Macro: Former Fed Chairman Ben Bernanke is in the news today as he made some rare public comments. He said when we see economic recovery in the Europe and better growth in emerging markets, combined with the existing economic improvements in the US, that interest rates may finally start climbing higher. While the US is experiencing economic growth, Bernanke noted Europe “is in a depression basically”, so in other words I don’t think he expects a rate hike soon.
Bernanke made another interesting point saying how the Fed may keep on lowering their unemployment rate target before raising rates IF they don’t see increases in wages. I think this makes a lot of sense. Unemployment may be coming down, but without real growth in wages it probably means the employment situation in the US could still use some support.
CNBC has a good article about it here: http://www.cnbc.com/id/102546029
US consumer spending was steady in February as people used their savings from the gas pump and chose to pay off debts or save. For some reason the market thinks this is bearish. Maybe in the short term because saving and paying off debt does not create new economic activity (not as much as spending anyway) but in the long term it has to positive. Reuters has a story on it here: http://www.reuters.com/article/2015/03/30/us-consumer-spending-idUSKBN0MQ18N20150330
Finally, the Euro is under pressure today and the US Dollar is higher. The long term theme is Europe needs quantitative easing and stimulus while the US will eventually be raising interest rates. After the big short covering rally last week, it seems like the EUR/USD could be consolidating before making the next move lower.
June EUR/USD:
Grains: The USDA Prospective Plantings and Quarterly Stocks reports are tomorrow. It seems like we have been waiting weeks for the release. I’m expecting the report to be mildly bullish for corn as we don’t get as many acres as we thought AND stocks could be a little lower than expected primarily due to better feed demand. I think the report will be neutral for soybeans as the USDA confirms a record large new crop soybeans acreage estimate.
After the report comes out tomorrow I will be updating our Supply & Demand Tables, as well as our price outlooks for Corn and Soybeans in Turner’s Take Daily. We continue to hold our new crop soybean put spreads, our short new crop corn straddles, and I still like working the soymeal spread and will be patient with that entry.
New Crop Soybeans:
New Crop Corn:
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