E Tuesday Talk: Of Rice And Rain

Rain will be welcome to grain crops from the Great Plains to the Canadian prairie to Northern Brazil. On the other hand the "raindrops" felt in the stock market yesterday may be less welcome to many investors. On Monday the S&P 500 closed at 4,163, down 22 points, the Dow closed at 34,078, down 123 points and the Nasdaq closed at 13,915, down 138 points. This morning futures for all 3 indices are trading slightly down. Too early to tell if it is just a light drizzle or an umbrella is needed. 

Umbrella, Closed, Monsoon, Rain


A look at the most actives yesterday shows action across all sectors; technology, financial, industrials, entertainment and pharma.

Source: The New York Times

TalkMarkets contributor Jack Scoville in his Grains Report - Monday, April 19 notes that rain is a factor for grain crops across both the Northern and Southern Hemispheres. 

"Wheat - Wheat markets were higher last week as Wheat remains a weather market. The weather remains too dry in the northern Great Plains and in the Canadian Prairies and farmers can’t plant. It has been very cold and some Winterkill was possible in the central and southern Great Plains. Any damage is expected to be light. Demand remains disappointing (WEAT)...

Rice - Rice was a little lower on Friday and for the week on what appeared to be speculative selling tied to ideas of weaker demand. Demand has been solid for exports but less for the mills...Texas is about out of Rice, but there is Rice available in the other states, especially Arkansas. Asian and Mercosur markets were steady to lower last week. New crop Rice is getting planted in Texas and planting is more than three-quarters done in Louisiana. Mississippi and Arkansas are starting planting.

Corn and Oats - Corn (CORN) closed higher on what appeared to be speculative buying based on ideas of strong demand and long-term weather outlooks for warm and dry weather west of the Mississippi River. There are also concerns about the production potential for the Safrinha crop in Brazil. Oats were higher. Chinese demand had been strong until recently and it looks like they need the Corn. Prices inside China for Corn remain extremely high. In Brazil,Winter Corn crop progress is well behind normal and it has been dry in major growing areas. Some showers are possible in southern areas this week...Demand for US Corn has been coming at a stronger pace than estimated by USDA and it looks like US ending stocks can be significantly less than current projections by the end of the year.

Soybeans - Soybeans (SOYB) were higher and Soybean Meal was about unchanged last week. Soybeans have been rallying with Corn and Soybean Oil. Also, there is still crush demand and export demand even though the demand is less now than before. The US does not have a lot of Soybeans in the country anymore as most producers have already sold. Buyers are scrambling for what is left. The Brazil harvest had been delayed due to late planting dates early due to dry weather...Harvest activities have increased but the harvest remains very slow overall. China has been buying for next year here but now is buying mostly in South America. US internal demand has been strong. Soybean Meal is under pressure on ideas of big production caused by the big rally in Soybean Oil. Production of DDG can increase in the near future as ethanol demand improves and more people start driving again."

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William K. 3 weeks ago Member's comment

The very wise advice given to gamblers has been " Do not gamble more than you can afford to lose", and this rather obviously applies to stocks as well. And the other, equally as wise advice, ha been to not gamble with borrowed money. So in the stock markets they call it "leverage" so a to make it sound less dangerous.

The really interesting part of the whole thing is that some folks do quite well even as they go in the opposite direction, gambling far more than they can afford to lose, and doing it all with borrowed (leveraged) funds. That is a puzzle that I have no hint of solving. And a game that I have chosen to not play. I may occasionally wager, but I never ever gamble.

David Marshall 3 weeks ago Contributor's comment

A wise wager is better than a brash bet, though Yuval Taylor presented a contrarian analysis 🧐

Robert Capasso 3 weeks ago Member's comment

I thought Yuval Taylor made some excellent points.