Written Commentary
MORNING COMMENTS
Geopolitics:
Minutes following Prime Minister Netanyahu’s fiery speech to the United Nations last Friday, Israel performed airstrikes on Beirut Lebanon, killing Hezbollah’s chief Hassan Nasrallah. Today, Iran responded with hundreds of missiles aimed at Tel Aviv, Israel. Israel has a very savvy air defense system, but some missiles and fragments can slip through the “iron dome”. American troops were instructed by the White House to shoot down anything incoming toward Israel. Iraq and Jordan grounded their airspace. The US embassy in Israel tells Americans in the West Bank to shelter in place until further notice. Energy markets reacted higher on the news of the retaliation. WTI crude oil above $70 per barrel again.
Macroeconomics:
The most predictable market today is gold. Shorts on energy were unraveled after news of missiles in the air. Housing prices are at all time highs and we just saw billions of property damage take more supply off the market in the southeast. Stocks have recently hit all time highs at somewhat ridiculous multiples, lead by tech. Interest rates are on the move and expected to see another cut 2 days following one of the most anticipated presidential elections in history. China is on vacation, but they are sure to react on Monday.
Ag Fundamentals:
US row crops followed energy higher in early trade today as the chaos in the Middle East unfolded further. Corn and wheat finishing higher while beans pulled back to close near unchanged. US farmers are planning to fill their storage with this large US production with the hopes that Brazil trips over their feet. Opinions are mixed amongst some meteorologists, but US farmers are betting on a dry October in Brazil.
Weather:
Forecast models are mixed regarding South American weather over then next few weeks. Both the European and GFS extended forecasts can be seen below. Brazil is slightly behind planting pace now, but they still have a wide enough window with enough uncertainty to allow for the possibility of both a bullish or bearish scenario to play out. Atmospheric flow needs to pick up moisture from the air closer to the equator and come down through the northeastern part of Brazil for the monsoons to show up.
Rainfall in Brazil now through October 11th
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -17 1/2 | -1 | -30 1/2 | 57% |
SX24/SF25 | -18 1/4 | 0 | -26 3/4 | 68% |
SX24/SN25 | -55 1/4 | -1 1/2 | -106 1/4 | 52% |
MWZ24/MWH25 | -21 1/2 | 0 | -30 1/2 | 70% |
WZ24/WH25 | -20 1/2 | – 1/4 | -24 | 85% |
KWZ24/KWH25 | -15 1/4 | – 3/4 | -24 | 64% |
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