BQC Afternoon Comments Jan 22.2025

CLOSING COMMENTS

Geopolitics:

President Trump has threatened Russia with sanctions and tariffs if they do not reach an agreement with Ukraine. As of December 43K Ukraine soldiers were killed, and 370K wounded. In the same period, Russia has lost 198K soldiers, and 550K wounded. Ukraine’s President Zelensky at the World Economic Forum yesterday said he will need an additional 200K European soldiers to secure a peace deal. Ukraine’s forces are made up of 800K soldiers and the extra 200K would allow them to secure the boarder once a deal is made. Russian President Putin was seen earlier this week on a face-time video call with China’s President Xi. They both vowed to improve their relationship to create a more multi-polar global community. India has been known to straddle the fence on these issues as well. Will the two most populated countries support their Russian “friends”? Hard to say, but at least China showed some support for Trump by sending their Vice President Han Zheng to Trump’s swearing-in ceremony. Trump mentioned taking back the Panama Canal for Chinese control in his inaugural speech, and of course there is still the threat of China moving in on Taiwan. Add it all to the pile of bargaining chips.    

Macroeconomics:

Crude oil has dropped another 50 cents today as the expectations of high capacity drilling has the market shorting oil. Crude oil dropped from $72/barrel to less than $67/barrel following election night back in November. It traded near $70/barrel leading up to the US holiday week after which it rallied to nearly $80. Oil’s four major bookmarks are China demand, the US dollar strength, US supply, and the result of the Russia-Ukraine conflict.   

Ag Fundamentals:

Brazil’s Agriculture Ministry have stated they will increase efforts to correct the issue found in the old crop cargoes halted by China this morning. Brazil’s representative does not expect export volume to be affected by the news of quality concerns. The recent cold front that dropped temperatures across the US to teeth chattering lows has caused plants around the country to experience slow downs and machinery failures. Bitter cold weather like this tends to also lower the supply chain productivity as well. This pinches margins tighter and leaves less incentive to max out production. In addition, the recent US weather has raised concerns for the winter wheat crop considering the poor crop ratings we saw as it entered dormancy.    

Weather:

Parts of eastern Texas, along the Gulf coast and the Florida Panhandle are in shock with the recent snowfall. There have been some power outages in Florida, but overall the effects of the southern snowfall have been traffic delays. The Great lake region should expect a few inches of snow to start the month of February. Brazil and most of northern Argentina are expecting to receive from 2 inches up to 5 in. of rain in the next 10 days