Home Indiana Agriculture News Seed Consultants 4/26/2013 Weekly Market Column with Gary Wilhelmi

Seed Consultants 4/26/2013 Weekly Market Column with Gary Wilhelmi

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Global economic policy is a mish mash of uncertainty. US 4Q GDP is at a 2.5 % annualized growth rate, versus 3% hoped for. 4Q of 2012 was at .4%. Growth has weakened over the last several weeks. The southern European recession has been working its way north, as is evidenced by a slow down in Germany, the strongest of the pack. China’s growth rate has also subsided, as it is aggravated by the spread of bird flu, which is also noted in Taiwan.
US earnings are winding down with a mostly positive trend, but revenues have been weak, and the University of Michigan consumer confidence index declined to 76.4 from 78.6 in March. Japanese consumer prices shrunk .9 %. , and their long term goal is for a 2% rise. The computer crazies have reemerged in gold driving it back up to $1473. WTI crude rallied up to over $93, and gas at the pump, here in Indiana, prices jumped to $3.99. The dollar index remains range bound.
As evidenced by trading patterns plantings are not yet delayed enough to create rallies in new crop corn or soybeans. This next week is important, and forecasts have turned mixed, so watch carefully. Crop scouts will examine the HRW area this week, but freeze damage is well known, and mostly discounted. Flooding has slowed grain movement, but export business is not too good anyway.
Chain cancelled some old crop corn purchases, but bought 300,000 tons of new crop corn. The IGC reduced Chinese soybean imports by 2 MT due to bird flu, and it has spread to Taiwan. Eastern Chinese poultry business is off 70-80 %.
Low volume in Ag markets enhances volatility, particularly in the bull spreads in corn and soybeans.
The charts look threatening on the downside in the grains and soybeans, but the cattle and hogs, on their lows could ratchet up.
June cattle resistance is at $124 and June hogs surmounted their $92 level Friday. Cash cattle were bid at $127 in the south Friday and $203 on northern beef. Boxed beef firmed last week, but demand remains lethargic. Hopes for a boost from cook out weather are mixed, as the key is how much money consumers have to spend. Pork demand is somewhat improved, and margins are holding in the black, whereas cattle margins are not. Export sales of the meats fail to impress.