Home Market Market Watch Gary Wilhelmi 6-15-12 Weekly Comments

Gary Wilhelmi 6-15-12 Weekly Comments


These are the times that jeopardize our financial future. The specter of a collapsing Europe hangs heavily on our rickety economy. We are besieged with political bologna.

The Greek election Sunday looks like it will produce an anti austerity outcome and that would heighten the probability of Greece’s leaving the EU. The domino effect is occurring as Spain’s interest rates hit the 7% tipping point. The picture of Italy’s economic prospects is not nearly as grand as the art that hangs in the galleries. Moody’s downgraded 11 different EU bank’s credit rating including one on France. Indeed the credit rating of France itself is in peril. Germany opposes any notion of expanded ECB bail outs. As strong as Germany is it can’t prop up the failing economies of its 15 partners in the EU. Former Fed chair Greenspan has called the euro a failed experiment. Our own abysmal economy got another bad report card in the Empire State manufacturing appraisal. This week on the 19th and 20th the FOMC meets and some form of stimulus is possible, but nothing has worked previously. The Fed doses not have bullets left in its chamber.

Other than the European threat the fundamental feature in corn and beans is the prevailing dryness especially in the south and east. Watch the Palmer Drought Index as a measure of our concern. This week rains are expected to intensify in the western Corn Belt but the east may only get a fractional drink. Looking ahead too the June 29th plantings report 96 million acres of corn are foreseen, 75.8 million beans and 57.6 million wheat. It, of course, is not so much the acres but rather what Mother Nature does with them that count’s. 75% of the Kansas wheat crop has been harvested and late yields have improved, while the spring wheat up north looks great. The Black sea wheat status is factored into the markets for now. South America will push the envelope of planting next year but Mother Nature lives there as well.

Cash cattle got waxed this past week, for a $3-4 loss, while choice beef advanced to a new record high at $199. The features showed the pattern of demand as there was only choice cut offered for Father’s Day at my local store. Pork cuts were strong but margins remain in the red. The deeper we go onto the summer the shallower becomes red meat demand. Do not expect much out of 4th of July demand as it is a hot dog and hamburger holiday.