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My twice-a-day newsletter is entitled “Commodity Insite.” The morning report is sent by email to subscribers around 7 a.m. Chicago time and again at noon.
Each day, I discuss the Big Four — stocks, bonds, currencies and commodities. There are sections about grains, livestock, the financial markets currencies, metals and the other markets such as crude oil, tropical markets, cotton, coffee, sugar and so on.
Here is my morning broadcast for June 24. I hope you find something of interest in my daily ramblings.
Grains
The grains did a huge nosedive yesterday amid heavy fund selling and speculative liquidation of losing positions.
At the close, old crop soybeans were down 59 cents and new crop 61 lower. Wheat prices fell 39 to 34 cents led by Chicago.
Old corn fell 21 cents and the new crop was 38 lower. And while soy meal dropped $10, soy oil fell 320 points.
The day was down and dirty. The week has been down and dirty bearish.
The only bullish feature yesterday was the bull spreads in corn, soybeans, soy products and wheat gained ground. The fact the bull spreads did well on a hard break is bullish in itself.
And the bull spreads are working because cash corn and soybeans are holding a stiff premium to the futures. The real stuff in other words is more expensive than the paper stuff.
Despite the sharp decline with grains that began the day the Fed hiked rates on June 15, I remain bullish grains.
Do note that along with grains since June 15 there has been a waterfall decline also seen with crude oil, down $15 a barrel in two weeks; copper; cotton; and a host of other commodity markets.
The grain complex has taken a drubbing, but so has most all other hard asset markets, as well — and, in my view, thanks to the Fed.
Wheat prices have dropped $3.80 a bushel in the past five weeks. The market is nearly back to where it was on Feb. 24 when Russia invaded Ukraine and caused 20% of the world’s supply to be pulled off the global marketplace.
Soybean oil prices have collapsed and are now back to where they were the day Russia did invade Ukraine. And the enormous decline with crude oil pressed the soy oil market lower in a major way.
But the fundamentals as I view them remain price positive for grains which keeps me firmly in the camp of the bulls.
The cash markets are higher than futures. The war in Ukraine rages on with zero signs it is going to end. And the heart of the growing season for corn and soybeans is at hand.
I cannot be bearish towards grains based on the fundamentals as I perceive them to be. But I do admit the collapse with prices since the Fed hiked rates on June 15 was and is a shocker.
Livestock
The critter complex stumbled the day before yesterday and closed in the red. Yesterday, the selling continued with only feeder cattle showing strength. With feeder cattle up 150 points or so, live cattle were 100 lower for most contracts.
The oinkers fell as much as 470 to 330 points with front futures the weak link. And despite the higher close with feeder cattle, I viewed the day far more bearish than bullish.
After the close today, U.S. Department of Agriculture will release a monthly Cattle on Feed report. The past three reports were bearish nearby futures, but the market has been holding up well.
The reason cattle are holding up well is simple. Once summer has passed, the upside potential for cattle prices is huge.
I fully expect new all-time historic highs to be posted as available supplies of market ready cattle decline sharply. I am very bullish cattle, but also patient.
What is posted here for June 24 was simply about grains and livestock. I also had opinions about stocks, bonds, currencies and the soft or tropical markets. There was not enough room to post my comments about those markets.
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The period ahead for grain prices will be determined entirely by the weather that appears to me to be threatening with the growing season ahead. The period ahead for cattle prices will be very bullish once the heavy supplies of market ready cattle are no longer a drag on prices.
I remain convinced the world is in the early stages of a commodity supercycle and have little interest in playing the short side of the ledger. I am bullish, plain and simple.