Written Commentary
CLOSING COMMENTS
Geopolitics:
Brazil’s Agricultural Minister Carlos Favaro plans on reveling a handful of agricultural agreements with China tomorrow. China”s President Xi Jinping is attending the G20 summit in Rio de Janerio today. Speculation around the agreements suggest that it will mostly be about fruit, beef and pork exports to China, but I have to think soybeans and other grains are involved in the conversation. China’s leadership tends to take long term positions into consideration more so than we do here in the US. Some of the most extreme predictions for South American agriculture output are as high as doubling their production in all grains by 2035.
Macroeconomics:
Crude oil is up 40 cents a barrel nearby. If more fighting between Russia and Ukraine continues this will be an important indication of stress on the global markets.
Ag Fundamentals:
Funds long in the corn market and demand strong in both export and domestic markets. Mexico is concerned about what will happen after January 20th and they are the primary reason corn demand is higher than normal. January soybean board is back below $10 and the 20 day moving average at 10.02. Beans will remain calm until China steps in or South American forecasts change. Wheat is reacting to a strong US dollar vs. the escalating war in Ukraine/Russia.
Below is a Map of Ukraine’s Missile Range Change after the Biden administration decided this weekend to allow Ukraine to use longer-range missiles against Russia. On a grand scale, it really isn’t that much different. There is just over a dozen more Russian asset targets within range now.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -10 1/2 | 0 | -31 | 34% |
SF25/SH25 | -10 | – 3/4 | -26 1/4 | 38% |
SH25/SK25 | -13 | – 3/4 | -27 | 48% |
SF24/SN25 | -35 | -2 | -80 | 44% |
MWZ24/MWH25 | -18 1/2 | +3/4 | -30 1/2 | 61% |
WZ24/WH25 | -18 | +1/2 | -24 | 75% |
KWZ24/KWH25 | -11 1/4 | +1/2 | -24 | 47% |
Cost of Carry
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)
>>Interested in more commentary by Joe Mauck? Go HERE
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