Written Commentary
MORNING COMMENTS
Geopolitics:
The spending bill that could potentially shut down the government on Saturday morning is the talk of the town. I have not read the bill but the main talking points are disaster relief and support for farmers. In order to receive both, republicans will need to agree to spending terms raised by democrats including increasing the debt ceiling and increasing pay to members of congress. Throw in a new NFL Commander stadium and call it good (haha). The way it looks today, a shutdown is very possible and could last through the Christmas holiday. $31 billion in US farm aid and a year-round extension of E-15 fuel sales is on the line.
Macroeconomics:
The Federal reserve’s third consecutive rate cut yesterday came with a hawkish press conference with Jerome Powell that sent a shutter through equity markets. The Dow was on it’s 9th straight day of lower closes too, so the momentum was heading south while Jerome broke news of two fewer cuts next year (from 4 cuts to 2 expected). The dollar broke higher and has since calmed down to just under 108 on the index. Additionally the spending bill and political ping pong within the house of representatives has thrown some uncertainty into the mix.
Ag Fundamentals:
Export sales were in line with expectations. There was a flash sale of 227K MT of soybeans to unknown destinations (8.34 million bushels). The strength of the US dollar has many doubting the current export forecast with bids flowing into Brazilian trade inbox’s the last few days. The Brazilian real is at record low values compared to the dollar, similar story in Russia and Egypt. Rains hitting parts of Argentina that had concerns and the next few weeks have a favorable forecast for South America. The US has received some rain along the Ohio river valley which has allowed for much needed relief to the river levels open the lower Mississippi. The US drought monitor is looking better today than the past couple months, but there are still some concerning areas in northern Iowa, Illinois and the upper wheat belt.
WEEKLY EXPORT SALES
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EXPORT & WORLD NEWS
This morning there was a flash sale of 227K MT of soybeans sold to unknown destinations. Colombia’s corn and meal purchases were mostly ignored yesterday with the dollar rallying and the
Fed press conference taking the spotlight. Algeria bought some durum wheat in an international tender yesterday, much of which came from Canada. Tunisia is looking to purchase another 100K MT of durum wheat.
Malaysian palm oil futures were down 21 ringgit overnight, at 4508.
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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