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Play Turner’s Take Ag Marketing Podcast Episode 280
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This week we go over the Fed minutes, crude oil, natural gas, and the grain and oilseed markets. We like crude oil but it is due for a correction. Natural Gas is up about 50% year over year and we talk about why that trend is likely to continue. Finally we talk about the grain and oilseed markets and why we like soybeans and soybean oil more than corn. Make sure you take a listen to this week’s Turner’s Take Podcast!
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Fed Meeting Minutes
The Federal Reserve meeting minutes for were released today for the June meeting. While the committee talked about tapering and higher rates, they want to see a full recovery post-COVID first. Rate hikes and tightening are a long way off in 2023. The Fed did acknowledge inflation concerns but said most of the price increases were transitory, which means short term in nature due to unique market supply and demand events.
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I still like Crude Oil but we are due for a correction. The delta variant could cause some shutdowns overseas and that would put a short term hit on the crude market. Longer term I still like energy but in the short term there could be some opportunity in the bear futures spreads. Sept/Dec rarely gets above $3.00 and it is around $2.85 now. A correction could bring that spread to $2.00 or lower. Longer term I like crude and if you don’t want to take a shot shorting the market, then use the next correction to get long Dec call spreads.
Natural Gas is up 50% in the past year. Supplies have come down as production slowed due to COVID shutdowns and demand has surged due to renewed economic activity, warmer weather, and strong export demand. The draw on Natural Gas could continue for the rest of 2021 as supplies are not seen building on demand until 2022. That makes $4 a target for Dec NG this summer and possibly $4.50 this winter.
Sept vs Dec Crude Oil
Dec 2021 Natural Gas
Grains & Oilseed
Looking at the balance sheets with the June 30 acres and it is clear soybeans will be very tight this year. Any loss in yield or increase in demand puts soybeans in a new price rationing rally. Below are two charts. The first is July 22 vs Nov 22. Currently we are around 83 cents. Carryout is expected to be tight at 150mm bushels or lower. The second chart is July 21 vs Nov 21 from this year. The point is if soybeans get just as tight next year as it did this year the July/Nov spread could go out to $2.00 again or higher.
July 22 vs Nov 22 Soybeans
July 21 vs Nov 21 Soybeans
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About Craig Turner
Craig Turner is a Senior Broker at Daniels Trading, author of Turner’s Take newsletter, and a Contributing Editor for Grain Analyst. Craig is often quoted in the Wall Street Journal, Reuters, Dow Jones Newswire, Corn & Soybean Digest, and also makes appearances on SiriusXM – Rural Radio Channel 80 providing commentary for the Grain and Livestock markets. Craig has also been featured in FutureSource’s Fast Break series, Futures Magazine Online, and INO.com. Mr. Turner has a Bachelors from the Rensselaer Polytechnic Institute (RPI) where he graduated with honors and has worked at the NYSE and Goldman Sachs. While at Goldman, Craig earned his MBA in the NYU Stern executive program. Learn more about Craig Turner.