Gary Wilhelmi 5/18/2012 Weekly Column

S&P 500 index near 1300 support and Dow looks to 12,250. The quandary in Europe continues as 16 Spanish banks have their credit rating down graded. Befuddled EU leaders hedge on forcing Greece to exit the organization. It is a mess with one currency, many fiscal policies and changing leadership a common place development. A Greek warrior scholar, 2500 years ago outlined problems in the Greek society, and indeed all nations which are like reading today’s accounts. I found the same similarities in studying Roman history economics is the early 1960’s, it was like reading the Wall Street Journal. Power corrupts and absolute power corrupts absolutely and here we are.

There may be storm clouds over the economic scene but the weather for our crops is excellent. We did hear of dryness concerns this past week in the western plains, delta, Russia and vicinity and Australia wheat areas. However, there are so many outstanding growth regions and corn production may rise to 14.8 billion bushels and soybeans 3.2 billion. Plenty of corn as witness the dollar premium of July corn to December, but beans are tight 210 m bushels old crop carry over to 145 million new crop is estimated. Global wheat has its trouble spots but overall there is enough.

Speculators were once important as providers of liquidity but now are a problem of volatility, creating dominant crap shooters. The NCGA is calling for a 30 day waiting period to study the impact of extended trading hours at the CME. The main issues are the markets trading during the release of government reports and the establishment of values in the grain trade. I agree with the NCGA.

A private source has projected a pick up of 2-2.5 million acre in soybean planting, and many agree. The final plantings report comes out at the end of June. There will not be a survey crop estimate until August, so if weather problems develop hold on to your hat. In evaluating the markets step back and take the long view so as not to be confused by speculative clutter.

The cash cattle trade was slow to shape up this past week as a cattle on feed report was due Friday afternoon. Those reports are one month old when they come out so they are more history lessons. The feature in this version was the anticipation of 88% placements, which would be bullish for deferred contracts. June cattle have come up off their low and are now bracketed between $114-121. Boxed beef swelled up over $191and on Friday pushed ahead to $192.51. Select grade steaks were noted features coming into Memorial Day. June hogs are ranging between $84 and $89. Exports are being hurt by the dollar near its high for the year and signs of a slowing Chinese economy. Chinese demand has been built on the emerging middle class, but those buyers will be the first to cut back if their wallets thin out.

Recommended Posts