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We have reached the final day for the month of November and as reflected in rather stagnant action overnight, we have little fresh information to provide direction and the trade appears fully on the way to shifting into holiday gear. With the exception of nearby wheat contracts and soymeal, the rest of the grains and soy are trading a just a smidge higher. We are likely garnering a bit of support from outside markets as we have energies and metals trading higher. Not helping is the U.S. Dollar, which has begun the week with additional strength and has tested the highs that were posted back in the spring. Keep in perspective that mark was the highest trade in the dollar since the spring of 2003.
Brazilian farmers continue to forge ahead with planting and AgRural now estimates that 81% of the beans are in the ground. This was an increase of 11% during the past week but still leaves the nation 8% behind the normal pace. It remains quite wet in the south and dry in the north. No one is quite sure about the pace of reforms in Argentina once the new administration takes over. The incoming agriculture minister has stated that export taxes on corn and wheat will be entirely eliminated and those on beans lowered to 5% from the current 35%. While once this has actually taken place, there should be no question that available supply/competition will heat up but markets as a whole have taken the news in stride at this point and theoretically have factored this into the current price structure.
There was an interesting story published in the Financial Times over the weekend and it would seem that not everyone is bearish on the prospect for the future of global commodity trading. Margarita Louis-Dreyfus, who inherited control of Louis-Dreyfus when her husband suddenly passed away in 2009, is currently working with banks to line up the necessary capital to purchase 16% o the holding company still owned by other family members. She already holds a super-majority. Note that Louis-Dreyfus has suffered similar results to other companies in the commodity realm recently and back in September recorded a 50% drop in net earning for the first six months of the year. While I certainly do not know all the inner working of the deal nor how long it will take to complete, but as an outsider, it would seem that this would be an ideal time, at least for Margarita to be buying the additional shares. The company was founded by Leopold Louis-Dreyfus in 1851 and has remained until family control ever since. They are generally ranked as the fifth largest grain company in the world.
While not necessarily a market mover, the other news of international significance is that somewhere on the order of 150 heads of state are gathering in Paris this morning for another climate summit. The last one held in 2009 in Copenhagen could not even come to an agreement as to which was the favorite Hans Christian Andersen fairy tail (I am personally split between the Emperor’s New Clothes and The Snow Queen) let alone any kind of agreement to cut emissions. Carbon credits again seem to be a favorite topic so we shall see if anything really develops this time around.
The Commitment of Traders report will be issued today due to the holiday break last week but outside of that, we have little to look forward to this week. While fundamentals continue to leave little to look forward to, we continue to believe that markets have factored in much of that news and remain at a level of value. In essence; additional sideways action ahead.
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