Katie Geerdes

The one thing that was clear to me from the May WASDE report was that US crop size still matters – a lot. And therefore the weather will still matter. Despite potentially producing 1 billion bushels more corn than last year and possibly producing a record corn crop, global corn stocks at the end of the season are seen dropping considerably due to a sharp increase in demand. If we could enforce Phase 1 of the original trade agreement with China, it would go a long way towards sustaining a long-term rally. Exports are the major outlier, and whether they remain strong or not will be a primary factor in determining the 2025 price outlook.   USDA actually increased Chinese soybean imports from 108 MMT to 112 MMT for next season. Had you told me that would happen last week, I would have said no way. But with the announcement that tariff relief is on the way with China, it becomes more plausible. If you saw Monday's episode of the Comstock Channel, we demonstrated how by simply using last season's soybean yield of 50.7 bpa compared to the 25/26 season of 52.5 bpa that was enough to send soybean stocks…

  President Trump reportedly surprised some of his own aids with his choice of leading off with a UK trade agreement. Then again it was the lowest hanging fruit and easiest to get put together on short notice. They have been working on a trade agreement with us since BREXIT. The UK parted with the EU and so was left without a dance partner. Their obvious first next choice was with the US. They had been after a trade deal with us for a long time so had a proposal ready that was waiting for just the right time to be presented to president Trump. They were essentially stalking us. They lead off with the offer to invite the president to meet the King in England. He was obviously enamored about the invitation. This deal was in the works long before "Liberation Day". That is another reason while the rest of the pending deals are going to take much longer. The deal with the UK is so far just a framework. The deal itself will add 10,000-20,000 pages yet to be written.   A trade agreement with the UK was not as complicated as will be the case with others.…

I am glad that we took the opportunity a couple years ago to attend the Berkshire Hathaway annual meeting in Omaha while both Charlie Munger and Warren Buffet were running the show. I have referred to the late Charlie Munger as my fantasy mentor as I love his take on many things, particularly crypto. Not a day goes by when there is not another headline of some huge theft of crypto currency and/or a crypto promoter being convicted of fraud right along with the headlines looking for the next suckers to invest to keep the schemes going. The crypto-industry has bought its way into the administration's favor by filling the coffers with campaign contributions. Crypto is the generational scheme contrived by a seemingly immortal/immoral den of thieves proving that history does rhyme. It is a tulip bulb mania times Teapot Dome.   Warren Buffet, while showing his age, still managed a very competent performance at this year's annual meeting, handling questions from Hathaway investors with clarity. He ended the meeting with the announcement that Greg Able will become CEO of Berkshire at the end of this year. I was not surprised as Warren and Munger have been focused on the…

White smoke billowed from the Vatican chimney on Thursday to announce the selection of a new pope. While anticipation was building during the papal conclave, it was a similar feeling for market participants waiting to see which country would be the first to strike a new trade deal with the United States. Like the dark-horse selection of the first American-born pope, it was also somewhat surprising that the United Kingdom crossed the finish line first on a tariff reduction pact. Traders had India, Japan, and South Korea at the top of the list for being the most likely to strike an inaugural agreement this week. Those countries and others will now have more pressure to wrap up negotiations because of the U.K. deal and considering the meeting scheduled with China this weekend. Implications of the U.K. deal were covered in the morning CommStock Report, with positive leanings for ethanol standing out. Dampening some of the market enthusiasm surrounding the deal was that 10 percent tariffs kept against the U.K. could represent the best-case minimum for all countries. Consider how the ag commodity markets will be impacted by possible trade deals with other countries:   Corn: Mexico remains the top buyer…

Footnote: Florida Governor DeSantis has been aggressive about removing undocumented workers from the labor force which has created a labor shortage in the state. In order to address that he supports allowing teenagers to work more hours doing more jobs. Federal labor law restricts "child labor". While I think that we need more immigrants if we are going to reshore supply chains in a massive factory building reindustrialization, working as a teenager didn't hurt me. Teenagers can do farm work because I know from experience. I was not 18 yet when I initially went to college. I of course worked on the farm, but also for a seed corn research company working in the field in the summers. My wife detasseled corn. Kids threw bales. We all walked soybeans. Roundup was literally a dream come true. I bought a couple extra gallons to put on the shelf in case they stop making it. Things were different with farm kids in the 1960's. I was not allowed to go out for basketball as a freshman in high school because my dad needed me to run a plow. Today no one plows anymore and they would have thought my dad terrible for…

I received a tenth of an inch last Thursday on my farm. That will be our last rain for a while. Hopefully between that and the soil moisture reserves, it should be enough to get the crop up and started. Most of the Central Corn Belt will not see much precipitation from May 1st until May 18th. That will be the window for most everyone to finish planting. Some family nearby needed 4 more days to get finished so it should not be a problem.  Temperatures remain above average as we move into May, so risk of frost appears non-threatening. Storm fronts begin to appear the end of next week, bringing 2" into large portions of the central growing regions and expanding from there.  This weather will need to materialize to help crops germinate otherwise there will be some replanting. The Southern Plains receive the bulk of the rainfall with Oklahoma set to receive another 5" on top of an already wet spring.   Brazil's Dry season has arrived on time. We don't see any significant rainfall in Mato Grosso and surrounding regions for the next two weeks that would benefit the Safrinha corn crop. The bulk of Brazil's second…

Part 6 of Many   The US faces an immediate major fiscal challenge. The US Treasury has to refinance about $7.6 trillion of existing debt this next year while borrowing another $3 trillion of new debt. That is a lot. The old debt was held at a lower interest rate so the Treasury will pay more to get bond buyers to recommit. It would have been better to have done this sooner when rates were lower. The bond market has wavered and shown some cracks in the solid façade as collateral damage from the trade war. It has been the unquestionable confidence in the dollar and US economy that has allowed the US to finance 7% of its annual fiscal budget. Jerome Powell says that the trajectory of our rising debt is unsustainable. Ray Dalio says that we have to get our borrowing down to 3% of GDP. The Fed is apolitical and so is Dalio. This is just economic reality. The US has been adding debt all these years knowing that at some point that it could be a problem and there are signs that that day is here.   US Treasury Bonds have held the confidence of world…

Out of Time Part 5 of Many Feeling the Heat of ICE   Given all of the focus on the tariffs and the trade war with the world, we do not want to lose sight of what else is coming soon to be directed at the business community on the immigration/deportation front. Phase-one of the war-on-immigration was securing the Southern border while rounding up the easier picking illegals that they have something on, either criminal or gang-land leads, among any others who become conveniently swept up in the apprehensions. For the most part, president Trump has broad general public support for these actions. The approach taken, unfortunately however, appears to be "anything worth doing is worth overdoing." They are getting some of the logistics set up for the next steps as they morph into phase-two deportations when funded by Congress.   The president of El Salvador has volunteered his country and prisons to receive deportees. What happens there will be cloaked better than Guantanamo. Phase-two will dive much deeper into the undocumented community with a stated goal of catching and deporting half of illegals, as many as 4-5 million, that are currently integrated into our economic system. Officials are working…

Traders were caught surprised by the latest reading on gross domestic product (GDP) showing contraction of the economy. Reversing sharply from 2.4% growth in the fourth quarter of 2024, GDP was measured smaller by 0.3% in the first quarter of this year. The report sounded alarms about a potential recession, which is generally defined as occurring when GDP growth is negative for two consecutive quarters.   The standard formula for GDP is that it is equal to the sum of private consumption, business investment, government spending, and the net balance of export and import activity. Two factors that stood out as the primary contributors of the contraction were lower government spending and higher imports. Both items were linked to new federal policy changes involving public employment cuts and tariffs. Government spending and imports are also components of GDP that are expected to shift less damaging to growth potential through the rest of the year.   Government expenditures alone were down 5.1% from the previous quarter, reduced to their lowest level in about three years after efforts by the Elon Musk-led Department of Government Efficiency started trimming government payrolls while cutting or holding back funding for various federal programs. Private research…

What will US consumers think when store shelves empty and retail prices for many goods increase? China appears willing to wait to find out. That is why president Trump has been so antsy to get trade talks started and the Chinese are not. Amazon said that they were considering posting the amount that tariffs added to product prices on their platform which sent president Trump off the deep end blasting the proposed company action as "a hostile political act". That caused Amazon to quickly reconsider as their stock dipped on the threat. His response will not be lost on other companies thinking of doing the same. He wants that cost hike covered up as if it didn't exist so that consumers cannot specifically identify it. That is how he does business. He said that companies as large as Amazon should not be raising prices but, given a tariff rate of 145% on goods coming from China, how much margin does he think that they have? Companies tried to prepare, anticipating a disruption of trade, by stockpiling inventories of key items, but this pause in trade will exhaust inventories. Then the question becomes if and how much and how quickly supply…