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We kicked off the day with Export Sales, GDP Q3 Growth Rate QoQ Adv., GDP Price Index QoQ Adv., GDP Sales QoQ Adv., Core PCE Prices QoQ Adv., PCE Prices QoQ Adv., Initial Jobless Claims, Continuing Jobless Claims, Jobless Claims 4-Week Average, and Real Consumer Spending at 7:30 A.M., Fed Bowman Speech at 8:55 A.M., EIA Natural Gas Storage and NY Fed Treasury Purchases TIPS 7.5 to 30 yrs. at 9:30 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Logan Speech at 12:15 P.M., and Fed Balance Sheet at 3:30 P.M.

The Federal Reserve lowered the federal funds target rate by 25 basis points at the October meeting, to a target range of 3.75% to 4.00%. This followed a similar cut in September and was in line with expectations. The Fed cited the recent softening of the labor market, but after completely missing the 2020 inflation run up, some members remain cautious about current inflation rates (which remain near multiyear lows). One governor was in favor of a 50 bps cut, while another preferred no cut. The chart shows that credit spreads have lightened in recent months, but both long and intermediate-term treasury yields are leaning towards another cut in December.

South American Weather Pattern Update

South American Climate Pattern Favorable into Mid-Nov; Soybean Seeding In Parana Normal:

The South American is void of threats into mid-Nov as heavier shower actively expands northward into Mato Grosso, Goias and fringe – but expanding – soy producing areas of north and northeast Brazil. Soaking totals of 2+” have fallen across the eastern half of Argentina and the southern third of Brazil. It remains that all of South America will be well watered on November 5^th. Showers linger in southern Brazil for another 24-36 hours. Daily shower impact the northern half of Brazil’s ag Belt beginning Oct 31^st, with 10-day accumulation in Mato Grosso, Mato Grosso do Sul, and Goias pegged at 1.50-4.50”. This is a typical Brazilian climate pattern. Also of note is that the principal forecasting models indicate moderate to heavy rain returns to central and northern Argentina Nov 2-5^th. There is no evidence of extreme heat through mid-November. An early start to the growing season is favorable.

Corn Market Searches for Guidance; Brazilian Prices Stagnate:

Brazil’s cash corn market is stuck. Expanding corn-based ethanol production & consumption provides a pillar of support, while the sheer size of production in 2025 keeps in place monthly exports of 6.5 MMT’s. Brazil’s corn ship lineup as of late October feature cumulative vessels worth 5.30 MMT’s, vs. 4.5 a year ago, and seasonal decline in weekly loadings has been less intense than last year. There’s enough for supply to meet ethanol and export demand. Note that Brazil’s daily cash corn price seasonal strength has been largely absent since August, and with interior prices in Mato Frosso still quoted below $3.80/Bu, vs. $3.95 a year ago in late Oct, ARC doubts any kind of rationing rally unfolds in Brazil through the balance of 2025. It’s the lack of movement in global cash corn markets that’s kept CBOT rallies challenged.

Corn Comments & Analysis

Corn & Ag Markets Await Details of Trump-Xi Visit; Rally Encourages Producer Selling Globally:

CBOT corn ended mixed, with calendar spreads narrowing. Price discovery over the next 24 hours will be centered on whatever details become available from Presidents Trump & Xi talks overnight. Although, news of success that China would resume buying US ag products and loaded 3 US soybean cargoes just before the talks, the grain complex reaction to the successful news have been rather muted. The market must want more encouraging details as many traders priced in a positive outcome. Headline volatility persists through the balance of the week, and many analysts maintain that the fundamental spark to propel March CBOT above $4.50-$4.52 is absent today. The Midwest cash ethanol market has done little in October, and ethanol inventories will be building seasonally from now till April. A peak in ethanol grind occurs in November. Otherwise, weakness in South American & Ukrainian FOB premiums indicates producers worldwide are rewarding the rally. The Argentine peso’s inability to sustain rallies keeps farmers there profitable. Most important overnight is the US and China’s ability to lower tariffs on one another. We must reiterate that China is unlikely to import sizable tonnages of corn/feed with their own large domestic supplies. Trade news rallies should be rewarded with the US lacking a demand driver thereafter. Corn should be nearing a seasonal peak without adverse South American weather. Dec corn has resistance above $4.36.

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