Market Report


Markets

3/14/16@11:07am
Dow -12.87
S&P -6.49
Nasdaq -3.72

Crude oil moved higher and the U.S Dollar moved lower last week, which positively influenced stock and commodity prices.  U.S. stocks fell this morning, offering clues to the course of monetary policy this year.  The Dow Jones Industrial Average slipped 25 points, or 0.1%, to 17188 shortly after the opening bell. The S&P 500 dropped 0.2%, and the Nasdaq Composite declined 0.3%.

Crude oil has slid more than 70% from its peak in ’14.  However, U.S. oil prices are up more than 45% from a 13 year low in February which came to an end after major producers held discussions about capping output.  As the bullish sentiment increases, the oil market remains supportive.  Could this rally lead to its own demise?  Higher prices will likely encourage shale producers to ramp up output again, muddying any forecasts for shrinking U.S. supply. Shale wells can be drilled and fracked within a matter of months, compared with the years it can take to complete other types of oil wells.

April Crude Oil

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Grain Markets

3/14/16@11:10am
May Corn +3’0 @ $3.68’0
May Beans+0’2 @ $8.96’0

 

Last trading day for March futures

 

In the News: El Nino may be weakening, but it is still clobbering crops in the Asia-Pacific region, effecting sugar, rice and palm oil production. http://www.wsj.com/articles/el-nino-may-be-weakening-but-it-is-still-clobbering-crops-1457953780

 

Corn:

The funds continue to increase their net short position and go further in to record territory.  Beneficial rains throughout the southern plains with more to come.  Nearby corns resistance in the low to mid $3.70’s.  We have seen a bit of a bounce in corn but fundamentally nothing has changed.

 

Beans:

May futures broke through the 50 and 100 day moving averages last week on its 8 day run closing higher and higher.  Farmer selling remains steady as prices rise.  Processor basis levers steady to weaker as they take more bushels.

 

As beans seem to push higher there is likely some resistance at $9, as many have offers in at those levels for the nearby.  Much of this rally comes from short covering, and funds seem to be adding some additional shorts as the market keeping us under $9 for the May.

 

Weather

After unseasonably warm weather in the Midwest, cooler temps on the way.  Still mild weather and some chances of thunderstorms tonight.

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New Cars:

 

New vehicle sales in the U.S came in at 17.5 million in 2015.  Used car sales (mostly subprime borrowers) has also been on the rise.  Total volume of U.S auto loans now reaching an all-time high of close to $1 trillion.  Impressive growth for the industry.

The concerning part is the default rate.  Through February, about 12% of the underlying loans were at least 30 days past due, a third of which were more than 60 days delinquent. In another 2.6% of loans, borrowers had filed for bankruptcy or the vehicles had been repossessed.  This from Equifax.

Those borrowers are at the outer fringe of the auto market. Still, the high level of missed payments for loans made so recently is a warning sign for an industry that needs every customer it can get to keep sales increasing at a record pace.  It will be interesting to see where auto makers go from here.

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Read more here: http://www.wsj.com/articles/subprime-flashback-early-defaults-are-a-warning-sign-for-auto-sales-1457862187

 

Greg Mockenhaupt

ProEdge Risk Management Consultant

P: (402) 685-5613 | Greg.Mockenhaupt@cvacoop.com

1007 County Road O

Oakland, NE 68045

www.cvacoop.com

About katcountryhub
I am a graduate of Northeast Community College with a degree in journalism. I am married to Jeff Gilliland. We have two grown children, Justin and Whitney and four grandchildren, Grayce, Grayhm, Charli and Penelope. I will be covering Lyons, Decatur, Bancroft and Rosalie and am hoping to expand my horizons as time progresses!

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