Market Update 4/3/2020
Apr 3, 2020
Equities continue to fall this week as U.S. jobless claims were double last week at 6.6 million due to the COVID-19 pandemic. Unprecedented numbers elsewhere with Canada reporting 2.1 million jobless claims (one-tenth of their workforce). Many analysts are now abandoning their ‘v-shaped’ recovery curve theory with a more difficult outlook for the coming months as the nationwide Social Distancing stays in place.
United States Dollar Index is higher again, debunking the basic economic theory that we should see inflation as money gets printed. After passing the first relief bill, Congress will continue to look at further relief and stimulus packages when they come back at the end of April. While some are in favor of large infrastructure projects, others argue that we should be focusing on another round of direct payments and loans for now.
You cannot underestimate the energy demand reduction occurring today with most of the world’s population under lockdown. That means drastically fewer people driving, and this showed up in this week’s EIA (Energy Information Agency) report for the United States where gasoline demand was down drastically week over week, and domestic crude and gasoline stockpiles are building. We are seeing gasoline and crude oil prices that we haven’t seen since the early 1990’s. With gasoline prices under $1.00/gal in some parts of the Midwest. One of the big questions is if low prices matter if no one can drive anywhere? It is a snowball effect; we are running out of physical space to put fuel products. Expect headlines to pop up on drastic cuts in oil and gasoline production. The current rumor is that OPEC (Organization of the Petroleum Exporting Countries) will be cutting 10 million barrels of oil production per day.
Corn is trading 14-15 cents lower to close the week. There is not much for bullish news in corn right now. The USDA came out with an estimated 97 million acres of corn to be planted this crop year, up from 89.7 million acres last year. Corn stocks estimates are at 7.9 billion bushels, down from 8.6 billion bushels this time last year. The combination of the oil price war between Saudi Arabia and Russia along with decreased consumer travel has significantly reduced ethanol and gas prices, taking a toll on corn demand for ethanol production. China continues to show interest in cheap U.S. corn with another round of purchases late this week.
May soybeans are trading about 27 cents lower to close the week, while November soybeans are trading about 16 cents lower. The USDA reported an estimated soybean planting acreage of 83.5 million acres, up from 76.1 million acres last year, but down from pre-report estimates this year. Some traders are worried that we will see a 1 to 3 million–acre shift after the acreage report, from corn to soybeans based on prices and market conditions. Soybean prices have been falling late in the week, following in the footsteps of soybean meal. On the bullish side of soybeans, Argentine soybean harvest is underway and private production estimates lowered from 52 million metric tons to 49.5 million metric tons.
May Minneapolis wheat is trading about 13 cents lower to close the trading week, while deferred months are trading about 10 cents lower. Last week’s wheat export sales hit a marketing-year low at 2.7 million bushels. The USDA reported wheat stocks at 1.4 billion bushels and 44.6 million acres, both within the trade average. Next week USDA will start their weekly crop ratings for wheat, domestically Kansas seems to be in decent shape, globally there has been some dryness in Russia and parts of the European Union (too early to be known if it will fully affect their production.)
BGE Recipe of the Week – Bacon-Wrapped Steakhouse Filet
- 2 bacon slices
- 2-2½ inch thick filet steaks
- Big Green Egg Classic Steakhouse Seasoning
- Extra virgin olive oil
Set the EGG up for direct cooking without a convEGGtor at 550°F/288°C.
On a perforated cooking grid, cook the bacon just until it has firmed up a little bit. Set aside.
Coat the steaks with olive oil and season with Big Green Egg Classic Steakhouse Seasoning on all sides. Wrap the partially cooked bacon around the edges of the steak, secure with a skewer.
Grill the steaks for 5-6 minutes on each side, or until the internal temperature is 125°F/52°C (or to slightly below your desired temperature). Remove from grill and let rest covered for 10 minutes.
Slice and serve!
Grain Team – Aaron, Connor, Dallas, Hank, Jenna, Joel, and Kevin