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05/23/24 No Longer as Tightly Shoulder to Shoulder

By The Commstock Report
The promise by President Biden of standing “shoulder to shoulder” with Israel proved to be one of the casualties of the Israel/Hamas war. It succumbed to the success of the Hamas/Palestinian public propaganda strategy. Gaza was a Palestinian state that was controlled by Hamas. Hamas is a terrorist organization dedicated to the destruction and elimination of Israel, transparently described by Hamas as capturing the territory “from the river to the sea” as its objective. Gaza was transformed by Hamas into an underground military complex, completed as a protected missile launch pad capable of reigning missiles down on Israel defended by its ‘iron dome’. Late last year Hamas launched a military offensive against Israel. On October 7th, 2023 highly trained Hamas assault troops successfully executed a surprise attack on Israeli settlements outside Gaza raping, pillaging and killing over 1200 Israeli citizens while taking many others hostage in their retreat to their underground fortress in Gaza. Understanding why Israel is so devastated, in US population equivalency that would be the same as 42000 murders/deaths. Hamas correctly anticipated that Israel would have no choice but to invade Gaza and were well prepared for the anticipated assault to make it as bloody as possible.…
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05/22/24 Brazil’s Corn Harvest Begins With Prices Below Cost of Production

By The Commstock Report
Second crop corn harvest has begun in select areas of Mato Grosso. Early yield reports are mostly favorable with yields reaching 130 to 145 bpa. This is to be expected. Early planted fields never lacked moisture. These higher yields will be needed to offset later planted fields. They are only in the initial stages yet of the harvest season which will last until early August. While initial yields are positive, they are partially offset by reports of quality issues from too much moisture. Meanwhile, lack of rainfall will negatively impact later planted fields. Farmers may be surprised by how much the rainy season did not extend through the month of April.   The main concern for safrinha corn growers is that the cost of production is around the $3.35/bushel area…and yet the current spot price for corn in Central Mato Grosso has been trading closer to $3.00/bu. It is not expected to improve much as harvest advances. This is why corn ethanol plants have located in these areas. It allows them to source the cheapest corn in the world.   The problem areas this year are located in parts of Goiás, Mato Grosso do Sul and Parana. One region of…
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05/21/24 NOT A Great Start!

By The Commstock Report
70% of the US 2024 corn crop was counted as planted last week. A small amount of progress was made here before the rain came today. Heavy rains and another system coming later in the week would appear to sustain protracted planting delays on the rest. My crop insurance company partner got half of his corn in in the recent couple day window. He said that 20-30% of what he planted he should not have been…in mud. He also said his planter had more mud on it then he had ever seen before but he did not plug. A subscriber e-mailed, “One more thing I saw many farmers running hard yesterday, and when they pulled out of the field WOW there was mud on the roads… Mud and great corn don't go together...So yes bad farming practices were in place.”   Rain totals could reach 2 inches here today. Planting may not resume here until the end of May. Farmers put crop in under conditions that they would not have, were it earlier on the calendar. The family is still planting corn and we will hire someone to plant my soybeans. They had put my corn in in April and…
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05/20/24 Why it’s Okay to Become Bullish Corn Again…

By The Commstock Report
Farmers ended 2023 "fighting" the corn market, stubbornly unwilling to sell as prices relentlessly softened early this year. Then came a capitulation as the John Deere low formed in late February. That is when farmer cash flow needs trumped farmers obstinance to sell and many became caught with expiring basis contracts. During this time the trade touted the bearishness of the deteriorating balance sheet looking for enough acres to get planted with a trendline yield to protract the bearish market trend into 2025 or longer. Low prices are the cure for low prices and the market began the process of healing itself. Low prices discourage acres and encourage demand interests. The March planting intentions report set expectations for corn acres at 90 mln which along with a trendline yield, 181 bpa, would be neutral, neither adding or subtracting much from the projected carryover when unadjusted for demand. That appeared to be enough to sustain the current negative trade sentiment that has pervaded the market so far this year. The trade has now been trained to think that $5 bushel is a great price for corn by showing them it could go to $4 bushel or lower. Farmers have thus opened…
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05/17/24 Speculators Launch an Aggressive Grain Buying Campaign

By The Commstock Report
Market participants were eagerly awaiting the next trader positions report due out after the closing bell today. Hedge funds are now expected to be nearly neutral in their holdings after having held record net-short positions as recently as February. Last week's commitments of traders report showed the biggest round of net-buying in corn since 2019 while it was the largest one-week swing ever for soybeans.   Prices were rallying while the speculators were rushing to cover their bearish bets; July corn futures gained 20 cents over the last position reporting period and July beans jumped 83 cents. The move for corn may have been relatively muted because more of the short-covering by speculators was matched against fresh selling by farmers. Stronger prices encouraged catch up selling of old-crop corn and triggered first sales of new-crop so that the commercial net-short position grew to its largest level since just before last harvest. Farmers did not have as much of the last soybean crop to let go of and there is currently less incentive to price the fall crop since November futures are trading at a discount to the nearby contracts.   Direction for the futures market now depends on whether money…
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05/16/24 Went To The Dogs

By The Commstock Report
My wife Jane and I just returned from our second time attending the annual Westminster Dog Show in New York. The Westminster, held annually since 1877, is the second oldest sporting event behind the Kentucky Derby in the US. The first trip was to watch some acquaintances of ours show. This time my wife wanted to see the Masters Agility Competition and I wanted to see the finals for the King Charles Spaniel breed which is the breed of our dog that we have named Lucy. She is our second Lucy King Charles. We love Lucy and she loves everyone. It was great going to the show covered by the Fox Sports network.   "Nimble" won the Final Master Agility Competition where 50 dogs competed in the finals. They are divided into 5 groups by height. "Nimble" was an 'American Dog' breed which is a mixed mutt of American Breeds accepted by the Westminster show for the agility competition. One mutt against 49 purebreds and the mutt won. It moved like greased lightning having the obstacle course imprinted in its brain winning by such a margin there was no close second. Border Collie, Australian Shephard and Papillon breeds performed well…
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05/15/24 Brazil Crop Estimates Move a Step Closer Together

By The Commstock Report
South American weather appears to be a repeat of last week.  While flooding in RGDS has not gotten worse, it has not gotten a whole lot better either.  Heavy rainfall continues to blanket most of the state with some areas to receive an additional 8" in the ten-day forecast.  That is on top of the estimated 25+ inches received in some areas since April 1st.   Growers are still trying to determine the damage but will not be fully known for some time yet.  We do know it has affected most major ag industries from dairy to edible beans to rice…but none more so than soybeans.   EMATER gave one estimate that of the areas remaining to be harvested, 22% will have significant damage varying anywhere from 20% loss to 100% loss.  This amounts to as much as 1.5 MMT loss.  Fields have been left exposed to moisture damage far too long and will no longer be acceptable to some elevators even with quality discounts.   In other words, the USDA crop estimate reduction last Friday of 1 MMT, didn't really make any other concessions other than making partial accommodations for the flooding happening in the South.   CONAB's May estimates…
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05/13/24 Carbon Deception…Just Like Actual Farming

By The Commstock Report
I am starting to feel like I might have gotten duped. Long time subscribers might recall how several years ago I signed up for carbon programs that would pay me for transitioning my crop production techniques. Technically, I didn't change anything I wasn't already planning on making the change. I am shifting to a more minimum tillage system where I rotate each year between no-till beans and strip-till corn versus conventional tillage. The timing was right as carbon programs were chasing down every farmer trying to get them to implement minimum tillage along with cover crops and other "carbon-friendly" practices. I didn't see any downside in my case. They were, after all, going to pay me for something I was already planning on doing.   After three years, I have the financial results of all my hard work. Forty Bucks! That is right. Now I do not mean $40 acre…I mean $40 in total for my 230 acres. Despite all the promises of how all the carbon credits I was going to be creating that would eventually lead me to making a 5-figure side hustle down the road, my first year I got $40 dollars. I wasn't exactly counting on…
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05/10/24 Crop Report Leans Mostly Bullish but Less so for Beans

By The Commstock Report
The crop report released today was widely anticipated for its inclusion of initial U.S. new-crop estimates as well as for its updated look at the South American production numbers. The outcome was decidedly more bullish for corn and wheat than it was for soybeans. For corn, the 2025 U.S. ending stocks estimate came in well below the average trade guess while the production estimates for Brazil also fell further than most had anticipated. It was the opposite for soybeans, with U.S. carryout rising by more than expected while numbers for South America were not lowered by as much as was thought to be necessary.   There were not many major surprises to come out of the U.S. supply and demand estimates. Sticking with convention, the USDA started by plugging in the trend yield estimates already published in February along with the acreage estimates from the March Prospective Plantings survey. Relative to the February Outlook Forum Estimates, the USDA turned a bit more optimistic about both corn exports and ethanol usage. What helped pad the soybean ending stocks for next year was that the government analysts were down 50 million bushels of soybean exports compared to what they previously predicted, which…
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05/09/24 Interest Rates Likely to Fall Later in the Year as the Result of a Slowing Economy

By The Commstock Report
2024 started out the year with high expectations for interest rate cuts with some forecasting as many as 7 rate cuts this calendar year. There was absolutely no precedent for such a thing and they were goofy if thinking that the inflation dragon had been slain. More likely is 1 or 2 rate cuts…only 1 pre-election. The Fed tightening did trim the rate of inflation significantly but it remains near 3.5% and appears to linger stubbornly above the Fed target of 2%. While the Fed has engaged in deflationary monetary policy, fiscal policy the world over remains inflationary to counter it. Western economies are ramping up spending to build arsenals that they once thought was unnecessary before Putin's aggression. Supply chains are not going back to pre-covid structures as the US in particular re-shores a significant portion of its manufacturing capacity that it previously off-shored during globalization. The Biden administration has also engaged in infrastructure spending that feeds new demand for raw materials and labor into the economy. With all of this happening, getting back down to 2% inflation anytime soon is unlikely without a significant slowdown/hard landing. Fed patience will be required. As both consumers and businesses are likely…
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