Weaker markets to start the week as corn is down 6 and soybeans are down 18.
Property developer Evergrande Group in China missed its debt payment and is in default. Shares of the company are down to a couple dollars from values of 15 dollars a year ago. This highly leveraged property company was making news late last week with the amount of debt that they owe. Some close to the company say the firm owes more than 52 billion dollars this year. The question has risen, is Evergrande Group too big to fail? The sheer scale of Evergrande’s debt burden also contributes to the low likelihood of a bailout. Standing in excess of $300 billion, Evergrande’s liabilities exceed Huarong’s total liabilities of 238 billion. By bailing out its most bloated property developer right now, Beijing would shoot itself in one foot to save the other. A $300 billion bailout would just transfer the liability to the government and worsen the government’s preexisting debt hangover. US Stocks are liquidating on the news falling sharply early this morning.
There is a significant change to wetter in Brazil in both the short range forecast and the long range this morning. A pattern change was hinted at starting at the beginning of last week and today it is much wetter. The forecast from September 28th through October 6th has substantial rains coming into the driest areas of Brazil. This looks to be the beginning of the rainy season.
Most markets are down on the news out of China this morning. We’ll see how Stocks and Energy handle the break this morning. Crop yields will be rolling in this week and so far, they are varying greatly with record yields and disappointing yields reported. I recommended selling on the rally last week, if you needed to unload anything at harvest. There are quick ship premiums that can be had, but will soon diminish. Take advantage of $5+ prices to lock in margin for fall and beyond. There are few guarantees in life and high grain prices are not one of them.
Have a Safe Day!