Written Commentary
MORNING COMMENTS
Macroeconomics:
There is talk among analysts and investors around China pushing a $283 billion fiscal stimulus package this weekend. Speculation around this announcement will be confirmed or denied at a briefing this Saturday held by China’s finance Minister Lan. This would give the second largest world economy a rush of confidence that could strengthen the demand picture for US exports.
Ag Fundamentals:
Row crop prices are all lower today following neutral October WASDE report. Corn yields breaking records this year in the US has production 45 million bushels higher than expectations. Corn exports increased by 25 million bushels to 2.325 billion bu allowing ending stocks to slide a hair below 2 billion bushels. The USDA reported a flash sale of 578K MT of corn to unknown (believed to be mostly EU) and 132K Mt of soybeans to unknown destinations this morning. Soybeans are still recording a record production at 4.58 billion bushels, 120 million bushels higher than the previous record set in 2021. Global bean stocks were basically unchanged as the market begins to focus on South American weather and Asian consumption. World wheat stocks were unchanged with Ukraine increasing production 23 million MT offset by cuts in EU (-1 MMT), Russian production (-1 MMT) and US stocks cut 16 million bushels. Russia’s Ag Ministry and major exporters held a meeting today discussing their export quotas. They announced a 41% increase in their wheat export tax to slow sales. Rains in Brazil are expected to begin early next week and long term forecasts suggest a normal to above normal amount of rainfall over the next few months.
Weather:
US farmers have been all gas no brakes this harvest and are expected to grind out corn harvest while bean harvest chugs closer to the finish line. Low moisture levels have given elevators optimal flowability conditions but have taken money out of the farmers pocket at the scales. Drying might be the only cost down this year.
December Soybean Meal has traded lower for 8 sessions in a row now. This is due to funds liquidating length ahead of today’s report and the uncertainty around the coming US election. Another reason may be because soybeans have been cut around the country at a rapid pace and processing facilities are seeing a high inflow of new crop.
South America’s Precipitation Anomaly Map for Jan/Feb/Mar is showing dry conditions in Argentina and southern Brazil (Rio Grande do Sul) while suggesting higher than normal rainfall in central Brazil.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -17 1/4 | +1/2 | -30 3/4 | 56% |
SX24/SF25 | -15 1/2 | +1 1/4 | -26 3/4 | 58% |
SX24/SN25 | -55 3/4 | +2 1/4 | -106 1/4 | 52% |
MWZ24/MWH25 | -20 3/4 | 0 | -31 | 67% |
WZ24/WH25 | -22 3/4 | 0 | -24 1/2 | 93% |
KWZ24/KWH25 | -16 3/4 | 0 | -24 1/2 | 68% |
Cost of Carry
US corn and bean production is reiterated by today’s WASDE report leaving the most uncertainty around global supply in the differed months. Rumors of a push for Chinese stimulus possibly announced this weekend creates optimism for demand nearby.
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