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US Economy, Put Options, Export Sales, Markets & Rain Days Update 04/29/2022

Highlights


The US economy in the first quarter contracted 1.4% vs. expectations of 1% growth. The people managing the economy have the same feeling you would have after buying a 300 HP tractor and when you get it in the field, you realize it can’t be more than 175 HP. Suddenly, the supposedly strong US economy may be facing a recession.


If the Fed raises the interest rate the next three months as planned, the economy will have much more difficulty to grow. If the Fed does not increase interest rates, inflation will most likely continue to be a curse on the future of our economy. The Fed is now between a rock and hard place. Once again, this economic mess continues to be government engineered.


Germany has agreed to stop buying Russian oil, clearing the way for a European Union ban on crude imports from Russia.


Andrey Sizov cut the Ukrainian wheat crop estimate and increased their corn crop.


Ukraine and Bulgaria have reached an agreement on transporting Ukrainian grain via the Bulgarian port of Varna on the western end of the Black Sea (away from Russia).


Soybean oil contracts made all-time highs by a substantial margin the past two days.


Some analysts are lowering the Brazil corn crop estimate to 108 million mt (USDA at 116).

September corn on China’s Dalian Exchange is around the equivalent of $11.56 per bushel.

December corn made a new high yesterday by a half cent at $7.55½.

The Biden Administration is asking Congress to provide $500 million in aid to US farmers to boost crop production of wheat and soybeans to head off a global shortage due to the war in Ukraine. No details available.

 

Delivery Assignments on May 2022 Futures:

Commodity

No. of contracts assigned

To date

Corn

0

24 Feb 2021

Soybean Meal

0

3 Feb 2021

Soy Oil

0

11 Apr 2022

Soybeans

0

28 July 2021

KC Wheat

27

22 Apr 2022

CBOT Wheat

12

22 Mar 2022

It is very rare, as probably never before, there are no soy oil deliveries.


 

Wheat Put Update


The September wheat futures contract was down 5 cents yesterday, so all puts should have increased in value. The $10 put settled at 51 5/8, up 2 1/8 cents. The $9.00 put settled at 20¼, up 2¾ cents.

A September wheat futures hedge made $250, the $10 put made $106.25, and the $9 put made $137.50. Normally, the $10 put would increase in value more than the $9 put, but nothing is 100% in this business.


 

Weekly Export Sales Update


Yesterday's Weekly export sales for old and new crop wheat were below the low end of expectations.


 

Market Data


This morning:

Crude oil is at $105.79, up $0.43

The dollar index is at 103.22, down 0.40

July palm oil is at 7,028 MYR, up 114. The contract high was made yesterday at 7,132 MYR. Palm oil owns 36% and soybean oil owns 28% world market share.

December cotton is at $124.95, down $0.05 per cwt. The contract high was made today at $125.83 per cwt. Cotton competes with soybeans and corn for acres.

July natural gas is at $7.040, up 0.046. The contract high was made April, 18th at $8.279. Natural gas is the primary cost to manufacture nitrogen fertilizer.

July ULSD is at $3.7375 per gallon, up 0.0236. The contract high was made March, 9th at $3.7675. ULSD stands for Ultra Low Sulfur Diesel.


 

Rain Days Update


The Western Corn Belt has 3 less rain days in the 10 day forecast than yesterday and the Eastern Corn Belt has 3 less rain daysthan yesterday.


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