Written Commentary
CLOSING COMMENTS
Ag Fundamentals:
Bulls are scrappy and continue to look for news to combat the large global supply. Ethanol production is up and stocks lower, confirming the US is in a high domestic demand environment. In addition to the 2 soybean flash sales of 132K MT each to China and unknown this morning, the US also reported a sale of 273K MT of corn to unknown destinations. Big question is will corn exceed the export sales estimate range for the 3rd week in a row? It is unlikely corn sales will be reported higher than the previous week’s 3.602 million MT. The December corn board is sitting between the 20 and 50 day moving averages. If we see better than expected corn export sales tomorrow it may be enough to lift values above the 20-day, currently sitting at 414’6. Soybean basis values have rebounded from their late September-early October lows. Nearby soybean spreads continue to weaken into first notice day. There is talk of Chinese and Russian representatives having discussions about closer ties with their soybean trade relationship moving forward. Littel details are provided, but it is a continuation of the narrative: China is actively looking to source beans from anyone other than the US.
Weather:
The last 10-12% of corn harvest may be delayed due to rain working its way across the corn belt in the next 5 days. I imagine the soil is so dry at this point that the moisture will be immediate soaked up and harvest will be able to finish up in most states by mid November. Only 5-10% of bean harvest will be subject to the same rains.
Rainfall Expectations between now and Tuesday next week are a result of two separate systems. One coming across Nebraska and Iowa this evening and a second system fueled by moisture coming up from the gulf on Sunday/Monday next week.
EIA Weekly Ethanol Production And Stocks
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Ethanol Stocks were lower despite the slight increase in production. Gasoline consumption is better than expected at 9.16 million barrels per day.
*Corn usage estimate subtracts sorghum used for ethanol based on USDA monthly grain crush report. Bushel to gallon conversion is based on implied yield: EIA monthly ethanol production divided by net (corn and sorghum) bushels crushed from USDA month report.
Export Sales Estimates – Week Ending 10/25
| Trade Est 24/25 | Trade Est 25/26 |
Wheat | 300,000-600,000 | 0-75,000 |
Corn | 1,800,000-3,500,000 | 0-500,000 |
Soybeans | 1,600,000-2,800,000 | 0-150,000 |
Soymeal | 100,000-350,000 | 0-50,000 |
Soyoil | 0-30,000 | 0-15,000 |
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -14 | – 3/4 | -30 3/4 | 46% |
SX24/SF25 | -14 3/4 | -1 | -26 1/2 | 56% |
SX24/SN25 | -56 1/2 | +1/4 | -105 1/2 | 54% |
MWZ24/MWH25 | -23 3/4 | – 1/4 | -30 3/4 | 77% |
WZ24/WH25 | -20 1/4 | – 1/4 | -24 1/4 | 84% |
KWZ24/KWH25 | -14 | +1/4 | -24 1/4 | 58% |
Cost of Carry
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