BQC Afternoon Comments Dec 13.24

CLOSING COMMENTS

Macroeconomics:

The US Dollar saw another boost to end this week with the GDP data from Europe coming in lower than expected by -0.25%. The Market was expecting a +0.15% change and they saw -0.1%  reported. Additionally the Swiss national bank cut interest rates by-50 basis points alongside the European Central Bank cutting rates by -25 basis points yesterday. The US Federal Reserve Bank is expected to cut -25 basis points next Wednesday following a neutral CPI report a couple days ago. The US dollar has seen a surge in the last couple months due to the global optimism behind change in US executive leadership. AKA Trump puts the US first, making the US an attractive investment compared to anywhere else in the world.  

Ag Fundamentals:

Two flash sales of soybeans in the last two days gave a whisper of support against the South American supply head winds. Totaling 634K MT of soybeans sold to Unknown destinations, or 23.293 million bushels of beans. The largest flash sale since the 840K MT sold to unknown on November 29th. Argentina corn planting should be about 60% complete by this weekend and Argentina is also nearing 60% for their soybean planting progress as well. Brazil will begin their second corn crop planting in January, so uncertainty around their largest corn crop supply is still in the conversation. Growing conditions in South America remain neutral, and precipitation is expected to be average to slightly below average for the next couple weeks. Production estimates for both Brazil and Argentina feels optimistic and could increase over the next 2 months. Thinking about planted acres for next year, corn looks a lot better than beans today.  Despite the cost to plant corn being higher than beans from a cash-on-hand perspective, corn pencils much better than beans from a production/value outlook and could offer better cash flow opportunities for farmers next fall. it will be interesting to see how the commitment of traders report shapes up later this afternoon. Many expecting to see the funds adding to their corn length and possibly short covering wheat.

Weather:

The Midwest will see a relief from the cold weather for the next 5 days. Rains are expected to spread moisture from Arkansas and Missouri east toward Indiana and Ohio. This should allow for river levels to improve enough to revert barge drafts back to max levels for a few days at least. Water levels have still not fully recovered in the US river systems and could become an issue over the next few months if conditions do not improve.