Written Commentary
CLOSING COMMENTS
Macroeconomics:
The best day of the year for both the Dow Jones and the S&P 500. Bitcoin trades above it’s all time high, Tesla closes above 1 trillion dollar market cap, and NVIDIA officially joins the Dow. The Dow was trading just below $42K to start the week and finished nearly $44K. The S&P 500 peaked above $6K for the first time ever earlier today closing just below. Today the market has a 65% chance of another 25 basis point cut in December and a 35% probability of a zero point cut.
Ag Fundamentals:
Soybean production estimates are cut due to a drier than normal finish to the growing season in the US. Soybean yields dropped 1.4 bushels per acre to 51.7 bpa average. Bean yields dropped the most in Missouri, Wisconsin, Kentucky, Oklahoma and Alabama. We saw Iowa, South Dakota and Minnesota cut their average bean yield by around 4.5 bu/acre. Soybean crush estimates were lowered 15 million bushels and they took 25 million bushels out of bean exports. Ultimately US ending stocks for beans came out 80 million bushels less at 470 million bushels. Corn usage unchanged, corn exports unchanged, and a slightly lower yield takes 60 million bushels out of the balance sheet. Wheat was a nothing-burger with 3 million bushels added to US ending stocks. The commitment of traders report show managed money buying both corn and soil oil and selling soymeal week over week. It is notable that manged money is now long corn 22K contracts. Details below.
US Soybean Yield was dethroned from the record high yield, lowered to 51.7 bu/acre today. This puts it in line with the trend and tied for 2nd highest yield with 2021 crop, 2016 reclaims the title at 51.9 bu/acre. Soybean production is still tied with the previous record set in 2021.
Managed Money bought 39K contracts of corn and 26K contracts of soyoil over the course of the week. Their corn position flipped from a record short earlier this year to 22K contract long today. Managed money also flipped from soymeal length to 8100 contracts short.
The Mississippi River Gauge at Memphis will see healthier flow by tomorrow and will continue through November 17th. Rain on Sunday in the Ohio river Valley should also add to improved conditions.
The Fed Watch Probability site is projecting a 65% chance of another 25 basis point cut on December 18th and a 35% chance of no cut at all.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -13 1/4 | – 1/4 | -31 | 43% |
SF25/SH25 | -13 1/4 | -2 | -26 1/2 | 50% |
SH25/SK25 | -13 1/4 | 0 | -27 1/2 | 48% |
SF24/SN25 | -38 | -2 | -80 3/4 | 47% |
MWZ24/MWH25 | -19 1/2 | +1 3/4 | -30 1/2 | 64% |
WZ24/WH25 | -15 | +2 1/2 | -24 1/4 | 62% |
KWZ24/KWH25 | -13 1/4 | – 3/4 | -24 | 55% |
Cost of Carry
Bean spreads look like they want to be walked out to the July. Unless there is evident news of struggling growth in Brazil, owning the July may not be the play.
Daily Trading Limits: Corn $0.30 (expanded $0.45); Soybeans $0.85 (expanded $1.30); Minneapolis Wheat $0.60 (expanded $0.90); KC Wheat $0.40 (expanded $0.60); Chicago Wheat $0.40 (expanded $0.60)
>>Interested in more commentary by Joe Mauck? Go HERE
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