Market Update 5/8/2020
May 8, 2020
Equity markets were firmer on the week with the Standard & Poor’s 500 Index up over 3% to 2928. Overall optimism on the opening back up of states, and the market’s view that the Fed is actually going to have negative rates in Q4 of this year have pushed the concept of “there is no alternative” back to the forefront of investment managers’ minds. As expected, the April unemployment numbers were simply brutal, but the market continues to pull a Taylor Swift and shake it off.
The Energy market continued to firm on the week with West Texas Intermediate Crude Oil Futures trading up over 23% on the week for June expiry. Overall, the market has done enough for right now to keep the glut of shale off the market and out of the delivery market at least for the time being. With all the oil that is in storage (rail cars, idle pipelines, and tanker ships) expect Crude futures difficult to rally unless production continues to shut to the lower side of expectations. Cash markets would suggest that so far that is happening with Bakken cash prices continuing to firm with last prices at $1.75 over WTI futures as of this morning’s assessments.
Lots of ups and downs in the grain markets but at the end of the day we are looking at both December Corn and November Soybeans ending the week essentially unchanged. Spring wheat managed a modest rally to make up what it lost during last week’s trading. On Monday USDA published planting numbers at 51% nationally for corn and 23% complete for Soybeans, expect decent increases to be printed this upcoming Monday as much of the belt managed to escape significant rains.
Decent week for export business done to China – seems like some business ex-US got done for both Corn and Soybeans. Hopefully, that continues in the slots where we are competitive to South America.
Weather forecasts remain cold for the upcoming weekend for much of the Eastern corn belt. With the risk of freezing temperatures across many emerged soybean and corn acres, market bulls attempt to build some weather risk premium in grain markets. Local temperatures are trending below average in the 1-10 day forecast with above-normal temperatures to follow.
Grain Team – Aaron, Connor, Dallas, Hank, Jenna, Joel, and Kevin