BQC Afternoon Comments Sept 19.24

Geopolitics:

Heat between Israel and Hezbollah in Lebanon is starting to intensify. More bombings occurred following the pager strike that Israel carried out on Hezbollah targets withing Lebanon. The next 48 hours could become worse for the northern boarder of Israel.

Macroeconomics:

Both the Dow and S&P hit all time highs today, one day after the Fed cut rates by -50 basis points. The market likes Jerome’s comments about the economy and is betting on their commitment to adjust rates further moving forward. The Dow closed at 42,025.19, closing above 42K for the first time. The S&P closed at 5,713.64, above 5700 for the first time.

Ag Fundamentals:

Corn and wheat lead row crops down today as US producers sell the last loads of old crop that they do not plan on blending with new this year. Both Corn and wheat are testing 50 day moving averages as spreads leak out to wider carries. Money moving from commodities to the equity markets? Riskier assets have reentered the conversation. The Gulf’s weather issues left with Francine and they are catching up the 2-3 days lost this week. Managed money covered shorts last week without increasing the prices by much.  They may have slightly eased back on short covering today while the country continues to sell old crop length. Demand for corn can still be seen in the basis heat map below, but the whole country is satisfied on bean length. Bean export commitments being at 5 year lows contributing to that.

Weather:

Rain is expected to spread across the Midwest over the next 7 days. Would have been better for the bean crop had it come a few weeks ago, but the 2-2.5 inches in the Missouri River Valley should help maintain gauges. Memphis is now at -7 feet and heading toward -9 feet by September 24th. The tropical storm in the Gulf of Mexico has shifted course eastward and will miss Louisianan and Mississippi for the most part. Brazil’s southern region (Rio Grande Do Sul) is very wet right now while the rest of the country remains dry.  October rains in South America will be watched closely.