CommStock Reports

On the Grains Good Tuesday morning, overnight we had the Trump tariff announcements and shockingly they look an awful lot like Trump 1.0 with an additional 10% placed on China Day 1. While China maintains that nobody will win a trade war, it looks like one is coming. It could take the number 2 economy down hard, as some are projecting a 1% slip in China's GDP. Now on to the markets, what is surprising to me is that we had these announcements yesterday around 6 pm and the grain markets haven’t reacted negatively at all, obviously a bunch of tariffs were already priced in. Speaking of priced-in, flash export sales to Mexico of 364,791 MT for 24/25 and 89,298 MT of corn failed to produce any reaction. We continue to believe that it is frontend loading by Mexico here is a visual chart of where we are at marketing year to date. 

DJTs rejection of globalization and free trade policy, soon to be replaced by an "America First" trade and foreign policy, is not a threat or negotiation ploy. It is real and about to be implemented in 2025. The world relationship as we have come to know it, post WWII, is about to undergo a material change. The opportunity that the US has given geopolitical allies to ride on our coattails as equal partners is over. The opportunity for allies to roll forward in the US orbit and be protected by the US policing the world order is over. This relationship was not one-sided as the US received great benefits as well. The US is the center of the world economy and without access to our markets or our security pledge to include trade partners under our umbrella of protection, it is about to undergo changes that will reorder the world trade-wise. It will geopolitically fragment into smaller zones of influence and self-interest. DJT is going to create an America First and foremost entity and will sell the benefits of the American alliance going forward to former and new allies for a fee. Even traditionally close allies and those who share our borders will be forced to pay to maintain relationships that they had become used to that they will now have to pony up for. Relationships are about to become almost totally transactional with decision making for who, how and what kind of relationships we have with other nations made ...

Above you will find today's installment of Morning Market Talk. Soybeans Hold Support You can click on the picture above to take you to this morning's episode. On the Grains Here we go off to the races for the holiday shortened week, corn continues its sideways chop, wheat grinds lower and soybeans try to mount somewhat of a recovery after last week's push to contract lows. This potentially could be one of those weeks that can be a momentum turner heading into the balance of the year. However, corn just seems to be stuck and will need something to boost it along. Eric talked on Friday in the video portion of the report about the wedge formation on December corn, the bottom side of the wedge is $4.23 and we will need to hold above that and then the 50 DMA is $4.18. The Commitment of Traders had the funds net buyers again last week of 4,639 contracts and long 114,628. If we punch the bottom side of that wedge we could see some of those longs hit the exit door. Over the weekend there were no long range attacks in Russia/Ukraine which is somewhat bearish wheat and not supportive of corn. The largest corn growing region in Argentina the Cordoba region has been dry however it is forecasted to receive rain, if that disappoints we may get the push to bust out of that wedge to the topside. Soybeans had great flash sales last week yet failed to mount anything of substance and the ...

Grains look set for a steady to slightly softer open as traders watch for guidance from the outside financial markets, especially the dollar index after it rallied to a new two-year high on Friday. A shortened holiday trading week includes markets closed for Thanksgiving and open for a shortened session on Friday. Interest rates, equities, energy, and metal futures will be open for trading on Thursday night. Grain futures do not have a night session on Thanksgiving; they will open at 8:30 am central on Black Friday before closing early at 12:05 pm. In the Headlines President Trump announced his selection for Secretary of Agriculture over the weekend, Brooke Rollins from Texas. Rollins was the director of the Domestic Policy Council during Trump's first term before last leading a research institute that supported Trump's 2024 campaign. She will be the voice to address how agriculture may be impacted by tariffs and changing trade policy as well as the official who would implement any changes to school lunch programs or SNAP benefits that might be pursued by the nominee for Health and Human Services, Robert F. Kennedy Jr. All of the various farm organizations have released their estimates for the price of a Thanksgiving dinner. The 39th annual tracking by the American Farm Bureau Federation had it at $58.08, down 5 percent from last year. The price of the turkey was down 6 percent as weaker demand was blamed as an offset of the lower turkey production that has followed from several years of ...

Friday was another session where grain traders had most of their focus locked on the continued tumble for soybean oil futures. After just testing the calendar year highs less than two weeks ago, the nearby soy oil contract has since dropped over 15 percent. Much of the soy oil loss was led by lower palm oil prices, which involved uncertainty about export demand and about the outlook for biodiesel production in Indonesia and Malaysia. There was related negativity about the potential direction of renewable fuels policies here at home as well, but that bearishness was balanced against the surprising surge in U.S. soy oil exports.   A big part of the current soybean oil story starts with the bearish outside reversal that futures suffered on November 11th. Soy oil futures reached a new six-month high early on that Monday session before traders went for the exit once they heard about President Trump selecting Lee Zeldin for head of the Environmental Protection Agency. Fast forward to this last weekend, the soy bulls were further spooked by the choice for oil company CEO Chris Wright to lead the Department of Energy. Zeldin was noted not necessarily for being against renewable fuels but for being anti-big government in general, while Wright was suspected to have a bias for Big Oil over the biofuels industry.   Crude oil is also experiencing heightened sensitivity to the new political influences and remains a key input for soy oil. Saying "drill, baby, drill," Trump will be expected to support further expansion ...

On the Grains Good Friday morning readers and good luck this weekend to the Wisconsin deer hunters. My positive attitude and halftime speech yesterday morning weren’t enough to get corn to go up and challenge that resistance that I have been mentioning. Yesterday exports for corn came in at 58.8 million bushels (mbu) which was an increase over last week's 51.8 mbu and about steady with last year's 56.4 mbu. Here is where it gets interesting, total outstanding sales are 1.236 billion bushels, which is up 39% year-over-year. Currently, the corn export program needs to average 24.1 mbu/wk the balance of the year (BOY) vs last year's needed pace of 31.9 mbu a very doable number. The take-home point is, will the market see USDA adjust exports higher or we will see sales slowdown? The likely outcome is that both will happen. Mexico has 12.9 MMT on the book’s vs 11.7 MMT last year and while they generally don’t run the risk of cancelling, that is still a possibility. China has yet to purchase any meaningful amount of corn but before we get too worked up about that remember last year, they only had 1 MMT (39 mbu) on the books through mid-November a number that could be offset with increased ethanol production.

Part 3 of 3-part series The Wall Cloud   Perception is reality and whatever perception that US consumers have of inflation it is of the worst kind. Earlier this year, I was checking into a hotel in Omaha, or trying to. The clerk was enthralled in conversation with others checking in before me, where they were all comparing notes on their extreme displeasure of gas prices having just shot up. There had been a fast and furious 40 cents gallon increase for whatever reason and they were stung by it. It sounded like it was the most important thing that had just happened to them and they were not getting over it. Gas prices did not trend much further higher and later fell back but they were not going to forget this. Gas Prices were thought of as too high and that was stuck in their consciousness like a pig in a bog. If they were asked in a survey that day whether the country was on the right or wrong track, they would have been explicit in picking it to be "wrong". Price inflation turned out to be the most telling factor in the 2024 election. I am sure that the democrats saw that in their polling but could not respond to it enough to change where they stood in the public perception. Economists makes charts of inflation that differ from the consumer experience at the store. Here is a chart from the Fed showing contrasting perceptions.     I think that the impact of ...

On the Grains I can feel it in my bones, today is the day, and the march is on for December corn. We finally have some movement in grains to the topside as corn makes another attempt to take out the $4.35 December level. We have reported on it since the USDA/WASDE report. Yet the market has failed us, leaving us to sit and wait for a broader push from some other commodities. Yesterday we had excellent flash sales, 202,000 MT soybeans to China and another 220,000 MT to unknown yet beans didn’t even attempt to move higher, and while up 7 cents overnight it appears that they will struggle at the $10.00 level. Malaysian Palm Oil continues its sharp downtrend overnight which weighed on the soybean oil complex yesterday. However, it appears that we can divorce ourselves from that, at least for today, but ultimately our direction will come from soy oil and exports for soy oil are underperforming. The export sales report released this morning will provide direction for the day session.

Much of Brazil's Center West region is on the home stretch, looking to wrap up planting this week while many farmers have been done for some time. Planting pace continues to stay ahead of the historical average, surpassing 80% complete overall this week. RGDS is typically the last state to finish planting, and it is already approaching the halfway mark. Planting pace is now beginning to slow down as we reach the finish line. There will likely be less than 10% left to plant as we reach December 1st. But what matters most to the market is that the bulk of the soybeans appear to be going in on time and without any significant issues.   Last year, it was the week of November 20th when the market topped out following a dry spell in Mato Grosso. It then began a slow and steady descent over a 90-day period, giving up nearly $3/bushel, finally finding a bottom in late February. Could history repeat itself? Last year Brazil lost 10 MMT to drought and the market still moved significantly lower. So far this year we don't currently see any major weather issues propping up the market and so it is hard to imagine the market rallying as the crop develops. We interviewed a grain market analyst on The CommStock Channel that described the planting season in Argentina as "perfect". The growing season has a long way to go and while we would expect some sort of weather event someplace, it would have to be ...

On the Grains Good Wednesday morning readers, let’s get this day started, overnight news was limited again. December corn had another untamed 2 ¾ cent trading range as we await something to get us out of this rut, just what that is remains to be seen. As I start this morning’s report we still have risk on in crude oil as Iran has skirted the U.S. sanctions put on in 2018 and are now selling $60 billion worth of oil using ghost fleets and tanker concealments. Either way, it’s difficult to imagine corn selling all that much cheaper with a steady to firm oil market. Anything near the $4.17 December will probably be bought and anything over $4.30 will most likely be sold. As the sand in the hour glass, these are the daily/weekly ranges we have to work with.

Part 2 of 3-part Series The Wall Cloud   I have some good news and bad news regarding RFK. The bad news is that he has been appointed Secretary of HHS. The good news is that he will not be appointed Secretary of Agriculture. Prior to the election he was videotaped standing in front of USDA headquarters in Washington excited about what he was going to do with our food system "when he got into the building." He will impose influence over how foods are regulated in his duties pursued from HHS. In fact. I believe that he intends to run the USDA remotely from his HHS office. Poor poor whoever is Ag Secretary. It will be interesting if Trump can find an Ag Secretary who will not get in the way of what he is there for. After all, the USDA is a prime candidate to get DODG'd, something you might be surprised as to how many farmers will support. It may not matter who Trump picks for Ag Secretary. RFK takes himself seriously and will hit the ground running. Others will soon be taking him seriously too. Food companies like Kellogg's, Kraft, ConAgra, Tyson, General Mills and others along with even McDonalds will pool resources to send a delegation of lobbyists and litigators to Washington DC to battle RFK's HHS. Consumers should be ready to pay more for RFK's food inflation.  Remember that I sold a portion of our family Eli Lilly stock? Eli Lilly investors reacted negatively to the prospect ...

On the Grains Another rollercoaster of an overnight trade as we see December corn up 1 ½ this morning with an impressive trading range of 2 ¼ cents. Honestly, without wheat and crude oil making a correction yesterday we probably wouldn’t have seen much for positive action on corn. In my opinion that correction was all war premium being put in to the market.  Overhead resistance continues to be the $4.34 from the USDA report on 11/8. Again, non-bullish weather in South America seems to be the focal point and it looks like we should get the safrinha corn in on time as bean plantings now are 78% this week vs 68% last week and 71% on average. For the record, when it seems like the market has tried to roll over in the past we have failed, it feels like it is trying to roll over again. Overnight Ukraine did use U.S. weapons for deep strikes, will that be enough to push this higher, time will tell. Here is a snap shot of the corn chart since the end of September, with the 50 DMA.

Part 1 of 3-part Series I can remember standing in the doorway to our home that leads to the basement looking to the west and seeing what was in the preceding picture approaching… A Wall Cloud. There was a different smell in the air and rumble in the distance so that all of your senses were playing into what was happening. The wind went briefly still, literally becoming the calm before the storm. It could make the hair on your neck stand on end. It gave you a sense of raw power and that it was irresistible. You hoped that it would provide needed rain but there was also the possibility that wind and hail would bring it. You knew that things would look different after the storm passed than they did before and there was some angst mixed in the emotion of what could come to be. There would be some good and some bad in the aftermath of the storm. Would the crops be watered and the trees still standing? You hoped that your insurance policies were up to date. There would still be a deductible to pay. After feeling the leading wind gusts tip my cap, I would shut the door and retreat to the basement to join the family and ride it out. The experience was ominous as well as being a bit thrilling.   I see a wall cloud approaching this great country. It was coming regardless of the politics after decades of buildup. The people know it, which ...

On the Grains The daily grind is on as we start the last full week of November, where did that time go? With only a handful of days before the December options expire it will be interesting to see what is left on First Notice Day, how much demand will try to stay in the December contract and force delivery? Below is a chart of the Dec/March corn spread starting in September, as you can see we have narrowed that up as exports continue to be excellent however, we still have a processor market that is short bought and will need to cover deliveries over the holidays as well. For anybody that wants to clean some cash corn up before the end of November keep an eye on those processor bids, I would expect to see some pushes being paid. What is concerning in the corn market is that the funds did add 87,000 contracts to extend their long to 109,000. We have gone from short to over 100k long and only managed to have rallied this market 25 cents. At this pace even if they were to stretch it out to a record position we would only have another 50-75 cents to move and its difficult for me to see a fundamental reason for them to get that long at this time, if they were to keep buying I am going to be moving grain out of the bin and looking to protect some 25 production as the subsoil is ...

Political headlines continued to dominate the weekend news cycle as fresh developments were limited in other areas. President Trump selected oil-fracking company CEO Chris Wright to be the Secretary of Energy. Conflict in the Middle East was heating up at the end of the week with reports about Israel destroying an Iranian nuclear facility, but then it looked evident that Iran was backing down from its recent promise of attack, instead supporting Lebanon to work toward a ceasefire agreement with Israel. Grain futures may face early selling pressure if crude oil kicks off the week softer like it has so often lately. In the Headlines The edible oil markets attracted extra attention again last week as reactions to both the Trump EPA head selection and the Senate leader election were considered for their future influences on biofuels policy. Soy oil futures were correcting lower along with palm oil before both markets closed better on Friday. Indonesia's government confirmed that it would implement a biodiesel program requiring palm oil blends of at least 40 percent. It also helped soy and palm oil that Chinese government officials confirmed plans to remove tax subsidies granted to exporters of used cooking oils. Traders were sounding the alarm about Chinese bean demand again. Importers are said to be flush with incoming soybean shipments. Chinese crush activity has accelerated, but demand is not keeping up with the excess supply of meal that is building up. Meal prices were down hard in China last week to wipe out processing margins ...

Friday felt like a last stand for the grain bulls after a week full of negative news and several key technical failings. Corn, wheat, and soybean futures fell four sessions in a row to test the next round of chart points thought to be significant to quantitative-based trading funds. Other discretionary funds had been selling commodities this week on the input from outside financial markets, particularly from the sharply higher dollar. Grains did finish the week on a positive note, although it was by no means a convincing victory for the bulls.   It is important to appreciate that there is still a considerable army of bullish grain traders willing to play defense against their positions. Coming into the week, it was the first time that the managed money funds had turned net-long in corn futures and options since the summer of 2023. The large speculators held over 273,000 contracts long to oppose other similar funds who remained short by about 251,000 contracts. Fund positions held just moderately net-short in soybeans and wheat; however, futures prices were not far from recent lows, so speculators could turn reluctant to rebuild shorts at much lower price levels than what they had sold previously this year.   The Monday-through-Thursday selloff sparked technical buying interest for the speculators while also likely stirring up some bargain buying by grain end users. A poor export sales report on Friday morning reflected tentative buying around the election. More flash sales popping up early next week would be a confirmation that buyers ...

On the Grains Yesterday wasn’t a good day in any market and beans were no exception. CONAB started the day off with its Brazilian projections at 166.1 MMT, while the USDA is at 169.0 MMT. Where have we heard this discrepancy storyline before? All last year. Technical selling dominated the trade as we took out the 20 DMA and the psychological support of $10.00 on the January beans. While we know that the bean crop will be large, if there is hope, it's for the Safrinha corn production. USDA has this year's corn pegged at 127.0 MT (up 5 MMT from last year) however, CONAB’s early estimates are for 119.8 MMT, a wide gap to close yet.

New Corn and Soybean RECOS: Cancel the previous orders. Sell 20% of 2024 corn at $4.40 May futures. Sell 10% of 2025 corn at $4.40 December 2025 futures. Sell 30% of 2024 soybeans at the market. Sell 10% of 2025 soybeans at $10.17 November 2025 futures.   Spoken by Elon Musk, I think the admonition "Clear the Decks!" is about to prove itself to be prophetic advice. I think that DJT's new Department of Government Efficiency (DOGE) is about to become very real. Trump has initiated the creation of the new department with Elon Musk and Vivek Ramaswamy driving the dump-truck that they intend to run over as many of the 450 or so federal government agencies with as they can as soon as realistically possible. The country's fiscal train is racing at a velocity soon to become terminal, causing us all to wonder when it is going to fly off the tracks. When you are spending nearly $7 trillion a year and taking in just $5 trillion in revenue, continually borrowing to fund the deficit, at some point in time global confidence in the good faith and confidence in fiscal USA is going to collapse. No one politically has really wanted to take on the thankless task of balancing the federal budget. Congress has failed, administrations have failed and even in DJT's first term, he failed too.   Let's be honest, during DJTs first term he made the budget deficit much worse. There was no reduction in spending and his tax cuts, which were extremely popular, were ...

On the Grains I’m unsure how many days I can try to spice up the overnight market with a wildly up ½ cent comment, but here it goes again today. In my 20+ years, I’ve never seen a Thanksgiving holiday chop trade the entire month of November. This is the year as the crop was put away early, and the basis in western Iowa reflects that. For producers that are going to move grain on a basis contract, please put pricing orders in at the same time so we don’t repeat last year’s end-of-February markets where all of those basis contracts were forced to price before first notice vs. March.

I typically try to catch the last few days of planting on the family farm in Brazil in late November. (Mostly so I can take at least some credit for its successful completion) J  But from the looks of things, they will be finished by the time I get there. They are over halfway done already, and the forecast continues to show solid moisture well into December. Overall, as of Monday Brazil is 72% complete with the soybean planting. Both Parana and Mato Grosso are already wrapping things up. For the most part, Brazil's crop will be planted by the end of November, slightly ahead of schedule.     We see continued rainfall blanketing the Northern tier of Brazil's growing regions in the next ten days with most areas receiving 1" to 3". Argentina's largest growing region of Cordoba along with neighboring RGDS should see additional moisture as well. The only state that appears to lean drier is Parana, but even then, that appears to be short lived as precipitation looks to return next week. Heading into December, we don't see many issues in the long-range forecasts, except for the MATOPIBA region in the northeast that we have highlighted in prior reports.   Other than the USDA overstanding corn yields, strong demand for US corn appears to be keeping prices afloat. Brazil briefly overtook the number one spot for global corn exports last year, replacing the US. However, the US is back on top in 2024. Much like production estimates, there is a large gap ...

On the Grains Good morning ladies and gentleman, we got another bucker overnight as corn is wildly up ¼ of a cent and soybeans are down ¼ of a penny. I started in the grain business in 2004 and remember the months that corn would only move 3-4 cents for the whole month, guess we are back at that. With corn and soybean harvest all buttoned up, 95% done on corn and 96% on soybeans, it’s a hurry up and wait game. While I am a little more friendly corn, some put options or options spread might be warranted as we sort out this geopolitical risk. July at-the-money ($4.50) puts are running 27 cents and depending on risk tolerance, you could sell a $5.10 for 11 cents to cheapen that up. With last year’s yield and reduced drying cost this should be at a profitable level, for most people.

Had Kamala Harris won the presidential election… accountants, lawyers and financial planners would have been inundated with clients pushing the election into a mad rush, frantic to put together and execute financial transactions before the end of this year. There is a lot of relief that the election of DJT just bought them more time…at least another 4 years. Had the democrats won both branches of Congress and the White House, the 2017 tax cuts would have largely been repealed, capital gains taxes would have risen, estate tax liability exclusions and the individual gifting limit would have both been shrunk and the stepped-up basis would have likely been eliminated. The 2017 tax cut provision sunsets at the end of 2025 but democrats, had they gotten a mandate, would have likely pushed through a replacement earlier in the year with an unknown date that ended current favorable tax considerations. The safest thing to do was to get transactions completed yet this calendar year to avoid risk to potential changes in tax laws. There were lots and lots of folks that had transactions pending waiting on the outcome of the election before pulling the trigger. Now waiting until 2025 should be safe. DJT and a GOP Congress are likely to fully extend the 2017 tax laws or even go further with additional tax cuts. The pressure came off.   For example, I have a long-time client who called me for advice saying that he had power of attorney with decision-making responsibility for a family ...

On the Grains Good Taco Tuesday morning, we start the day with limited news on both corn and beans as the overnight was only up a penny on corn. Interesting to note yesterday, the front months did better than the deferred contracts. Two things that are telling for us, first that the demand is stronger than expected and we want to own corn now rather than later, secondly there could be some concerns over the tariffs and the long term effect of those by harvest of 2025. Maybe this will be the fuel to bust us up over that spike high created last Friday after the USDA/WASDE report.  Unless the weather forecast shifts, that could prove to be a spot to clean up some sales or get some put option bought for next spring/summers storage bushels for producers that want to have price protection for grain in the bin. 

PLEASE REFER TO THE HEDGE AND TRADE STRATEGY PAGE FOR UPDATES!! USDA has a track record of putting out bad news early in a crop year which when factored into balance sheets is bearish. One great example of this rut they are in is that they start out the year with some high estimate of soybean stocks, weak exports, burdensome soybean carryover projection which depresses markets, and then the after harvest when farmers have sold a lot of their crop, they get real and adjust production lower in the November production report. Corn basis here never dipped below par during harvest and is now +30 above CBOT at the ethanol plant. Our soybean basis is 45 under January.  Basis levels for both corn and soybeans have been signaling for some time now that supply and demand were in better shape than the USDA and CBOT suggested. Heartland rains allow Mississippi river levels to recover. The WASDE report saw USDA reduce corn production by 61 mln bushel which came directly off the carryover with no adjustment being made to their demand estimates. They put it at 1.938 bln bushels…still a healthy carryover. RJO sees exports +75 mln bushels and ethanol crush +50 mln bushels above USDA which would shrink the carryover 125 mln bushels to near 1.8 bln. USDA looks for US corn acreage to rise 1.3 mln acres from this year to 92 mln in 2025. I can see that. We are increasing our corn acres in 2025 in our farm cropping ...

On the Grains While we may not all agree on the election, or just how the next 4-years shakes out, we can agree that the it’s great to have the epic return of Yellowstone back on Sunday nights, one of the greatest TV shows ever made and if you don’t agree your just wrong. (HA kidding, this is America and its possible there might be one person that subscribes that doesn’t like the show)    Speaking of epic returns, the USDA and WASDE came back at us with some friendly news, I won’t go into too much detail as we covered it in-depth yesterday but the bean reduction was pretty drastic as it was the largest ever drop from October-November yield cut of 1.4 BPA. Most of the production loss was in an “I” state only Indiana had a yield increase. Overshadowing the report was news that wires services were reporting President-elect Trump had tapped Robert Lighthizer to return to the role of U.S. Trade Representative, the same role he had with China during trade war 1.0. Weather patterns have shifted to a touch dryer for South America, something to keep an eye on with the funds as short as they are.