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02/10/25 Afternoon CommStock Report- The New State(s) Of Canada…Here is Some Advice

By The Commstock Report
Canadians did not take President Trump's invitation to become the US 51st state very well. I have a Canadian family acquaintance that I called to get him and his wife's take on our offer for their country to join us as a state. It was a very cold response. As I have previously mentioned, my mother's side of the family settled in Quebec in 1644 as part of the original group of 800 French families whose travel was paid for by the King of France as incentive to settle New France. My ancestors were one of the founders of Marysville, a town of 11,300 today, which is located north of Montreal in which they were issued a deed to land by the King. This is where my great-great grandparents were married. I have been there. The Demers family has flourished in Canada and has a website and annual family reunions to this day. They still speak French (and English). My direct ancestors in the family emigrated to Kanekee, Illinois in the 1850s to find work… with 4 double great uncles serving in the Illinois infantry in the Union Army in the civil war. After the war they settled in western Iowa…
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02/07/25 Afternoon CommStock Report – Corn and Soy Price Differences under Increasing Scrutiny

By The Commstock Report
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…
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02/06/25 Afternoon CommStock Report – Ukraine Still on a Front Burner in 2025

By The Commstock Report
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…
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02/03/25 Afternoon CommStock Report – The Stupid is Only Getting Started

By The Commstock Report
(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…
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01/31/25 Afternoon CommStock Investments – Don’t Fight the Funds

By The Commstock Report
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…
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01/30/25 Afternoon CommStock Report – Delayed Harvest and Dry Weather Pattern Continue In Brazil

By The Commstock Report
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…
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01/29/25 Afternoon CommStock Report – USDA Created Ag Recession

By The Commstock Report
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…
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01/28/25 Afternoon CommStock Report – USDA Created Ag Recession

By The Commstock Report
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…
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01/27/25 Afternoon CommStock Report – Placing Blame is Often Pointless

By The Commstock Report
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…
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01/24/25 Afternoon CommStock Report – Export Sales Update

By The Commstock Report
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:  …
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