Grain Markets and Other Stuff

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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.

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0:00 New Tariff Man
3:05 Xi, Brazil, Farm Trade
4:55 Brazil Crop Estimates
8:23 Russia Update
9:59 US Ethanol Exports

🚨 Major Shifts in Global Trade and Leadership 🚨

🇺🇸 Donald Trump Appoints Howard Lutnick to Lead Commerce Department
Donald Trump has selected Howard Lutnick, the Chairman and CEO of Cantor Fitzgerald, to head the Commerce Department. Known for his strong stance against the outsourcing of American jobs, Lutnick is expected to play a key role in implementing Trump’s tariff and trade policies. Trump's agenda includes a 10-20% tariff on all imports and a 60% tariff on imports from China 💼🇨🇳. He is also considering raising tariffs on imported cars from Mexico and countries that stop using the US dollar 🚗💰.

🌏 China Urges for Peace and Stability in Global Trade
During the G-20 and APEC summits, Chinese President Xi Jinping emphasized the importance of peace and avoiding extreme trade measures that could disrupt global trade 🚢⚖️. Xi expressed concerns about the economic repercussions of Trump's tariff plans, particularly regarding the potential for other countries to adopt similar policies 🌍. Meanwhile, Brazil is gearing up for agricultural trade deals with China, expected to include fruit, beef, and pork 🌱🍖.

🇧🇷 Brazil’s Soybean Industry on Track for Record Crop 📈
Brazil’s soybean crop is expected to hit record levels this season, with projections from the Brazilian Association of Vegetable Oil Industries estimating a crop size of 167.7 million metric tons (mmt), a 9.4% increase from last year 🌱. Exports are projected to reach an all-time high of 104.1 million metric tons, driven by a boom in soybean crush, which is set to rise 4.6% this season 🌾💥.

⚔️ Ukraine-Russia Conflict Escalates
The ongoing war between Ukraine and Russia continues to intensify, with Ukraine striking a Russian military facility after being approved to use US-supplied long-range missiles. In response, Vladimir Putin updated Russia’s nuclear policy, stating that Russia would use nuclear weapons if Ukraine attacks Russian territory with Western-supplied weapons. The situation remains volatile, with Donald Trump suggesting he could push for peace talks once back in the White House 🕊️💣.

🌾 US Ethanol Exports Reach New Heights 🚜
US ethanol exports are on track to set an all-time high, with a record 29.6 million barrels exported in the first eight months of this year 📊. The increase in exports comes as a result of last year’s record corn crop 🌽, leading to a decline in corn prices and making US ethanol more competitive globally 🌍. Production is also at a record pace, with daily production averaging 1.046 million barrels per day ⛽.

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🌍 Global Tensions Rise as US Approves Long-Range Weapons for Ukraine 🚨

In a significant escalation, Moscow has issued a warning after President Joe Biden's approval of Ukraine’s use of US-supplied long-range missiles. The decision comes amid heightened global tensions, as North Korea joins Russia in supporting its stance against Ukraine. 🇷🇺🛑

As Russia intensifies its assault on Ukrainian residential areas 🏚️, Putin reiterates Russia's readiness to use nuclear weapons if necessary ☢️. Experts suggest the timing of this shift may be too late to alter the course of the ongoing war. Meanwhile, Ukrainian forces have made their first strike into Russian territory using Western-made missiles. ✈️💥

🌱 Brazil's Soybean Planting Surge 🌾
Brazilian farmers are rapidly advancing their soybean planting, with 80% of the expected area already seeded as of last Thursday 📊. Although concerns about reduced rainfall in certain regions persist 🌧️, the crop remains on track. Additionally, Brazil has made significant progress on its first corn crop 🌽, with 86% planted compared to 72% last week.

🌾 Improved US Wheat Conditions 🌾
Rainfall has brought a much-needed boost to winter wheat conditions in the High Plains 🌧️. Crop ratings for wheat have risen to 49% good to excellent, marking the best conditions since 2019 📈. Kansas, Oklahoma, and Texas have seen significant week-over-week improvements 🌾.

🌱 Corteva’s Hybrid Wheat Seed Could Revolutionize Yields 🚜
Corteva announces a game-changing hybrid wheat seed that could boost yields by up to 20% in dry conditions 🌾🌞. This new non-GMO seed technology will initially be rolled out in North America by 2027 and aims to improve wheat production without additional land or resources 🌍.

📉 US Soybean & Wheat Shipments Update 🚢
US soybean exports declined last week 📉, with a -8.4% decrease in shipments compared to the previous week. However, corn exports were on the rise, with shipments up +37% from last year 📊. Wheat shipments were down significantly, falling by -48% compared to last year 🚜. Flash sales were reported with soybean oil, soybeans, and soybean meal sold to international buyers 🛳️.

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📊 Funds Expand Net-Long Positions in Corn
Last week, large money managers substantially increased their net-long positions in corn: 
Net buyers of 97k corn contracts, with a total net long of 100k contracts—the largest since February 2023.
Despite the buying spree, the Dec24 corn contract gained only 12 cents during the reporting week.
Funds were also net buyers of 17k soybean contracts and sellers of 18k SRW wheat contracts. 📉

🌍 China’s Tax Rebate Changes Impact Soybean Oil Prices
China plans to reduce or eliminate export tax rebates on various products, including used cooking oil: 
The removal of tax rebates for used cooking oil, widely used in biofuel production, has raised US soybean oil prices.
US soybean oil futures climbed 2% on Friday, reflecting expectations of increased domestic usage.
Chinese used cooking oil imports have been undercutting US farmers, with concerns about fraudulent imports raised earlier this year. These changes will take effect December 1.

🏭 US Soybean Crush Hits Record High
The National Oilseed Processors Association (NOPA) reported an all-time high US soybean crush for October:
199.96 million bushels processed, up 12.8% from September and 5.4% from October 2023.
End-of-month soybean oil stocks rose slightly to 1.07 billion pounds, below the trade estimate of 1.09 billion pounds.
Strong crush numbers signal robust domestic demand for soybeans and soybean oil. 🌱

🌍 Summit Carbon Pipeline Gains Approval in North Dakota
Summit Carbon Solutions has secured regulatory approval for its carbon pipeline route in North Dakota:
The permit was initially denied in 2023 but was granted after Summit made changes to its proposal.
Summit has secured 82% of easements in North Dakota but still lacks eminent domain authority.
The company plans to reapply for a permit in South Dakota this week after a prior denial. 🌎

🚢 Disappointing Export Sales
US export sales were lower across the board last week:
Soybeans: 1.6mmt (57 million bushels), down 24% week-over-week and from the 4-week average. China was the largest buyer.
Corn: 1.3mmt (52 million bushels), down 53% week-over-week and 52% from the 4-week average. Unknown destinations topped the buyers.
Wheat: 380,100mt (14 million bushels), a slight +1% week-over-week but -17% from the 4-week average. South Korea was the largest buyer.

🌾 Rain Boosts US Winter Wheat
Rainfall across US HRW wheat country has improved soil moisture and crop conditions:
Rain was observed in Kansas, Texas, Oklahoma, and Missouri overnight, following substantial rainfall last weekend.
Winter wheat ratings improved last week and are expected to improve further with the recent rains in HRW and SRW wheat areas.

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🌾 Soybean and Wheat Futures Weakening
Soybean futures are moving closer to August lows, with the Jan24 soybean contract dropping 20 cents per bushel on Thursday, hovering around 20 cents from its August low. Factors such as a massive Brazilian crop, the US/China trade tension, and global supply pressures continue to weigh heavily on prices.
Similarly, the Dec24 HRW wheat contract dropped 8 cents and is trading just 9 cents above its August low. However, there is some optimism as US winter wheat conditions are likely to improve with the recent rainfall.

🏛️ Trump Administration Changes
President-elect Donald Trump has nominated Robert F. Kennedy Jr. to lead the Department of Health and Human Services (HHS). The nomination is expected to face Senate challenges, especially given Kennedy’s controversial stances on food safety, environmental policies, and vaccination.

Trump’s tariff proposals continue to attract attention. Jamie Dimon, CEO of J.P. Morgan Chase, believes tariffs are a necessary tool for addressing unfair trade but emphasized that their implementation needs to be cautious. Despite this, Dimon was not invited to serve in Trump’s administration.

🔋 US Ethanol Production Hits Record High
The US ethanol production reached a record-high last week, with output hitting 1.11 million barrels per day. This exceeded previous records set earlier this year. Ethanol stocks also saw a slight increase of 5% year-over-year. However, implied gasoline demand saw a slight dip of 1.1% compared to the same week last year.

🌎 Brazil Adjusts Crop Estimates
Brazil's Conab (National Supply Company) has made slight adjustments to its 2024 corn and soybean crop estimates. The forecast for corn production stands at 119.8mmt, a small increase, with soybean production remaining at 166.1mmt. Exports for both crops have been adjusted slightly as well.

💡 Farmers Turning to Generic Chemicals
With a decline in farm income, farmers are increasingly turning to generic pesticides and fungicides to cut costs. This shift could financially impact large chemical companies like Bayer, Syngenta, and Corteva, particularly as patents on active ingredients expire. Bayer's stock reached a 20-year low due to these changes.

🌧️ US Drought Conditions Update
Drought conditions continue to persist across a large portion of the Corn Belt, although some relief came last week with rainfall across Ohio, Kentucky, Indiana, Illinois, and Missouri. Drought conditions in Nebraska and Southeast Wisconsin worsened, but significant improvements were noted in the Southern High Plains, including Kansas and Oklahoma.

📦 USDA Flash Sales
US soybean export sales were reported at 176,000mt (6 million bushels) for delivery during the 2024/2025 marketing year. This brings the year-to-date soybean export sales up by 17% compared to last year.

*Correction at the top of the episode- Today's date is Thursday, November 14th.

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🏛️ Impact of Trump's Trade Policies on US Agriculture
US farmers are unsure about the effects of Donald Trump's trade policies on soybean exports and biodiesel production. While tariffs may limit soybean exports to China, they could also lead to increased demand for US soybean oil due to restrictions on imported oils, particularly for biodiesel production. There's optimism that Trump's policies might curb imported biofuel feedstocks from receiving 45Z tax credits, potentially expanding the US crushing capacity. However, higher construction costs due to tariffs may hinder this expansion.

🌽 Flash Sales of Corn
US corn exporters reported two flash sales on Wednesday:
401,357mt (16 million bushels) of corn to Mexico for delivery during the 2024/2025 marketing year.
290,820mt (11 million bushels) of corn to unknown destinations for the same delivery period.

🇦🇷 Argentina's Grain Crop Forecast
Argentina's Rosario Grain Exchange raised its forecast for the 2024/2025 soybean crop to 53mmt - 53.5mmt, up from a previous estimate of 52mmt - 53mmt. The increase was due to favorable rainfall in October, improving planting conditions. However, the exchange lowered its corn crop estimate to 50mmt - 51mmt, down from 51mmt - 52mmt due to drought earlier in the year. Additionally, the wheat crop estimate was cut to 18.8mmt, down from 19.5mmt, reflecting the ongoing dry conditions.

🏢 ADM Faces Accounting Troubles
ADM's (Archer Daniels Midland) compliance chief, Ben Bard, is departing amid ongoing accounting issues. These accounting errors were discovered earlier this year and led to an SEC investigation, the resignation of the CFO, and $12 billion in market value losses. Bard was responsible for global compliance and internal audits. The company is still working to resolve these issues.

📊 Consumer Prices in October
US consumer prices rose 0.2% in October, bringing the annual increase to 2.6%, up slightly from 2.4% in September. Housing costs contributed significantly to the increase, rising by 4.9% over the past year. Futures markets are pricing in about an 80% chance of the Federal Reserve cutting interest rates by another quarter point at its December meeting, despite concerns over potential inflationary pressures from Trump's policies.

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🌿 Lee Zeldin Nominated for EPA Head
President-Elect Trump's choice to lead the EPA has sparked controversy. Lee Zeldin, former New York congressman, will focus on deregulation to boost American business and energy dominance. Critics, including environmental groups, argue that Zeldin is unqualified and will harm environmental policies, especially concerning biofuels. His nomination will require Senate confirmation.

📉 ADM Faces Financial Reporting Delays
ADM (Archer Daniels Midland) has requested more time to file its third-quarter financial report after accounting errors were discovered. This follows a previous delay earlier this year, marking a rough period for the company, which has seen its stock fall by 29% year-to-date. These errors have affected financial data spanning six years.

🌾 Russia's Grain Production Forecast Includes Occupied Ukrainian Land
Russia's agriculture ministry forecasts a 130 million metric ton (mmt) grain harvest for 2024, a 12% drop from 2023. This includes grain from Ukrainian regions under Russian control. There are concerns that these figures may not reflect the true harvest numbers, as Russia allegedly includes Ukrainian data in a bid to hide its losses from the ongoing conflict.

🌾 US Winter Wheat Conditions Improve
US winter wheat conditions improved due to recent rainfall. As of Sunday, 44% of the crop was rated good to excellent, up from 41% the prior week. Kansas saw the biggest improvement in conditions, along with Oklahoma, Texas, and Nebraska. The crop is 91% planted, near the average of 93%.

🌱 US Row Crop Harvest Nears Completion
The US corn harvest reached 95% completion, the fastest pace since 2005, while soybeans were 96% harvested. North Carolina and Colorado are the only states running below-average harvest pace. Meanwhile, Louisiana, Minnesota, North Dakota, and South Dakota have completed their harvests.

📦 US Exports: Soybean Shipments Decline Slightly
Soybean exports were slightly down last week at 2.3mmt, but still up by 13% compared to the same week last year. Corn shipments also saw a slight decline but were up by 10% versus the same week last year. Wheat shipments were stronger, increasing by 69% from the prior week.

📈 Flash Sales for US Corn
US corn export sales continue to perform well, with a flash sale of 110,500mt (4 million bushels) to Mexico for delivery during the 2024/2025 marketing year. Corn sales are up 48% compared to last year, reflecting strong international demand.

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0:00 South American Crop Prospects
5:55 Drought in Cattle Country
7:48 US Dollar and Commodities
9:41 Bitcoin and Mystery Buyer(s)

🌱 Brazilian Soybean and Corn Planting Ahead of Last Year's Pace
Soybean planting in Brazil is progressing faster than last year. By last Thursday, 67% of the soybean area was planted, compared to 61% at the same time last year. AgRural reports that planting is moving smoothly across most of Brazil, with only a few areas affected by limited rainfall. First corn planting in Brazil is also ahead of schedule at 72% planted, although slightly below last year’s 76%. 

🌱 Argentine Soybean Planting
Argentina’s soybean planting is expected to continue at a brisk pace, supported by recent rainfall across the country. The Buenos Aires Grain Exchange reports 8% of the anticipated soybean acreage has been planted, with 2.1 million acres planted over the past week. The forecast indicates hot and dry weather conditions in the coming days, which should allow for continued planting progress.

🐄 US Cattle Herd Expansion Impacted by Drought
US cattle herd rebuilding has slowed due to the persistence of drought in key cattle-producing regions. While many expected the herd to expand following spring moisture, 50% of US cattle are currently located in drought-stricken areas. This has kept producers from holding back bred females for expansion. Beef prices are surging to historic highs, driven by limited cattle supplies.

💵 Dollar Strengthens Post-Trump Victory
The US dollar has surged following Donald Trump's presidential victory. The Bloomberg Dollar Spot Index gained 0.7% to its highest level since November 2023. Expectations that Trump's trade policies would strengthen the dollar have been a key driver, alongside the quarter-point rate cut from the Federal Reserve last week. The yen and euro both saw declines against the dollar. With Trump’s proposed policies, the dollar could continue to appreciate, especially with trade war concerns.

💰 Bitcoin Sets New Highs, Eyes $100,000
Bitcoin reached a new all-time high on Monday, surpassing $88,000. There is growing speculation that it could hit $100,000 by the end of the year, partly driven by Trump’s victory and the rise in CME futures trading for Bitcoin. Although Trump’s potential focus on cryptocurrencies is uncertain, the recent surge in Bitcoin’s price is a key development for traders in the space.

Conclusion:
The Brazilian and Argentine planting seasons are progressing positively, which may affect global soybean supply. US cattle producers are facing challenges with expanding their herds due to drought, driving beef prices higher. The US Dollar and Bitcoin markets are reacting strongly to Trump’s victory, signaling potential continued volatility and growth in these assets. The agricultural market continues to respond to weather patterns and trade policy developments, with implications for both global grain production and US livestock markets. Stay tuned as these market developments unfold!

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Here's a summary of the latest developments affecting agriculture and commodities markets:

🌾 USDA Cuts Corn and Soybean Production Estimates
USDA reduced its soybean yield estimate to 51.7 bpa from 53.1 bpa, cutting production by 121 million bushels. This was a surprise to the market. Demand estimates for soybeans were also lowered, particularly for crush and exports, though the reductions in supply were partially offset.
The corn yield estimate was adjusted down slightly to 183.1 bpa from 183.8 bpa, with no change in demand estimates for corn.

🌍 Trump Administration Update
Robert Lighthizer, the former US Trade Representative, has not yet been invited to return to his post in the new administration, despite expectations. He played a key role in the China trade war and the renegotiation of NAFTA. Speculation continues that he may take on a different cabinet role, such as Treasury Secretary or Commerce Secretary. Meanwhile, China's top ambassador to the US has reiterated that tariffs benefit no one, signaling ongoing tensions in trade relations.

🌱 California Climate Rules Update
California's Air Resources Board approved new climate rules that could impact fuel prices significantly. The plan raises emissions reduction targets, supports zero-emission vehicle charging infrastructure, and removes incentives for methane capture on dairy farms. Environmental groups have criticized the move, especially its potential to increase fuel prices by up to 65 cents per gallon.

📊 "The Funds" Shift to Net-Long in Corn
Large money managers (the funds) moved to a net-long position in corn, buying 39,000 contracts. This is the first net-long position in corn since August 2023, a dramatic shift from a record net-short position earlier in the year. Funds were also net buyers of soybeans and SRW wheat.

📉 Moody's Lowers ADM Credit Outlook
Moody's downgraded its credit outlook for ADM due to continued accounting errors. Despite the company maintaining an A2 rating, this downgrade reflects ongoing issues with financial reporting that have already led to significant market value loss for the company.

🌧️ Weekend Precipitation in Hard Red Winter Wheat Areas
Substantial precipitation of 1" to 3" was recorded across hard red winter wheat areas in Kansas, Colorado, Oklahoma, and the Texas Panhandle. While this brings some relief, HRW wheat futures remain under technical pressure due to poor crop ratings, exacerbated by dry conditions earlier in the season.

📦 Flash Sales Reported by USDA
US exporters reported several flash sales last Friday, including:
107,000mt of soybeans to China
132,000mt of soybeans to unknown destinations
200,490mt of corn to unknown destinations
These sales contribute to strong export performance for both soybeans and corn, further supporting the market.

Conclusion:
USDA's crop adjustments and ongoing political developments add to the market's volatility. Traders are watching closely, as both domestic production and global trade dynamics shift. The Trump administration's potential moves on tariffs and trade, especially with China, could keep agriculture markets in flux. Stay tuned for updates on trade policies and crop conditions as the year progresses! 🌽🌍

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🌱 Soybean Market Rally
Soybean oil futures have played a significant role in a recent rally in the soybean market. The December bean oil contract gained 4.3% on Thursday after a 3% increase on Wednesday. This surge is attributed to expected policies from a Trump administration that may lead to greater domestic usage of soybean oil, especially with anticipated tariffs on imports of used cooking oil and Brazilian sugar ethanol.
Soybean futures also saw a sharp increase, with the January 2025 contract gaining nearly 23 cents per bushel.

🇨🇳 China's $1.4 Trillion Stimulus Package
China announced a $1.4 trillion stimulus package aimed at local governments facing "hidden" debt strains. This move is seen as an effort to counterbalance the negative impacts of previous stimulus measures, particularly those from the 2008 global financial crisis. Traders had largely anticipated such measures to stabilize the economy.

🌾 USDA Crop Production Estimates
Preliminary estimates from the USDA indicate an increase in corn acreage for next year, projected at 92 million acres, up from 90.7 million this year.
Soybean acreage is forecasted to decrease to 85 million acres from 87.1 million, while wheat plantings are expected to remain stable at 46 million acres.
The combined acreage for corn, soybeans, and wheat is anticipated to fall to a three-year low.

📊 Upcoming USDA Reports
The USDA's monthly Crop Production and WASDE report is set to be released today at 11:00 AM CST. Expectations include marginal downward revisions to corn and soybean yield estimates, which could lead to slight reductions in carryout estimates. Analysts believe demand estimates for corn, particularly for ethanol and exports, might be too low.

🌍 Strong U.S. Export Sales
U.S. corn export sales reached 2.8 million metric tons (109 million bushels), surpassing expectations and marking an 18% increase from the previous week.
Net soybean sales were reported at 2 million metric tons (75 million bushels), down 10% from last week but up 10% from the previous four-week average, with China being the largest buyer. Net wheat sales stood at 374,700 metric tons (14 million bushels), with Mexico as the top buyer.

🌧️ Drought Monitor Update
Recent rainfall has improved drought conditions in many areas of the Corn Belt, especially in Missouri, Iowa, and Wisconsin. However, drought conditions worsened in parts of Kentucky, Ohio, and Michigan.
Current drought status:
Corn: 71%
Soybeans: 63%
Winter Wheat: 57%
Spring Wheat: 41%
Cattle: 54%

📉 Corteva Shares Decline
Shares of Corteva plummeted by as much as 7% to $57.45 due to a lowered earnings outlook, driven by planting issues in Argentina caused by stunt disease and dry weather. Despite the decline, the company's stock is still up about 20% year-to-date.

💵 Federal Reserve Rate Cut
The Federal Reserve cut interest rates by 0.25% on Thursday, a decision that was unanimously approved and anticipated by markets. Fed Chair Jerome Powell stated the cut aims to strengthen the economy and labor market while addressing inflation. There is speculation that another quarter-point cut may come in December, followed by a pause in January to assess the effects of current monetary policies.