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BQC Afternoon Comments Sept 6.24

September 6, 2024
Joe Mauck
@TradewithAFS

MORNING COMMENTS

Macroeconomics:

Crude oil dropped 1.70 per barrel, trading below $68 per barrel for the first time in 14 months. Both US and Chinese economies are showing signs of slowing. Prices were looking for support with the crude oil inventories falling by almost 7 million barrels last week. Gasoline demand has been good recently, but the US is nearing the end of it’s driving season. Now eyes are on natural gas, slightly higher today, as barge freight values increase due to low water and cooler weather is expected this weekend.

Ag Fundamentals:

Corn Export sales came in better than expected at 65 million bushels. New crop sales were committed to Mexico (32 million bu) and unknown buyer (19 million). Soybean exports were in line with expectations, at 53 million bushels. Wheat exports were reported at 12.5 million, lower than expected. The Commitment of Traders report shows Managed money short covering across the board; excluding soybean oil which they were already long and bought an additional 18K contracts.

Weather:

The short term weather concerns include a possible early frost creeping into northern Minnesota and northern Wisconsin on Saturday night, dryness in Indiana and Ohio leading to low river levels in the Mid-South regions, and the development or lack there of a tropical storm in the Gulf of Mexico. The likelihood of a widespread frost occurring this weekend is low, but temps will reach the lower 30s in those northern areas. Do not expect rain in the right places for the Memphis river gauge to improve for at least the next 7-10 days. River levels at Memphis will reach -7.5 feet by September 12th. they start to shut the river down at -11.5 feet historically. The tropical storm that is making its way up the eastern coast of Mexico now has a 40% chance of developing into a cyclone. Longer term concerns include dryness in Brazil, the reformation of La Nina, and dry heat in Ukraine and southwestern Russia.

CALENDAR SPREADS

Spreads are firming due to news of dryness in Brazil. The soil is sometimes too dry to plant in Brazilian growing areas. If their planting is delayed, that opens the window for American farmers to fill the demand needs at the back half of our marketing year.

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