The bigger they are...
No doubt we are all familiar with the old idiom, “the bigger they are, the harder they fall,” and that would appear to be an apt description of the action we have witnessed in nearby corn for the past couple of days. Actually, when I sat down earlier this morning to write today’s commentary, prices had rebounded, but as it turned out, that was temporary, and a second mad rush for the theater exits ensued. I did not hear reports of anyone yelling “fire,” so I have to suspect that the opening of barge traffic at Memphis had something to do with the second wave of selling. No doubt, “this too shall pass” as none of these markets can really afford to stimulate demand for the time being, but it is a stark reminder of just how rapidly things can change in volatile times such as this.
Before leaving this topic entirely this morning, we need to touch on the issue with the bridge across the Mississippi River at Memphis. Realistically, this should become the “poster child” for the sorry state of the infrastructure in the country and hung in the offices of every elected official across the nation. Not because it is the most significant issue out there, but at least for now, it is the most visible and highlights the immediate economic impact that will occur when these problems come to light, and we can absolutely count on more of them. Approving monies to be spent on building or rebuilding infrastructure in this country is certainly not a “sexy” issue for a politician. I doubt many have even championed this as their crucial election rallying cry. That said, these problems are not new, and the longer we allow partisan bickering to take precedence over tackling these problems that will genuinely impact our economic well-being, the farther we will fall behind in global competitiveness, let alone the everyday safety of our citizens.
While obviously quickly dismissed, the USDA announced another considerable sale of corn to China this morning. They purchased another 1.36 MMT for the 2021/22 crop year.
We had a few economic releases this morning. Fed April Capacity Unitization came in at 74.9%, which was right on expectations and up from 74.4% the previous month. Industrial production increased just .7%, which was down from a positive 2.4% in March. The University of Michigan preliminary Sentiment Index for May surprised most everyone by slipping down to a figure of 82.8 compared with 88.3 in April and the expected 90.1. Preliminary May Current Conditions came in at a reading of 90.8 compared with 97.2 in April and May Expectations were at 77.6 versus 82.7 last month. The dollar did not take too kindly to the numbers and pushed sharply lower after two days of gains, but equity markets have rebounded. The S&P 500 is still lower for the week but continues to rival the highest weekly closes, and the Dow Industrials are on track to record the second-highest weekly finish on record.