The Commstock Report

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…

Morning Market Talk Eric is feeling under the weather today and there will not be a Morning Market Talk. On the Grains The row crops continue to struggle, considering the 90-degree temperatures and the 30 mph winds blowing across the western corn belt. While V1-V6 water use is relatively low in early growth, I can get behind the theory that the crop isn’t getting mudded in, will be off to a great start, and will undoubtedly be "deep-rooted.” However, the NASA GRACE model below measures the top 1 meter of soil moisture. If the crop gets germinated and up, we could be alright and hit the timely rains. I get a little cringy feeling when I see the center part of the grain belt with very little moisture in the top 1 meter. Those major corn-growing areas need to be produced to have a shot at the 181 BPA national yield. The drought monitor maps will run tomorrow at 7:30 am. Look for traders to watch that closely. Corn and Soybeans are still struggling to attract investment from funds. There are ongoing questions about the WASDE numbers, especially considering the rising demand and increasing exports for the 25/26 crop year.…

  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.…

On the Grains Yesterday was the fuel, now we need the spark. The USDA/WASDE numbers came out at the low end of the trading range for domestic production (25/26), while exports increased and could rise again in the July report. If there is risk in the July numbers, it’s from lower feed, seed, and ethanol figures. The 50 million export increase feels low, and the USDA is already buffering for decreased ethanol numbers later in the season or holding it in reserve to offset a potential for lower yield if the dryness persists. As a farmer, it seems simple: we don’t grow a bushel of corn, that bushel comes off the carryout, yet history tells us that it’s closer to ½ bushel that comes off the carryout. The USDA is already forecasting record demand, leaving plenty of room for adjustments if needed. Meanwhile, 25/26 global stocks decreased by 10.5 MMT from last year and 21 MMT below the average trade figure. We will post the full report below. This content is for members only.Register Already a member? Log in here

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…

On the Grains Good morning. We know that China and the US have reached a 90-day deal that will slash tariffs to 30%, down from 145%. Meanwhile, goods heading into China will only be hit with a 10% tariff, while the Trump 1.0 tariffs from his first term remain in place. More details will follow as they become available. Equity markets are on fire: DOW is up 927, NASDAQ is up 769, and S&P is up 162. Crude oil is up $1.81, while gold is down $127. This content is for members only.Register Already a member? Log in here

Happy Mother's Day. Bulls will like that President Trump had positive things to say about the trade talks with China on Saturday, but the tone of the market open may depend on developments that could still follow the second round of talks occurring today. Grain futures otherwise have upside limited by the rapid advancement of planting progress and by continued technical selling pressure. Talk to your broker to consider hedging soybeans before the Monday crop report, possibly using short-dated put options similar to what was recently advised for coverage on new-crop corn sales. In the Headlines Most headlines about the weekend trade meeting with China referred to President Trump's comments about there being a "total reset" in relations between the countries. Trump posted on his Truth Social website Saturday evening that it was "a very good meeting...many things discussed, much agreed to. A total reset negotiated in a friendly, but constructive manner." India and Pakistan agreed to a ceasefire after back-and-forth military operations that have taken place since the terrorist attack against tourists on April 22nd that India blames on Pakistani Islamists. The ceasefire broke but then fighting paused again by Saturday night. President Trump said that "the USA was…

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…

On the Grains Is it possible that we were not forgotten? Yesterday’s trade deal, including zero tariffs on ethanol to the UK, it was a massive win for agriculture. I like where the first deal went, let’s see where the rest of them go. The U.K. uses 1.4 billion liters of ethanol annually. With removing the 19% tariff, U.S. ethanol is expected to become even more competitive against Brazilian and EU producers. The beef deal included is likely a non-factor as they will not adjust policy limiting the use of growth hormones, which the bulk of cattle have here. It’s possible that some small regional plants would open up a program and try to hit that niche market that could potentially provide some margin relief to them, time will tell.  This content is for members only.Register Already a member? Log in here

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…