A 10 Foot Pole
Most economists are in the "on the other hand" camp, but not Jamie Dimon. Right or wrong, at least you know where he stands. See quote, lower left.
Pretty good rally today, once again in sync with grain markets. Chicago markets are anticipating skinnier balance sheets, especially for soy. That market will be at risk until late July, and will soar on any real or perceived threat to supply. We expect the profitability spreadsheets to stack up with soy in first place by several lengths, followed by corn, then sorghum, then in no particular order, wheat, rice and cotton. What is unique about the beginning of the decision period, is that every crop has a price that represents a profit.
Soy has a balance sheet that is paper thin, and should climb the ratio ladder on the other crops. Rice, wheat and cotton have balance sheets that argue for lower prices, and are in the position of giving up big chunks of acres to soy. Corn's balance sheet is a little tight, but this market will benefit mostly from coat-tailing soy. The new crop cotton/soy ratio will continue to move toward soy, and may well test the lower historical extreme, in the 0.05 to 0.04 range. The Mar 2022 ratio is currently at 0.07.
Our guess for sales tomorrow is another good week, call it 300 krb, combined. As for the SD report, shave a few hundred thousand off US production, and most other numbers are near unch. Our short Mar futures position is breaking even, but our short July/Dec spread is +60 ticks. Another position we like, with caveat, is long Mar 2022 soy against short cotton. No margin break on this "spread," but the soy side should beat hell out of cotton over time. The Mar 22 cotton made a new high today.
Mar has reached between the 50% and 62% retracement of the minor selloff from the 7427 high. On the spot continuous chart, today's close is the highest since 3 May 2019. 7300 is stiff resistance, and an upside breakout is confirmed with a close above. COT report shows specs remain at roughly the 60% decile long. Seasonal history is + into 1/02.