CommStock Reports

Hedge funds have turned net-short in corn futures and options for the first time since 2020. The sentiment shift was sparked late last month when the March contracts went into delivery and then selling interest was sustained throughout the recent economic turmoil. The Commodity Futures Trading Commission is expected to catch up with the most current trader positions report this afternoon following a cyber attack that disrupted the data release for nearly two months. The updated numbers should show the managed money trader category keeping a net-short in corn for the second straight week to go along with a heavily net-short wheat holding. Funds will have trimmed down a net-long position that remained in soybeans during a reporting week when May futures lost about quarter. Hedge funds are likley to have flipped net-short again on hogs after their bets briefly poked into net-long territory in the week prior. More length has also recently been erased from net-longs held in live cattle and feeder cattle futures.   One thing that stands out about the fund corn position in particular is its split between longs and shorts. With the net-short recently recorded above 50,000 contracts, the position consisted of over 224,000 short positions, but also more than 170,000 longs. A large total of corn longs remaining represents a substantial amount of additional liquidation that could still pull futures sharply lower; however, it also signals that a large pool of professional money managers continue to believe in the potential for higher corn prices.   Hedge funds have ...

On the Grains: Grains are mixed this morning with corn barely steady, beans down again but wheat firmer. Corn got only a whiff of support from yesterday's weekly export sales that set a marketing year high at 3.1 million tonnes. It got caught in the downdraft from beans with sales of only 152K and not even close to the low end of expectations that ranged from 400K to 900K. Beans have broken key support and continue under pressure from fund liquidation. Soybean oil was already in trouble and is pressured further by sharply lower crude prices overnight that translate to lower demand for biodiesel in the minds of traders. Contributing to that was this week's surprising rise in crude oil stocks while traders were expecting a drawdown. Those stocks are now 8% above the 5-year average and another contributing factor in overnight losses was yesterday's testimony by Energy Secretary Jennifer Granholm before a House Committee yesterday. Last fall when crude was well over $90 per barrel, the Biden administration promised with considerable fanfare that they would begin refilling the Strategic Petroleum Reserve (SPR) "at a profit" if WTI dropped into the $68-72 range. It was thought that might provide somewhat of a "floor" and oil had rallied several days. Asked about plans to refill the SPR, Granholm pulled the plug on any "floor" talk by informing "it will be difficult to refill the SPR this year because we're actually still in the process of fulfilling the 26-million barrel sales committed to earlier." Overnight ...

Fungicides have now become just another staple crop input used when growing corn/soybeans where we live. Fungicide application has become part of our agronomic program. While fungicide use had previously become common practice in places without winters that tended to be warm and damp like the Delta or Brazil, we get consistent positive yield results here in NW IA from fungicide use too. Would that always have been the case or just something that has happened in the last decade or so. It could be that a warming planet is changing the habitat for fungi so that they adapt just as it has the location of where animals live, where aquatic marine life migrates and at what altitude tree-lines are located. The concept that the risk that climate change poses resulting from rising earth temperatures may be a lot more than melting ice in the arctic. That premise made it on the small screen recently in the Netflix series, "The Last of Us". The fictional storyline deals with a fungal apocalypse where the warming planet triggers evolution in a fungus to the point where it infects humans who become a host controlled by the fungus. I watched an episode or two and thought that it was so-so. The concepts are interesting though, diverting from the typical virus driven pandemic, though the zombies are quite similar. You do not want to get bit by either. There are some parallels in nature that reportedly fit the script where they claim that there ...

On the Grains: Overnight trade was steady to mixed in corn and beans but firmer in wheat after yesterday's plunge. Stocks are a little firmer after ending sharply lower on a wild up-and-down afternoon while oil was lower overnight after three days of gains. If it sounds like a hodge-podge of indecision at this point that pretty much sums up trader attitudes while they digest dueling messaging from Fed Chief Jerome Powell and Treasury Secretary Janet Yellen yesterday. The Fed raised interest rates a quarter point, as most expected. The focus was "reading between the lines" of what he said after the announcement. What hawks heard was his emphasis on the need to continue fighting inflation with the Fed's goal to tame it back towards 2% from its current rate of 6%. What doves heard was the noticeable absence about the likelihood for "continued hikes in rates as needed through 2023" that have accompanied post-hike remarks in the past. Instead, all Powell indicated was "likely need for one more quarter-point hike by the end of the year." So what makes Powell think one more hike might be all that's needed to keep inflation slowly working downward? Because there are other signs of a slowing economy now exacerbated by the banking crisis that Treasury Secretary Janet Yellen addressed in Senate testimony yesterday. While downplaying ideas the government was preparing to guarantee deposits beyond the $250,000 limit on FDIC insurance for all banks after doing so for SVB and Signature Bank depositors, she simply reassured ...

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 publicly acknowledged. I am sure that there are others that have not been. One is near Denver Colorado, another is a joint base in the UK and another is the Pine Gap facility in Alice Springs, Australia pictured above that is operated jointly with Australian military intelligence services. These intelligence gathering centers ...

Wheat Recco Day 3: On 03/19/23 we recommended that all producers, regardless of class, push cash sales another 10% if May KC hit 8.41. This sale was triggered on 03/21/23. You should now be 75% sold. Continue with the additional recommendation to sell another 10%, regardless of class, if May KC can trade to 8.58. On the Grains: While most focus is on the upcoming planting intentions report coming at the end of the month there is also the quarterly stocks report that will be released at the same time. While there is a good range of trade estimates for acreage, there should be enough intended acreage so that it would be hard for acreage itself to be bullish without some unfavorable weather. The trade expects better weather this year than a year ago with the fading La Nina and developing El Nino. I have been a little surprised at the lack of market concern displayed by soybeans and cotton markets over the prospect of maintaining acres. The cotton market, in particular, appears to be saying, "Don't plant cotton." Old crop cotton was never profitable after its harvest and new crop is also an unprofitable crop at current futures price levels.  Comparatively, corn and soybeans have thin margins. Drought still maintains some grip on the Texas high plains where a lot of cotton is attempted to be grown. The trade appears to be building in expectations for a negative planting intentions report leading to a potential "dog catches car" type outcome. I would think that ...

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 significant price increases include eggs, milk, bread, and pet products. Eggs have seen the most significant price increase over the last year, increasing a whopping 250 percent to $4.82/carton. Keep in mind, egg prices haven't just shot up due to inflation, a rampant avian flu outbreak is also to blame. This outbreak has also ...

While the S&P chart looks generally defensive, support was found so far where it needed to be seen so bulls have a chance to repair things. It looks like 5 waves down from the February high, which would be the trend. After additional corrective trade, which could form the right shoulder of a head and shoulders formation, then things will get dicey again. All markets are waiting on the Fed Wednesday to signal where it is going next with monetary policy. The Fed will give their verdict on the health of the banking system. On the Grains: Do oats know? Probably if oats can take out Monday's high, then other CBOT markets may get permission from this leader to do so. Otherwise, it is just noise. The weather conditions that have been supporting the soy complex in South America come to an end with the season. The trade looks for further reduction in the Argentine crop to as low as 25 mmts. A lot of South American crop conditions have to be in the market but each time they have set up to fail, selling exhausts. Both bulls and bears lack conviction. A rebound in soyoil turned the market higher Monday but I can't say that the soyoil chart looks that promising yet for the bulls. Monday's lows are now key support for spot soybeans. They are getting some soaking rains to replace drought with local flooding in Argentina but it is too late in their growing season for much yield recovery. ...

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 portfolio that they did not have assets to cover. Bank of America reportedly has $108 bln in these yield curve bond losses but they have deposits and equity enough to absorb them. These yield curve losses are a banking sector wide problem and one reason why Moody's lowered its rating ...

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 in moving funds to the "too big to fail" banks after FDIC guaranteed deposits beyond the $250,000 limit for SVB and Signature Bank to set a precedent.   Also pressuring prices is the extension of the Ukraine "safe corridor" deal; though not without confusion on the length of the extension. It's for 120 days according to the ...

New Monday Wheat Recommendation: 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. Opening calls are for the grains to start steady as traders sort out cues from crude oil and outside financial markets. In the Headlines Geopolitical tensions are heightened further following Vladimir Putin's visits to Crimea and Ukraine's occupied city of Mariupol and ahead of Putin hosting Chinese President Xi Jinping in Russia this week. China is attempting to support plans that would negotiate a ceasefire in Ukraine while locking in new territory for Russia. Complicating the matter for China was the Friday announcement of an arrest warrant issued for Putin by the International Criminal Court for war crimes. European markets will be even more important than usual for setting the Sunday night market tone, since more turmoil with Credit Suisse and other European banks will have to be addressed on Monday. Several regional U.S. banks are also still under pressure as they face heavy withdraws and shorting of their stocks while their assets are being marked down. Banks continue to have the problem of having to borrow at higher interest rates and pay higher interest on deposits while money is tied up in long term Treasuries that are worth a ...

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 patterns this summer.   On the other side of the country, Florida is still feeling the effects of Hurricane Ian with an orange crop that could fall to a 90-year low this season (recently driving orange juice futures to all-time highs). Florida has been on a drier, warmer trend as of late, so now ...

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 deepening relationship between Beijing and Moscow" by discussing further "strategic cooperation" through planned signing of "several bilateral documents."   The relevance for markets has no end in sight to geopolitical turmoil. As if to underscore that, Poland has announced it will send four Soviet-era Russian-built MiG-29 jet fighters to Ukraine in coming days. It puts ...

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 for the particulars). These policies have been significantly improved and appear to be very appropriate risk management vehicles for the current fundamental conditions. The ante is being raised significantly for those in the cattle industry who want to call the raise thus holding their hands to see if they win ...

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 but could threaten up to 10% of China's hog production. That could dampen soybean meal demand but enhance U.S. pork export potential.   Yesterday's PM report laid out the "bombshell" CFTC dropped with another "catch-up" release of the Commitments of Traders report showing fund positions as of Feb. 28. It showed breathtaking fund liquidation of nearly ...

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 been very useful in my decision making. I am not what many call a "trader". I am an investor. For example, when natural gas declines so that I can see 5 waves down and has lost near 80% of its value from the high it is time to invest in ...

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 advantage of this price break to source corn out of the PNW. Hopefully we'll see some more since corn is still over $10 per bu. in China. Speaking of that, we've got good sources telling us USDA's ending stocks numbers for China are little more than propaganda USDA is buying. They have those stocks at ...

Let's take a break from the serious and talk about something mundane today. The pi that I am talking about is not apple, cherry or chocolate pie but the kind of pi that mathematicians like. 3.14 or March 03/14 is pi-day. Scientists see today as a holiday of sorts. The symbol, used by mathematicians to represent the ratio of a circle's circumference to its diameter, is the lowercase Greek letter π, sometimes spelled out as pi. It is a number rounded off at 3.14 that goes on ad Infinium. It is coincidently Albert Einstein's birthday. It has become an international holiday celebrated by physicists and mathematicians giving them a good as any excuse to enjoy a pie of their favorite pie. My favorites are rhubarb and sour crème raisin or any other kind of pie that is available.   The Scientific American explains the history of pi. "The importance of pi has been recognized for at least 4,000 years. A History of pi notes that by 2000 B.C., "the Babylonians and the Egyptians (at least) were aware of the existence and significance of the constant π," recognizing that every circle has the same ratio of circumference to diameter. Both the Babylonians and Egyptians had rough numerical approximations to the value of pi, and later mathematicians in ancient Greece, particularly Archimedes, improved on those approximations. By the start of the 20th century, about 500 digits of pi were known. With computation advances, thanks to computers, we now know more than the first six billion digits of pi."   Neil deGrasse ...

On The Grains: Overnight grains tried to mount a modest rebound but as this goes to press they are weaker again. Lower prices in palm oil and crude are again pressuring soy oil on macro-economic worries. (Natural gas is a notable exception in the energy complex, moving higher yesterday and again overnight.)   Weekly export inspections were uneventful for corn and beans, both well within the range of expectations. Wheat was sour, falling just under the very lowest of expectations. Ironically, wheat was the only one of the three that managed to close in the green yesterday, even with Russia agreeing to extend the safe corridor deal out of Ukraine for another 60 days. (In overnight news, Ukraine disputes that new limit and says it will operate on current language extending the deal for 120 days unless Russia specifically halts it.)   Credit fund short-covering in Chicago wheat for yesterday's gains in wheat.  The COT report showed funds extremely short Chicago wheat while only modestly long KC and MGE wheat. In other news, there are already some worries developing about delays in spring fieldwork for the northern Plains where snow depths up to 20 inches are widespread.   Stock markets are firmer overnight. Today we get another reading on inflation and that has traders edgy. Traders are expecting headline inflation to have fallen to 6.0% in February from 6.4% in January and core inflation to have eased to 5.5% from 5.6%. If there was any "consensus" to glean among the pundits, it's that the Fed will now ...

The US Treasury, FDIC, and the Fed came together quickly with the blessing of the White House to jam a finger into the hole in the dyke that was the Silicon Valley Bank (SVB) leak. They did not even get through the weekend before another bank, Signature Bank with $89 bln in deposits also collapsed from some of the same issues as SVB. A quarter of Signature Banks deposits reportedly came from cryptocurrency. The Banking industry is finding out that cryptocurrency is not real money so should not be considered to be actual dollars on deposit. Every dollar on deposit that is in cryptocurrency is essentially just a loan on a dubious asset that bears its own risk parameter. If a real bank is lending real money against fake cryptocurrency deposits, then they are undercapitalized. The whole cryptocurrency thing is a fool's illusion and it can now be seen how even banks have become party to the fools. How can that be? It can be. The Fed is making it clear that it doesn't want cryptocurrency held in banks.   The action taken by the government Sunday to essentially insure the uninsured FDIC deposits in SVB and Signature, were unprecedented. Doing this bears risk. First of all, they loaned SVB the money to give it liquidity and they will sell the bank to a qualified buyer. SVB Depositors who were at risk no longer should be. However, they were not clear whether this accommodation was extended to all banks.   There are many problems with ...

On the Grains: Grains tried to mount a recovery in early evening trade, but are mostly back in the red as this goes to press. Fundamentally, the reality of major gains for both bean harvest and 2nd crop corn planting in Brazil is countering further decline in Argentine crop estimates. The Black Sea "safe corridor deal" will still likely automatically renew six days from now, but there are still questions as Russia is only now joining the discussions between U.N. officials and Turkey and still insisting on sanctions relief.   But it's still the "macro environment" for the U.S. banking system and economic outlook that has traders most unsettled this morning. Precious metals are stronger while energies and the dollar are weaker. To prevent the SVB collapse addressed in our Sunday Preview and yesterday's Special Report from spreading further shockwaves throughout the economy, the Federal Reserve Board announced last evening the creation of a new Bank Term Funding Program (BTFP). It came from Treasury Secretary Janet Yellen, after consultation with President Biden, approved the plan for this new BTFP to offer FDIC loans up to one year to California's SVB, New York's Signature Bank and any other institutions that protect all depositors "above and beyond" the current $250,000 limit on FDIC coverage.   Great plans were made to assure this should not be seen as a "taxpayer bailout" of banks themselves because the loans would be against holdings in government securities as collateral (valued at par) and still have to be repaid. The new source ...

Jim Acosta, a CNN host and reporter, made one of the most uninformed statements that I have ever heard on air this weekend when he said that runs on bank deposits were irrational. He was discussing the Silicon Valley Bank (SVB) collapse caused by what may have been the first bank run on deposits ever in 'digital banking' history. Money now moves with the flick of a computer key. People are told "not to panic". I have always argued that it is often smart to panic as long as it is before everyone else does. I panicked and sold all of my 2022 corn last December and "so far so good". When pundits tell you not to panic, what they are often really saying is that you should have panicked some time before that. As in the case of SVB, those that panicked first got their money wired out of SVB before the FDIC stepped in and shut it down. There are companies in that category that will make payroll because they panicked and got their funds transferred to safety.   It seems to be a common assumption that all bank deposits are insured by the FDIC. They are not. What they forget is that there is an insured limit of $250,000 and 87% of SVB deposits were held in accounts with balances exceeding those limits and therefore were uninsured. Companies like ROKU and ETSY have hundreds of $millions deposited in SVB that were not insured. Will they lose those deposits?...not all ...

Grains are called slightly higher to start, but bullishness over weather will have to contend with a risk-off tone that should develop across most markets because of concern about the Silicon Valley Bank drama. In the Headlines The failure of Silicon Valley Bank is going to be felt further this week as regulators decide what to do with billions of dollars of deposits that exceeded FDIC insurance. A run on the bank reportedly produced unfulfilled withdraw requests of over $42 billion last week. Part of those deposits will be counted on by companies that need the funds to make payroll this week, so major layoffs are a possibility. There will also be risk of a domino effect when more companies and individuals attempt to move deposits out of banks that they fear are similarly vulnerable. There may be additional strength in bonds as investors move their money to safer assets, and as traders bet that interest rates will have to ease. The Federal Reserve Bank announced an emergency meeting for Monday, when options for backstopping Silicon Valley Bank will be discussed. On Friday, the market quickly adjusted its odds toward expecting a 25 basis point hike on the next meeting instead of the previously anticipated 50-point bump. The next Federal Open Market Committee meeting will finish with a rate decision on March 22nd. The media were calling it a "race to the bottom" for Argentine crop estimates last week because analysts were seemingly tripping over themselves to come up with low enough numbers ...

Ahead of this morning's monthly jobs report, it was feared that good news would be bad news for markets in the sense that investors would interpret strength in the labor data to mean more interest rate hikes from the Federal Reserve Bank, which pressure stock prices but support the dollar. Even though the jobs report turned out solid enough with higher than expected payroll additions, stock futures were initially able to stage a small rebound, likely because of help from a smaller than expected rise in wage inflation. Stock market strength struggled to stick, but it was helpful for the grains that the dollar broke down and interest rates eased following the report.   Bond prices were up – and yields down – after the jobs report and in follow up from nervousness over that economy that developed from news about financial trouble at the Silicon Valley Bank. The headlines were a source of bad news that ended up being good news for those betting on interest rates topping out sooner. Market-based bets on the trajectory of the federal funds rate were moving the expected target sharply lower at the end of the week.   As for the jobs report specifically, the good news of a strong hiring pace may not be what it seems since many of the new job seekers were just laid off and have joined an increasing number of people reentering the labor pool after an extended absence. Indeed, the new payrolls number was higher than expected, but the unemployment ...

On the Grains: Overnight markets are weaker again. One of the most time-honored axioms in trading is to beware markets that cannot move higher on bullish news. We're witnessing a classic example of that in the grains since Tuesday's WASDE showed far greater cuts in Argentina's corn and soybean crops than the average trade estimates, followed Wednesday by the Rosario Grain Exchange pegging crops far lower still.   Then yesterday before markets even opened Brazil's CONAB dropped the Brazilian crop to 151 MMT, 2 million lower than USDA's figure and not far from Matthew's estimate of only 150 MMT in this week's Brazilian Operations Update. It was followed by weekly corn export sales of 1.41 MMT that blew the lid off expectations that ranged from 600k to 1.2 million. Didn't matter. Corn tumbled anyway. It got caught in the downdraft of a horrendous net decline in weekly soybean sales (due to cancellations) of 23,000 tonnes against expectations for new net sales ranging from 200K to 700,000 tonnes.   What the heck is going on? The macro environment for both the U.S. and global economy is looking grimmer and grimmer and it's feeding the bears in commodities. Stocks are down again and this week the DJIA is flashing a classic 1-2-3 top formation following a downside key reversal registered in mid-December. That was wave 1. The market rallied back but fell short of the mid-December high. That was wave 2. Now, this week, we've taken out the late December low. That's wave 3 and opens up ...