Written Commentary
CLOSING COMMENTS
Geopolitics:
News today is swirling around rumors that the Israel and Hezbollah ceasefire is close. On the north side of the Black sea, Ukraine and Russia exchange drone attacks over the weekend. Many spent time talking about the Biden administration’s decision last week to allow Ukraine to escalate with longer range weapons against Russia
Macroeconomics:
The Dow and Russel 2000 both closed at record highs today. The market is happy about Trump’s Treasury secretary pick Scott Bessent. Scott is like-minded to Trump about the role and has talked about keeping a lid on inflation. Trump also picked Brooke Rollins to be Agriculture secretary. She will be at the front of the trade deal renegotiation between the US, Canada and Mexico. She will also have say in the taxes around biofuels.
Ag Fundamentals:
Winter wheat crop conditions don’t really matter yet, but they did improve +6% week over week. Hearing China may have booked up to 10 cargoes of soybeans last Friday for Feb delivery with an “optional origin”. They are keeping the back door cracked in case they need to swap origins from the US to South America. Strong corn demand between exports to Mexico and higher than expected usage for Ethanol keeping prices above support. Large supply numbers out of AS will keep prices capped.
Weather:
Rains hitting areas of Ukraine/Russia, Southern Brazil and Argentina this week. River levels in the US are okay, but need more rain to fully recover. Cold temps are expected to cover the Midwest late in the 5-7 day forecast.
US Wheat Ending Stocks are higher this year, but still below the 10-year average. (red line, just Below 900 M bushels)
World Wheat Ending Stocks are below the 10-year average (red line, 10.065 bil bu) and 1.46 billion less than 2019/2020 highs.
NASS WINTER WHEAT CONDITION RATINGS
Winter Wheat Crop Conditions are +6% better than last week’s good/excellent numbers. Ohio, Nebraska and Oklahoma improving double digits, while Kansas, Missouri, Arkansas and Illinois all jumped 5% or better as well.
Calendar Spreads
Spread | Last | Chg | Full | % of FC |
CZ24/CH25 | -8 1/4 | +1 1/2 | -31 | 27% |
SF25/SH25 | -8 1/2 | +1/4 | -26 | 33% |
SH25/SK25 | -13 1/4 | +1/4 | -27 | 49% |
SF24/SN25 | -34 1/2 | +1/4 | -79 1/2 | 43% |
MWZ24/MWH25 | -15 1/2 | 0 | -30 1/4 | 51% |
WZ24/WH25 | -20 | +1/2 | -23 3/4 | 84% |
KWZ24/KWH25 | -10 1/2 | +3/4 | -23 3/4 | 44% |
Cost of Carry
Spreads firmer today due to: corn sales to Mexico, bean cargoes to China, high ethanol and crush demand, and a looming huge supply with little to no weather concerns globally.
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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