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Tidbits, Put Options, Export Sales, Markets & Rain Days Update 04/22/2022

Highlights


September corn futures on China’s Dalian Exchange is $11.87 per bushel.

About a third of China’s population is on covid lockdown. That is 100 million more people than we have in the USA. That means their consumption of natural gas, coal and crude oil products will be down maybe as much as 25%. We need to watch for their recovery because their increased energy consumption will jump start the world’s energy sector.

The International Monetary Fund (IMF) reports the recent surge in strength of the Chinese yuan is making the case that the yuan should be the international trading currency instead of the dollar. For a century or longer, international trade was done in US dollars even if a US company was not involved. China’s yuan reserves have increased 23% the past year as countries trade-in their US dollars for yuan. At the top of the dollars-for-yuan list is Saudi Arabia. On the bright side, as the yuan becomes stronger versus the dollar, US products for export become less expensive.

Ag Secretary Vilsack announced the USDA will invest $420 million in 132 infrastructure projects in 31 states to rehabilitate dams, flood prevention, and watershed restoration projects.

Federal Reserve Chairman Jerome Powell said a 50-basis-point rate hike (half percent) could be coming in May. The stock market went from nicely higher to smartly lower and finished down 368 points and the dollar index was firm. Higher interest rates mean a stronger dollar which will make US goods more expensive for foreign buyers. However, if the market expects the dollar to continue higher for the long run, foreign buyers will buy commodities ahead as fast as they can before the dollar gets even stronger. To wit: 1979 saw the sharpest increase in the value of the dollar ever. US corn exports set a record high in 1979 that stood for 26 years!

Ukraine says 20% of the expected crop area for this year is planted (2.5 million hectares = 6.2 million acres). Ukraine has planted about 216,000 hectares of corn, well behind the 5-year average, with an expected total area of 4 million hectares to be planted.

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