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Grain markets opened up stronger Sunday night but eventually succumbed to omicron shutdown fears. It this podcast we go over inflation, interest rate hikes, and the threat of omicron shutdowns. We also talk about why covid shutdowns hurt energy markets more than grain and oilseeds. Make sure you take a listen to this week’s Turner’s Take Podcast.
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Macro Markets
Equity and energy are leading the markets lower today as omicron is spreading around the world. Traders are concerned the high rate of infections could lead to some government imposing economic shutdowns.
The Bank of England raised interest rates last week from 0.10% to 0.25% as monthly inflation is hitting 6%, three times their acceptable target. The US is tapering bond purchases and plans for three rate hikes in 2022. These are hawkish policies to fight inflation. China on the other hand cut lending rates as they are still dealing with their real estate crisis. It is impossible to know what the real inflation rate is in China but one has to assume it is elevated just like the rest of the world. As major global economies are tightening fiscal policy, China is easing. Their real estate crisis is probably worse then they are letting on in public.
Below is a chart of the US Dollar index. A close above 97 continues the bullish trend. A close above 98 could lead to a break out to 100. Major support comes in at 94.50.
US Dollar Index
Grains & Oilseeds
The markets opened up stronger on threatening weather in Argentina and S. Brazil but the screen eventually went green to red as the global macro markets caused selling pressure across the board. South American weather is forecast to be hot and dry over the next two weeks. This is the time of year when the markets build weather premium into corn and soybeans. Seasonally corn, soybeans, and wheat trend higher for the next few weeks. The markets may be down today due to omicron shutdown fears but once they selling subsides, grain and oilseeds should be first to rally.
India announced today a halt on agricultural futures trading for the next year. India is the largest importer of vegetable oil and the are very concerned about food inflation. While this move will most likely have minimal impact on global vegetable oil prices, it does imply India thinks food inflation will get worse before it gets better.
Below is a chart for March Corn. If Argentina and S. Brazil stays hot and dry for the next two weeks then corn should close above $6.00 and could trade between $6.20 and $6.40. Timely rains and a break in the heat put $5.60 in play. The next few weeks will go a long way in determining the S. American crop.
Holiday Week
The markets will be closed Friday, December 24. Thursday is a full trading day but once we close the markets will not open back up until Sunday night. Please note that volumes tend to get thinner the closer we get to Christmas.
About Turner’s Take Podcast and Newsletter
If you are having trouble listening to the podcast, please click here for Turner’s Take Podcast episodes! Craig Turner – Commodity Futures Broker 312-706-7610 cturner@danielstrading.com Turner’s Take Ag Marketing: https://www.turnerstakeag.com Turner’s Take Spec: https://www.turnerstake.com Twitter: @Turners_Take Contact Craig Turner
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