CommStock Reports

I drove I-35 North from Des Moines to Minneapolis this past weekend. Crops looked good from the highway, but it was not hard to find some standing water. This would indicate fields are well saturated, and yet more precipitation is scheduled for this week. A lot of tile got updated in our area last year following the flooding, which is proving advantageous early in the season. Are you looking for some early Christmas presents for the kids? Consider getting the family some farm tile. It can't fit in a stocking, but you will need it eventually. My father installed a fancy 9-acre CRP waterway in one of my fields. Nothing says Christmas like the gift of CRP. It is not as shiny as a new gun, but it is being put to good use this season.   The only good thing about the heat threat this weekend was that it was brief. Temperatures are in retreat as it is replaced with more rainfall of 2" to 4" in the upper Grain Belt. The heat does linger in the Eastern Corn Belt with temperatures up to 7 degrees above average in Illinois, however, are closer to normal in Iowa and Western Corn Belt. While pockets will see scattered showers of half an inch, the warmth should help the water table recede and root systems to move deeper.  We see favorable precipitation reaching into the first week of July. Beyond that the precipitation begins to level off and leans drier later in the month. ...

On the Grains You can’t call it a comeback unless you are down, which corn is surely down, pushing calendar year lows (Dec 25) yesterday. Funds continue to point to the weather and pile on. You know what happens when the boat gets heavy on one side? It capsizes, or, in commodity terms, capitulation occurs. The longs are starting to get weak in the knees, which is justified given the ongoing war in the Middle East that can't even move this market.

I do not profess to know the full current state of affairs in the trade war with China but I know enough to know that president Trump is far from being transparent as to sharing what they are with us. He is giving us the white-washed version of the state of conditions that exist in trade between us and China. There may have been a miscalculation in the degree of leverage that the president believed that he had over China and their response may have come as a surprise to him. That response was that they came close to completely shutting off their exports of rare earth elements and permanent magnets made with them to the West. The surprise specifically was in how quickly that embargo significantly disrupted our supply chains. Few knew how dependent we were on China for many items. You could buy the finished product made with rare earths and magnets in China but not the components to make them yourself. Chinese customs cracked down on rare earth smuggling.   China controls exports of rare earth elements and industrial magnets through export licenses. Here is a chart from the WSJ showing their response to Trump tariffs…a drop of 59% in April followed by 93% in May. That lite a fire under the US urgency for trade talks:   Supply chains the world over are fully dependent on obtaining key rare earth minerals and derived materials of which China is the dominant processor and manufacturer. The supply of rare earths is not ...

On the Grains What is confusing is the comparison between this year and last year. Here, we are forecasting a record crop, with G/E ratings down 2% to 70% compared to the previous week, and 1% higher than last year. The national final corn yield came in at 179.3 BPA, yet we are trading as if that 181.5 BPA is in the bag. So, 1% better G/E rating is worth 2.2 BPA, got it. Alright, moving to carryover. Last June, the USDA projected a carryover of 2.097 billion bushels. This year, the USDA has 25 crops with a 1.75/1.8 billion carryout. Yet, on June 24, 2024, December corn futures settled at $4.42, last night, December 2025 corn futures traded at $4.32. You can also include world stocks, as they decreased from 285 MMT to 275.2 MMT. The Commitment of Traders report, released yesterday, showed that funds sold an additional 20,768 corn contracts, leaving them net short 181,788 contracts. In June 2024, the funds had a net short position of 212,000 contracts, and the price was higher. Sure, the maps show rain, and rain makes grain, yet it feels unlikely that 181 is in the cards with the broad swath of corn that isn’t looking the best. The funds were forced to cover the last harvest and acknowledge that the crop wasn’t as good as expected. Yet, in wet years, it appears that we generally must wait until the January crop report to receive much positive news.

I had not planned on writing another CommStock Report on the Middle East quite so soon but I am not in charge of the world. While 14 bunker-buster deep-strike bombs delivered on Iranian nuclear sites had to have rearranged the landscape, we will soon see if they change the hard mindset of Iranian leaders. I will deep dive into the historical context. I assumed that president Trump was going to have to follow through on his threats to jointly participate militarily with Israel in the war against Iran or no one would take him seriously in the future. He had given Iran 60 days to concede their nuclear program in negotiations and when that deadline expired Israel took the lead with the initial attack. There is no way that Iran could be allowed to develop nuclear capability as, being religious zealots, they may think Allah wants them to use it. We don't need any more Kim Jung Un's to deal with either. Iran's intention to become a nuclear power meant that if they were unwilling to cooperate, we had to make the decision for them to insure it was forcefully done. In the larger scheme of things, President Trump had to go with what I call the "Fonzie moment". Remember the sit-com "Happy Days?" When the Fonz entered a room everyone else stepped back to give him space. When Richie asked why people reacted to the Fonz like that… someone whispered to him, "because one time he hit someone!" Now ...

On the Grains What a weekend, the US did join in the destruction of Iran’s nuclear sites. A move that was suspected to take another week for President Trump’s decision, yet some analysts are saying that it might have taken too long already, and that the enriched uranium has already been moved. Iran has called for retaliation against the US as major cities go on high alert for sleeper cells. More on that below.

The start of a heatwave may inject weather risk premium into the grains to open the week, assuming the commodity space also benefits from the tailwind of oil prices rallying in response to the weekend strike against Iran. In the Headlines U.S. forces used bunker-buster bombs to strike three nuclear facilities in Iran this weekend. Iranian leaders tried to downplay the effectiveness of the operation, but President Trump said the underground nuclear sites were "completely and fully obliterated." There will additional developments according to Iran's response and as U.S. officials continue to give briefings to the public. All markets should show reaction to the widening conflict, but crude oil remains the most sensitive as one possible point of retaliation includes Iran attempting to close the Strait of Hormuz, which has recently handled some 20 percent of global oil flows. Another Russian strike against the Ukrainian port city of Odesa occurred late last week. There was damage to a railroad after what Ukraine reported was an attack by 86 drones. An earlier skirmish around Odesa was thought to have contributed to sparking the 25 cent rally for wheat futures on Wednesday last week. The recent return of focus on the port has observers wondering if Russia is shifting back to actively targeting Ukraine's agricultural and shipping assets. Russian wheat crop estimates were on the rise again with the country's ag minister saying production could reach 90 million metric tons. USDA has recently called the crop 83 mmt, which aligns better with reports of drought having ...

We had shared the long-term forecast for a 2025 drought based upon the 89-year drought cycle. I also said that we would not position for it in the market until evidence surfaced that supported drought development. Here we are entering the last half of June and no major drought appears to be developing. Locally our farms have gotten over 5 inches of rain so far in June with more in the forecast and the field tile have begun running. Statistically the window for the 89-year drought would extend another 3 or more years. Our crops were planted in April under good conditions with our soybean crop having the earliest planting date (April 24) in our farm’s history. A year ago, at this time, we had just finished planting our crops in June and then we were thrown the greatest flood here in NW IA/S MN history. Yet by August last year we were in drought so we all know how variable extremes can be. I had some prevent-plan corn and below APH yields last year. This year is the opposite so we hope the yields will be too. We are presently looking at potential for the state of Iowa to produce an all-time record yield. The same may also be true for KS, SD and MN.   Due to recent rains, we will actually bank some sub-soil moisture for mid-summer. Early dryness should have rooted down crops. Fertilizer and chemicals went on well. The burst of heat this weekend will produce an ...

Morning Market Talk Below, you will find today's installment of Morning Market Talk.   Can Grains Stand on Their Own?   You can copy and paste the link below for this morning's episode.     On the Grains   New Recco Day 1: Sell the balance of 2024 wheat regardless of class at the market. While wheat is starting to make a move higher, we are capitalizing on this latest rally and cleaning the bins on 2024 wheat.   New Recco Day 1: Sell 10% of 2025 wheat production vs the September futures at the market.   Good morning, let's finish the week on a high note. We have been talking about wheat for what feels like a year, waiting for it to break out and pull corn with it. While we experienced a breakout in wheat earlier this week, it was hindered by excessive moisture in the western regions (potentially damaging quality), and the EU/Russia are dealing with extreme dryness in several areas. Weekly export sales estimates are 300-500, up from last week's 188.1. With wheat on the right path, its corns turned to follow along. Which it did overnight, posting minimal gains, up 2 cents on the December contract. The December weekly chart has rock-solid support at $4.34, and a close of $4.475 would be ideal ($4.46 this morning). Now, it's fine to follow the wheat higher, but ultimately, we need a storyline to support that move, which is developing. Weekend high temperatures are forecasted to be well into the 90s, with many places (including here) estimated heat index of well into ...

The market continues to trade weather, which overall remains non-threatening.  The Bermuda High is seen sticking to the Eastern Coast, bringing continued rainfall for at least the next two weeks.  Heavier rainfall is centered in Iowa and surrounding states bring up to 3" by July 1st. Parts of the Eastern Corn belt which have been excessively wet, will see less rainfall.  We have previously identified a region of Northern Illinois and Southern Wisconsin which have missed most of the rain up until now.  They are now expected to get 2" later this month which should help out a lot.  If I had to pick a region that was shifting drier, it would likely be North Dakota.   One analyst described the market rebound on Tuesday as dead cat bounce.  Meaning there was more room to the downside.  Chatter at a local grower meeting in NW Iowa could overhear some farmers saying they have 280 bpa potential.  We agree but there is a long growing season yet to go.  Summer heat is finally arriving with temperatures roughly 6 degrees F above average in Iowa and one pocket in Northern Illinois almost 10 degrees F above average.  We see this as more of a positive than a negative as the month started out cooler than normal.  Heat units are needed this time of year to help the crop development speed up.  If it was August and temperatures were 10 degrees above average than it might have the opposite effect.  But that is then, and ...

On the Grains Good morning, December corn has managed to recover half of what it lost on Monday as we await something of substance on the 45Z. The Senate version of the 45Z biofuels bill reportedly does include a reduced tax credit of 20% for foreign-sourced feedstocks.  Why we are using taxpayers' dollars to fund foreign-sourced feedstocks is beyond me. Both the House and Senate bills will be extended to 2031.

PLEASE REFER TO THE BROKER COMMENTARY PAGE FOR UPDATES!! Excerpt from the 6/12 Thursday Commstock Report: “Closing the border and deporting actual criminals is widely supported. After that there is a pause for reflection before going further. Most realize the degree to which our food supply chain is dependent on undocumented or falsely documented labor and are incredulous that they would purposely disrupt it, given the focus on food price inflation. Will ideology overcome good sense?” It appeared that President Trump was made aware of the big mistake that they are on the precipice of making, with their over-zealous immigration enforcement and deportation actions and stepped back from that brink last weekend. After vowing to protect farmers and that “changes were coming”. This is what followed: Breaking News: They called it a temporary pause in enforcement and deportations in this sector. You know how that goes… they could change it anytime. This a.m. it sounds like they did. The pause may have only lasted until Monday as word went out that this order was being at least partially reversed and the raids were back on. Packing plants, farms and hotels were targets for raids again. The backstory was that Ag Secretary Rollins had convinced the President of the necessity of the pause but then Chief immigration ideologue Stephen Miller and his protégé ICE Queen Kristi Noem were infuriated by the pause and forced its reversal as the pause would give illegals safe places. This could change again but doubt and fear will continue which can take down ...

On the Grains Good morning. Yesterday’s disappointing day in corn occurred despite excellent export inspections, as traders examined maps showing rain and improving crop condition ratings. Although the crop condition report was released after market close, there were expectations for an improvement in the scores. Iowa saw a slight decrease from last week, down 1% to 64% G/E, which is 10% above last year. Illinois increased 2% and was reported at 70%, compared to the previous year’s 65%, and Nebraska was up 4% at 73%, but well below last year’s 81%. December corn did test and held support yesterday, barely. The European weather forecast now indicates that arid conditions and increased temperatures are expected to persist for the next two weeks.  Argentine corn continues to be the cheapest export corn in the world. We will keep an eye on export sales this week to see when buyers switch origin.

PLEASE REFER TO THE BROKER COMMENTARY PAGE FOR UPDATES!! US Army Parade Review: I loved the DC parade. We played “where is Ethan?”, looking for Eric Relph’s son in the mix of soldiers. They found him for us, third over from the left in the first line behind the 4th Infantry flags. They should be proud, something for the family to look back on. His job is serious though…we thank him for his service. While the parade reportedly cost $45 mln… that is not that much if you amortize it over the 250 years of the US Army. It was a family friendly, not over the top event that projected the best of our military. It will aid recruiting. The US Navy has its 250th year anniversary coming this year too, October 13th. Most of the Navy is deployed. Maybe a fleet review at Norfolk? The birthday of the US Air Force is September 18th 1947, the Coast Guard officially began August 14th 1790 and the US Space Force is the newest branch of service, born December 20th 2019. How Long Does It Take for Iran to Admit Defeat? Israel's attack on Iran answered some questions that I did not have a clear explanation to before it commenced. One question that I have had was why the Saudis, Emirates and Qatar were so cooperative with Donald Trump as to keep pumping more oil when he asked them to as crude oil prices were clearly under pressure because of it? The price of oil had fallen well below their budget needs, and ...

On the Grains Marketing is much like assembling a 500-piece puzzle, you find two pieces that fit and keep working on it, only to later realize those are the incorrect pieces. Gradually, we construct the picture with greater confidence. Then, unexpectedly, a “Black Swan” appears and alters everything, much like last week, Red Rover launching some ballistic missiles. Given the limited follow-through in corn over the weekend, this is a bit concerning. If we can’t even drive this market higher because of war, what can we elevate it with? The EPA gave us a bone, I honestly did not anticipate those RVO numbers for biodiesel. Historically, it hasn’t yielded great results to rely on the government, yet soybeans continue to lack follow-through.

Grains look to follow through on a firmer close from Friday, with war in the Middle East and bullishness over biofuel news being the top inputs. Upside may be limited by a favorable weather forecast. In the Headlines Back and forth missile attacks continue between Israel and Iran. Israel's strikes against Iran's nuclear assets rallied crude oil futures by nearly $5 on Friday. The U.S. government is taking a measured approach as President Trump urges Iran to accept a nuclear deal. Soybean oil futures were locked limit up for most of the Friday session in response to the government's announcement of higher than expected renewable fuel volume obligations. A substantial increase of the biomass-based diesel fuel target contributed to the total biofuel blending requirement rising from 22.33 billion gallons this year to 24.02 billion gallons in 2026 and 24.46 billion gallons in 2027. The Federal Open Market Committee meeting will be held this week with the central bank making a decision on interest rates Wednesday afternoon. Market odds are showing an expectation for the fed funds rate to stay unchanged at 4.5 percent. The White House is reportedly scaling back on immigration raids for hotels, restaurants, farms, and meatpacking plants. President Trump posted on social media that "our great farmers and people in the hotel and leisure business have been stating that our very aggressive policy on immigration is taking very good, long-time workers away from them...we must protect our farmers, but get the criminals out of the USA." Trader Positions Money managers were net-sellers of about ...