Second verse, same as the first

Published on: 10:33AM Aug 03, 2020

Here is a bit of pop trivia that may be lost on most born after 1958 or so.  In 1965 a British group, Herman's Hermits, made it to the top of the Billboard Hot 100 chart with a snappy little song, "I'm Henry VII, I Am." My apologies if you now have that tune stuck in your head, but the jest of the song is that this fellow, Henry, marries the widow next door, who has been married seven times before and each of the previous husband's names was also Henry.  At the end of each verse, the group sings, "next verse, same as the first," and then goes on to repeat everything they had sung previously.  If you think this was probably not a high watermark in cultural music history, you are undeniably correct. Regardless, the song's underlying message is that everything is just a repeat of what has come before is still insightful and could be used as the theme for ag commodity markets right now.  The stories remain the same, and from one month to the next, and realistically one year to the next, we really do not seem to encounter anything new, or at least new enough carry us away from entrenched patterns. "Next month, same as the last." So, here we are into August, looking little different than July.  It almost seems appropriate that when this song made it to number one on the charts in 1965, it displaced, "I Can't Get No, Satisfaction," and on the B side of the disk was a song titled, "The End of the World." Both seem eerily relevant for markets and culture today.

We do at least have another new export sale to kick off the month with.  This morning the USDA reported a sale of 260,000 MT of beans to unknown destinations.  8,000 MT of this will be for the current crop year and 252,000 for 2020/21.

Tyson Foods released third-quarter earnings this morning, which came in a bit better than expected. Net $527 million or $1.40 per share.  This is down from $1.47 per share a year ago.  It is interesting to note that overall beef sales were down 23.8%, pork down 16.5%, and sales of chicken down 4.2%.

During the week ending July 28th, large speculators were actually purchasers of corn, 3,453 contracts, but if you dig a bit deeper you will find that the group classified as “Managed Money” were sellers and have taken on a larger percentage of the overall short position.   During the week they sold another 5,500 contracts and hold 89% of the overall short position of 161,500 contracts.  In other commodities, large specs remain short over 44,000 contacts of Chicago and KC wheat and are long 29,560 contracts of beans.  Managed Money is actually long 62,000 contracts of beans.

It would appear we have begun the month with more action in the macro markets than in the ag sector, which I guess comes as little surprise.  Energies and metals are bit higher, equities are building on last month’s strength and the dollar has shot higher.  While I believe in the overall picture, the dollar has more ground to lose, but for the near term at least, we sit is a very oversold position and could be in store for a corrective advance here in early August.