Written Commentary
CLOSING COMMENTS
Macroeconomics:
The US equity market is buckling up for an important earnings week, next week. Five of “The Magnificent Seven” companies will report third quarter earnings. “The Magnificent Seven” stocks are Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA and Tesla. A Bank of America analyst was the first to use the nickname in 2023 when describing stock performance for the group. The impressive performance of these seven stocks is driven by tech innovation, financial performance, market dominance, global economic conditions, brand equity, and R&D. Tech stocks used to be viewed as a risky investment but many today look at these seven an believe they will outperform most investments even through a recession.
Ag Fundamentals:
The row crop complex is red across all commodities today as we head into the weekend. Rains across the US growing regions has slowed the last 20% of corn harvest, but because we are so ahead of pace it should not become a huge concern. The USDA reported a sale of 116K MT of beans to China and a sale of 136K MT of corn to Mexico . Since Monday this week, the US reported flash sales like these totaling 1.347M MT of beans (49.5 million bushels) and 628K MT of corn (24.7 million bushels). Bean sales reported to mostly China and unknown and corn mostly to Mexico, Japan and unknown.
Weather:
Rains across the Northern Plains, Midwest and into the Great Lakes region will give some farmers a nice break from a non-stop harvest. The 10-day forecast (image below) shows 1-2 inches of rain can be expected in the heart f the US. South America can expect to see rain coming across the central growing regions between now and the first week of November. No major weather concerns today for South American Farmers, but northeast Brazil and northern Argentina/Paraguay are missing some of these early rains.
“The Magnificent Seven” are listed below with their performance and scheduled earnings date. 5 out of the 7 will report earnings for Q3 next week and it may cause some volatility in the equity market.
The Next 10 Day Rain Forecast has folks dusting off their umbrellas for a shot of 1-2 inches of rain between now and November 3rd.
Calendar Spreads
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Cost of Carry
Spreads are weaker today. Corn makes sense, we still have 20-25% left to harvest and most on-farm storage was packed with beans. So corn has a lot less resistance to delivery than beans. Bean spreads back off as options expire and the spread squeeze seems to settle with a shift in positions.
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