Written Commentary
MORNING COMMENTS
Macroeconomics:
The next three days will be focused around The Federal Reserve’s highly anticipated two-day meeting, starting tomorrow and finishing with their decision announcement on Wednesday at 1:00 pm CST. The market is expecting a 25 basis point cut from the current 5.25%-5.5% rate. polls show as high as 41% of traders believe we could see a cut as high as 50 basis points. With two Fed meetings following Wednesday, the Federal Reserve will have 3 chances to change rates between now and the end of the year. Federal fund rates could be as low as 4.5%-4.75% by the end of the year.
Ag Fundamentals:
Any pull-backs in the recent USDA yield projections for this year’s crop will offer support for prices moving forward. The highest production numbers have been mentioned, and I do not expect to hear anything higher at this point. If production is adjusted at all the rest of the year, it probably decreases from here. The USDA is projecting a record bean production at 4.586 million bushels. Aside from the US harvest progress, the row crop market is paying close attention to Brazil’s weather and any signs of less rain in the forecast. Their monsoon season is early October.
Weather:
The eastern half of the corn belt is going to be dry for the next 7 days. This includes the Ohio river valley which is an important source of water for the lower Mississippi River. River logistics are tight in the middle of harvest, for the third yer in a row. River freight rates can be seen in a chart below the 7 day precip map.
The Mississippi River Gauge at Memphis is expected to drop 2-3 feet by the end of the week to -8.5 feet by Friday. We start to see closures and boats getting stuck around -9 to -10 feet on the gauge.
Record Low River Levels in Memphis, TN
The last two years have marked record low river levels at Memphis. This year will be the third year in a row that gauge is in the top 10 lowest years.
Export & World News
The USDA confirmed a private sale of 100K MT of US soybeans to China. In addition, the US sold 132K Mt of soybeans to unknown destinations.
Malaysian markets are closed for holiday.
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