Financial markets are in disarray but bounce 599 points in the June Dow, which is now lead, 20,860. Bonds off 7 points 20 tics exposing how much variability there is in a financial market where the fed and treasury have promised unlimited liquidity. It just cant come fast enough. Corn down 10 3/4 to 344 as fund sold another 35-40K of new contracts, most likely to commercial hands, as margin calls force weak longs out. Could you imagine if there was that big of percentage volume selling of the Dow by one of the big money boys? SEC would shut them down. In Ag, it helps the commercial, so look away. Who would have thought US corn could be the cheapest in the world in a calamity. Beans firm, up 2 1/2 with china supposedly knocking. 824 1/4. This is going to be a story you hear again and again over the next year. Please evaluate your planting accordingly. Wheat firm as well, 499 1/4, plus 1 1/4. Rice up to the top of the options range, 1395, up 33 1/2 but the most tired rally I have ever seen.
Monday Dow collapse of 2589 point to 20,399 shook the market to its core. If you erase the fantasy 1300 point late Friday rally, the loss is cut in half, but that is a story for another day. Bonds up 4 points, 13 tics to 181.02. Fed open up the spigot but not enough. Fear has taken over around the world, and sadly, just like this virus, some of the hype will just take more time to run its course. At this point I would have to say global wealth as been destroyed at a level never before seen in history, in dollar terms. With us in Ag, longer term, we clearly have demand destruction in corn because ethanol 15 billion gallons will be a ceiling instead of a floor. As people shut in, fuel demand drops, just like it did in china. corn closes off 11 at 354 3/4, on long liquidation. I still hope for a decent rally, as current supply is overstated and nothing incentivizes the farmer to produce record yields, but the upside has lowered. . Long liquidation in beans put us down 27 cents, 821 3/4. Meal off only 3 and I think after the early margin call selling, beans could have a decent bounce. Wheat down 8 to 498. Rice up 29 1/2 to close 1361 1/2, in the area of options congestion and a bit above where I thought this rally could go. Problem is I don't have a firm handle on how much new domestic demand has been created from these store runs, but it is a measurable amount. Now is the time for calm and measured decisions, not knee-jerk reactions. I expect some novel and positive changes to come out of the back side of this storm.. This is America, and that's just what we do.
Fire lit in the Dow with government money to the rescue, 22,988, plus 1903 points. Dow had a 2600 point rally from the lows, or basically a good year in a single day. Bonds in an 8 point range with a 176.21 settle, off 2 points and 11 tics. Bonds don't see all the easy money the Dow did I guess. Corn unchanged as it couldn't hold early gains, 365 3/4. Beans fell 10 3/4 to 848 3/4. Wheat stalled at 506, up 1/2 cent. I just cant see the long term bearishness of the grains in one breath and empty shelves in the next. Rice up 16 1/2 more, 1332, as nervous shorts continue to cover. The next government report will be planting intention at the end of the month, and either this corona virus from Wuhan, China(there, I said it out loud) is a dud, or people start to grasp that the illness's primary target, old people, is what most of the agriculture sector is made of. Kind of hard to make record yields with dead people. For what its worth, I don't think you are at much risk. There is a new joke about the virus I would tell you, but you probably wont get it.
Dow collapse of 2490 points Thursday is the feature, 21,085. Surprisingly, bonds off a point and 17 tics to 179 even. That is a liquidity crisis. Treasury will be the next to step to the plate to cure that. Beans off 13 3/4 to 859 1/2. Wheat down 7 1/4 to 505 1/2. Corn hit for 8 3/4 to 365 3/4. Rice short cover continues, 1315 1/2, plus 17 1/2. As expected, we are seeing runs on the stores, and I am simply shocked that anyone would be willing to be short corn or beans as shelves are stripped bare. Time will tell. If this thing is a real crisis, exactly how is the farmer, the target demographic of the corona virus, going to get planted the record crops we are forecasting?
Leading Tuesday with the Dow again, off 1274 to 23,575. Bonds up 30 points, 180,17. Rice short comes out more, up 13 cents, 1298. Corn off 3 to 374 1/2. Beans off 3 as well, 873 1/4. Wheat drops 9 1/2 to 512 3/4. Fear has surpassed reason for now. I will say in the big picture if the shelves are picked over, there is massive food demand. At the end of the day I expect Americans to buy a bunch of stuff they will never eat, but it is demand. CBOT floor is now fully closed.
Dow rips up 972 points Tuesday to close 24,849. Bonds drop 6 full points. 179.19 Wow. Nothing really changed to signal we are out of the woods, but the computers sure are having fun. Up day in the grains as corn gains 4 3/4 to 377 1/2 and wheat up another 3 1/2 cents, 522 1/4. Beans gain 6 1/4 to 876 1/4 and meal is firm. Rice up 11 on short covering and liquidation. 1285. Deliveries are winding down in all the grains and doing so at premiums to carry. Worth noting in the bigger picture.
Monday trade has the corona virus front and center again, with the Dow down 1912 points, 23,877. This falls within expectations of support from the monthly charts, with a big hole underneath if this area fails. Bonds up another 5 full points, 29 tics to 185.19. That is 6 points off the highs and the biggest range I can recall. Wheat the bright grain spot up 3 cents, 518 3/4. Corn off 3 1/2 to 372 3/4. Beans take the brunt of the hit off 21 1/4 to 870 and probably a great long term buy. Rice off 17 to 1274 with a fair amount of scale down buying. In Ag, china food inflation was reported at up 22% year on year Feb. numbers. I went to Costco last night to see if they were still selling 31 and 33 cent rice in bulk. Other than some strange Indian type, they weren't selling any. Store was picked clean of bulk rice. Store seemed full of other options and the rice slot was full of flour and sugar. Hoarding run then demand destruction by lack of supply maybe?
As usual, corona virus is the lead story, with bonds up 6 full points and a tic as flight for quality is full on, 179.22. Dow 271 lower, 25,789, but that is 600 off the lows. Wheat off 3 cents, 515 3/4, while corn breaks 5 3/4 to 376. Beans off 5 3/4 as well, 891 1/4, but meal up a buck. Rice drops 19 1/2 to 1291, and that's with someone, probably a commercial, selling 1300 puts 200 times. Bonds are pricing in a bigger drop for what its worth. I think a decade from now when they reconstruct what is happening now in real time, someone will tell us that we should have been concerned with the TESLA shiny bobble that distracted the masses while liquidation happened by the classes. Just a guess.
Corn gives back Wednesday, off 3 1/4 to 381 3/4. Wheat chops but settles up 1/2 cent, 518 3/4. Meal off 5 bucks and beans down 10 1/4 to 897. Rice drops 37 to 1310 1/2 with only a 224 drop in OI, or about 5% of the fund long. Careful trying to catch this knife. Dow yo-yo off 905 point, 26,060. Bonds up a point and 17 tics as were are moving to flight to quality, fear, and long term low rates.
So the Dow blows up for 1085 points, 26,965, and the world is starting to realize it is only make believe, with the computers just churning every sucker they can get to come to the dance. I'm guessing they are running low, so we soon should see either a significant reset to a lower price where people will just put up the money and stop looking, or just a calming effect of less fear of the corona virus and we just loose volatility. Players are getting tired of all the sucker punches. Bonds up 3 tics, 172.04. Wheat drops another 9 to 518 1/4 and I just don't see the benefit of playing either side right now. Rice off 5 1/2 cents, 1347 1/2, with the funds defending. Corn spreads invert, and we close 3 3/4 higher, 385, and up against a layer of resistance. Beans gain 3 3/4 to 907 1/4 as meal tries to determine if this is the new pricing area.
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