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Economy & Consumers, Canola, Broilers & Ethanol, Put Options, Markets & Rain Days Update 5/19/22

Highlights


Yesterday, Target, Lowes, Macy's, and Walmart all issued their quarterly financial reports and both were major, major disappointments for the trade. Target’s stock lost 27%! Consumers are not spending nearly as much money as the market expected.


The US government warned yesterday that one-third of the nation is under significant threat of infection by the latest variants of the coronavirus. This is a set-up for something, multiple possibilities.


Last week there were estimates that the US economy contracted in the first quarter of 2022. Given today’s retail news, the Federal Reserve is faced with controlling inflation by tightening the money supply which will put the country into a recession, which has probably already happened, we just don’t have the facts to confirm it yet.


As grain producers, high inflation, which we most definitely have, is bullish as all get out, but a recession is bearish as all get out as demand evaporates. We must watch these markets closely be ready to pull the trigger, not only on grain marketing, but on all financial matters.


China has opened the door for the importation of Canadian canola. That door has been closed since March 2019 in the aftermath of Canada's arrest of Meng Wanzhou, the Chief Financial Officer for Huawei Technologies for doing business with Iran. The US government had asked Canadian authorities to arrest her. China showed their dismay by refusing to buy Canada’s canola for three years. The US Justice Department agreed in September 2021 to drop their extradition demand and allow Ms. Meng to leave Canada, after she admitted to wrongdoing in exchange for prosecutors dropping wire and bank fraud charges.


Canola is an oil seed. For you soybean producers, the good news is Canada had a terrible canola crop last year and will not have any canola to export until this year’s harvest.


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