OptionEye - Macro Outlook - July 20th
Not a good day for commodities.
Overnight saw good selling pressure. Corn down 5, beans down 12 and wheat down 8. Precious metals had a flash crash as well with gold down $18.40 to $1116.07. The low was $1115.63 earlier today.
Oil is hanging in there only down .10 cents to $50.79.
The 10 year yield is at 2.34% and looking for direction.
Stocks are slightly higher and quiet with the S & P future pointing towards an opening of just over 2 points higher.
The dollar is slightly stronger to 97.97 up .11 and still pretty high.
We get no significant news out today...
Re: OptionEye - Macro Outlook - July 20th
Farm crisis is building with the direction of this market and its all quiet from Marketers, Farmers, and Banking industry when will this come to light. The losses that farmers are going to take this year is going to be huge and it will be on many fronts too. Were going to loose money on this crop unliess you have way above average yields and get quality the market wants. Along with this will be steep declines in equipment values and land values on the balance sheet for coming year reducing equity values as well as changing debt to asset ratio significantly. Then add in cash losses from this crop and for alot lost value on old remaining inventories net worths are going to further decline. Also fair number of operations are going to see large tax bill for coming year and will not be able to deferr these with tightening lending institutions, equipment manufactures, and dealers pulling back on taking addtional risk. So we have perfect storm brewing unless we see some improvement in these markets and right now that is not happening. Government program is not much of safety net now because numbers that were put together for that were prior to inflation we experienced in last 3 to 4 years. Are we going to see deflation for land values, rents, input costs until we get to equilibrium and how many farmers do we loose. Especially the next generation that have just started in last 5 to 10 years and have never experienced farming like this. Also at same time we have one of most aged number of farmers continuing to farm and how long will they want to continue or are able to farm.
I look at our farm today how big of loss will you have say you get 85% of your prooven yield for the last 10 years at todays market prices and how many years could you go like that before youre in real trouble. The loss for us is frightening and youre in place where there's no help from crop insurance, you can market all you want but price is not there to make a profit. It leaves you with trying to ajust land costs and inputs whch may happen but will take time to get done if possible to get done. Also i am in last 10 years before retirement to young to quit but too short to recover losses in longterm before this cycle could turn around. I know farming is challenge but i think this is going to be bigger challenge than i experienced going through the 80's and i wonder how many others out there are thinking the same thing.
Re: Local Bank ain't
gonna bail ya ( generally ).
they Have to loan 22% of their CD portfolio back to the govt " to "Float that govt."
( the new laws and regs from 2003 On, make local banks just a " deposit collection facility for the Fed dough ....supposedly needed by the feds" ).
Farm Credit can Bail ANYTHING ( EASY Deal...just depends on STRUCTURE and Future Structure of your operation ....can take 6 to 8 weeks though.
AND it depends on the area, depends on the Folks working there ( THEY CAN ALL B just collecting Salaries and NOT Working MUCH in ANY or ALL Their Offices ).
Good luck to ya...doin it yourself with em. LOL
sooooo. Pray to Jesus.
Perhaps JUST run the Cattle.
( forget Dam lenders...there's All kinds and types of JV Partners for LIVESTOCK... ie sheep, goats, cattle, horses...even More of em for Deer and Elk ). MO