corn belt. This will be mostly positive as it will allow field work to continue. I am hoping for my crops to get planted this week, but it will all depend on how much rain we get.   Major weather threats are absent for Brazil's Safrinha corn crop. We continue to see 1" to 3" of rainfall for most of Brazil's second crop corn production area through the end of the month. The SW region of Goías leans drier but could still see some scattered showers. Extreme climate seems to linger in RGDS as it remains void of any major precipitation along with parts of neighboring Argentina. Pick a weather pattern already! One month it is too wet and then the next month it is too dry!   Well, that didn't take long. We had reported last week how iPhone's were traditionally more expensive in Brazil ...

On the Grains Good morning, ladies and gentlemen. As we turn the corner at the midway point in the week, there is limited news in the row crop markets. Soybeans stole the show yesterday, as even the least attractive row crop has its day in the spotlight. News that India is resuming palm oil imports after a five-month lull, as prices are now below soybean oil, this didn’t affect the market. Malaysia's palm oil production continues to face challenges, with total output is expected to be below 19 million tons, the lowest in three years. U.S. soybean exports could slow down, yet at the impressive rate India has been buying, 128,000 TN this year, the USDA will likely adjust upcoming reports as current exports are at 2.10 billion pounds already, exceeding projections. While all this demand has been good, it could correct at any moment, the soybean oil chart could get toppy as we have almost a perfect double top at $48.54/55. ADM also announced that it will be closing the Kershaw, SD, crush plant due to uncertainty about biofuels. More on biofuels, Governors from seven Midwest states are calling on the EPA to issue emergency waivers for both E10 and E15, similar waivers have been issued in previous years. Wouldn’t it be nice if we didn’t have this annual red tape on ethanol?

I have found that when a Navy Seal tells me something that I can take it to the bank. 30-year veteran Navy Seal Jason Gardner, now leadership instructor with the Echelon Front, spoke at our first Family Farm Masterclass in 2022. I had breakfast with him and we discussed Afghanistan and Ukraine. There was debate at the time as to whether Putin was truly planning to invade Ukraine. Our intelligence agencies were warning that the invasion was being prepared but not even all of Ukraine's leadership in Kyiv was convinced that it would actually happen. There were many skeptics who argued that Putin would not invade as it did not make sense. What mattered was that it made sense in Putin's head. I asked Jason for his opinion. He said that he had contacts in the teams who were in Poland and they had told Gardner that the invasion was imminent. I believed him. I also acted on the advice. We bought wheat calls that turned out to be the most profitable call options that we had ever purchased in my life as a result of this chain of information. We shared that info with subscribers. It comes down to who you believe. I will bet that some subscribers were skeptical and did not act.  We are not in the habit of making willy-nilly market advice and I tried to convey the serious source. I also, with rare exception, follow my own trading advice which I did in this instance. ...

On the Grains As you can see, yesterday’s planting progress was released. It was only slightly higher than the average trade guess of 11%, coming in at 12%. What is surprising is how fast the great state of Iowa is throwing it in the ground. I say that light-heartedly because we know no farmers take more time to set up a planter than Iowa farmers. Yet, Iowa farmers are still 11% ahead of the 5-year average, coming in at 18%. Almost 1/5 of the intended acres are planted on or before Easter. While yields are still undetermined and there is much more to raising a crop than planting it, most importantly, the earlier planted crops fare better in a dry year. Some are calling for an additional million corn acres due to early planting. I will reserve my judgment on that till later in the spring. I am not out selling headlines, and it’s still plenty wet in the east. On the national average, UAN 28% and 32% were higher last week. 32% was up $9.39/TN while 28 % was up $7.19. Wisconsin led the charge higher as both of those products were up $22.50 and $10.89/TN. Higher fertilizer prices could limit just how many get swung into corn.

"Thank you for all the kind comments on the 40th Anniversary CommStock Report aired Good Friday" Hope that you had a pleasant Easter!   Let's catch up on the market outlook:   So far, the weakness seen from the equity market highs, while having achieved the textbook definition of being a bear market correction, is relatively minor. I trade the e-mini-S&P. Weakness seen thus far is not enough to correct a 16-year bull market. The initial decline was arrested at the first level of significant support at a 50% retracement of the final leg up. It is extremely unlikely that this weakness is over yet and we do not know how big that it will get. If and when that low is broken, then the bear market is likely to become expansive with an extended duration to it. There is potential for this bear market to have a great scale of significance. There is real risk that it can mark the beginning of the undoing of American exceptionalism.   A 38% retracement of the 16-year bull market sets a downside target of 2635. That is just one possibility of many from the opening of Pandora's Box. I decided to buy more time with my September 5800 strike put option, rather than buying June. I have noted that markets have not responded to fundamentals until events are realized. Markets have not anticipated the news but have responded when fears become reality. Fully anticipated things are being called "surprises" as markets belatedly respond. I do not see recent ...

On the Grains Remember those stupid graphic T-shirts that everybody had to wear in the mid- to late 1990s, the No Fear ones? I remember “No Fear Biking" and “No Fear Hockey.” Whatever the slogan was, it was always “No Fear.” I don’t remember “No Fear Farming, it will work out.” However, I may print some up and give one to my banker when he asks about our cattle inventory.

When reminiscing about how we used to give away Carson City circulated Morgan silver dollars, minted with silver from the Comstock Lode mine, as an incentive to new subscribers, it dawned on me that that was 40 years ago. Those silver dollars are worth about five times what they cost us back then. When the company started in the early 1980’s, I was a refugee from the Ag Depression of the 1980’s, becoming a broker so that I could continue to farm. The initial owner of the company was a stockbroker, and I was the commodity broker. I was the one who came up with the name of the Company, Commstock Investments, in order to cover both investment classes. The owner, who had a family legacy in the beef packing industry, left to become CEO of a beef packing plant in Dodge City KS and subsequently he sold me Commstock Investments. In 1985 representatives of the local radio station, KICD, walked into our office. The source of commodity information that they were airing was retiring, and they needed a replacement. The initial version of the Commstock report began as a radio report on that single station. That was back when the recording technology was an 8-track tape, and as stations were added it had to be individually re-sent from a master recording to each station.  There was no editing the report while recording it, so when I had a cold there was some sneezing and coughing in those reports. Today the recording is ...

I was a bit surprised to see Ray Dalio as one of the quests on "Meet the Press" Sunday April 13th. I follow Dalio and he has been issuing some warnings over financial markets that I was not sure that they would air on national TV. They did. He did not hold back. He is not worried about a garden variety recession. Dalio has been in the industry for about 50 years and is a student of history. He forecasts, "The times ahead will be radically different from those we've experienced in our lifetimes, though similar to many times in history." Did you understand what he meant?  He sees current developing events as more similar to the 1930's. The following is a summary of his interview on "Meet the Press". Here is a construct of the interview: "Ray Dalio, the founder of Bridgewater Associates, delves into the critical themes of his upcoming book, "How Countries Go Broke," offering a sobering analysis of the prevailing global economic and political climate. He posits that the current tariff disputes are not isolated incidents but rather manifestations of deeper, more systemic issues rooted in five fundamental historical forces that have consistently shaped global trajectories. These forces include the cyclical nature of money, credit, and debt, often culminating in unsustainable levels; internal societal conflict arising from ideological divides and disparities in wealth and values; the shifting world order characterized by ascendant powers challenging established ones, currently marked by a transition from multilateralism to a more unilateral ...

On the Grains Be cautious of Monday's planting report on relatively light news while we finish the week. I have clients in western Iowa who are done with corn. Yes, you read that correctly. While exceptionally early, the dry conditions are too good for many to slow down. I was skeptical of the 95.3 million corn acres that the USDA released at the end of March, yet as early as the Midwest is rolling, it sure is possible now. If you switch acres from beans to corn, remember you get longer December 25 contracts. Look at managing that risk before the June 30th acres report, and possibly before the Memorial Day weekend, as this thing will be wrapped up in no time. The Buenos Aires Grain Exchange estimated its 2025/26 crop at 20.5 MMT, the second largest on record and 10.2% higher than last year's troubled corn crop.

Planters are rolling this week as temperatures have allowed soil temps to warm up to 50 degrees Fahrenheit for most of the state of Iowa. I am looking to get my crops planted in the next ten days. Heavy rainfall will cover Texas, Oklahoma and Missouri with up to 5" in some areas this week. Scattered showers will bring 1" – 2" to much of Iowa, Illinois, Wisconsin and Michigan. Nebraska and the Dakotas look to get a big old goose egg, with virtually no precipitation scheduled for this week. Global corn stocks remain extremely low and are becoming increasingly dependent on the US growing season to keep the world fed.   Brazil's Center west region continues to see adequate rainfall through the end of April. Most areas will receive up to 4" this week. RGDS has yet again turned dry but as they are over halfway through harvest, it may not make much difference at this point. We received soybean yield reports in RGDS as low as 8bpa. Meanwhile we have heard yield reports in the North as "far exceeding their expectations". Good yields should at least partially make up for the bad.   This is more or less what happened in CONAB's April crop update, drastically reducing the RGDS crop by 2.4 MMT from March. This was more than made up for in other states which allowed for an overall increase of 0.4 MMT, taking production to 167.8 MMT. It helped that they found an additional 160,000 acres of soybeans. The biggest ...

On the Grains Good morning, ladies and gentlemen. What will today bring on the CBOT? We are here to start this party with the NOPA crush numbers, released yesterday. March's crush was 194.55 million bushels, below estimates and last year's crush of 196.4 million bushels. This marks back-to-back months of disappointing soybean usage. Any anticipation of increased usage in future USDA reports might be met with disappointment. Soybean oil stocks finally saw a reduction, the first in six months. While a meal rally is a real rally, if we could get something cooking in the oil, it would also support the bean complex. Oil stocks year-over-year for March were sharply lower, down 19.1%. 

The Yale Budget Lab put out their numbers for how much the tariffs would cost an American household at the tariff rates that existed last Friday to be $4700. They also explain that the cost will not be that high because high tariffs will destroy demand and consumers will find alternatives or go without. They do not have $4700. This would be crazy inflation prompting the Fed to increase rather than reduce interest rates. China did not respond to the last US tariff rate hike to 145%, calling the tariff rate escalation a "joke". What they meant by that is that after tariffs get so high, orders are canceled and business collapses. Beijing put out a White Paper which stated that by their estimation that when the tariff rate bests 54%, it becomes irrelevant as the exchange of business stops.   The Chinese White Paper asserted: "With tariffs at 54%, most models – including our own – have exports to the U.S. falling almost to zero," they said in a research note. They calculated the total damage from the 2025 tariffs to be roughly 2.2 percentage points off in GDP. A large hit but one that Beijing is capable of offsetting. Rory Green, chief China economist at TS Lombard, agreed that at a certain point, it doesn't matter how high China tariffs go. Even if the U.S. continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of the world economy. It again repeated the ...

Tales as Old as Time   Morning Market Talk Below, you will find today's installment of Moring Market Talk.   Cash Cattle/Soybean Technicals   You can copy and paste the link below for this morning's episode.     On the Grains   One thing is for sure: history repeats itself. It is just a matter of when that happens that keeps the market guessing. For example, I am certain there were times when my grandpa looked at what my dad was doing shook his head, and said it would never work. Likewise, I am positive my dad has watched me attempt tasks I thought I had a better way of doing, shook his head, and said, "That will never work." This is as old as time itself. I would guarantee that in the caveman era, a father was watching his son trying to make fire a new way that he learned from another tribe and said that would never work We will freeze to death, probably followed by "damn kid can't be mine." While most likely dressed similar to Fred Flintstone. My point is that the market will react until proven correct or incorrect, and staying rational will be the key to survival. While this is no endorsement of tariffs, I am saying the rhetoric of "the sky is falling," and the tariffs have been on for 2-weeks could be getting the cart ahead of the horse, especially for 2024 and most likely 2025 row crop prices, fundamentals are winning out. The equity markets aren't close to touching 2023, let alone COVID-19 ...

For some time, I have explained to subscribers, warning in my uncompleted series, "Out of Time", that at some point the debt bubble would get so big that supply would exceed demand. Fed Chairman Jerome Powell recently said, "Our debt is manageable but the trajectory of US debt is not."   That was pre-trade war. On the current trajectory, they will need to sell more bonds than the market can absorb. The result would be higher interest rates, when a weakening economy would otherwise lower them.  There were signs in the bond and currency markets that this worrisome inflection point may be getting reached. There was worry about a recession and global growth slowing and instead of interest rates falling and bonds serving as a safe haven in the turmoil occurring, 10-year Treasury rates rose over half a point last week.  Debt supply continues to grow. One source of influence was the tariffs, which are the biggest tax increase in history. Another source is the prospect of declining revenue from a recession. Trump says that other countries pay the tariffs. He should tell that to the business woman who canceled her order in China because she could not come up with the $200,000 customs required to allow her product to be imported as she loses her home. These tariffs on China will destroy a lot of American finances. The 90-day pause in tariffs for most countries had reportedly generated 20 who submitted written proposals and calls from many more. President Trump is ...

On the Grains What a finish to yesterday's Masters, as Rory McIlroy needed an extra hole to win after blowing a comfortable lead. That also reminds me of grain marketing: Sometimes, we make great sales, and sometimes, fear drives our decisions, last week's cattle trade was all about emotion and algorithms. However, what was important was that he didn’t lose his composure and allow one bad stroke to ruin the great tournament he had played. If I have seen it once, I have seen it or said it a thousand times myself, “If this sale is your worst, you will have a great year.” Often, waiting for the market to make another higher move that may or may not come to make another additional sale. The next three months will be vital for how fast and how many acres get planted. The weather, so far, isn’t favorable for 95+ million acres, and we never know what the summer weather will be like. Put options may be a helpful tool this spring to manage market movements. When writing this, December 25, $4.60 short-dated with a June expiration, is trading at 15 cents. Now, maybe that is not a level you are overly excited about, but that’s fine, there is nothing wrong with putting an offer in for $4.80 or something higher at a price and letting them work.  I am watching the short-dated because the price between them and the full-month options is about 50%. Yes, you don’t have the time, but ...

Current grain calls are steady to slightly lower, but the mood may continue to shift more bullish if U.S. stock index futures follow through on stronger closes from Friday. In the Headlines The latest additions to the tariff timeline included new exemptions for electronics made in China. Smartphones, computers, semiconductors, and other chip components will escape import charges. U.S. Customs officials were notified of the carve outs on Friday evening before President Trump said that he would explain the tariff exceptions on Monday. While U.S. equities remained volatile last week, the biggest moves were coming from the dollar and interest rates. The dollar index settled below the 100-par level and was at its lowest value in three years. Foreign investors were trimming their dollar holdings while also cutting exposure to U.S. Treasuries. The bond market had one if its largest selloffs on record amid suspected liquidation of Treasuries by China. Forced selling of Treasuries was also noted for U.S.-based hedge funds facing margin call pressures and there was likely added selling interest from the so-called 'bond vigilantes' that believe the government will continue to face problems with high inflation and debt. The 30-year Treasury yield poked just above 5 percent last week, but the government auction then showed robust demand and the rate ended the week at 4.87 percent. U.S. government representatives met with leaders of Iran on Saturday to discuss the possible start of official negotiations over Iran's nuclear program. The two sides plan to meet again this week, so there is the ...

All these claims by the Trump Administration about trade deficits exclude exported services in their calculation. Surely the sale of services to other countries means income to the US. If you include services, the US comes up with a more balanced trade with many countries, which goes against the trade deficit claim. In 2024, US services exports reached a record $1,107.8 billion, up $81.2 billion from the previous year, driven by increases in travel, business services, and financial services. Exports were $3,191.6 billion, up $119.8 billion from 2023 so one can see that services were too large of a contribution to just ignore. In the case of Canada, which has been a huge consumer of US services, they run a very small overall trade deficit if services are included with goods balancing trade. When all these Canadians winter in the US they spend money here in the US that is included in the services category (they used to). President Trump excluded services from his creative calculation of tariff rates, so he could show a deficit and higher tariff for all countries. If we include services this deflates his argument. The formula they used, starting with the overall trade deficit, would have calculated much lower reciprocal tariffs, if services had been included. They also used the retail price of goods sold in the calculation, not the imported price just to make the numbers larger. From AI:   Trade Imbalance: A trade imbalance happens when a country's imports (what it buys from other countries) are worth more than its ...

On the Grains Growing up in the Midwest, summer trips sometimes were to Great America outside Chicago to ride rollercoasters. I didn’t like the upside-down rides then, so I thought I would be a commodity broker and feed cattle. That makes perfect sense. What we have going on in the marketplace is one step scarier than those rides because I can at least look at them and decide if I want to get on or not, this time around, it doesn’t matter if I want to get on or not, you are going to do it. These equity markets are similar to getting on the ride and having the operator leave you on while they grab a bite to eat and nap. While metals did drop dramatically after the tariff announcement, they seem to be recovering nicely, with gold making new highs and silver slowly coming along, at least the metal market is starting to make sense even if the DOW/NASDAQ/S&P are still trying to figure out how to manage these times.      

I was lucky enough to have lost my phone recently so I had to get a new one. I got a good jump on the tariffs. We will see if the new phone can last through the length of the trade war. Let me know what that is. I had recently ordered and received a number of household items, odd stuff like stairs for the dog to climb up to the bed. When each box came, they were almost all "Made in China." We will be a lot more attentive to where this stuff comes from if it continues to be available. I doubt the dog would be so lucky if the stairs were 145% more expensive after the President's latest tariff hike.  Anything priced near a 145% markup will see demand destruction. 145%, applied to what have been $450 bln in Chinese exports to the US, sounds like it would generate a lot of revenue. That is an illusion, however, because when the tariff rate rises to near triple digits, trade collapses as does tariff revenue. Unless they too increase them, China is only charging us an 84% tariff on what we sell to them so I suppose the 61% difference is our margin of winning according to the White House. Tariffs imposed at these levels simply halt business for buyers and sellers. The tariff hikes could just as well be infinity+1 for all that it matters.  A 90-day pause was announced for countries that did not retaliate to ...

On the Grains Welcome to the main event, today’s USDA report, set to be released at 11 am. Dissection class is over, and it’s time to learn our grades. Following yesterday’s whopper of a news story, President Trump issued a 90-day pause on tariffs for countries that have reached out to negotiate a deal that set all markets skyrocketing. The right wing will toute this as a victory, issuing statements on how the tariffs worked and got people to the table, the left will say that President Trump blinked after the massive selloff in the equity markets and wanted to put a stop to the uninhibited selling of equities before people had a meltdown- personally, it doesn’t matter to me however you look at it, I look at it for the simple aspect that I am long live cattle, long corn, and long soybeans and a move higher was beneficial to my bottom line. China was not one of those countries, offering Australia an olive branch to “join hands” and fight against the United States, an offer they wisely passed on. President Trump said, “China wants to make a deal. They just don’t know how yet.” While that might be a bit of a stretch, Goldman Sachs revised the Chinese economy to 4% growth from 4.5% due to the tariffs. While 4% growth still seems high when everything you make has a 125% tariff. I get it, the purchaser of those goods will pay the tariff, but I can tell you ...

The middle two weeks of April remain dry for the majority of the US Corn Belt. Longer term forecasts, while less accurate, don't provide much in the way of moisture relief either. Those areas of Ohio and the Delta region should dry out quickly. Temperatures appear to remain near their averages through Central Iowa but run a bit cooler in the Eastern Corn belt versus the Western regions. We can begin planting corn this Thursday and temperatures will be in the low 60's. I don't know why you would not see the planters rolling hard this weekend. With the drier forecast, you could have most of the state planted by the end of the month.   Pete Hegseth should be happy. All anybody can talk about this week is tariffs. While I don't think we should judge the market reaction to the tariffs on just the last few days, clearly the market is not happy about them. Export-exposed industries will take the biggest hit. That means agriculture in general but within the ag production industry, some are still more vulnerable than others. The US cotton industry is likely finished. While it had been limping with a cane the last several years, the tariffs just put a double tap to its head. The US cotton industry has had a long history in the US going back to the 16th century. I always thought of US cotton as being as American as Apple Pie. I guess we are not making all of America great ...

Morning Market Talk Below, you will find today's installment of Moring Market Talk.   BREAKING: China Retaliates Further   You can copy and paste the link below for this morning's episode.     On the Grains Keeping up to date on the current situation in Washinton is becoming difficult. While rumors are drastically moving the market, this is one spot with AI trading that isn’t all that great. The Bank of England reported that hedge funds had faced significant margin calls with the tariffs, which is not surprising as we have seen wild swings. Treasury Secretary Bessent said that nearly 70 countries have now reached out to discuss trade deals. What happens, or how fast, remains to be seen, but it is a good sign to see something.   On the corn market, Secretary Bessent reported that the Japan-U.S. talks were going well and that they would receive priority. While the corn market has managed to defy all odd trading higher since the announcement, if something were to happen between Japan/Mexico- and the U.S., we could see sharply lower corn prices. The USDA report is likely to show an increase in exports as they pass on adjusting them in the February and March reports. Eventually, they must acknowledge that the pace is far exceeding what is needed to reach total projections for 24/25. Spain purchased nine million bushels yesterday in a flash sale, a country not known for big flash sales. Was this to appease President Trump’s tariff plans? This positive corn price action has come regardless of crude oil falling ...