We are now into the silly political season with the election just four months away. False trumped up political claims and exaggerations will pollute the airways. This loose talk will further confuse our troubled economic landscape. It is just impossible to expand business and hire employees when you don’t the rules of the game.
In late news, J.P Morgan’s loss is deepening, but their earnings were better than expected at #1.21 versus $ .70 forecast. Other bank and financial earnings are beginning mixed. The Libor scandal worsens and the PFG commodity commingling of funds situation in Chicago casts another long shadow. Forty- eight years ago when I began to work at the Board of Trade, I respected the brokerage firms on the street, but now after years of working for failed managements may opinion has changed radically.
In reports, Chinese GDP came in at 7.6% as expected for the second quarter but that is well down form 10% last year. The PPI was at +.1% and that points up our softness. Europe offers new direction as regards solving their profound debt problems, and neither do we as the Fed has no new arrows in its quiver. Italy and Spain continue to play rope a dope with their collapsing economies. Copper picks up on Chinese stimulus talk but has been weak reflecting the reigning in of Chinese growth and the same can be said of India.
Drought rolls on with no relief in sight. It would take about fifteen inches of rain to bring relief, but for much of our corn it is already too late. Soybeans are entering their prime development time and high temperatures and scatted showers are all that is in prospect.
Corn yield, without the benefit of a survey estimate, not until August, is down to 146 bpa and beans at 40.5 bpa and things are getting worse. 2012-13 carry over’s could fall below one billion bushels in corn and one hundred million in beans. That could pencil out to $10 corn and $20 soybeans, with wheat also running at $10. Ignore the immense gyrations in the markets and scale in market, into steep rallies. The corn crop is in critical condition and beans and wheat are threatened with contagion. China has sold some soybeans out of their stocks, and that is a symptom of their concern regarding US production. The dollar a year ago was at 74.97 on the index, and Friday reached 83.78, which hamstrings all export sales. Crude has been slogging around in the mid $80 range, but some still feel it may go much lower, we’ll see.
Cash cattle dropped another $2-3 to $114-115 as boxed beef fell $6 on the week. The dog days of summer are fully engaged and meat demand is stifled. Beef export sales were OK but pork has receded somewhat. Cattle slaughter is slipping and weights due to the heat are in decline. The opening of some CRP acres has relived the high feed cost issue slightly. Pork features now turn to bellies as it is BLT season. Feeder cattle have been violent following the lead of King Corn.
Major stock index’s close the week unchanged as bank earnings led the rally.