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05/17/24 Speculators Launch an Aggressive Grain Buying Campaign

By The Commstock Report
Market participants were eagerly awaiting the next trader positions report due out after the closing bell today. Hedge funds are now expected to be nearly neutral in their holdings after having held record net-short positions as recently as February. Last week's commitments of traders report showed the biggest round of net-buying in corn since 2019 while it was the largest one-week swing ever for soybeans.   Prices were rallying while the speculators were rushing to cover their bearish bets; July corn futures gained 20 cents over the last position reporting period and July beans jumped 83 cents. The move for corn may have been relatively muted because more of the short-covering by speculators was matched against fresh selling by farmers. Stronger prices encouraged catch up selling of old-crop corn and triggered first sales of new-crop so that the commercial net-short position grew to its largest level since just before last harvest. Farmers did not have as much of the last soybean crop to let go of and there is currently less incentive to price the fall crop since November futures are trading at a discount to the nearby contracts.   Direction for the futures market now depends on whether money…
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05/16/24 Went To The Dogs

By The Commstock Report
My wife Jane and I just returned from our second time attending the annual Westminster Dog Show in New York. The Westminster, held annually since 1877, is the second oldest sporting event behind the Kentucky Derby in the US. The first trip was to watch some acquaintances of ours show. This time my wife wanted to see the Masters Agility Competition and I wanted to see the finals for the King Charles Spaniel breed which is the breed of our dog that we have named Lucy. She is our second Lucy King Charles. We love Lucy and she loves everyone. It was great going to the show covered by the Fox Sports network.   "Nimble" won the Final Master Agility Competition where 50 dogs competed in the finals. They are divided into 5 groups by height. "Nimble" was an 'American Dog' breed which is a mixed mutt of American Breeds accepted by the Westminster show for the agility competition. One mutt against 49 purebreds and the mutt won. It moved like greased lightning having the obstacle course imprinted in its brain winning by such a margin there was no close second. Border Collie, Australian Shephard and Papillon breeds performed well…
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05/15/24 Brazil Crop Estimates Move a Step Closer Together

By The Commstock Report
South American weather appears to be a repeat of last week.  While flooding in RGDS has not gotten worse, it has not gotten a whole lot better either.  Heavy rainfall continues to blanket most of the state with some areas to receive an additional 8" in the ten-day forecast.  That is on top of the estimated 25+ inches received in some areas since April 1st.   Growers are still trying to determine the damage but will not be fully known for some time yet.  We do know it has affected most major ag industries from dairy to edible beans to rice…but none more so than soybeans.   EMATER gave one estimate that of the areas remaining to be harvested, 22% will have significant damage varying anywhere from 20% loss to 100% loss.  This amounts to as much as 1.5 MMT loss.  Fields have been left exposed to moisture damage far too long and will no longer be acceptable to some elevators even with quality discounts.   In other words, the USDA crop estimate reduction last Friday of 1 MMT, didn't really make any other concessions other than making partial accommodations for the flooding happening in the South.   CONAB's May estimates…
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05/13/24 Carbon Deception…Just Like Actual Farming

By The Commstock Report
I am starting to feel like I might have gotten duped. Long time subscribers might recall how several years ago I signed up for carbon programs that would pay me for transitioning my crop production techniques. Technically, I didn't change anything I wasn't already planning on making the change. I am shifting to a more minimum tillage system where I rotate each year between no-till beans and strip-till corn versus conventional tillage. The timing was right as carbon programs were chasing down every farmer trying to get them to implement minimum tillage along with cover crops and other "carbon-friendly" practices. I didn't see any downside in my case. They were, after all, going to pay me for something I was already planning on doing.   After three years, I have the financial results of all my hard work. Forty Bucks! That is right. Now I do not mean $40 acre…I mean $40 in total for my 230 acres. Despite all the promises of how all the carbon credits I was going to be creating that would eventually lead me to making a 5-figure side hustle down the road, my first year I got $40 dollars. I wasn't exactly counting on…
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05/10/24 Crop Report Leans Mostly Bullish but Less so for Beans

By The Commstock Report
The crop report released today was widely anticipated for its inclusion of initial U.S. new-crop estimates as well as for its updated look at the South American production numbers. The outcome was decidedly more bullish for corn and wheat than it was for soybeans. For corn, the 2025 U.S. ending stocks estimate came in well below the average trade guess while the production estimates for Brazil also fell further than most had anticipated. It was the opposite for soybeans, with U.S. carryout rising by more than expected while numbers for South America were not lowered by as much as was thought to be necessary.   There were not many major surprises to come out of the U.S. supply and demand estimates. Sticking with convention, the USDA started by plugging in the trend yield estimates already published in February along with the acreage estimates from the March Prospective Plantings survey. Relative to the February Outlook Forum Estimates, the USDA turned a bit more optimistic about both corn exports and ethanol usage. What helped pad the soybean ending stocks for next year was that the government analysts were down 50 million bushels of soybean exports compared to what they previously predicted, which…
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05/09/24 Interest Rates Likely to Fall Later in the Year as the Result of a Slowing Economy

By The Commstock Report
2024 started out the year with high expectations for interest rate cuts with some forecasting as many as 7 rate cuts this calendar year. There was absolutely no precedent for such a thing and they were goofy if thinking that the inflation dragon had been slain. More likely is 1 or 2 rate cuts…only 1 pre-election. The Fed tightening did trim the rate of inflation significantly but it remains near 3.5% and appears to linger stubbornly above the Fed target of 2%. While the Fed has engaged in deflationary monetary policy, fiscal policy the world over remains inflationary to counter it. Western economies are ramping up spending to build arsenals that they once thought was unnecessary before Putin's aggression. Supply chains are not going back to pre-covid structures as the US in particular re-shores a significant portion of its manufacturing capacity that it previously off-shored during globalization. The Biden administration has also engaged in infrastructure spending that feeds new demand for raw materials and labor into the economy. With all of this happening, getting back down to 2% inflation anytime soon is unlikely without a significant slowdown/hard landing. Fed patience will be required. As both consumers and businesses are likely…
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05/08/24 Profit Opportunities are Still Likely

By The Commstock Report
Farmers have been anxiously awaiting some sort of market rally of substance since last harvest, only to be disappointed time and time again.  It is typical for those who are optimistic to want to point to the next seasonal, but so far none seem to be working.  Harvest lows, January contract expiration, March acreage reports have done nothing to persuade managed money from exiting their short positions.    We may have to temper our expectations this season as to what a rally is, but we continue to remain stubbornly optimistic waiting for any type of rally that would produce a profit.  My local bid is currently offering $4.50 cash corn for new crop.  Even with a decent yield, I am breaking even.  While I might not have the lowest cost of production, I doubt it is that different for most others.  Some may even be in a worse situation.   I have a hard time wanting to lock in a break-even price.  But I also have to keep in mind that the market does not care what my break-even price is.  We have identified profitable targets to begin making new crop corn sales but we need the corn market to break…
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It Ain’t Over ‘Til It’s Over

By The Commstock Report
It ain't over 'til it's over.  The market had already begun moving on from Brazil's soybean harvest as it was nearly 95% complete.  Rio Grande do Sul, the second largest state for soybean production, was the last major area to wrap up harvest.  RGDS was about to have one of their best seasons in a long time.  With roughly 25% of the state remaining to be harvested, massive rains have begun causing apocalyptic type damage to cities and farms, with a reported death toll at 80 people and rising.  We see images of what appears to be lakes where an unharvested soybean field sat ready to be cut just days earlier.  Grain storage facilities are also submerged underwater.  As many as ten meatpacking plants have suspended operations.  RGDS historically averages as much as 6 inches in the April/early May time frame.  So far, they have received over 20 inches in that same amount of time with as much as 10 inches or more expected in some areas into next week.  It is reportedly the worst flooding in 85 years!   Yield damage is prevalent across the entire state but weighing slightly more to the western side where it shares a…
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05/06/24 Surprise-Surprise

By The Commstock Report
Given the record short winter and unprecedented amount of crop preparation that had been done this spring, I was expecting that this year may have been the first when both my corn and soybeans entirely got planted here in April. About half of the family's corn got in and no soybeans. 39% of the corn and 25% of soybeans were planted in April in Iowa. April was cold and wet with only a few days where planters could run. Northern tier states…the Dakotas, Minnesota, Wisconsin and Michigan were all single digits for planting progress in April. The problem is that not much may be going to get planted in the first half of May either and the conditions of what gets planted may be poor as they are mudded in. We are now wet. Our soil profile is full and rain is left standing to drain by tiles, creeks and rivers. The drought has been drowned here in NW IA. Probably shouldn't complain about standing water here when they got up to two feet in TX, OK and AR which caused real flooding. Again…Dr. Elwynn Taylor says that Iowa moisture in May is determined by precip conditions in AR. Air…
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05/03/24 Objectives for Potential Technical and Weather Rallies

By The Commstock Report
For corn, RJO technician Dave Toth identifies the current price strength as being still only a "bear market correction" that would mark out a C-Wave on the Elliott count, but he says the alternative is for this rally to be a "dramatic 3rd-Wave of a major reversal higher." The possibility of broader trend change needs to see July corn futures sustain a move above $4.75, which would complete a 50-percent retracement of the slide from the October high. July soybeans have to first clear their March high at $12.40 before they can reach the 50-percent retracement level at $12.81.   On the way higher, old-crop corn and soybean futures could possibly face pushback from heavier farmer selling. At $4.75, many farmers across the country are getting close to or above $4.50 cash values while a rally toward the $12.81 futures target would likely bring the average cash soybean bid near $12. It is also notable that a rally for July corn to $4.75 should be expected to poke the new-crop December contract into the $4.90's. More farmers are expected to make their first sales or hedges for the new-crop if the December contract gets close to $5, which is not…
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