Morning Comments November 5, 2021

Harvest 4

It was another risk-off sort of day yesterday as we saw a key reversal in crude as well as strength in the dollar and a recognition the US bean export window is rapidly closing, piling on and pushing us lower across the board.

The OPEC+ announcement yesterday morning was exactly what was expected with participating countries deciding to keep production expansion at 400,000 barrels per day as originally agreed upon. Ahead of yesterday's meeting, the Biden administration had requested both publicly and privately the group up their production expansion to 800,000 bpd. 

After the announcement, the administration was quick to make it clear they would do whatever it takes to lower energy costs to consumers, with many assuming that means a release of supplies from the government's strategic reserves. 

With the U.S. having the potential to be the world's largest oil producer by far, one must wonder if those in power in DC will take a look at other common sense approaches to increasing production as well.

In addition to oil falling off we saw some interesting developments in soybeans and its products that had some in the industry wondering if something hadn't changed in the political conversation surrounding renewable diesel and other 'green' energy developments. 

As we had talked about earlier in the week, the elections held Tuesday sent a bit of a shockwave through the political leaders of the democratic party. The big shift in independents has some political pundits questioning whether those on the left have the support to make major economic directional shifts such as the Green New Deal and other pet projects. 

Reality is, just as we have seen in China, many of these ideas are great in theory, but when facing steep increases at the pump and worrying over whether they can heat their house, the consumer just wants cheap, easy to access energy sources. 

In addition to macro developments, we are watching a fundamental shift in soybeans as a whole. Export sales came in larger than expected yesterday, helping to support prices, but we are now seeing China come in as an active buyer of Brazilian beans for December shipment. 

Weather throughout much of Brazil has been nearly ideal for an early start to the growing season, with concerns over dryness being pushed to the far southern crop areas, down into Uruguay, Paraguay and Argentina. Rains are expected to fall in even the driest areas over the weekend, with planting expected to continue at a breakneck pace.

With ocean freight continuing to push cheaper there are some concerns over long-term export demand for just about everything commodity-related and that's not going away anytime soon. 

Looking ahead, we will likely see some continued position squaring ahead of next week's USDA report as well as some spillover direction from outside markets. Crude is a bit stronger overnight, working to gain back what it lost yesterday, while the dollar continues to bump up against what has been a pretty strong resistance level at 94.50.

Keep in mind when looking at pricing opportunities, especially in corn we are still over 50 cents above lows put in place just over 3 weeks ago.

Corn down 1 to 2 

beans down 5-6

It was another risk-off sort of day yesterday as we saw a key reversal in crude as well as strength in the dollar and a recognition the US bean export window is rapidly closing, piling on and pushing us lower across the board.

The OPEC+ announcement yesterday morning was exactly what was expected with participating countries deciding to keep production expansion at 400,000 barrels per day as originally agreed upon. Ahead of yesterday's meeting, the Biden administration had requested both publicly and privately the group up their production expansion to 800,000 bpd. 

After the announcement, the administration was quick to make it clear they would do whatever it takes to lower energy costs to consumers, with many assuming that means a release of supplies from the government's strategic reserves. 

With the U.S. having the potential to be the world's largest oil producer by far, one must wonder if those in power in DC will take a look at other common sense approaches to increasing production as well.

In addition to oil falling off we saw some interesting developments in soybeans and its products that had some in the industry wondering if something hadn't changed in the political conversation surrounding renewable diesel and other 'green' energy developments. 

As we had talked about earlier in the week, the elections held Tuesday sent a bit of a shockwave through the political leaders of the democratic party. The big shift in independents has some political pundits questioning whether those on the left have the support to make major economic directional shifts such as the Green New Deal and other pet projects. 

Reality is, just as we have seen in China, many of these ideas are great in theory, but when facing steep increases at the pump and worrying over whether they can heat their house, the consumer just wants cheap, easy to access energy sources. 

In addition to macro developments, we are watching a fundamental shift in soybeans as a whole. Export sales came in larger than expected yesterday, helping to support prices, but we are now seeing China come in as an active buyer of Brazilian beans for December shipment. 

Weather throughout much of Brazil has been nearly ideal for an early start to the growing season, with concerns over dryness being pushed to the far southern crop areas, down into Uruguay, Paraguay and Argentina. Rains are expected to fall in even the driest areas over the weekend, with planting expected to continue at a breakneck pace.

With ocean freight continuing to push cheaper there are some concerns over long-term export demand for just about everything commodity-related and that's not going away anytime soon. 

Looking ahead, we will likely see some continued position squaring ahead of next week's USDA report as well as some spillover direction from outside markets. Crude is a bit stronger overnight, working to gain back what it lost yesterday, while the dollar continues to bump up against what has been a pretty strong resistance level at 94.50.

Keep in mind when looking at pricing opportunities, especially in corn we are still over 50 cents above lows put in place just over 3 weeks ago.

Corn down 1 to 2 

beans down 5-6