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04/24/2024 Rainy Weather Returns to Slow Planting and Discourage New Fund Selling

By The Commstock Report
NEW WHEAT RECCOS DAY 2: On prior advice SRW producers are 80% sold on '23 wheat and 15% hedged on '24 wheat. HRW and HRS producers are 65% sold on '23 wheat and nothing sold on new crop. SRW and HRS producers are advised to use this rally to sell all remaining old crop, while HRW producers are advised to sell another 20% (to get to 85% sold) but hang on to the last 15% to squeeze a little more out of this rally with HRW crop ratings declining. On the Grains Grains are steady-to-mixed in overnight trade after a strong start to the week and hints that funds are becoming more inclined to lighten up on huge net short positions than add to them. The weather outlook is turning wet again for much of the Midwest and central Plains from tomorrow through the weekend, which will likely slow the planting pace reported in Monday's Crop Progress report. Ukraine's Ag Ministry predicts about a 10% decline in grain output this year dry weather is beginning to tone down Russian prospects as well. Further, in response to the new major financing for Ukraine moving through the Senate and to Biden's desk, Russia is expected…
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04/23/2024 Big Drop in HRW Wheat Ratings More Than Offset Improved Ratings for SRW!

By The Commstock Report
NEW WHEAT RECCOS DAY 1: On prior advice SRW producers are 80% sold on '23 wheat and 15% hedged on '24 wheat. HRW and HRS producers are 65% sold on '23 wheat and nothing sold on new crop. SRW and HRS producers are advised to use this rally to sell all remaining old crop, while HRW producers are advised to sell another 20% (to get to 85% sold) but hang on to the last 15% to squeeze a little more out of this rally with HRW crop ratings declining. On the Grains Grains are firm in overnight trade as of 6am, with wheat the clear leader as it was yesterday before traders had even seen the big hit to HRW wheat ratings released after the close (more on that later). As for weekly export inspections, corn was the only big winner. At 1.624 million tonnes it easily beat the top end of expectations at 1.5 million. Beans and wheat were within the range, but towards the lower end. After the close, we got the weekly Crop Progress Report. It showed corn planting at 12%. That met expectations, was on par with last year and 2 points ahead of average. On a state by…
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04/22/2024 The Case for Adding Some Weather Risk Premium Building

By The Commstock Report
On the Grains Grains were mixed in overnight trade with corn and beans on the soft side but wheat prices firming as of 6am. Weekend news was dominated by both events and non-events in both DC and the geopolitical arena: The major event was House passage of $95 billion in 3 separate aid packages for Ukraine, Israel and Taiwan. It's likely to clear the Senate easily but it happened only through Dem support that offset GOP opposition because the bills lacked any funding for U.S. border control and have Speaker Mike Johnson still facing criticism within the party. The major non-events making news are seemingly lessened risks of widening regional war with few signs either Israel or Iran want to trade blows again for reasons discussed below. That has oil prices quiet along with ideas OPEC+ has enough unused capacity to mitigate disruption of Iranian supplies. The Commitments of Traders report out after markets closed was somber news for those of us hoping this market will need to build in some weather risk and perhaps trigger more short covering by funds. It showed that through last Tuesday, those funds had actually been adding to already-large net short positions in all…
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04/18/2024 Markets Mixed With Bulls and Bears at a Nervous Stalemate for Now

By The Commstock Report
On the Grains Grains are mixed yet again in overnight trade, with corn and beans steady to weak but wheat slightly firmer. EIA data out yesterday showed a big drop in weekly ethanol production to a 12-week low and well beyond expectations with stocks declining only marginally. On the brighter side, they also showed gasoline stocks falling more than expected implying stronger demand. This morning we get weekly export sales at 7:30, which could set the tone for early trade. Here are the ranges of expectations: Corn, 300,000 to 900,000 tonnes, Soybeans 300K to 650K, Wheat negative 100K (due to net cancellations) to 200K. Sometime today, the Climate Prediction Center will issue its latest 3-month outlook for May-July and that will give the trade the next reading on yield risks in this growing season. Beyond that, speculation is already beginning on what the May WASDE will show for USDA's first look at the 2024-25 season balance sheets. Then there's the geopolitical uncertainty in the Middle East that has the world on pins and needles. Israel insists it will have to retaliate for the weekend attack while Iran blusters that if there's any encroachment whatsoever onto Iranian assets or territory, they…
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04/16/2024 Weekly Crop Progress Data Not Setting Off Any Alarm Bells

By The Commstock Report
On the Grains Grains are steady to mixed in overnight trade. Weekly export inspections were within the range of expectations for both corn and soybeans yesterday and wheat actually came in above the high end of the range, but all to no avail with lower prices for all three. Hopes that stubborn inflation data might help convince funds to start lifting short positions more methodically bore no fruit yesterday. To the contrary, funds were again big contributors to the selling in corn, wheat, soybeans, and soy products yesterday. The weekly Crop Progress Report put corn planting at 6%, a bit less than 7% expected at last year's pace, but still a bit better than 5% average. They started reporting soybean planting this week and put it at 3% complete, the same as last year and the average and a point better than the 2% expected. Spring wheat planting is at 7%, just as expected, a point better than average and several points ahead of last year at only 2%. Winter wheat was rated at 55% good to excellent overall, down a point from last week but still the best in four years. Last year at this time, only 27% was…
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04/15/2024 Macro-Economics and Weekend War Escalation Dominate Market Jitters

By The Commstock Report
On the Grains Grains are modestly lower in overnight trade as macro-economic and geopolitical tensions are twin fountains of uncertainty to start the week. Grains managed to close higher Friday despite another massive slide in the stock market tied to resurgent inflation worries and sagging hopes of interest rate relief. The June contract for the DJIA broke through important support at 38,400 in place since last December. It's also now oversold and further downside will hopefully be limited to completion of a 62% retracement of the entire move up from December lows to the double top at about 40,300. Then over the weekend, the world witnessed Iran's blatant escalation of Mideast conflict by launching hundreds of drones, ballistic missiles and about 30 cruise missiles towards Israel. Nearly all were intercepted and destroyed by combined forces of Israel, the U.S., the UK, France and even Jordanian air support before they entered Israeli airspace. The UN Security Council met in emergency session Sunday to urge both sides to stand down. There was fear oil prices could soar if this raised odds of assault on Iran's oil export capacities, but so far, that hasn't happened. The attack was widely telegraphed and oil prices…
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04/12/2024 Markets Absorb Fairly “Bearish” WASDE Numbers Surprisingly Well

By The Commstock Report
On the Grains Grains are mixed in overnight trade thus far. Yesterday's WASDE has been sliced, diced and critiqued thoroughly for being almost stunningly conservative in changes to balance sheets that produced higher than expected ending stocks in U.S. and global balance sheets, particularly in soybeans. Particularly disappointing were the modest 25 million bu. increases in corn usage for feed and for ethanol. It puts feed usage up only 214 million bu. for the year when the March stocks report alone suggested feed usage already up 300 million bu. for the year. The stingy increase for ethanol puts usage for the second half of the year only 58 million bu. higher than last year when first half usage has already been up 166 million from last year. They also inexplicably left soybean crush unchanged from last month despite crush data suggesting it should have been raised to help offset their cut in exports. Yet by end of day, board losses were relatively modest despite USDA's conservatism, as if that "conservatism" itself had already been dialed in to some extent. Attention now shifts back to planting progress, crop condition ratings and the growing season outlook. We should see the planting pace…
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04/11/2024 Room for Surprises in Range of Trade Estimates for Key WASDE Metrics Due at 11am

By The Commstock Report
On the Grains Grains are mixed in overnight trade, a few cents either side of unchanged. The DJIA is down further after yesterday's big plunge after the March CPI data. It came in higher than expected for the fourth straight month. Back in December, pundits were suggesting up to 6 rate cuts for 2024, then pared to 3 in January and just 2 last month. Yesterday's news has some pundits now doubting any cuts at all and some thinking there might be another increase in store before yearend instead. That kind of thinking caused a spike in the US Dollar Index that wiped out the slide we'd seen so far this month and made a new high for the year and a gut punch for export prospects. At 7:30, we get weekly export sales, which could set the tone for grains ahead of the 11 am release of the WASDE numbers. Here are the ranges of expectations: Corn 750K to 1.3 MMT, Soybeans 200-600K, and Wheat -100K (due to net cancellations) to 250K. The key WASDE metrics are changes in U.S. ending stocks and the trade is looking for modest cuts for corn and soybeans, and a slight increase for…
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04/10/2024 Creeping Inflation Worries Seeping Back Into Markets?

By The Commstock Report
On the Grains Grain prices are mostly firmer in overnight trade. There is little to chew on from the fundamental side until traders see tomorrow's April WASDE update and the extent and direction of changes in ending stocks forecasts. Until then we're seeing more and more commentary confirming Ag traders taking note from outside markets like gold and the likelihood Consumer Price Index (CPI) numbers due later today will show prices increased by 3.4% in March, up from 3.2% in February. The Producer Price Index (PPI) will be out tomorrow and that's expected to show an annualized increase of 2.2% for March, up from 1.6% in February. Further re-stoking inflation worries, the Energy Information Administration (EIA) just raised its average price estimate for Brent crude this year to $89 a barrel from $87 previously. Reasons? "Expectation of strong global oil inventory draws and ongoing geopolitical risks." EIA specifically cites Middle East tensions and attacks on shipping in the Red Sea in combination with OPEC+ extending output cuts into the seasonal increase in demand for summer driving. Speaking of gasoline demand, all is not well on that front long-term. NCGA is sounding the alarm on the impact EPA's new tailpipe emissions…
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04/09/2024 Planting Progress Right on Schedule, But Soil Moisture Still Lags Last Year at This Time Nationally

By The Commstock Report
On the Grains Grains are soft in overnight trade thus far with no signs of any issues in yesterday's weekly planting progress update. Weekly export inspections were actually pretty good yesterday. Corn loadings came in above the high end of expectations, wheat loadings right at the high end and soybean loadings midway in the range. Between stronger than expected jobs growth data and Fed remarks about toning down expectations for rate cuts by year end to two instead of three. These factors have some pessimistic pundit's even suggesting there is potential for further hikes if the decline for inflation rates should end and start creeping up instead and that's rattling the stock markets. The weekend news about SAF qualifications for corn are not being released until mid-May was actually a bit better than expected for some in one sense. They note that originally, it was feared to meet specs to qualify for use in SAF production, farmers would have to comply with all three requirements of "efficient" tillage, "efficient" fertilization practices as well as employing cover crops. Now it appears any one of those practices may be acceptable and if so, the requirements may be less onerous than feared when…
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