CommStock Reports

Fresh news was limited through Sunday morning, so the political stories continued to dominate. Iran's latest threat against Israel remained a heightened risk point for global security and the markets. There was also a flaring of conflict with Russia after Ukraine launched its largest-ever drone attack against Moscow over the weekend. Grains look to have a firmer open on the contingency that crude is up while the dollar index edges back lower. In the Headlines December corn futures rallied 16 1/2 cents last week. November beans gained 34 1/4 cents. December Chicago wheat futures were up 4 1/2 and Dec KC wheat futures lost 2 1/2. December live cattle were down $2.22 while November feeders finished the week lower by $1.45. December lean hogs dropped $3.65. Spurring angst over the weekend was news that President Trump has asked Robert Lighthizer to take the U.S. Trade Representative spot again. Lighthizer was the architect of Trump's trade war with China and was a lead negotiator for the U.S.-Mexico-Canada trade agreement. Lighthizer is a deficit hawk and protectionist that has a long history of battling against China and the World Trade Organization. China was observed as a light buyer of U.S. soybeans last week, still under contracts that are expected to be delivered on in the next two months before trade policies will start to change. There are still 4.94 million metric tons of soybean purchases by China that are marked as 'outstanding sales,' or export commitments not yet shipped. The outstanding sales would be vulnerable to ...

A Friday crop report capped off election week with bullish numbers but a tentative price reaction. The headline summary is that USDA lowered the corn and soybean yields from last month. Corn yield dropped 0.7 to 183.1 bushels per acre versus the wider expectation for no change. Soybean yield was cut 1.4 to 51.7 bushels per acre against the average trade guess calling for a reduction of just a few tenths.   Most of the weight on the national corn yield came from a 4-bushel drop to 218 for Illinois. Large production swings were also produced by Iowa corn yield being down 1 to 213, as well as on lower yields for Nebraska and Texas. It was mostly Indiana that held the national corn yield from falling further, with that state's crop up 7 bushels from last month, to 209 bushels per acre. The biggest soybean production revisions were made against lower yields in Illinois, Iowa, Missouri, and Minnesota.   With no adjustments made to acres, the lower corn and soybean yields were still enough to take away from ending stocks, with corn carryout staying below 2 billion bushels while soybean stocks fell under 500 million bushels. The ending stocks could have shrunk further but for the USDA taking a conservative approach on demand. Corn usage was untouched despite reason to think the export target should have been raised. Soybean exports were also trimmed lower despite current sales commitments that were running well ahead of the previous pace needed.   The lower U.S. production numbers helped ...

On the Grains Welcome to the early show, we've got some market makers or market breakers out today, the USDA/WASDE 11 am report. While exports have been excellent and are undeniably what is supporting the bottom-side of this corn market, let’s take a look at yesterday's export sales report. Corn sales were reported at 2.76 million metric ton (MMMT) that is 108.9 million bushels, up 18% vs last week and also up on the 4-week average. Here is where the smoke show starts, that is up from last year’s same-week 40 mbu and brings total commitments up to 1.125 billion or 48% higher. Pealing the onion back a little more, we need to average 25.5 mbu the rest of the shipping season vs last year’s 33.4 mbu needed.  While some of this may have been risk off purchases with the election it’s still a blistering pace and should be reflected in today WASDE report. 

PLEASE REFER TO THE HEDGE AND TRADE STRATEGY PAGE FOR UPDATES!! Political pollsters and analysts proved once again that election outcomes are hard to call and to have had a good track record, doesn’t mean much for the accuracy of forecasting the next. Ann Selzer, Peter Zeihan, Michael Moore, James Carville, Dr. Allen Lichtman and some other very smart people got this election wrong.  Selzer’s Iowa poll was a far off miss with her forecast for US House seats in Iowa blowing up as well. Her Gold Standard status is now tarnished. Back to her drawing board. The election results were not a small miss. None of the polls saw the blow-out for DJT and MAGA GOP coming. One result is that we did not have to wait until late week to discover the winner. Trump appears to have swept all 7 swing states settling the matter quickly. Trump even won the popular vote so it was not nearly as close as polls predicted. He will have one heck of a mandate to do whatever he wants. There will be no hard pushback against the White House and GOP congress for at least the next 2 years. CO2 pipelines lost the election too with SD voters killing a bill that had already been passed by the legislature in SD. The CO2 pipeline developers offered counties a revenue stream from their projects and all voters had to do was accept with a "yes" vote on what was called Referred Law 21. The no’s ...

On the Grains I will be honest, a Trump win and higher corn and soybean markets yesterday, were not on my daily radar. I would be lying if I said I wasn’t expecting a breakout, and I surely wasn’t expecting a higher bean market. December corn closing higher five days in a row (depending on today) has its sights set to test the $4.34 from early October. While tariff fears vs China really won’t affect the corn market, our business relationship with Mexico could be in question. EIA numbers out yesterday had the ethanol production at 1.105 million barrels per day, a new marketing year high. Implied grind would put ethanol production at a 5.497 corn usage for the year. It’s pretty early in the year to think that we won’t have a few bad weeks and get wildly bullish just yet. If there is anything in this market that has me friendly, it's the corn, the spread action on the December/July corn as we have moved from 37 cents into 23 cents. Basis always tries to move corn to the market first, if that doesn’t work, the spreads react and the last resort is the board tries to do it. We are on leg 2 of 3 now. 

Brazil's planting pace has sped up to the point where they have now caught up to their historical 3-year average, reaching 58% planted overall mid-week. Both Mato Grosso and Parana are already 80% planted. We spoke with one large producer with 50,000 acres under operation in Central Mato Grosso that was finished about 10 days ago. They can plant about 2,200 acres per day. (Which means they could plant my whole farm in about 4 hours). They use different maturity groups to help stagger the soybean phases so that they won't all be ready for harvest at the same time. Part of their strategy is to also use lighting speed planting so that they can get their second crop corn in earlier. They are intent on planting "safrinha" corn by January.   The weather outlook remains positive across all major growing regions through mid-November. In fact, rainfall appears to be building with large parts of Mato Grosso and Goiás expected to receive up to 8" in the first half of November alone. Surrounding states should see 1" to 3" which will be enough to keep the "pedal to the metal" when it comes to planting speed as well as helping germinate those first planted fields. Last year soybeans rallied on a dry November in Brazil, but so far, we don't see anything that would indicate a repeat of that. La Nina forces have dwindled to the point that drought in Southern Brazil seems less likely. The longer-term forecast shows above average precipitation ...

On the Grains I am starting this report rather early, 3:30 am, just on the fact I was awake and turned on the election results. As of now, Former President Trump is at 267 electoral votes (at time of sending he clinched the Presidency) with some states still too close to call however, major news centers posting “No viable path for Kamala to the White House” it’s only a matter of time before its official. Exit polls have voters voicing frustration on the current economy as inflation has not skipped over any voting demographic. While everybody wants change, this inflation horse is outta the barn and doesn’t want to return to his stall all that bad. The “soft” landing sounded nice, I never did see how that was going to be achievable without some level of pain inflected. Obviously it’s way too early to tell what the cabinet will look like on January 20th and if history repeats itself it will change multiple times before 2028. RFK, while having some good points about nutrition and big pharma certainly has concerning view points for commercial agriculture.   

Election Day is finally here. Most people are tired of the campaigns and want them to be over with but as I have suggested, the outcome could be in doubt for days or weeks to come. Election officials who are charged with counting the votes say the result for the presidential race may not be known until later this week. They caution patience. We may not be entirely sure who the next president is until they swear the oath of office, hand on a bible, on January 20th next year. If DJT is not the apparent winner he will move heaven and earth to become that. The initial election results may just open a pandora's box or it could close one that feels like it has already been opened. Here we go.   Markets have been building in expected outcomes. Bitcoin has bet the farm on DJT winning. He has been invited to join the cyber currency mania with a digital currency of his own. He was initially cool to cryptocurrency until he found out how the scam worked and how much founders could profit from it. That is similar to the path upon which he created his own social media platform. Crypto-regulation is more likely under Harris.   Gold and equity markets have been climbing together making new highs this year which is historically dystopian. That is not supposed to happen. Gold and Bitcoin are supposed to be a hedge against equity market exposure. Those with money appear to be going all in with ...

It feels like we have been living the comedy movie from the 1980's European Vacation where Chevy Chase and crew continued to go around the roundabout forever not knowing how to exit. Well the end result of billions of dollars is coming to fruition for one candidate starting today. The markets have been dissected about cause and effect of each candidate and what once seemed so scary hasn't moved the needle at all, at least not yet today as we start the morning wildly up 1/4 cent on December corn and 2 higher on soybeans. What was expected to be the most sensitive market today, the equities are also quite so far. I'm guessing that changes as more exit polls are released later today. For everybody at home saying this rash of exports is 100% political hedging, remember they can cancel those sales if the non-tariff person gets elected, until they are lifted it remains a risk.

There has been a decline in public confidence in political polls likely in part from expecting more from them than what they can deliver. The saying "garbage in-garbage out" could readily apply to polling methodology. National polls tend to be hard to conduct as they have to account for many different local nuances that feed into the margin of error. The Iowa poll conducted by Selzer and Co. is considered to be an exception. It is headed by Ann Selzer who started in polling working for the Des Moines Register before building her present private polling company in 1996. Here is what Wikipedia says of her Iowa poll: "Anns polls of Iowa voters have a reputation for being highly accurate, based on their performance in major elections from 2008 through 2020. She has been described as "the best pollster in politics" by Clare Malone of FiveThirtyEight, which also gives Selzer & Company a rare A+ grade for accuracy." The Selzer poll has earned the moniker of being "The Gold Standard of Polling."   The news that the latest new Iowa poll reported Saturday p.m. that Harris had leapfrogged into the lead over Donald Trump 47% to 44% in Iowa, shocked the political world. The polls margin of error is 3.4%.  All but 9% said that that they have fully made up their minds. Independent voters who have supported Trump in every other Iowa Poll flipped to Harris, 46% to 39%.  5% of Iowa Republicans said that they were in favor of Harris. 0% of Democrats ...

I can’t wait to get this election over so we can stop reporting on it. We do have this week of risk to manage whether that risk is corn, beans, cattle, hogs or even the equities. As we reported yesterday the funds covered shorts in the corn, added longs to cattle and hogs but we net sellers in the bean complex. I would venture to guess that almost everybody that reads this report has bought a put option at some point with varying degrees of success. With the increased risk of this week's elections we do have short-dated puts or even weekly puts that would cover you for whatever amount of time that you decide. Personally, I feel that the S&P looks the most vulnerable to any surprise on Tuesday night and we have fielded many calls about buying weekly put options in the last two weeks. The weekly options, while short in time, can be rolled out at a later date in time if they end up being needed.

T-minus 2 days until the election. Traders are factoring in the news of Harris leading Trump 47 to 44 percent in Iowa. The forecast came as a surprise against previous predictions in a state that went for President Trump by solid margins in 2016 and 2020. The poll of Iowa voters conducted for the Des Moines Register has been known for accuracy; however, it was contrasted by an Emerson College survey that had Trump still holding a sizable lead. Chatter on the subject seemed aimed toward giving Harris advanced odds relative to last week, which could initially lean bullish for the grains by way of speculative short-covering. In the Headlines December corn futures dropped 3/4-cent last week. November beans fell 5 1/4 cents. December Chicago wheat futures lost a penny and Dec KC wheat futures gave up 5 1/4. December live cattle were down $3.77 while November feeders finished the week lower by $2.75. December lean hogs rallied $4.40. The order of events begins with the election on Tuesday, followed by the Federal Reserve interest rate decision at 1 pm central Thursday, with the week capped off by the November crop reports at 11 am Friday. Uncertain is the timing of the election results being realized by the public and accepted or not by the candidates. Weekend headlines were focused on the election, so there was less attention being paid to the Middle East conflict, but that situation still has every potential to pop up and shock the market as the new week opens. ...

If judged by the mostly weaker-trending volatility measures, grain and livestock traders are discounting the risks of any major surprises that could pop up next week. Lower volatility premiums may still incentivize hedging with futures and options ahead of the three big events – election on Tuesday, Federal Reserve Bank decision on interest rates Thursday, and the November crop report on Friday. There could also be opportunities to react if volatility rises with big price moves in either direction; for example, re-owning upside exposure if a sharp selloff is deemed rash and overdone, or using a strong relief rally to advance crop sales.   After a consolidating, sideways trade for corn futures lately, the CME Group's corn volatility index just scored a new six-month low. Soybeans, soy meal, and wheat futures currently all have volatility scores near the bottom of their six-month ranges; same for cattle and hogs. The only contracts reaching new highs on the volatility scale are soy oil futures. Most of the volatility readings peaked in May or June this summer (cattle a little earlier, in April). As a general takeaway, we can expect options with similar duration and strike position to be priced lower now than they have been for most of the year, due to the decline of implied volatility premium.   What do you do if you think volatility is low and what about if it changes? One strategy for going long volatility is to open an option 'straddle.' The straddle involves buying both the call and the ...

On the Grains Good Friday morning, buckle up, we got ourselves a rally in soy oil following production concerns in Malaysian Palm Oil. How much traction that story gets, only time will tell. We've had an impressive week so far and should set the stage for some great crush numbers in upcoming reports. While any increase in usage is great, stocks are still burdensome.   On the corn, another wild day of testing the 50 DMA and then just hanging out followed up by an action packed overnight of up 2 1/2. The export sales report was favorable at 92.2 MB as we are running about 41% ahead of last year at this time. Meanwhile USDA only has a slight increase in exports (3%) in year-over-year business. If this trend holds it should put us at 2.475 billion bushel export mark for 24/25 vs USDA at 2.325 billion bushels. In a normal year I would question whether we had the ability to FOB that much corn out of the U.S. However with the large South American bean crop coming we should have additional FOB capacity as bean exports die off in January or February.

"RFK Promised USDA"   "RFK for USDA" is what Robert Kennedy Jr. appears to have gotten from DJT for his dropping out of the race as a third-party candidate and endorsing Trump. RFK has been explaining what he thinks that DJT has promised him for boarding the Trump train. DJT has confirmed that a deal was made with RFK. Is that a problem?   Listen to this YouTube video from RFK and decide for yourself. "When Donald Trump gets me inside the building I'm standing outside of right now, it won't be this way anymore. American agriculture will come roaring back, and so will American health," Kennedy said in a social media video.   You can view the video here     When I watched the RFK video it sent a shiver down my spine. RFK embodies virtually every threat to the US food supply system that our industry has been fighting against for years. He comes from so far from the extreme left they won't claim him. Pretty much everything that we know and everything that we do in Agriculture would get turned upside down by RFK. He would gut any farm bill like a fish, not even crop insurance would escape unscathed, and he would be incapable of executing any kind of viable replacement. That would put US Ag productivity stranded out in some kind of desert. The US food supply chain would be cut to pieces and something else would have to grow in its place in order to feed our country as food prices ...

On the Grains Happy Halloween, we did get a treat last night in the form of rain moving across the area. That was the first measurable rain since the end of August. Flash sales yesterday were supportive but corn just doesn’t seem to find any buying enthusiasm, still trapped between the 50 DMA and the 100 DMA as we await a break out. Export estimates for this morning's sales report are 65-80 million bushels (mbu) of corn, 58-78 mbu on soybeans and 15-18 mbu of wheat.

The soybean market is getting spooked this week with how quickly planting pace has picked up in Brazil. We stated last week how it would accelerate but they went even faster than anticipated, planting nearly 20% in one week! Parana is already 3/4 finished and Mato Grosso is nearly 60% complete. With 38% planted overall, Brazil is catching up to their historical average. If they plant an additional 20% this week just like they did last week, they will have all but caught up.   Rainfall accumulations for October seem to be centered on the state of Goiás where they received up to 8". The central part of Mato Grosso saw up to 6" but that was not evenly spread across the state. This has allowed for ample soil moisture build in these primary growing regions. The forecast shows heavy rainfall covering virtually every area north of the state of Parana this week, with most areas expected to receive an additional 3". With the heavy rains and fast start to planting in Parana, state agency DERAL has already upgraded their state's production to 22.4 MMT, 1.5 MMT higher than CONAB.   The November outlook continues to show more of the same with abundant rainfall in the Northern tier of Brazil. While this may slow the planting somewhat, the precipitation will be welcomed. RGDS will go without rain this week for the most part, but the extended forecast shows it returning next week. RGDS hasn't even started planting soybeans yet, so it won't have any ...

On the Grains What’s done is done, this crop is basically harvested and put away as many of my clients finished up yesterday. Make no mistake, some pockets of Minnesota did disappoint. I don’t know how but some of these dry areas pulled in fantastic corn yields this year and now it’s all about demand. The USDA Ag attaché in Ukraine sees this year’s production at 23.3 MMT for corn, down from the USDA’s official estimate of 26.2 MMT which is also down sharply from last year’s 31.0 MMT (WASDE is at 32.5 MMT). The long and short of it is that Ukrainian exports will likely struggle to hit 17.8 MMT vs the USDA’s forecast of 23.0 MMT. Those sales will have to be made from somebody else. For example, China purchased 4.6 MMT from them last shipping season. While they can be as reluctant as they want to buy from the US and wait for Brazilian supplies, we continue to hear that the domestic demand in Brazil is way under the estimates. USDA has total exports at 2.325 billion bushels vs. last year's 2.292, a number that could end up being 200-400 million too low, buckle up for tomorrows export sales report.

Voters often say that they want to hear from candidates what the policy positions that they hold are. Some voters say they favor candidates with certain policies but when given information on those policies it has little/no impact on their vote. They have previously mind-melted with the political camp of their choice and policy actually has little impact on their future fealty. Minds are no longer changed by facts. Campaign events that used to be very influential on public sentiment now appear to have no impact on the movement of the needle of voter opinion. There is a lot less interest among voters in what the party platform may be. It has little influence on what they think, so then are facts useful? Republicans in general have pretty much done away with party platforms. Neither our county nor state of Iowa GOP shares a specific policy platform on their websites, sticking to platitudes and slogans. They are managed from the top down rather than the bottom up and candidates do not adhere to the platform anyway so why bother? In the case of our local democrats, they do promote a platform which in Dickinson County where I live, in my opinion, is not friendly to either business or the Ag sector. I was disappointed in what I read. Two local issues of controversy are wind turbines and CO2 carbon pipelines. While the breakdown of support and opposition for wind power generation and CO2 sequestration does not conform strictly to party ...

Above you will find today's installment of Morning Market Talk. $2.50 Higher Cattle You can click on the picture above to take you to this morning's episode. On the Grains Grains found some support overnight as we go to press this morning. While yesterday’s range-bound corn trade wasn’t exciting to watch, it was impressive considering the energy market meltdown. December corn is still caught between the 50 DMA at $4.10 and the 100 DMA at $4.16. Also the 50% retracement is offering support at $4.09. What surprised me on the harvest progress was that even my home state of Wisconsin is 65% done vs. the average of 35%. As noted last week, we are getting a lot of calls about re-owing crop that moved this fall, with harvest officially at 81% done if we can get something nearing the $4.00 bought it is probably a place to take a look at that. However, if that is something you are looking at, realize we will need some weather problems in Brazil if we expect to get any sort of extended upward move in prices. Options maybe the play as it allows a person to stay in for the long haul, possible spring if need be. Moving on to soybeans, unlike corn the 50 and 100 DMA are well above the market. The 50 day is at $10.07 with the 100 DMA at $10.38 and we continue the downward trend. November hits the delivery process at the end of the week with 74,000 open interest that need ...

Prospects for a new Farm Bill may or may not improve after the election next week. Farm Bills have been enacted during lame duck sessions before. Both parties say they want to pass a new farm bill but they each have different versions of what that bill should contain and there is no consensus. They have settled for extending the current version but there are programs that eventually require that they be refreshed to be fully funded that need reauthorization or modification. The commodity title of the farm bill has pretty much been useless as reference prices for PLC or ARC are set too low to be relevant. If…if our ability to survive financially comes down to PLC and ARC to save us we are in a world of hurt. There had been no emergency for improving the farm income safety net until this year when net farm income for grain producers has shrunk next to nothing. This happened without triggering any significant income support from the existing farm bill. The farm income safety net is set too low to warrant being called a safety net. There will be a number of farmers who will fail and a larger number of failures without farm aid. The downturn in the Ag economy will prompt many older farmers to retire and cash out. The problem is that younger farmers have not had the time to build the equity to be able to survive an Ag recession. Bankers will do what they can ...

Grain futures may still be stuck in the loop of starting on the defensive after closing weaker the previous Friday, which is how the last several weeks of have went. More of the strong grain export data could help spark an upside turnaround for prices if there is also support from the outside markets. Traders in all markets will have this as the last full week to adjust positions ahead of the election. In the Headlines December corn futures gained 10 1/2 cents last week. November beans rebounded by 17 3/4 cents. December Chicago wheat futures lost 3 3/4 cents and Dec KC wheat futures fell 8 3/4. December live cattle were up $1.82 while November feeders finished the week higher by 97 cents. December lean hogs held positive by $1.85. U.S. harvest pressure and better weather shaping up in Brazil are the dominant negative factors for grain futures again at the start of the week, but last week showed that buyers can surface if they have motivation on the demand side. Last week featured flash export sales on all five mornings. While daily sales announcements should be expected regularly at this time of the year, the totals are stacking up better than hoped. Traders are looking ahead to next week for more than just the general election, as the Federal Reserve Bank will also be announcing its next interest rate decision on Thursday, November 7th. Current odds call for the fed funds rate to fall 25 basis points to 4.75 percent. With futures ...

The end of next week will be the beginning of November, marking a transition past the busiest harvest month and shifting the focus from how big the crops were to how they will be used going forward. What will still influence the market heavily during this period are the immediate decisions about selling versus storing. Farmer selling interest will factor in alongside regional production and space considerations to help determine where basis and board prices are headed.   Grain storage capabilities can be put into perspective with a few numbers that include the latest USDA estimate for total U.S. storage capacity of 25.5 billion bushels. The amount of space owned on the farm holds a slight edge over commercial capacity. Adding up corn, soybeans, wheat and other stored crops, it could be estimated that storage capacity on the national level was less than a quarter full coming into the fall row crop harvest. The new corn crop represents almost 60 percent of total storage and this season's soybean production estimate equals about 18 percent of national storage capacity.   It matters where the storage surpluses and deficits have developed. Just like the national yield averages, looking only at storage utilization for the whole country will hide the extremes within different regions and states. Much of the current supply-versus-storage landscape is carried over from the previous season, particularly with less pressure on corn to fill space in the West and Southwest while soybeans are comparatively scarce in the East. Some of the changes so far ...

Above you will find today's installment of Morning Market Talk. Weekly Drought Monitor You can click on the picture above to take you to this morning's episode. On the Grains If I could sum up yesterday’s trade with one word it would be disappointment. Unless things change drastically it looks to be a poor finish to the week. While yes, corn did close higher, we had that whopper of an export number (142 million bushels) the largest sales in three years and the best we could muster was 2 ½ cents on the close.  Overnight action is off 2 ½, what we gained yesterday, on corn and down 8 on beans. In fact, at the time of writing this, only wheat and oats have any green on the screen. While it’s early (3:40 am) it appears that the December corn has $4.17 in its sights (100 day moving average) and if we see much pre-hedge we could test the 38.2% retracement level of $4.15 and below that the 50-day moving average at $4.09. Rinse and repeat on soybeans, except with a little more down pressure. Export sales of 79 million bushels, which is the second highest export number going back to November 2023, we gave it all back on the board. While the 50 day is providing support in the corn, we couldn’t hold it yesterday in the beans at $10.07. The November chart doesn’t look great after yesterday’s reversal, going into the weekend we will need some outside help to prop this thing up. ...

I have explained in these reports how that tariffs are an appropriate response only when used to correct some unfair trade infringement or for national security objectives. At present that is pretty much how the US is using them and they represent only 2% of federal revenue. DJT says that he is literally in love with tariffs and pretty much like someone with a hammer seeing everything as a nail, intends to use them universally and aggressively going on offense planning a tariff blitz. Economists, trade experts and most businesses believe that Trump is wrong about tariffs and his plan for tariffs would spark a historical trade war. He says that they are wrong and relishes the opportunity to prove it. He says the way to avoid tariffs is to build manufacturing plants in the US. That suggests that we have an inexhaustible unutilized workforce which we do not. His immigration plans will much further reduce the available US labor. We do not have an unemployment problem and most of the jobs he would create are at the bottom of the wage scale. The US has had a lot of history with tariffs though not recently which means that the current population of Americans living has never experienced them. After Herbert Hoover and the Smoot-Hawley tariff debacle, up until Trump both the GOP and democrats were on the same page seeing tariffs as negative.   This chart below shows the history of tariffs in the US. The US started out using tariffs ...