Written Commentary
MORNING COMMENTS
Geopolitics:
China’s President Xi Jinping spoke at the BRICS summit today and when the leader of the second largest economy in the world speaks, people listen. He used the word “urgent” when speaking about the need for change in the international financial architecture. Xi also called for no further fighting in Ukraine and Russia and a ceasefire in Lebanon and Gaza. The United State’s GDP is $28.78 trillion as of October 7th 2024, and China comes in 2nd at $18.53 trillion. If you are comparing the GDP per capita, countries like Canada, Germany, UK, France, Italy, and Japan all rank higher than China, India and Brazil combined.
Macroeconomics:
According to the CME Fed Watch website, the probability of the US Fed cutting interest rates 25 basis point cut is the most likely at 92.3%. That is slightly down from 93.7% this time last week. One month ago, the probability was 50/50 between 25 basis pts. and 50 basis pts. Now there is a 0% probability of a 50 pt cut and close to an 8% chance there may be no cut at all.
Ag Fundamentals:
Corn having a good day today despite a large us crop applying pressure. December corn values closed a penny higher than the 100 day moving average at 418’0. We have had good new from both the export front to Mexico and unknown buyers as well as a higher than expected ethanol production report today. Corn CZ/CH spread holding at 13¢ carry. Storage space tightening will start to force corn to deliver. The flash bean sale to China this morning is another small bite to get them through these uncertain weeks ahead. They may have one or two more of these 5.1M bushel purchases before the election, but no one is expecting them to order up the family platter. It is good thta China is participating, but these are still small fries.
Fed Watch Probability for the next interest rate cut is leaning hard toward 25 basis points come November 7th. (7.7% probability of no cut.)
Brazil 10-Day Forecast
EIA Weekly Ethanol Production
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EIA Weekly Ethanol Stocks
Ethanol Stocks were lower by 52,000 barrels week over week, despite the higher production. We are not too far from our ethanol stock numbers this time last year.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -13 | – 1/4 | -30 3/4 | 42% |
SX24/SF25 | -7 1/2 | +1 1/4 | -26 3/4 | 28% |
SX24/SN25 | -42 3/4 | +4 1/2 | -106 1/2 | 40% |
MWZ24/MWH25 | -22 | – 1/2 | -30 3/4 | 72% |
WZ24/WH25 | -19 3/4 | +1/2 | -24 1/4 | 81% |
KWZ24/KWH25 | -14 3/4 | – 1/2 | -24 1/4 | 61% |
Cost of Carry
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