Katie Geerdes

Prior to Putin’s invasion of Ukraine, the Biden administration released what was an unprecedented amount of US Intelligence gathering relative to Russian preparations for their invasion to give the world warning as to what was to come. This intelligence was highly accurate but was quickly forgotten about as only their mistakes tend to linger in the present consciousness. Taxpayers should be getting something for all of the $billions they pour into black sites like the NSA. They would love to tell us more but it would reveal their sources and methods in doing so. Recently, the Biden administration announced to the world sharing intelligence that China was preparing to provide Putin/Russia with lethal aid to assist them in their war in Ukraine. Russia is running out of drones, missiles and ammunition amongst other things ahead of what is expected to be a spring Ukrainian counterattack that will come when they are ready. Ukraine has been holding the line on the Russian offensive in the east while training, restocking, and further arming its military for this offensive. Where does the US get its intelligence from?   There are reportedly 3 known US surveillance gathering bases in the world that have been…

About two years ago, I remember talking with my parents about how much I enjoyed grocery shopping. The variety and affordability of food made each grocery store run an enjoyable experience, but since then, that joy has disappeared as grocery prices have shot through the roof. Grocery shopping has now become a daunting chore that makes my bank account cringe with every purchase.   According to the most recent Consumer Price Index (CPI) report, overall grocery prices were up 11.3 percent year-over-year in January. This figure is well above the overall inflation rate of 6.4 percent. A USDA report released last year showed an average family of four spent anywhere from $958 to $1,445 on groceries in the month of January 2022. That same report released this year discovered in the month of January a family of four spent between $1,047 and $1,576 on groceries. That’s a nine percent jump! Did your income increase the appropriate amount to cover these increased costs? Mine sure didn’t. With this increase in prices, 20.3 percent of an average household’s income is now going towards groceries. Back in 2021, households were only spending 5.2 percent on groceries.   A few products that have seen…

Yeah, what a smart-aleck. Fed Chairman Jerome Powell will announce what change there will be, if any, to the Fed controlled interest rate at 1 pm Wednesday. There is a wider range of expectations than usual this time as one result of the banking turmoil that just erupted with some banks failing after a sustained period without that happening. Some banks have always failed and in most cases that is really no big thing as a result of the FDIC which has functioned quite well as an institution. The banks that failed recently had new circumstances that contributed to these failures. That list includes yield curve risk, an enormous number of deposits above the $250,000 FDIC insured limit, digital banking real-timing the speed of transactions, and in the case of Signature bank, crypto “imaginary money” as deposits. Their demise was largely due in part to having assumed too much yield curve risk. They had invested deposits in long term bonds when short-term rates were next to nothing and then… Fed interest rate hikes inverted the yield curve sending short-term rates above long-term ones. That caught these banks crosswise resulting in $billions in ‘marked to the market’ losses in their bond…

NEW WHEAT RECCO DAY 1: As noted in yesterday’s “Sunday Preview”, we’re using Fibonacci retracement theory to set targets in KC May wheat for advancing old crop sales. Regardless of class, advance old crop cash sales another 10%, to 75% sold, when KC May hits its 50% retracement objective of $8.41. Set a target at a 62% retracement to $8.58 in KC May to advance sales another 10%, to 85% sold.   On the Grains: There was certainly no shortage of geopolitical drama over the weekend to unsettle traders with a “risk off” posture pressuring grain markets in overnight trade.   The banking crisis is not over. Swiss banking giant UBS Group agreed to buy out its rival Credit Suisse for $3 billion in the biggest megamerger of systemically important megabanks since the 2008 financial crisis. But even that failed to calm fears. Crude oil is down again in overnight trade on continued macro-worry and taking soy oil with it. (Soy oil is also under pressure as doubts grow about biodiesel growth predictions linking back to those disappointing EPA mandates for biodiesel use back in December.) Other regional banks such as First Republic are suffering “runs” as depositors seek safety…

California is threatened by flooding from another “atmospheric river” that formed to funnel a massive stream of water vapor over the central portion of the state. This week’s atmospheric river system was one of the stronger ones that the National Weather Service says can carry as much as 15 times the average flow of water at the mouth of the Mississippi River. Excessive rainfall is a problem for crops in the region while wind gusts of up to 100 miles per hour are responsible for power outages. The storm was the latest in a string of severe weather events that have occurred this winter to provide relief against drought in the West, but that now pose the risk of flooding for many farmers heading into the spring planting season.   California weather should remain a matter of interest as Nutrien meteorologist Eric Snodgrass says that “we need to be watching the West Coast sea surface temperatures closely.” The risk of drought in the Midwest is elevated if these Pacific coastal waters continue to turn colder, although Snodgrass cautions that the effect could be minimal or even entirely offset if an El Nino takes over as the dominant influence of weather…

Grains are poised in overnight trade to open on a firm note as hopes build that bank crisis contagion will be held in check by rescue plans among global central banks. But it’s a nervous confidence that needs to get through the weekend without new crises developing at other banks. Stocks had a decent bounce yesterday and crude oil is up again in overnight trade.   Yesterday provided the 3rd straight day of big flash corn sales to China. And in what has become a near weekly event, the Buenos Aires Grain Exchange has lowered its estimate for Argentina’s soybean crop sharply yet again. Yesterday it pegged the crop at only 25 MMT, down another 4 million from its last estimate. That’s now 8 million below last week’s USDA WASDE estimate of 33 million and down 42% from last year’s 43.3 million.   In other headline news this morning, Chinese leader Xi Jinping visits Russia’s Putin in Moscow next week. China has already urged Putin to continue the Safe Corridor deal that automatically renews this weekend unless he stops it. That’s likely a done deal since Xi’s trip is at Putin’s invitation and being billed by both sides as “showcasing…

The media has gone to great lengths to ensure that everyone knows about the impending decline in cattle numbers and subsequent expected drop in beef production. Is the material herd liquidation a good thing or a bad thing? I am going to be a contrarian here and say that it is the latter. The futures market is attempting to price in this historical decline in cattle numbers. Feeder cattle futures have soared to levels that will be problematic for the feeding industry. Keeping a pen full of feeders on feed would have an interest cost of over $130-140 head per turn for just the animal itself if you have the cash equity for everything else. The cattle industry is highly capital intensive and high leverage is going to be the demise of some feedlots who will not survive the credit crunch coming at them. The price of feeder cattle will become a rationing process to determine which of those who want to continue feeding cattle can afford the investment and risk. Feeder cattle producers are being offered an enormous profit potential opportunity. Will futures prices materialize? We would suggest Livestock Risk Protection (LRP) insurance policies (talk to Eric Relph 712-227-1110…

Overnight trade is mixed with corn and beans on the plus side but wheat soft as we go to press. The safe corridor deal for Ukraine we likely renew without incident despite Russian complaints and threats. Why? Because now China has weighed in favor of extension and with continued China support critical to Putin he’s unlikely to buck them.   The latest 2-week precipitation outlook came out yesterday. It leans favorable for the whole country except for parts of HRW country in the Southern Plains and potentially excessive in much of the E. Corn Belt and threatening fieldwork delays.   Today we get another batch of weekly export sales. Another big flash sale of corn to China yesterday of 667,000 tonnes has raised hopes for more and expectations for this morning’s weekly sales of corn range from 700,000 to 1.5 million tonnes. Expectations for soybeans and wheat range from very low to robust; as low as 50K for beans to as high as 700K and as low as 75K for wheat to as high as 500K. Another issue making headlines is a new outbreak of African Swine Fever (ASF) in China. It’s not seen as threatening as the 2019 disaster…

Recently, I have come to feel like it is harder to get clients to act upon our market recommendations than it has been to call the market. Up until August 2020 we had been very bearish the corn market. I recognized an upside chart gap as a breakaway gap that would lead to an extended gain. It was tough getting subscribers to make the change as they get psychologically locked into a mindset, which we had fed, and I repeatedly advised “time to change horses” as the trend turned higher. Since August 2020 we were very bullish until last December. I am going to walk through the chart and try to give you more clarity as to how I make these determinations. While I do grasp fundamentals believing them important, most of my major decisions are derived from technical chart analysis. As this is my 50-year crop anniversary I have learned a little something along the way. I have been looking at Elliot Wave chart patterns for a few decades now. I can’t tell you what the wave count for every market is all of the time but every so often something in the pattern does stand out and has…

On the Grains: Grains are firm in overnight trade as fund long liquidation finally subsides a bit in corn and beans while short-covering in wheat continues. Crude oil is soft and still below the $72/barrel threshold where President Biden said last October the U.S. would begin to replenish the Strategic Petroleum Reserve. Not a peep about that lately, but it does act as a potential “floor” at this level. The Dow is down hard again as this goes to press. Uncertainty in the wake of the unfolding banking crisis; what the Fed will do on interest rates and what Congress will do on banking regulations still abounds.   Funds had actually doubled-down on their short bets against Chicago wheat and found themselves still short nearly 100,000 contracts with crop condition ratings actually worsening for HRW country and heavy snowpack up north threatening fieldwork prep for spring wheat. As a result we saw double-digit gains in wheat actually leading the way higher for a change instead of a dragging corn back like a ball-and-chain.   Yesterday’s highlight for corn was the 675,000 old-crop sale to China. It finally confirmed rumors we’d been hearing for weeks that China was going to take…