CommStock Reports

Part 1 of 3 There is history that tariffs came before income taxes as the means to fund the government. We know this because tariffs provided most of the revenue that funded the US government from the birth of the country up until 1913 when the US adopted the income tax which replaced tariffs. The concept of tariffs providing the revenue to fund the country is being revisited in this century by DJT, who sees tariffs as the solution to many of our fiscal problems including the deficit. They are the other side of his tax cuts, being seen by him as the means to replace lost domestic tax revenue. He loves the concept that the rest of the world would or could be made to pay our way in that world. He does conveniently leave out the fact that they may not want to cooperate with this economic model.   Countries, friends and foe alike, will not take the imposition of tariffs on the levels proposed by DJT lying down. They will retaliate with tariffs of their own as well as construct new economic and political alliances to benefit and protect themselves from the loss of US market access. Such tariffs are extremely likely to be the match which lights a historical bonfire of a trade war. They have watched the US weaponize a system of global financial controls where other countries trade in US dollars and move money only with the permission of the US banking authorities both inside and outside ...

Below you will find today's instalment of Moring Market Talk.   Grains Quiet... For Now   You can copy and paste the link below to take you to this morning's episode.     On the Grains   Good Tuesday morning everybody, yesterday we got the weekly crop progress numbers from our "somewhat" friendly USDA. Here we go, Corn was up 1% at 65% G/E vs. 51% LY. While it's hard to imagine that sitting here in Minnesota, a 1% increase isn't much to dispute either way. A client called in yesterday from Illinois and reported that areas that didn't spray for fungicide are running 50-80 bpa less than those that did, while he did admit most everyone sprayed so I would expect that to be a small area. Soybeans were off just 1% at 64% G/E vs. 52% LY.   Harvest progress, corn harvest progress came in at 9% this week, that's up from 5% last week and up slightly over the average of 6%. Soybean harvest was reported at 6% vs the average of 3%. It's time, let's roll. For some reason I am more excited this year to see what we have than I have been in the last few years, even knowing my personal crop won't be as good as my APH. The northern part of the county I farm in just didn't get enough rain in August to expect a huge bean crop and our corn silage was nothing to write home about- average to slightly under APH. Grundy/Tama County Iowa bean yields starting to be reported, ...

Harvest is rushing forward at us as crop maturity accelerates. Harvest has to have begun somewhere. It has not been an ideal finish to the growing season as August turned dry and September has stayed that way causing the fill to run out of gas, even in places that had flooded earlier in the year. The weak finish should mean that the highest USDA yield estimate for corn/soybeans was seen this month. Soybeans here are quickly yellowing and harvest will begin soon. My soybeans, 2.5 maturity, were finished being planted June 5th. They are just starting to show a yellow leaf here and there along field edges with the bulk of the field still grass green. The forecast looks good however with no frost seen coming yet. We have had moisture locally and have had time enough in the growing season where an APH soybean yield is still possible but not probable for all.   My corn, harvested as silage, was field appraised at 188 bpa which is 53 bpa below my APH. All yields here will be extremely variable. Corn planted in April on well drained fields could yield in APH territory. There is not much of it and some of that is water damaged. Corn planted in June on poorly drained fields will yield far worse than in any drought here. The previous yield that the crop adjuster had checked before mine was only 100 bpa. An observation from this crop year was that well tiled fields do not necessarily ...

On the Grains Welcome to another week of exciting futures action brought to you by the CBOT. Here we go, soybean harvest has kicked off in Northeast Iowa as a client of mine called Friday doing his first field of beans. Those beans on lighter ground planted April 18th were running 55 bpa, he was pleased with the yields considering the lack of rain in July and August. That farm has done as high as 70 bpa in good years and very well could have been 70 bpa this year with any amount of rain in August. While I think it’s too early to call a trend, I think about the NFL and undisputed and conclusive evidence, to overturn a call, that’s what it feels like when I think about the USDA numbers going forward. It’s just going to be so spotty that any quantifiable change will be left for the January report or even later in the stocks numbers well into 2025. 2019 continues to come to mind when we played kick the can all the way to the stocks report in August of 2020 when all the 2019 crop was gone, half the 2020 production priced, and USDA adjusted the stocks sending us on a bull run. While we can’t and most likely won’t sit around and do nothing staying somewhat flexible on marketing seem pertinent.

Grains are expected to lean firmer on the open, potentially behind the lead of wheat, which was last week's best performer. Drier conditions will be still be a stress this week, but for a rapidly declining portion of the crop. The warmer temperatures will help dry the corn crop down where needed and further delay the risk of a frost/freeze event. The immediate focus in on oil and other financial markets as the Fed meeting approaches. In the Headlines December corn futures were up 7 cents for a third straight week up. November beans held a 1 1/4 cent gain. December Chicago wheat futures bounced 27 3/4 cents and Dec KC wheat futures were up 22 1/2 cents. October live cattle were up $2.47 while Oct feeders had a bullish reversal and climbed $8.17. October lean hogs were down $1.05. The September corn contract expired at $3.90 3/4 on Friday to leave an expiration gap up to the December of about 23 cents. September 2024 soybean futures went off the board at $9.86 3/4, leaving a 20-cent gap up to the November contract. The new nearby corn futures otherwise now have three weeks of settling above key support at $4 while the same is true for November soybeans above $10. This week is Fed Week, with the Federal Reserve Bank set to reduce interest rates for the first time since 2020. Earlier odds were calling it highly more likely to see a quarter-point rate cut, but the fed funds futures finished last week with ...

Price action following the September crop report showed bearish speculators using the initial corn yield reaction to cover short positions rather than rebuild them. Buying enthusiasm will test the staying power of old longs in the futures market and the resistance from old-crop grain still moving into the cash market ahead of the even bigger wave of new-crop selling interest on the way. This is not the first time we have produced big crops nationally despite facing numerous weather challenges regionally, nor is it the first time that bearish USDA leanings have conspired with the trading funds to lean on the grain futures market. It must be said that every year is different, but there are several things going on right now that we have already experienced to some degree before. The characteristics of the present are currently stacking up with notable similarities to 2020, which was the last election year with President Trump running and when similar issues included Chinese tariffs, immigration and border security problems, challenges for U.S.-Mexico-Canada trade relations, and ongoing conflict in the Middle East. The last year that interest rates started moving lower was also 2020, when grain prices made their most recent major lows and the last time when hedge funds reversed out of a heavy short held against grain futures. Four years ago on the September crop report, corn yield was projected at 178.5 bushels per acre (183.6 current) to count toward a carryout of 2.5 billion bushels (2.06 current). The September 2020 soybean yield ...

On the Grains While we summarized the USDA crop report last night, grains are trading higher this morning following wheat and crude oil. Metals are sharply higher on a softer U.S. Dollar with a risk-on attitude before next weeks fed meeting. Most likely we will see that 25 basis-point rate cut but there is still an outside chance that we see the 50 basis-point cut. Several economist are projecting gold at $3,000 oz. and silver at $37 next year if the feds continue to stay on pace for the 200 basis point rate cut by next May. Any reprieve will be welcomed on the operating notes, especially for cattle producers. The producer price index (PPI) rose .2% in August vs .1% estimates.

USDA methodology changes with subsequent USDA production reports from beginning early in the season with producer surveys to where they put some boots on the ground up until they have plots harvested to have real data. There will be harvest data in the October report with most plots harvested by the November report. USDA left their corn/soybean harvested acreage estimates unchanged this month. They will likely tweak acreage in the October report. Pockets of drought and flooded potholes dispersed around the extremes of the corn-belt should result in a reduction in harvested acres in each of corn and soybeans.   The focus of the September report was on projected yields. USDA added .5 bpa to last month’s 183.1 bpa. That gets us to a 183.6 bpa record yield. That was the top end of trade estimates.  That increases their corn production estimate by 39 mln bushel to 15.186 bln. That increase in supply however was offset by a 55 mln bushel reduction in carry in stocks to the balance sheet. They revised 2023-24 ethanol use and exports higher. They left all of their 2024-25 demand projections unchanged so slightly higher 2024 production was erased by larger demand last year. The US corn supply will be extremely regionalized this year with burdensome supply in IL and IN and tight stocks in the WCB and Plains.   USDA took 3 bpa away from the IL corn crop (222) while adding 3 bpa to each IA (212) and IN (210). They took 2 bpa off the MN ...

On the Grains Good morning and welcome to the show. Several key reports out today starting with the Export Sales report and PPI both released at 7:30 a.m. Shortly after that we have the much anticipated September USDA report. Yield trade range is from 180.5 to 184 bpa, if the report comes in outside of those numbers, expect some movement. Adjustments to the 23/24 exports and an increase in the ethanol grind are all reducing stocks from last year. Moving on to 24/25, export sales are running 8% better than a year ago, EIA report from yesterday had ethanol production rising to 1.081 million barrels per day as ethanol production continues to run almost 4% better than last year. Also, keep an eye on what they print for Ukraine production as its likely they drop that by 2MMT, down to 25 MMT, and possibly adjust the Argentine’s production numbers. The Rosario Exchanges has the crop at 46.5MMT that is a whopping 4.5MMT lower than the USDA.

Brazil weather forecasts seem to agree that most of the countries soybean production area will remain dry in the month of September. A seasonal moratorium that establishes a crop production window has been established in Brazil to dictate when specific crops can and cannot be planted. This is done to help control the spread of diseases that flourish in a country without winter kill. They have been pushing the start date for planting back earlier in an attempt to give the second crop corn that follows more time to progress. That moratorium was lifted September 7th in Mato Grosso. Despite that, we don't see any great hurry for producers to begin planting. A very small percentage of growers begin in September anyway. But that changes quickly.   Historically farmers in Mato Grosso are 50% planted by October 15th.  While there is still plenty of time for that to happen, a series of events will need to take place for that to occur. To be 50% planted by October 15th, farmers will need to begin planting in force by early October. For farmers to begin planting early October, there will need to be some solid precipitation by late September. Currently there is very little forecast. The soybean market will be very sensitive to Brazil's Center-west growing conditions in the next 45 days. If dry conditions persist into October it could begin to delay planting which could set the tone for the soybean market for the next six months.   The Rio Madeira water levels continue ...

On the Grains: Row crops are finally finding some footing on the overnight markets trading 2-3 better on corn and 9 higher on beans, helped along by energies after yesterday’s disastrous crude oil trade. Concern for hurricane Francine as it makes it way to landfall and the overall U.S. lower oil stocks have stabilized that this morning. Today’s EIA report will also give us a current picture of what inventories look like.

The corn harvest is already over for me. A dairy heifer grower located just a couple miles away from one of our farms harvested the corn as silage. They buy it on a per bushel basis using the field appraisal done by the crop insurance adjustor. That is bushels that the ethanol plant here will not get. That eliminates my harvest cost and grain handling costs. Likely reduces harvest field loss as well. They bring back manure. I have not bought commercial P&K other than what is in starter in many years. My fertilizer cost is primarily N. The 235-acre field yielded 188 bpa. That was about 20 bpa more than I expected but well below the APH of 241 bpa and last year's 261. It will bring down my APH a few bushels for next year. It was a poor crop by our standards all due to record flooding here. When I realized that my crop yield would not reach guaranteed insured bushels, I stopped spending on elective inputs. What surprised me was how healthy the corn was…no disease and no pests. Use of fungicide would have been a waste of money. Don't know if that was attributable to the hybrid Pioneer PO953 109-day.   I estimate my corn production breakeven to be near $1100 acre. That is brought down by the input savings, absence of harvest costs and manure applied. My 85% APH coverage is 205 bpa X the $4.66-bushel crop insurance price which is then $955 acre guaranteed revenue. ...

On the Grains Fall Feeder Cattle, with the market within $3 of recent lows look to cover immediate purchasing needs at current prices.   As of the time of writing this, 3:30 am, Corn has backed up 1-2 and soybeans are off 11 ½, as to where we’re on the markets when this hits the inboxes is anybody’s guess as both corn and soybeans are sitting right at the overnight lows (I’m not going back to rewrite the report later in the morning so a timestamp saves the hate mail if it changes). It will be vital to hold last week’s low at 1001 ¾ and 403 ¼. Coincidentally, the 23 exponential day moving average also rest there on corn and slightly higher on beans. That moving average can be were algorithmic trading gets fired up (1004 and 403 are the numbers to watch).  Personally, I’m questioning my conviction on whether they hold.  

It has been a dry end to the growing season for much of the heartland depleting soil moisture levels, particularly in regions of the Missouri and Ohio River valleys, which feed the Mississippi river. There is no forecasted improvement in precip in this region to maintain Mississippi river levels to support normal barge traffic. Shipping costs via the Gulf then rise becoming a logistics bottleneck impairing our export competitiveness right when we need it at harvest. Tropical systems, originating in the Atlantic that move through the Gulf can push moisture up into the heartland Mississippi river-shed but none are currently forecast to push that far north. The hurricane season lasts until November 30th. The timing of low river levels at harvest is not helpful. Mississippi levels are back down to where they were a year ago when shipping was disrupted and are expected to continue falling. Farmers in the Delta region do not have a lot of on-farm storage so they rely greatly on river terminals. There is a regional disparity in where old crop stocks are located. This is reflected in basis. The ECB is where the old crop carryover is most concentrated as well as having the best yield potential for the current crop. This may tax storage capacity there. We have seen the corn-belt subdivide into what have become 3 regionally centered price discovery concentrations depicted on the DTN corn basis map below. One is the river market pulling from east of I-35 including much of the ECB. That ...

Good morning producers, we had limited action overnight in the row crops. We might see a little more position squaring ahead of the USDA report on Thursday, but only time will tell. Looking at the Commitment of Traders report from Friday we had pretty good action on both corn and beans. Funds now short 176,000 corn, covering 65,000 and short 154,096 on the beans covering 22,455. Here in lies the problem, we have covered 75k of those and moved the corn from $3.85 to $4.16 and settled well off the weekly highs. Soybeans have fared a little better in light of, what I would call a bleaker fundamental outlook, with world ending stocks estimated at 134 million tonnes vs last year’s 112 million tonnes. Hey, maybe the USDA will throw us a bone on Thursday and help a guy out, I’m not holding my breath.

Bids and offers on the grain futures looked like they were stacking up slightly below the Friday settlements, but traders are expected to turn friendlier if oil and the outside financial markets show any early rebound strength. Market participants have their focus on fighting in the Middle East as they digest new concerns over the global economy. In the Headlines December corn futures were up 5 1/4 cents last week. November beans were up a nickel. December Chicago wheat futures bounced 15 1/2 cents and Dec KC wheat futures were up 12 1/4 cents. October live cattle were down $3.05 on a bearish weekly reversal while Oct feeders were lower by $6.80. October lean hogs also put in a lower low after turning down from a higher high last week, dropping $2.72. Technical considerations have taken on more importance following two weeks of rebound strength that left December corn futures back above $4, November beans over $10, and Chicago wheat above $5. Looking at retracement potential, December corn could take back 38 percent of the slide down from the year's high if the contract reaches $4.28, with the 62 percent Fibonacci target just above $4.50. November beans have their 38-percent retracement level up at $10.60. That level for December Chicago wheat is $6.12. Conflict in the Middle East flared up over the weekend as Turkish President Tayyip Erdogen rallied Islamic countries to unify against Israel. The statements followed the alleged shooting of a Turkish-American woman by Israeli troops that brought Turkey closer to the ...

Private groups and individuals have been issuing fresh yield predictions that factor in everything from farmer surveys and crop scouting to satellite imagery modeling. A general consensus has formed for expecting a lower corn yield on next week's report, although the trade is not clearly convinced that the national soybean yield estimate has any room to drop. Examining the state by state yield estimates, it is seemingly easier to cut corn yields for major producers like Illinois and Iowa than it is for soybean yields. Let's start with a look at the I-states. The USDA August estimates called for record Illinois yields of 225 bushels per acre for corn and 66 bushels per acre for soybeans. Results from Illinois are heavily weighted within the national yield averages since the state is expected to harvest the most soybean acres and the second most corn acres behind Iowa. Yields for Iowa have been at 209 bpa for corn and 61 for soybeans, with Indiana at 207 bpa corn and 62 for soybeans. For corn, lowering the Illinois average by six bushels per acre still leaves a state record but would cut about one bushel per acre from the national average. Taking just two to three bushels away from Iowa would leave a state record but remove about a half of a bushel from the national. Indiana has less than half of the corn acres that Illinois and Iowa have, so it would require Indiana to lose its record yield potential and be down more ...

Fall Feeder Cattle, with the market within $3 of recent lows look to cover immediate purchasing needs at current prices.   Overnight action was very quiet as row crops push pause for a minute. We have had good action on the grains for a week now, the question remains will fund traders want to continue to lighten up on grain shorts ahead of next week's USDA report? It sure feels like one of those Fridays where we lack conviction to do much of anything. Possible “daily” black swans might be lurking in today’s export sales numbers. Trade has fairly decent numbers dialed, without confirmation of those we will be setting the stage for give ups into the weekend, which feels unlikely at this time but possible.

Above you will find today's installment of Morning Market Talk. Grain Setback is Healthy You can click on the picture above to take you to this morning's episode. On the Grains Good morning as we round out this first week in September we have gained some optimism in corn and soybean prices. Since Frist Notice day lows, December corn has rallied 29 cents and November beans are up 60 cents. While what feels better, looking at the computer screen, it might not feel as good for producers in the northern belt that have watched crops go backwards. Wheat surely has been the driver as we have seen that rally almost 55 cents on the Chicago December contract, yet Paris Milling wheat has $10/mt to go yet before we hit major resistance, so is there more in the cards, I believe so. Ukraine drought conditions are expanding underpinning the market. We advised last week to put hedge orders in at $4.22 December and I would hold with that and the November Soybeans at $10.43. Cash basis, in the west, remains on fire with old crop pushes being paid west of I35 and good enough bids that are getting trucks moving from a distance. Unfortunately, for customers east of that it’s back to the store and sell the carry as the old crop stocks just won’t get moved before the harvest starts. Throw in some low water levels on the Mississippi and you have the ingredients and recipe for some very poor cash prices this fall. I ...

Headlines from Bloomberg are a little bit misleading, making vague announcements that Brazil is having its worst drought in 40 years. Brazil is still in the middle of its dry season. Other than some first crop corn, the row crop season has not yet begun. The dry weather can affect perennials crops like coffee and sugarcane, but a certain level of drought is expected each year. All of our coffee is irrigated, and my brother-in-law says he wouldn't grow coffee without it. It is way too expensive.   The weather forecast for September shows little if any precipitation in major growing regions. Mato Grosso has historically not been allowed to plant soybeans until September 16th. But this year they have reportedly pushed the date forward a week, allowing producers to begin planting by this Saturday, September 7th. Considering the dry forecast, I don't think it will make much difference. There will always be some courageous grower that will begin planting in the dry dust, waiting for it to rain. But the bulk of the planting window takes place in October. The long-term outlook does show precipitation arriving by then. This would give us an early indication that planting in the Center West region will take place on schedule but won't have an early start. I always wanted to wait until we accumulated 3 inches of rainfall on our farm before we began planting. This provided us a little bit of a buffer in case the start of the rainy season did a ...

Above you will find today's instalment of Moring Market Talk. Libyan Oil to Blame You can click on the picture above to take you to this morning's episode. On the Grains Good Wednesday morning. Yesterday’s impressive run across the board was most likely funds covering after the three day weekend. The funds, USDA, and every other market analyst can tell them what they want to hear, that the soybean crop is just fine, yet large swaths have gone backwards with the limited rain.  Several Northeast Iowa farmers I talked to yesterday said that the bean crop, planted early, hoping to avoid the dryness, had small bb like beans and he was estimating harvest in just three weeks. If the Export market wants them they better get them now while the producers are convinced that the crop is made and before the combines roll. Currently, the U.S. is the place to grocery shop running a 50-60 cent discount to South America. Which brings us to the next point- USDA and CONAB are still a zip code apart on last year’s yields. While, there is nothing saying that they have to matchup, we’re selling beans cheaper than them. The truest form of stocks has always been the FOB numbers and were open for business. Rumors are circulating that another 6-9 cargos of beans will be reported today, time will tell. Fuel for the fire on ethanol. Yesterday’s July crushing report came out and 473.5 million bushels of corn were used for ethanol production in July, up from ...

In over 5 decades of farming one occurrence repeatedly observed, based upon my past experience, is if our yield was down the price went up and vice versa. If I produced 100 bpa corn and the price was $3 bushel… then if I produced 150 bpa corn the price may be $2 bushel. While the yield and price may have varied greatly, the gross dollars per acre remained relatively stable.  While I have not given up on this relationship yet for this crop…currently both my yield and the price are down, starving the gross dollars per acre. My downside risk stops at my $955 acre corn crop insurance revenue coverage so significant crop revenue insurance indemnities are likely. Yes, the yield challenge in our region (NW IA) has not been recognized by the market. I expect that yield and price are out of line and will adjust toward a more historical relationship with the coming harvest into early 2025. We swept our bins a while ago but those with old crop left in supply deficit regions, with storage available, if finances allow, could profit from holding it at this point until early in the next marketing year. After all, end-users just bought a lot of corn that they thought was cheap.   I watched a weather webinar recently put out by weather/agronomists based in IN that I believe is typical of the assumptions being made today by these analysts. All they could talk about was drought, never mentioning wet regions. They pointed ...

Above you will find today's instalment of Moring Market Talk. Beef Prices Tumble You can click on the picture above to take you to this morning's episode. On the Grains Good morning and good riddance to the 23/24 marketing year. We turn the page into September and the start of harvest. Long perceived fears of basis pricing and DP pricing vs the September came and went while managing to pull the Sep/Dec spread in two cents, currently sitting at 22 cents. Why did this happen and not flush the September board like the March and July contracts did? First off, some end-users still are needing coverage to get to the fall harvest and especially in areas that have production concerns. Secondly, we have seen spot export sales that will need to be covered yet this month as well and last but not least, many DP (delayed pricing contracts) are set to expire the middle of October end-users/elevators basis is the widest giving them as cheap of ownership possible. What do we have to look forward to this harvest, while if you are sitting in an area that is tributary to the Mississippi River and the export system we have, yet again, low water to deal with this year. October basis on corn and beans could get a little sloppy with reduced drafts on barges, taking away what price advantage we have for exports vs. Brazil and other South American countries. While historically fall basis isn’t great on corn what is concerning for me are the ...

Grains are closed for Labor Day before a 7 pm central open of the Tuesday session. Corn and soybean futures will look to follow-through on a firm close last week, with the December corn starting with an immediate test at $4 and November beans right at $10. Stock futures were trading in a quiet pre-open along with the energies and metals. In the Headlines December corn futures completed a weekly reversal to finish up by 10 cents over the last five sessions. November beans rallied 27 cents to settle at $10.00 exactly. December Chicago wheat futures bounced 23 1/2 cents and Dec KC wheat futures were up 30 1/4 cents. October live cattle closed the week higher by $2.90 while Oct feeders were up $3.37. October lean hogs were up $1.65 for a third straight up-week. Labor Day in the U.S. comes as there is attention being paid to a growing labor dispute that could threaten a strike by port workers on the East Coast and along the Gulf of Mexico. The International Longshoremen's Association will meet this week to form its contract demands. Up to 25,000 union members could strike after their current employment agreement expires on September 30th. The railroad worker dispute in Canada also continues as the union appeals to the courts after the government directed the labor contract to be mediated without a strike. The Middle East plunged into further turmoil over the weekend after Hamas killed six Israeli hostages, including one Israeli-American man. Protests have erupted in Israel as ...

September corn futures entered the delivery period on Friday with a spread against the December contract that was around 24 cents, which measured well above 100 percent of any basic "fully carry" calculation. Historically wide futures spreads have specifically signaled a current lack of demand for physical delivery on the Illinois and Mississippi River, which is part of the relative weakness for basis in the Eastern Corn Belt. Compounding the basis and spread pressure, lower water levels on the Mississippi River also look threatening again for Gulf export demand after that same logistical headache was faced during the last couple of fall seasons. Basis in the West has been expected to maintain relative strength due to better competition that fuel processors there have with the feed and export sectors.   Further logistical troubles on the river system do not have to materialize for worries to remain about Gulf export demand. While low water levels on the Mississippi River and around the Panama Canal have been problematic, more grain export share has also shifted from the Gulf to the Pacific Northwest because of lost business with China being offset by gains for countries such as Japan, South Korea, and Columbia.   One alternative to the negativity dominating in the grain market right now is that Chinese purchases from the U.S. do not actually end up continuing to fall next year. The latest string of new-crop soybean orders seems to indicate China's responsiveness to price over anything, since they were spurred by the last leg lower ...