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CommStock Reports

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  • 02/07/25 Afternoon CommStock Report – Corn and Soy Price Differences under Increasing Scrutiny
    The fast approaching spring season places attention on upcoming planting decisions and how farmers will respond to changing crop price signals. Current consensus has formed around the expectation for heavier corn acreage and a smaller soybean area, an outcome that could eventually work against what has been a mostly stronger relative price trend for corn compared to soybeans.   The new-crop soybean/corn ratio (SX25/CZ25) currently stands at 2.27, which is down from a year ago when the SX24/CZ24 multiplier was 2.47. December corn futures are trading roughly 8 cents lower than where last year's contract was trading at this time, while November soybeans are just over a dollar cheaper. There is a loose seasonal trend that sees soybeans strengthening relative to corn through the end of this month. Slight upside for the ratio since its low in December may fit with the idea that futures prices needed to buy soybean acres. Crop budgets were recently updated by the University of Illinois to show local break-even prices that are closer to the current market on corn than on soybeans. The total cost to cover on corn was calculated at $4.60 (CZ25 futures at $4.65) and the cost for soybeans was $11.05 (SX25 at $10.58).   Two factors stand out as potential causes for the corn-soybean price divergence: exports and processing demand are both exceeding expectations to a larger degree for corn than for soybeans. On the trade front, cumulative corn export sales are up 28% from a year ago versus the USDA target for growth ...
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  • 02/07/2025 Front Loading Corn-Maybe, Pork Replacing Beef Locally
    On the Grains Welcome to Friday’s edition of the Commstock report. What a week it's been. Most of the action has been in the cattle trade, yet grains have also provided some spark. The Rosario Grain Exchange confirmed that Tuesday and Wednesday rain benefited crops in the central growing area. Export sales, released yesterday, continue to support corn as sales were 58.2 MBU, up from last week's 53.5 MBU and the last 4-week average of 54.3 MBU, crushing last year's 45.6 MBU. While some have continued to say that Mexico’s purchases are front-loaded, and looking at the chart, it could be. However, they did have the worst drought in 500 years. Total corn sales to Mexico stand at 16.4 MMT vs last year's 15.8 MMT. I would say that price had more to do with Mexico’s frontloading and the need to replace bushels that were not grown domestically vs. tariffs. The September lows offered a good spot to get long corn for them.  Also, to back up that theory, Mexico removed the ban on accepting GMO corn from the United States.
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  • 02/06/25 Afternoon CommStock Report – Ukraine Still on a Front Burner in 2025
    Front burners issues are in hard competition with each other to attract attention and keep it. Let's get more up to date on our perspective on the state of the war in Ukraine with Russia. Both Ukraine and Russia now appear to be prepositioning for talks. Putin doesn't appear to have the wherewithal to crush Ukraine while it doesn't appear that Ukraine has the resources to force the removal of Russian forces from all of its territory. The engagement has evolved into a mutual bleeding of each other. It is likely that some kind of ceasefire and negotiation eventually takes shape pausing the hostilities for this round sometime in 2025. That would mean that Ukraine may soon begin to recover its Ag production and exports by late 2025/2026. Unless either of them has something hidden in reserve to change the current head-to-head stalemate on the battlefield some alternative outcome to a victory will be negotiated. President Trump will reportedly offer a plan next week. A negotiated outcome is an embarrassment for Putin. Russian numerical advantages have been blunted by Ukraine's resolve and Western resources.   Casualties on both sides have been brutally high but the depth of the resulting drain of manpower will plague Russia's future the most. Russia is in demographic decline and this war will drain its productive-age population further. It is being wasted in this war. Russia's military has conducted the war with little concern over limiting its casualties. That is the way that Russia has always fought wars. ...
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  • 02/06/2025 Eggs Making Headlines
    On the Grains Good morning. Rangebound is the theme for today's trade. March corn continues to rally but fails against the $5.00 level. This is the fourth time in the last seven trading days that the nearby corn contract hits $4.97 or better and runs out of steam. Yesterday's flash sales to South Korea (330,000 MT for 25/26) and excellent EIA ethanol report weren’t enough to bust out of the overhead resistance. Ethanol production currently is running at about 7% in January over January higher. If we do see some exports slip, the grind would offset some of that demand. How much we offset while that depends on how many exports are canceled. Many people have talked about Mexico's frontloading exports. While some of that may be true, they did have a drought of biblical proportions, and I would guess that it's possible that they cancel some, but it is highly likely it will be all and that they will need to lift the vast majority of what is on the books. I will continue to sell nearby corn against the $5.00 level until proven wrong.  
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  • 02/05/2025 Safrinha Corn Needs To Get Planted Now
    Safrinha Corn Needs To Get Planted Now Tariffs are the focal point this week with Brazil's pending harvest taking a back seat. As I write this President Trump is set to meet with President Xi of China. The market seems to be expecting a favorable outcome, looking for China to extend an olive branch much like Mexico and Canada. So far it has been working. Neither Canada nor Mexico wished to test Trump's resolve which will likely lead to further threats of tariffs anytime a country falls out of line with the United States. As the tariffs have only been put on a 30 day pause, we have not seen the end of this story yet.
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  • 02/05/2025 Eggs Making Headlines
    On the Grains Good morning, subscribers. We will try to avoid the tariff talk as much as possible, that story has been run, and only time will tell what China elects to do. President Xi Jinping and President Trump did not have their scheduled phone call yesterday, and the White House gave no reason why this was canceled. The original trade deal that China signed was for significant Ag purchases, which China has continued to fall short of reaching. I would suspect President Trump will push to at least get that covered, yet China has been courting Brazil since that deal was signed, making any large announcement or new deal with China a wait-and-see storyline. 
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  • 02/04/2025 Is this MapQuest?
    On the Grains I often see reels on Facebook making fun of my generation's use of printed maps and directions before the GPS became affordable. Yet here we are. It feels like I am young and have a full head of hair again, looking at outdated printed directions before the ink is dry (do not ruin it, I am drafting the story, so it is my vision, you too can have hair and be skinny if you so choose in my story). Back to the regularly scheduled program. Are we tariffing or not? That is the question of the hour and a fluid situation.
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  • 02/03/25 Afternoon CommStock Report – The Stupid is Only Getting Started
    (updated as of 1 p.m.) US importers, who frontloaded inventories of goods from Canada, Mexico and China are glad that they did. Logistics companies in TX say that their commercial warehouses have filled since the November election as US companies-built inventories fearing that Trump tariffs would be retaliated against. Wal-Mart for example has utilized warehouses and distribution centers which they filled with imported goods. That way they have some time to adjust to new pricing. It also gives them a price advantage over companies who could not frontload. There are a lot more goods ordered on their way but they have to be landed and clear customs before the tariffs are evaded. I bought a new I-phone last week as they will not be getting any cheaper. The 10% tariff on China was so well telegraphed in advance it was barely mentioned, waiting now on a response from China. Many companies will have to raise prices to account for the tariff costs and consumers, already in ire over inflation, will not like more of it.   Some of Trump's tariffs announced this weekend did not last the day Monday. The Trump administration does not have its people in place yet to execute the tariffs or to engage in negotiation yet Trump stuck to his Feb.1 deadline to announce tariffs. Thus, he subsequently agreed with Mexico's president to hold off on them for 30 days which should cool things off. Will Canada get the same deal? Conditions will change hour by hour like trading ...
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  • 02/03/2025 Movies and Markets
    On the Grains One cannot help but draw comparisons between movies and markets. For example, the 90's hit Home Alone when Kevin is in the basement, and the furnace kicks on, making a loud noise and scaring him, and he runs upstairs yelling. Yet the next time, he looks at it and says I am okay, which does not scare him. Well, that is like tariffs and markets. Except the funds are Kevin, and the furnace that makes the loud noise is tariffs. How everything plays out between Mexico, Canada, and the United States, nobody knows just for sure, but it is enough of a caution to send the funds hitting the pay window and moving to the sidelines. In fact, on world trade, it is starting to feel like we are home alone. We did gap lower on the overnight March corn.
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  • 02/02/2025 Sunday Market Preview
    Opening calls are for the grains to face pressure from tariff negativity. A recovery would likely hinge on the stock market and dollar being able to stabilize. The energy market could lend support if crude oil rallies in response to the prospects of Canadian imports being curbed. Tariff concern also has the potential to ease the longer it goes without retaliation against agriculture by China. In the Headlines President Trump announced new tariffs of 25 percent against Canada and Mexico as well as an additional 10 percent tariff on imports from China. The only exception listed is for a smaller 10 percent tariff to apply against Canadian energy imports. Mexico initiated a contingency plan that will be expected to produce various tariff and non-tariffs responses. Canada responded with 25 percent retaliatory tariffs against $107 billion worth of U.S. goods. Effected U.S. goods include orange juice, spirits and wine, coffee, appliances, and paper. Canadian officials also signaled their intention to later tariff beef, pork, and dairy. The Chinese government promised to appeal to the World Trade Organization. China did not immediately raise the issue of retaliatory tariffs, although that course of action could still follow as soon as this week. The USDA's inspection service agency announced on Saturday that imports of cattle from Mexico would be allowed to resume "within the next several days." The cross-border cattle trade had been halted since late November due to the detection of a screwworm infection in southern Mexico. Over 1.2 million head of cattle were imported from ...
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  • 01/31/25 Afternoon CommStock Investments – Don’t Fight the Funds
    Price action on Thursday and Friday pointed toward the commodity trading funds wanting to reduce risk at the end of the month and ahead of the weekend. Squaring off positions involved taking profit on the longs in corn and soybeans, but covering shorts held against wheat. Speculators stepped to the sidelines by closing out some of their bets, but they did not reverse them. As we track the ebb and flow of speculative positioning, it should be advised to not fight the funds if they are going to continue to play defense in front of a robust net-long in corn while also going on the offensive in soybeans and wheat. When there are signs that the funds are not just liquidating longs but also opening new shorts, the approach for hedgers will be to follow the funds and sell ahead of a possible flip back into the type of bearish environment that dominated for most of the past two years.   Here are some observations about the current state of trader positions and what they mean for the market:   - Funds are significantly more bullish for corn than at any point over the last two years, although the net-long is still smaller than record levels from 2021. The net-long in corn was last comprised of 416,000 longs and 104,000 shorts.   - While the net-long in corn grew again last week, the number of short positions was larger as well. Short positions that total above 100,000 contracts and grow from there have historically preceded lower ...
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  • 01/31/2025 Annual Cattle Inventory, 25% Tariff
    On the Grains Yet again, export corn sales, were at the top end of the expectations, with sales of 53.5 million bushels (MBU). While down slightly from last week’s 65.4 MBU. Total commitments are now at 1.704 billion bushels, up 29% vs the previous year. I know we said after December and the January crop report that we might run the risk of falling short on USDA projections for sales, it appears now if we match last year's Feb-March sales, the 2.450 might be too low. Our balance of the year, if we can match that Feb-March of last year, only needs to be 20 BMU vs last year's 28 MBU. Any sort of hiccup in Brazil’s production could easily put us over that. Looking back at the reports from August of last year, we talked about our contacts in Brazil, saying that the domestic demand is grossly underestimated. This same company was in our office in August and predicted a 180 to 181 national yield, at that time, everybody was at 183 to 184.
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  • 01/30/25 Afternoon CommStock Report – Delayed Harvest and Dry Weather Pattern Continue In Brazil
    Rainfall starts out below normal in Mato Grosso this week, but that is mostly seen as a good thing. Farmers are anxious to make progress on soybean harvest while simultaneously getting caught up on second crop corn planting. This break from daily showers doesn't seem to last long as precipitation begins to fill in later this week again. Argentina and Southern Brazil did receive pockets of showers, but combined with extreme heat, the market does not seem to think it was enough to reduce yield loss. The weather story seems mostly unchanged. While pockets of RGDS in Southern Brazil continue dry, the vast majority of Brazil's growing regions will see more than sufficient rainfall.   We still don't think Argentina and Southern Brazil have seen the end to a dry period, but the longer-term forecast remains more favorable. We are reaching the end of peak soybean precipitation demand. That being said, many regions that plant a month later still need rainfall in February…and it appears they will get it. Brazil's 24/25 soybean season is entering its 4th quarter, and we see no reason why they won't reach the USDA's target of 169 MMT or more. Argentina has begun to trim their yield estimates, and they may have to cut them some more. But collectively South America could still produce 18 MMT more than last season. That one-year increase represents 15% of the US 24/25 bean crop. It would be like adding the equivalent of an additional 7 bpa on US bean acreage. ...
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  • 01/30/2025 Money Flow, Stress Test
    On the Grains Overnight markets were slightly weaker after yesterday’s impressive rally across the board. Yesterday’s move can be credited to two things: first money flow, and second the weather in South America. Forecasters continue to have 11–15-day models having rains, which will continue to inhibit harvest progress and second crop planting progress. It seems kind of early to be worried about second-crop corn just yet. However, the world stocks available to use, minus China, are tight, so there are probably reasons to be at least concerned. Now throw in Argentina, which continues to be hot and dry. Once the train leaves the station, the money follows. All eyes are on the front month, March corn, as it tries to take out the $5.00 resistance levels.
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  • 01/29/25 Afternoon CommStock Report – USDA Created Ag Recession
    Part 2 of 2   It wasn't just grain farmers that USDA shafted with misinformation last year. National Hog Farmer published a contention that USDA "did hog farmers no favor" by overstating hog numbers in their September quarterly report. USDA set the market up to expect larger supplies than materialized. The result was "hog prices that were lower than they should have been longer than they should have been." No one will compensate hog producers for the USDA error. Going further the NHF article stated, "In fact, the November report that pushed out a 180++ yield number was against a backdrop of 91% of the crop harvested at the time of the report, a solid 15% more than normal. How did they miss so much? The Chief of the USDA offered no explanation aside from, "That is what the data said." That dude has a career in politics. Wait, he already works for the government. This is inexcusable." At least hog producers benefited from the USDA misinformation that depressed grain prices and thus reduced their feed costs "more than they would have been longer than they would have been otherwise." The NHF lamented what grain farmers were going through saying "the USDA (surprise!) has indicated that the crop was not as big as we thought in November. Or September. Or August. This flip is egregious. Period."   Corn and soybean production losses were real. Hog market losses were also real. USDA needs to get real about how their data processes are contributing to net farm income losses that would otherwise be unjustified were the ...
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  • 01/29/2025 All Markets Top, When is the Question?
    On the Grains Overnight markets were slightly higher last night. Don’t look now, but we may have a wheat move upon us. Wheat finally reversed its trajectory and snapped a streak of four lower sessions. We mentioned yesterday that we felt like wheat needed to make a move if we wanted corn and beans to play along, while here we are. Paris Milling Wheat was up last night and that has spilled over into the U.S. markets. It’s a matter of whether this move can extend itself.
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  • 01/28/25 Afternoon CommStock Report – USDA Created Ag Recession
    Part 1 of 2 USDA's Chief Economist and the rest of his dominion need their butts kicked. When DOGE gets around to evaluating the USDA and how it delivers for US farmers, as a farmer, I believe we would be better off without WASDE reports than the misinformation that USDA has been consistently delivering. The 2024 Ag Recession was a disaster of their making. I suppose that I should explain why…here it goes:   The process by which USDA creates and updates its balance sheet for crops throughout the growing season has historically been advantageous for end-users and subsequently penalizes producers. USDA consistently initially overstates production and carryovers through the processes that they use. I have alluded to this in this report in recent years but in 2024 they outdid themselves. USDA puts their finger on the scale of price discovery in favor of lower prices. This time it felt like something consistent with the administrations' desire for lower food costs. The $10 bln that farmers are being paid in financial aid is to compensate for market losses that USDA created. From their initial assumptions through the growing season, they provided bad information to which the market responded negatively like a wet blanket on prices. The market did nothing wrong as it interprets the information USDA gives them. The market responded correctly to data that was misinformation on both the production and demand side of the corn/soybean balance sheets. Their methodology initially skews carryover projections far higher than they actually were which depressed ...
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  • 01/28/2025 Passing Logic, Many Dollars Ago
    On the Grains Yesterday, we held support for the March corn, which we mentioned in the morning report, a good sign for corn. Also, we did see a USDA flash sale of corn to Mexico of 139,000 MT. Until we can get a wheat move, corn looks to be range bound. Russian wheat has slowly crept its way higher in the international markets, yet Paris Milling wheat put a low in yesterday. What gives? We know the Russian crop went into the ground in rough shape and most likely won't improve, yet the US futures refuse to do anything with that news. Since that story has some traction, back at the start of October, futures have fallen from $6.03 down to $5.36 vs the Chicago contract. The funds are still short, and it appears that they are not in any hurry to cover. I know hardly anybody who is reading this report grows much wheat, but without a move to cover those shorts, corn is going to have limited upside. It's possible that the funds will decide to cover some of those shorts when the US crop comes out of dormancy, but that’s down the road.
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  • 01/27/25 Afternoon CommStock Report – Placing Blame is Often Pointless
    The LA wildfire is beyond imagination which has made it a national event/disaster that will be unforgettable. The recovery will appear as insurmountable as well. There is a propensity for politicians to focus on blame or credit from highlighted events and most criticism for the LA wildfire is coming from the cheap seats who have never experienced such a fire. Unfortunately, I have when I was president of Brazil Iowa Farms and my son Matthew was the farm operations officer in Bahia. I have listened to some of the criticism of the fire risk management and the handling of the California wildfire and many of the critics do not know what they do not know. Yes…some fire departments were under-resourced and there was a reservoir that was empty (which there was a reason for) but if everything that critics have pointed out is correct, do you know what difference that would have made to the outcome? None whatsoever. The result would have been exactly the same. Critics do not understand the scale of wildfires and how they are uncontrollable regardless of resources in the worst conditions. Instead of a hurricane with rain and a storm surge, these wildfires are a hurricane of fire. It is the hurricane force wind driving the fire that turns them into monsters. You can fight a fire but not the wind. It is not fire that spreads fire, it is the embers from the firestorm that does that. You cannot stop jet propelled burning embers ...
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  • 01/27/2025 Weather Markets, Cattle on Feed, and Colombia
    On the Grains Let’s get it started, we talk about the shift in acres. While the spread favors corn (2.27), we must still put fertilizer on, which is likely the main stopping point. This last rally in corn allowed 2024 producers to become slightly profitable and bankers to look at cash flows and feel a little more comfortable with 2025 plans- even if that does include more corn acres.
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  • 01/26/2025 Sunday Market Preview
    Opening calls are steady to slightly lower for grain futures after a weaker close on Friday. Weekend rains in Argentina may keep the bulls in check along with possible pressure on energy prices. A potential source of support could come from further decline in the dollar's value and from related strength in grain export demand. In the Headlines Grains closed lower on Friday but still held gains for the week. March corn futures were up 2 1/4 cents over the four sessions that made up the shortened holiday week. March beans were up 21 3/4 cents. The nearby Chicago wheat contract was up 5 1/4 and the March Kansas City up 11. February live cattle jumped $8.02 and January feeders finished higher by $5.20. February hogs were up $1.17. Soy futures felt pressure from news that Argentina was lowering its export tax through at least June. Despite facing drought throughout the current growing season, Argentina is still set to produce enough so that it remains the world's top exporter of soy meal. Cuts to Argentina's crop estimates can still be price friendly down the road, since USDA last predicted the Argentine soybean crop at 52 million metric tons versus what the Buenos Aires Grains Exchange just estimated at 49.6 mmt. The next Federal Reserve Bank meeting wraps up on Wednesday this week under strong consensus that there will be no cut to the fed funds rate. Market-implied odds also suggest that the central bank will hold its rate steady at 4.5 percent through the ...
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  • 01/24/25 Afternoon CommStock Report – Export Sales Update
    The weekly export sales report featured some eye-popping numbers for corn and soybeans. Totals for both crops were the highest in more than a month. The update coincides with rumors about Chinese buying interest being reinvigorated. Last week included a trio of daily flash sale announcements for soybeans to China before a corn sale to an unknown buyer was linked to China this week. Other importers are also stepping in to help corn and soybean sales track ahead of levels needed to meet the current USDA projections. The export report placed additional attention on what lies ahead for trade policy during a week that was fraught with back and forth developments regarding President Trump's tariff plans.   A review of recent corn and soybean export activity further supports claims about the USDA looking way too pessimistic in its estimation of trade potential for the 2025 marketing year. After the shock of record-large yield reductions made in the January crop report, upward revisions to the export projections could be the next source of major cuts to the carryout estimates. Here are where exports stand after today's update and ahead of the next supply and demand report coming on February 11th:   Corn export sales accumulated since the start of the marketing year on September 1st have reached about 1.65 billion bushels, or roughly two-thirds of the target. Corn sales are up 29 percent from a year ago compared to the USDA saying they will only end up growing by just less than 7 percent. The ...
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  • 01/24/2025 Weather Markets, Cattle on Feed, and China
    On the Grains Good Friday morning, here we are trading headlines again. What exactly is “priced into this market” remains to be seen. Bullish headlines get bearish results, and vice versa. As we mentioned yesterday, The Buenos Aires Grain Exchange cut its estimates for its soybean crop to 49.6 MMT and took corn to 49 MMT as well. Both crops were cut by 1 MMT, a seemingly small number, and undoubtedly numbers that Brazil will more than offset. More critical for US exports was the release of Argentina’s reduction in export duties, revised down from 12% on corn to 9.5% and from 33% to 26% on soybeans, while bean products went from 31% to 24.5%. They want the business, and the world will react.
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  • 01/23/25 Afternoon CommStock Report – Who is Nostradamus?
    And What does he have to do with getting the Crops in on Time? Nostradamus, who is also known as Michel de Nostredame, was a French astrologer, apothecary, doctor, and reputed seer, who made some predictions about the Earth through the years. With the publication of his famed book "Les Prophéties" in 1555, Nostradamus gifted the world and its future generations a quasi-poetic time that predicts wars, pestilence, natural disasters, civil unrest, political assassinations and other such lighthearted fare. Outlining his predictions for 2024, the oracle wrote, "The dry Earth will become more parched and there will be great floods." Sounds like climate change. That could have described our farm in Northwest Iowa last year. The great flood was followed by a drought.   This is the Nostradamus prognostication that caught my attention. Nostradamus wrote: "From the cosmos, a fireball will rise, A harbinger of fate, the world pleads. Science and fate in a cosmic dance, The fate of the Earth, a second chance." Most interpretations believe that he was referring to an asteroid hitting the earth thus predicting that in 2025, a gigantic asteroid might come dangerously close to colliding with Earth. NASA has some predictions for potential asteroid threats this year, but none of them are posing a threat to the human race as of now"   I do not agree that he was referring to an asteroid strike. I think that if we add science to the source of the prediction that it is far more likely that the solar maximum cycle due to peak in 2025 ...
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  • 01/23/2025 There She is Boys, $200 Cattle!
    On the Grains Good morning, subscribers. Even rumors of the flash corn sale being China couldn’t motivate corn yesterday. USDA’s carryout reduction was great news, but it’s all about the South American crops now. Last night’s Comstock Report outlined the current situation in Brazil. Could we have a storyline? It's possible, yet it's just too early to tell. The Buenos Aires Grain Exchange and the Mato Grosso Institute of Agriculture will release crop estimates today or tomorrow. Yesterday’s spike high of $4.92 will remain the objective in the front month, while make no mistake, a lot of grain has moved on this rally. It’s going to take some basis work the next time end users want to cover some needs.
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