Elephant in the Markets


Everyone is talking about how the big, beautiful corn crop is so big that the prices are going to crater to levels below last year. Well, when everybody’s thinking the same thing, nobody’s thinking. That’s according to Einstein. Also, price is not just supply = price. In my economic schooling, it was supply + demand = price. And what’s missing is the concept that we could have a strong demand base building to want this corn crop, and that is not necessarily trade deals getting signed (even though it will take all of them), but an event that is taking place that is already going to bring our demand improvement naturally. That event is already happening, and it’s called the US dollar. In this video, I show the collapsing state of the dollar and the valuations it’s starting to get to that encourages demand and helps us compete with Brazil on both bean and corn pricing. I also bring up the Brazilian Real currency and show how it bottomed last December with soybeans and when everybody predicted beans going to 850 under Trump. Instead, we have soybeans floating near the $10.50 range without trouble because the Brazilian real is rallying and is continuing to rally.
Converting over to focusing on the US dollar for grains is not sexy. It’s not like a weather forecast or of quick change in supply and demand numbers. It just shows up slowly at first and are more pronounced later on as more export sales continually get announced and competition works in our favor because the currency versus others.
Today was also a big day in the cattle market as the USDA announced the opening of the Mexican border for feeder cattle. As we have been discussing in the newsletter, this was not a matter of “if” but “when “they were going to open it, and now it’s going to start occurring starting July 7. We discuss our expectations in pricing in this video on where we think the live and feeder cattle markets are working their way to.