CommStock Reports

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 below 150 million bushels! While it is unlikely to see stocks drop that sharply, it does show how important yield will be, and thus how important the weather will be.   So far the weather is cooperating. Dry areas in the Western Corn Belt begin to see some solid precipitation with parts of the ...

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. Also, the increase in Brazilian production of 4 MMT, which will compete with US corn to find a home, and that home is likely China. While we agree this is concerning, you can see the glass as half full or half empty. Currently, at $ 4.40’s for December corn, I look at the glass ...

  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. First off, president Trump is focused on trade deficits. In the case of US/UK trade it is the US with the surplus, exporting more to the UK than they do to us. The president sees trade deficits as others stealing from us. In this case, by that train of thought, we have then ...

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.

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 transition for some time. Who would succeed Warren had been decided with only when to be determined and the meeting settled that.  I have confidence that Able is able, and if Warren has confidence in him so do I. Warren will stick around as chairman. While the BRK stock sold off on ...

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.

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 able to help" and that he was "going to increase trade, substantially, with both of these great nations." A possible ceasefire between Russia and Ukraine was being negotiated over the weekend, but Russia had not yet agreed to begin the proposed 30-day pause in fighting. Ukraine and its Western allies were pushing for 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 of U.S. corn, accounting for about one-third of all exports in the current marketing year. Almost five years into the U.S.-Mexico-Canada Agreement, individual trade terms are up for renegotiation. Mexico could follow the path of the U.K. deal whereby U.S. tariffs against automobiles and steel are lowered. Japan and Columbia have been ...

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. 

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 keeping me home. Yet this was common then. It was just how families farmed. I probably would not have been that good at basketball anyway. The younger generation does not know how to work in part because they are not allowed to. You work…you learn. This is a lost opportunity ...

On the Grains Good morning. Yesterday's announcement of the US/China meeting to discuss trade gave life to the markets early, but as the day wore on, they faltered. President Trump announced that he wouldn’t lower tariffs for China in a good-faith effort ahead of the meetings.  All markets are in a “show me” mindset and will likely stay there until announcements are made. Even after the announcements, I want to see it and believe it. A United States/United Kingdom agreement is expected to be announced today. While probably not a big deal for agriculture, it outlines what future agreements will look like.    

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 crop corn is already "made" with what little soil moisture reserve being enough to fill ears and get it to the finish line. We see Brazil's safrinha crop inching higher from CONAB's April update as weather conditions have been near perfect until now. Whatever minor yield issues that exist in Parana will ...

On the Grains: There have been significant developments in the China/US tariff back and forth as they both agreed to meet in Switzerland on Thursday. Treasury Secretary and U.S. Trade Representative Jamieson Greer are scheduled to meet with Beijing’s delegation. Secretary Bessent stressed that these are preliminary talks and that we are a long way from a deal, let alone a deal China performs on. I apologize for my glass being half empty regarding China, after Trump 1.0. I don’t believe China upholds its portion of any agreement. Again, I worked at the export desk where a “great meeting” occurred just one week before, and we missed export sales by $1 per MMT. Maybe times are different, and this deal will have teeth, yet I remain cautious. China has cut its key rates and reserve ratios to aid its economy, which has been hit by tariffs. China has stated, “The US abuse of tariffs has severely disrupted global economic and trade orders.” It’s hard to take any statement from them about abuse seriously, they have abused their people, land, and other countries in the Belt and Road Initiative.   

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 investors so that the US dollar was the currency of choice in which to park wealth. There are strong signs that the confidence in the dollar is waning. China has stopped investing in the US and encouraged fellow BRICs members to do likewise. The US has militarized the global financial system through dollar dominance ...

On the Grains Planting progress was 40%, within the 35-48% trade range and on the 5-year average. I thought it might be closer to 45%. Last week, we planted 14.7 million acres, which will be crushed as it's finally opened up in SE Minnesota and Northeast Iowa. 55.7 million acres remain yet to be planted, and we will get everything in the ground promptly this year. Ohio might struggle for another week, but the extended forecast also looks better there. July corn had an ugly day yesterday as we look to make a bottom for the near term, and if the $4.50 holds, we should be good. “While plant in, the dust and the bins will bust” motto still holds true, and traders piled on the short side yesterday as they lacked the motivation to buy the market as the 6-10 day looks good. July support at $4.50 and looks like it should hold as we have done enough damage ahead of the WASDE report, and crude bouncing off 4 years lows yesterday should be supportive ethanol.

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 to acquire a much deeper knowledge of who, what and where these illegals are by enlisting the tax reporting system to expose this information. Once they are identified and targeted, they will come for them. The new federal budget will give them the funding they need to execute their dragnet. Many construction companies, trucking firms, food ...

On the Grains Let’s take a look at developments over the weekend. First is planting progress, which will likely be in the low 40% tonight. While southeast Minnesota struggles to get much in the ground, it will be a wide open 10 days, and the bulk will get planted. We will keep this short and sweet. The crop is getting in the ground. Funds also expect the corn to get into the ground, noting that they were sellers of 41,000 contracts, leaving them 71,329 long. If we could get a storyline, they could add significant length, yet the time is short for that to develop. Two weeks of good weather and nothing left for a news story but a drought to bring them back to the market, as the demand story feels stale and traded.

Grains stand to follow through on a mostly stronger close from Friday. The old-crop corn contracts were down against the later months as spreading remained an active part of trading. In the Headlines The next Federal Open Market Committee meeting takes place this week under expectations that the central bank will not reduce its lending rate. Policy updates will come from the meeting's finish on Wednesday at 1 pm central, with Fed Chair Jerome Powell's press conference half hour later. Market implied odds were 97 percent for no rate change this month. Odds also shifted dramatically last week for what to expect in June, with views flipping toward thinking the Fed funds rate will hold steady again next month. A weak GDP reading initially supported rate cut ideas last week before a stronger jobs report went the other way. An NBC Meet the Press interview with President Trump aired on Sunday morning to provide fresh comments on market sensitive items such as energy policy, government budget plans, and tariffs. Combined with President Trump's recorded cabinet meeting late last week, the interview kept the tone aggressive on maintaining tariffs and digging in for the trade war with China. Trump has been heavy in his recent mention of lower gasoline prices, even posting that 'gasoline just broke $1.98 a gallon,' but the national average was recorded much higher at $3.16. The energy market will continue to find influence from President Trump's influence on a possible ceasefire deal in Ukraine and a nuclear agreement with Iran. USDA ...

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 has estimated that over 200,000 federal workers were fired just in the month of March. One caveat for jobs report out this morning was that federal government employment was only shown lower by 9,000 for April and down 26,000 since January; the layoffs will be felt more fully in the future, in part because ...

On the Grains For all the “fear” of the economy falling to zero, Apple's earnings yesterday were reported at $95.4 billion, up 5% year-over-year, beating expectations of $1.62/share and paying out $1.65. Apple also announced it will purchase $100 billion in its stock buyback program.  Chinese sales, shockingly, were down 2.3% year-over-year. If an analyst expected them to gain market share in China, I wonder what they think and if the hamster is still running around? Undoubtedly, the concern is the tariffs and how the 2nd quarter numbers look, some might have been preemptive buying ahead of the tariffs supporting numbers last quarter. In my house, we upgraded one phone, an Apple Watch, and AirPods ahead of the tariffs. I believe all three were in January. Not solely based on tariffs, but it did help make the decision easier. The phone and watch were over five years old, and the AirPods I lost are essential in this business.

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 chains can restructure to compensate?   Asian logistics managers say that they have seen 90 outbound container ships from Chinese ports destined for the US cancelled since the initiation of the trade war versus 50 at a comparable timeframe during Covid. Their data lags by a couple weeks and they say that exports from ...

Above you will find today's installment of Morning Market Talk. Mayday Mayday You can click on the picture above to take you to this morning's episode. On the Grains Equity markets are rebounding as the market is getting signs that the first deals on tariffs might be close to being done. Potential deals include Japan, South Korea, and India, but Trump is not in a hurry to rush into a deal to get it done. US Trade Representative Greer, said in a statement that the US and China have not had official talks yet is clearly a misdirection by the administration from earlier reports that China had come to the table. At the same time, the equity markets are on a rip higher this morning as Microsoft and Meta are leading the way. Several major companies are set to release earnings today- Microsoft, Meta, Pfizer, and United Parcel Service. Microsoft reported that $9.7 billion in share buybacks and dividends for Q3 maintaining its aggressive shareholder return strategy. Yesterday, 120,000 MT of corn was sold for delivery to an unknown buyer in a flash sale, and today’s export sales report is expected to show 1.0 million MT to 1.25 million MT. The weekly EIA ethanol report, released yesterday morning, had ethanol production up 2 million gallons per week vs. last week's production and setting a record for the last week in April production, taking out the 2018 highs. Also, during the previous four weeks, production averaged 1.027 mbpd, up 3.2% from a year ago. Currently, we ...

PLEASE REFER TO THE BROKER COMMENTARY PAGE FOR UPDATES!! My crops got planted the middle of last week. We were scrambling to get them put in ahead of a forecasted rain. We made it just in the nick of time as it started raining on the last two rounds. Soil conditions were about as good as we have seen in the last several years. We have already gotten a couple of inches in April with more forecast for this week. Temperature forecasts continue to remain above average and so it appears any risk of frost is limited. Scattered rainfall of 1" to 1.5" will encompass most of the Corn Belt this week. Texas and Oklahoma received the most with up to 4" in some areas. Nebraska is the one state that has been left out of any significant April showers, showing limited precipitation in the near term. The May outlook shows a slightly drier trend for Iowa and most of the Eastern Corn Belt. Meanwhile Northern regions in the Dakotas and Minnesota should see above average rain along with the Southern Plains. For the time being, corn areas affected by drought are receding to the Western Corn Belt. It may not come as a surprise that planting pace matters. Our research concludes that while there is never any guarantee, there is a correlation between how quickly the crop gets planted and the corresponding yield. Those that attended our Ag Outlook at the Illinois Farm Bureau last summer may recall how we highlighted that having only ...

On the Grains Risk off was the theme that dominated the trade yesterday, as the Brazilian state of Parana’s Department of Rural Economics reported corn conditions at 63% good to excellent. Currently, there is a limited risk of developing a crop problem in the Brazilian crop. That's not to say that something couldn’t arise in the future, but it's looking good so far. 

Footnotes on Pope Francis: While Lutheran, I have long admired Pope Francis as personifying what a Christian should be. I set him out as being the most Christian Pope, living and preaching the gospel in humility, in my lifetime. That pitched him into contrast and conflict with some of the strongest cultural and political movements today. All Pope Francis did was point out how Jesus said to treat strangers and children and that was contrary to what many politicians were selling voters or voters were demanding of politicians. That is why the public uproar against a caravan of children crossing our southern border a few years ago forced me to comment on the hypocrisy. My wife and I visited the Vatican and gazed at Michelangelo's Sistine chapel ceiling. While most impressive, we also came away with an aversion to the overall ostentatiousness of the place. The irony and our connection to Pope Francis was that we shared that perception which is why he chose not to live there. I am not convinced that had Martin Luther known Pope Francis that there would be Lutherans today. I recommend the movie "Conclave" for an idea of what comes next.   Footnotes on the Vast Lutheran Conspiracy: Lutheran groups were named in a Flynn/Musk social media post baselessly accusing Lutheran charities of money laundering. DOGE's assault on Lutheran Family Social Services produced a backlash among Lutherans who know Elon Musk's depiction of the organization as a crime syndicate, labeling government financial support to provide social services using ...