It all comes down to weather!
Apr 24, 2009
Dollar weakness is the big news today. It’s down big! I would encourage you to review the on your AgWeb. Essentially, it has a solid top around the 90-cent level. The last two days' recent drop and follow through to the downside is opening up the concern that is there something wrong.
The answer is yes. The world is getting concerned that the U.S economic recovery may be slower than expected. Unemployment claims, instead of spiking lower, are still going up. The auto industry is in crisis with GM looking to go into bankruptcy and Chrysler not much further behind. Finally, the chairman of the Fed looks to be in political hot water. Talk is starting to surface he may be replaced with an individual that is much more in line with administration thinking. This has all led to big concerns about the U.S. economy and it’s speed of recovery—thus the exceptionally fast decline in the dollar. Granted, short term it may help corn exports but long term if the dollar were to drop below 76 I believe it would be reflective of a slower and possible resumption of big concerns about the economic health of the global economy.
In regards to corn, it’s going to be all about weather for the next several weeks. To help us get a handle on this, we have joined up with Dave Tolleris to help us understand the weather patterns. He will be giving an update every Wednesday. So far his opinion continues to be cool and wet for much of Midwest into early May. Granted we will get some field work done, but the risk are growing that much of the Midwest is going to be forced to plant around the wet spots. If this pattern continues much beyond May 20th, one would expect more beans and less corn acres. It forces me to look positive on the long July corn/short bean spread or long December corn and short November beans.
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