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05/13/2024 Planting Weather Looks Iffy and Likely to Fall Further Behind

By The Commstock Report
On the Grains Grains are weaker in overnight trade thus far, giving back some of Friday’s strong gains but still looking positive from a chart perspective. Trader reaction to Friday’s WASDE netted solid gains for corn and wheat but only modest gains for beans on the coattails. That stems mostly from USDA once again coming in with only a “token” reduction of 1 million tonnes for Brazil’s soybean crop to 154 MMT against an average trade estimate of 152.5 and private estimates down there still closer to 147. Tomorrow we’ll get the latest CONAB report (their USDA equivalent) and, if anything, that’s expected to be even lower due to disastrous flooding in southern Brazil.   This content is for members only.Log In Register
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05/12/2024 Sunday Market Preview

By The Commstock Report
Happy Mother's Day. A mostly steady open is expected for the grains as more active planting progress over the weekend is weighed against technical bullishness following from a strong close on Friday. In the Headlines Corn futures finished higher for a third week in a row with the July contract up 9 1/2 cents over the last five sessions. July beans managed to hold onto gains of 4 cents for the week. July Chicago wheat futures rallied 41 cents last week and KC July was up 23. June live cattle finished last week lower by 52 cents while May feeders dropped $4.50. June lean hogs were down 57 cents. The largest solar storm in more than 20 years occurred over the weekend. The geomagnetic flaring provided a widespread display of the Northern Lights while it also disrupted satellites, some of which farmers were trying to rely on for GPS guidance while planting. The government's Space Weather Prediction Center noted that "the source has mostly been a large, complex sunspot cluster that is 17 times the diameter of the Earth." The initial new-crop estimates were reported on Friday and now the market will reflect changes in opinions about acreage, yields, and…
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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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05/10/2024 Grains Firm Heading into Today’s WASDE for Multiple Reasons

By The Commstock Report
On the Grains Grains are all higher in overnight trade with wheat leading the gains. That freeze on already drought stressed wheat in Russia has caused three of its key wheat districts to declare a “state of emergency” and that’s led to more short covering by funds. In supportive news for corn, the Rosario Grain exchange just reduced its estimate for Argentina’s crop another 2 million tonnes, to 47.5 million versus USDA’s April WASDE at 55 MMT. The trade may also already be responding to yesterday’s confirmation from NOAA that we’ll likely see an earlier shift to La Nina conditions known for bringing hotter and drier summers to the central part of the country. This content is for members only.Log In Register
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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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05/09/2024 Grains Recover on Pre-WASDE Positioning and Muddled Planting Weather Forecasts

By The Commstock Report
On the Grains Grains are higher in overnight trading with wheat up double digits after two days of losses. Weather forecasts are becoming scrambled as to impact on planting pace through the weekend and into next week. Some parts of the Midwest are expected to dry out enough for planting to resume, while intermittent showers will return to others just about the time planters might have resumed. Most importantly, this week and next week are the two where planting typically makes its biggest gains and Monday’s planting progress report is likely to show corn planting has fallen even further behind normal, which should prove supportive. This content is for members only.Log In Register
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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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05/08/2024 Wide Ranges of Trade Estimates for Key Metrics in Friday’s WASDE Set Up Potential for Major Market Impact

By The Commstock Report
On the Grains Grains were narrowly mixed but leaning weak as of 6 am in overnight trade. The trade is absorbing trade estimates now out for all the key metrics in Friday’s May WASDE report. It will feature both tweaks to the 2023-24 balance sheets and the first “official” USDA projections for the 2024-25 season. So far, all the trade has had to go on were the preliminary “guesstimates” from the USDA Outlook Forum in February, before USDA even had the March Prospective Plantings to go on. Looking at the wide ranges of estimates, there are extremes either bulls or bears can focus on that set up potential for significant market reaction if USDA numbers come out near either end of those ranges! This content is for members only.Log In Register
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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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05/07/2024 Corn Planting Falls Behind Normal While Soybean Lead Shrinks

By The Commstock Report
On the Grains Overnight grains are soft after yesterday’s strong gains as traders take stock of the drivers behind it. Top on the list was a wave of fund short covering as ongoing flood problems in southern Brazil shrink crop estimates even further and wet weather slows planting here. It’s the strongest signal yet that funds may finally be abandoning a long-standing bearish bias and it could feed on itself if positive chart action unfolds further.   Yesterday started out with so-so weekly export inspections. Corn loadings were in the upper end of the expected range, wheat loadings mid-range and soybeans near the low end. However, it didn’t matter when new short covering by funds kicked in for all the grains, beans, oil and meal. SBM was smoking hot on word that those southern Brazilian floods have not only stalled harvest but also idled some major crushing plants indefinitely. Wheat is getting support from ongoing issues threatening quality in EU wheat and production in both Russia and eastern Ukraine. With Australia’s 2023/24 crop and export prospects down sharply as well, fundamentals are slowly improving. This content is for members only.Log In Register
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