11/27/2024 Market Commentary

Rains have fallen across the Midwest and Great Plains, slowing post-harvest field work but helping the winter wheat crop. The USDA released November’s WADSE report, trimming back yields greater than expected: corn was cut by .7 bushels per acre, and soybean yield was trimmed back by 1.4 bu./ac. Trade had been expecting an increase in exports on the balance sheet, but corn remained unchanged and soybean exports were trimmed by 25 million bushels. Even with the changes, trade is comfortable with carryout numbers.

The U.S. Dollar has moved higher, making U.S. products more expensive, but fortunately, the rains increased river levels, cheapening barge freight and offsetting the strength of the dollar. The Feds also announced another rate cut of 25 basis points, and trade is looking to the potential of another cut in December. Soybean crush and ethanol production is strong, with new records last month. The demand for soy oil supports soy crush, a cheaper alternative to sunflower, palm and canola oil. China also is potentially reinstating the export taxes for used cooking oil.

Japan plans to increase its ethanol blending mandate to E10 by 2030 and E20 by 2040. Currently, Japan does not have the infrastructure to produce enough ethanol and will depend on imports, potentially from the U.S. In the future, trade will be closely watching for announcements from the Trump Administration on biofuels.

Brazil and China announced a partnership this month. China will invest in infrastructure development and technical assistance and expand Brazil’s sorghum exports to China. China currently accounts for 90% of U.S. sorghum exports, and Brazil only produces enough sorghum for its needs. This leaves the question of whether Brazil will shift acres to sorghum production or how it plays out.