Written Commentary
CLOSING COMMENTS
Macroeconomics:
The US consumer confidence has rebounded in the final weeks of the presidential campaign. Meanwhile the JOLTS job report (7.44M openings) had 420K fewer job openings than last month and 540K short of the market estimate. JOLTS openings have been trending lower since the highs in June of 2022. With the Fed watch almost 99% sure of a 25 basis point cut next week I am starting to hear doubts and reasons to stop cutting rates with the economy improving. It’s not that simple, but if the Fed pivots and decides to wait until December to cut rates again we could experience a volatile November. In their previous meeting minutes, many within the Fed were unsure a 50 basis point cut was warranted in mid September. Alphabet reported earnings today with in line to better than expected data. Google’s parent company beating expectations may be a good indication that the big tech earning to follow this week will also be solid. GOOGL is up 6% following the news.
Ag Fundamentals:
Month end is approaching and many have been exiting their November soybean positions. News of better weather in South America and the lack of purchases from our friends overseas continues to put pressure on bean values. Both Nov and Jan bean futures dropped below the recent October 17th lows and now are searching for support. The next line of technical defense could be the lows set back in mid August (Nov 955’0 and Jan 973’6). Winter wheat conditions may be the contributing factor supporting the grasses. Wheat could easily recover between now and spring.
The US Consumer Confidence is measured based on surveyed households. When the report actual is higher than the forecast then the dollar should react higher.
Total Outstanding Credit Card Debit in the US continues to climb. The ease behind card approvals to lower income households and the lack of education behind owning debt in your pocket allows consumers to pile their daily purchases on cards that have become increasingly difficult to pay off. Physiologically, it is simply less painful to swallow higher grocery bills if you swipe a card rather than pay cash.
The Fed Watch Odds for the Fed’s Rate Cut Decision is showing almost a 99% chance of the Fed cutting 25 basis points next Thursday. Additionally there is a 75% chance of another 25 point cut by the end of the December 18th Fed meeting.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -13 1/4 | +3/4 | -30 3/4 | 43% |
SX24/SF25 | -13 3/4 | -1 3/4 | -26 1/2 | 52% |
SX24/SN25 | -56 3/4 | -5 1/4 | -105 | 54% |
MWZ24/MWH25 | -23 1/2 | – 3/4 | -30 1/2 | 77% |
WZ24/WH25 | -20 | +3/4 | -24 | 83% |
KWZ24/KWH25 | -14 1/4 | – 1/4 | -24 1/4 | 59% |
Cost of Carry
Soybean spreads weaker again today as November positions move to January. Thursday is first notice day. The last 15-20% of corn left to harvest still needs a home. December/March corn spreads remain between the -12-14¢ carry to March as many expect domestic ethanol production and exports to keep corn spreads propped up.
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)
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