China and Brazil Strike "BIG" Ag Deal

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0:00 Brazil/China Agreement
3:00 Corn Futures are Resilient
6:09 Ethanol Production is STRONG
7:25 Russia Wheat
8:43 Deere Earnings
9:45 Flash Sales
🇨🇳 China Opens Door to Brazilian Sorghum Exports
China has agreed to accept Brazilian sorghum exports, which could significantly impact the US sorghum market. Last year, China imported $1.83 billion worth of sorghum, predominantly from the US 🇺🇸, but with this new deal, Brazil could emerge as a major supplier 🌍. Brazil’s share of the global sorghum market currently stands at just 0.3%, but production has doubled in the last three years to 4.4 million metric tons (mmt) 📊. The move could become even more significant if Trump implements tariffs on China, potentially disrupting US exports to China.
🌽 Resilient Corn Futures Show Strong Demand
Corn futures have remained resilient, with the Dec24 contract showing modest gains despite earlier setbacks 📉. Demand continues to be strong, with export sales exceeding the pace needed to meet USDA projections 📦. Ethanol production is near record levels, contributing to the overall strength of the corn market 🌽. Large money managers are holding a net long position of around 114,000 contracts, suggesting optimism for continued demand. Calendar spreads are also showing strength, reflecting better-than-expected demand.
⛽ US Ethanol Production and Stocks Update
US ethanol production saw a slight dip last week but remains at record highs, averaging 1.11 million barrels per day ⛽. Production is up 6% compared to the same week last year, while ethanol stocks reached 22.56 million barrels, marking a +2.4% increase from the previous week 📉. However, implied gasoline demand showed a -10% decline from the prior week and a -5.9% decrease compared to last year. Despite this, ethanol exports are strong, contributing to record-high production levels.
🌾 Russia Faces Wheat Decline
Russia’s wheat production is expected to fall in the coming year, with farmers shifting to more profitable crops like soybeans and sunflowers 🌻. Frosts and drought have damaged this year’s crop, and production is projected to decline to 83 mmt, down from 92.8 mmt last year 🌾. In addition, increased input costs and export restrictions are further challenging the wheat market.
🚜 John Deere’s Struggles in a Weak Farm Economy
John Deere is set to report its lowest earnings since 2020, with estimated adjusted earnings per share of $3.87 for the fourth quarter, down from $8.26 last year 💼. Deere’s profit forecasts for the next fiscal year could drop to $5.83 billion, reflecting ongoing challenges in the agricultural sector.
🌱 USDA Flash Sales of Soybeans 🇺🇸
The USDA reported flash sales of soybeans on Wednesday, with 202,000 metric tons (7 million bushels) sold to China for the 2024/2025 marketing year 🇨🇳. Another 226,200 metric tons (8 million bushels) were sold to unknown destinations.