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03/10/2024 Sunday Market Preview

By The Commstock Report
Grains are poised to follow through on strength from Friday's finish. Price direction on Monday morning may depend on anything that pops up at 8 am central when the USDA reports on daily export sales and/or cancellations. In the Headlines Friday's crop report did not produce any major changes, so market participants are left looking ahead to the Prospective Plantings and Grain Stocks reports coming up at the end of the month. For the planting estimates, analysts will look for numbers close to what were issued from the Agricultural Outlook Forum in February, which predicted corn acres down on the year to 91 million and soybean acres up to 87.5 million. Last year, the March plantings report was higher than the February estimates by 1 million acres of corn, but the projections matched exactly for soybeans. Compared to the final outcomes, the prospective estimates in March would end up being 2.6 million acres too low on corn and 3.9 million acres too high for soybeans. There were cancellations announced on Thursday and Friday for U.S. wheat exports that were previously committed to China. Chinese buyers were washing out of contracts that were opened in early December. The largest daily purchase…
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03/08/24 Grain Prices Find Relief from Crop Report Being Out of the Way

By The Commstock Report
The World Agricultural Supply and Demand Estimates (WASDE) report was released today to show very few changes from last month. Most notable was that the government analysts decided to stay stubbornly high on their production estimates for Brazil. Prices did not react much initially, but they firmed up eventually on the likely relief of the report being put behind us without having produced any drastically bearish revelations.   A quick first glance was given to the U.S. carryout estimates, which were only expected to change slightly if at all.  U.S. wheat ending stocks were up by 15 million bushels to correspond with the export target being cut by that amount. The average wheat price projection was cut by 5 cents to $7.15. The corn price estimate was also cut by a nickel, to $4.75, but that was the only change made on the U.S. balance sheet for corn. For soybeans, there were no changes at all from last month, leaving carryout at 315 million bushels and the price at $12.65.   Brazil's soybean production estimate was again only cut by 1 million metric tons (mmt), which was missed by an average trade guess looking for a reduction of nearly 3.5…
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03/08/24 Wide Range of Trade Guesstimates for Brazilian Crop Size Make it the Biggest Wildcard for Today’s WASDE

By The Commstock Report
On the Grains Grains are quietly mixed in overnight trade. Yesterday's weekly export sales were in the top half of the expected range for corn, but YTD sales are still running 28% over last year vs. USDA's forecast for a 24.6% increase so today's WASDE should leave corn export sales unchanged. Wheat sales were near the low end of expectations but YTD sales are still 5.9% over last year vs. USDA's call for a 4.5% decline. Yet wheat managed to score the strongest gains yesterday as a further sign that relentlessly bearish news is pretty much dialed in with ending stocks projected to be the second tightest in a decade.   Soybeans and soybean oil were the shining stars of last week's sales. At 613,500 tonnes, soybean sales were above the high end of expectations at 600K. Alas, YTD sales are still down 19% from a year ago with USDA's current forecast at less than a 14% decline. That makes beans vulnerable to reduction in today's WASDE. Soybean oil sales were spectacular. At 29,200 tonnes they blew away expectations that ranged from a net reduction of 5,000 tonnes to only 10,000 in new net sales. The big surprise buyer was…
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03/07/24 Delay… Delay… Disappoint…Politicians are Pretty Much All Alike

By The Commstock Report
The current administration's biofuel political advantage over the Trump administration is being squandered by delays in regulatory benefits for biofuel. Trump's RFS waivers for refineries cost the ethanol industry 1.5 bln gallons of ethanol demand or in terms of corn demand, over 500 mln bushels of lost corn demand. Today’s 2,172 bln bushel carryover projection would be well under 2 bln bushels were it not for the master-stroke of Scott Pruitt’s EPA RIN waivers to Big Oil. It can be argued that that action taken back then cost us over $1 bushel in today's corn market. Trump did stamp initial approval of the year around E-15 but then did not consummate it in the regulatory process. Neither did Biden. It will require waivers again for E-15 sales this summer. They supposedly approved permanent E-15 for 2025 so a waiver then is not needed but don’t hold your breath. The WH is reportedly scared to death over what gas prices will do this summer with the election approaching this fall and someone sold them a bill of goods that E-15 increases gas prices. I am incredulous over that contention as I see the opposite, ethanol is cheaper than gasoline so more…
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03/07/2024 Firmness in Grains Overnight Hint Market Bears Less Confident

By The Commstock Report
On the Grains Grains are notably higher in overnight trade as of 6 am. There isn't any particularly bullish news to explain why so it only supports the notion that the pervasive mood of bearishness is largely dialed in and day-to-day change depends heavily on whether funds are adding to their huge net short positions or lightening up on them. Alas, even that has been inconsistent. Funds sold wheat hard to new 3-year lows yesterday. Another factor was worry that China may cancel some SRW purchases from the U.S. and Russian wheat offers have reportedly dropped below $200 per tonne. In the weekly energy stats from EIA, ethanol production backed off some last week, but it is still running strong enough to meet or beat USDA's current corn usage estimates for the year. Gasoline usage rose to a 10-week high, so that was supportive to ethanol consumption, yet stocks remain at a record high for this point in the year. Today's trade will also feature "positioning" ahead of tomorrow's WASDE report, there are few changes expected in the U.S. balance sheets but the "global" ending stocks are a wildcard heavily dependent on what USDA does with its South American forecasts.…
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03/06/24 Someone Interesting – Howard G Buffett

By The Commstock Report
Sometimes when doing a report, the research leads me to new places of enlightenment. Such was the case with my recent report on Ukraine. "If someone granted you $3 billion to accomplish something great in the world, what would you do? In 2006, legendary investor Warren Buffett posed this challenge to his son Howard G. Buffett. Howard set out to help the most vulnerable people on earth—nearly a billion individuals who lack basic food security. And Howard gave himself a deadline: 40 years to put the resources to work on this challenge." One of his 15 books, "40 Chances "recounts Howard's personal and professional experiences in surprisingly candid and colorful fashion…successfully blending personal stories with a tough look at the struggle to fight domestic food scarcity and world hunger…"   The Howard Buffett Foundation has been adding inserts to Farm Journal magazines entitled "Courage of a Nation" promoting "Farmerhood", a non-profit helping small farmers in Ukraine.   The publication's parent company Farm Journal Media also produces the AgDay and U.S. Farm Report television programs and publications including The Packer and Drovers Magazine.  They placed expansive multi-page inserts in the magazine that caught my attention triggering my curiosity. Howard has spent a lot of time in Ukraine focused on…
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03/06/2024 Early Trade Estimates for Friday WASDE Beginning to Trickle In

By The Commstock Report
On the Grains Grains are mixed in overnight trade. As of 6 am, corn and beans are mostly steady but wheat generally weak yet again. Soybean oil should get some support from growing evidence that palm oil production is declining in both Indonesia and Malaysia. China has been buying corn aggressively from Ukraine lately and plans to ship most through the Red Sea as its grain vessels have so far not been subject to Houthi attack. But in a noteworthy feature of China's recent party congress where it lays out objectives for the coming year, one thing that jumped out is sharply increased funding for "stockpiling of grains, edible oils and other materials" to restore "grain security and price stability." The stock market took a big hit yesterday ahead of today's testimony before Congress by Fed Chairman Powell. February jobs data is expected to be down sharply from January and yet he's expected to tell Congress it's still too soon to look for rate cuts. Also bearing down on the economic outlook is that over $17 trillion in government bonds are coming due for renewal over the next several months. Many bear current interest rates under 1% and will need…
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03/05/24 Do Not Fold or Spindle

By The Commstock Report
Recently, one of my colleagues wrote in this report that one of the GOP criticisms of the farm bill was that they allege that illegal immigrants were getting food stamps under SNAP. I know that is a common assertion and I was curious how much truth, of any, that there was to it. I happened to know an expert in social services who has a great deal of experience working with the immigrant population in Des Moines who would know if they are accessing SNAP. Attacking SNAP, calling it corrupt and abused, has been a common theme for Farm Bill critics for as long as they have debated them. As a general statement, most user-abuse has been purged from the system. Some use a broader definition, seeing SNAP as undesirable welfare that for which only elimination would suffice. SNAP opponents have tolerated it as the necessary compromise to get the votes to enact the larger farm bill with Ag titles. One gets the impression today that hard hard-right slice of House Republicans, that are punching above their weight, have reached a tipping point where these opponents would do away with a farm bill altogether if that is what it took…
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03/05/2024 Cash Basis Improvement Bodes Well for Market Where Most Bearishness Already Dialed In

By The Commstock Report
On the Grains Grains are slightly weaker in overnight trade following yesterday's welcome gains. National average basis improved 2 cents in corn and a penny in beans while holding steady to firm in wheat. Short covering by funds was a noteworthy feature yesterday. They remain holding their near record short in corn and beans, but even evidence they're not adding to their net short position is supportive. Export inspections yesterday were well within the range of expectations all around, but near the low end of the range for wheat. Despite that, wheat was easily the leader yesterday, stemming from reports that widespread hail has damaged India's crop and a report from Australia's ABARE had put their crop at 26 MMT. That's still slightly above USDA's last estimate of 25.5 million, but significantly lower than private estimates closer to 30MMT. We've yet to see pre-release trade estimates ahead of Friday's WASDE, but when we do, they'll tell us much about the odds for price-sensitive changes. Of most interest will be trade estimates of how much USDA will cut its own estimates of Brazilian soybean and corn crops. The most welcome news yesterday was that Valero would ship CO2 from eight of…
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03/04/24 Sure Wish the Wind Would Blow…NOT!

By The Commstock Report
March has come in as a lamb, a really warm/windy lamb for our region of the country. Red Flag/High wind warnings stretched the entire middle section of the US. They fanned wildfires in TX. Moisture was relegated to the West coast where they got literally feet of snow. High temps into the 70^s and gale force sustained winds are drying out our topsoil moisture profile. There is no snow cover here so topsoil is exposed to the warmth and wind. I drove home to NW IA from Des Moines Sunday fighting the wind. Wind turbines were in full go. I noted last fall that an inordinate large amount of tillage had been done. This was a good test for conservation tillage practices putting these practices on trial. Tillage to soybean ground that is done is light if at all. I left mine untouched. Strip till did not open topsoil up enough for the dirt to blow. Overall, I was very impressed with how little dirt was moving Sunday. The only exception was not more than a mile in length where someone had disked soybean ground and there was a mini-size-dirt blizzard blowing across the road. You could see dirt polishing…
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