Just 80,000 new jobs versus 100,000 expected with some up at 160,000. Dow fell about 200 points, as unemployment held at 8.2%. A slow down has set in after a string of weak monthly reports. Europe remains muddled as serious solutions are beyond their collective leaderships. The dollar pushes up near yearly high at 83.54 and that pressures crude oil and gold. The US is approaching a fiscal cliff at years end when tax cuts expire and debt deepens. The IMF warns that if our leadership does not take control we could go over the Buffalo jump. There is a lot of corrective air under the US stock markets.
This is not just a heat wave it is a serious economic threat. The solar pattern is similar to what ravaged the plains in the 1930’s. With corn over 50% pollinating it is getting too late to recover yields. 76% of our agricultural land is in drought. The corn rating is 46% good to excellent which is the worst since 1988. As evidenced early Friday corrective profit taking can occur at any time and after such large rallies such trimming of the sails can be extreme, and in this speculatively dominated trading environment I mean EXTREME.
South American crops are off to a good start and the world will need all they can produce. The rationing of our troubled crops will be accomplished by reduced animal feed consumption, decreased ethanol production (off 5.2% from last year) and a strong export limiting dollar. Upside potential is impossible to measure as no improvement of weather is foreseen, so $8 corn, high teens in beans and maybe $10 wheat are possible.
The intense heat is literally trimming the fat from cattle and hogs as it likewise curbs appetites at the dinner table. Cash cattle were expected to shape up at $117-118 up from $116 in last weeks light trade. Boxed beef has fallen to $193 and must firm up to help struggling cash. Producers are losing $170 per head. Pork cutout has been toppy as margins descend deeper into the red. August hogs are at an $8 discount to the cash at $101.