3 things to watch

[00:00:01]This is Carl with the three things I'm watching for Thursday, June the 18th.

[00:00:07]Uh actually Friday for trade though, folks. No markets tomorrow. Closed for Juneteenth. Uh egg markets open back up Sunday night at normal times. Mark that down.

[00:00:18]Uh I want to talk about processing margins. Uh been under a little bit of pressure here last week, a little over a week.

[00:00:25]Ethanol, the current return about 30 to 35 cents a gallon. That's down about 15 cents from the high. Soybean crush still holding around that 325, 330. That's down about 90 cents to a buck from its high here. And that was only just couple weeks ago.

[00:00:43]Those numbers got a little bit out of hand to the upside. So, we're correcting and likely correcting a little bit uh more than we should to the downside.

[00:00:53]But the bottom line is even at 30 to 35 cents on ethanol and you know board crush on soybeans at 330 and interior close to $4.

[00:01:05]Um still the very good returns. Uh I don't think you're going to see plant closures at that rate. And uh definitely going to see plants running full board to capture them margins. So, in effect, that is also supporting interior basis.

[00:01:21]And that's further uh evidence uh on yesterday's talk about uh the physical trade not matching paper trade. You're seeing this here and and this is a good example of it. The uh processing margin still supporting interior basis. Now though, we're starting to throw in a little export demand could make it a little more interesting in those cash markets.

[00:01:45]Second thing I want to talk about US-Iran war. Um a 90-day memorandum signed by President Trump. We'll see or 60 days, I guess.

[00:01:55]We'll see what uh all entails.

[00:01:58]Um rather interesting. Some of the details come out are a little maybe suspect. Haven't really seen a lot. But one interesting thing is it does you know it covers also Israel and and it needs to re-remove from Lebanon immediately. Um we'll see if Israel holds to their end of the agreement. If they don't the whole thing gets jeopardized. Bottom line is with this uncertainty, I don't think you're going to see heavy vessel travel vessel travel in and out the Strait of Hormuz. I don't think you see heavy vessel travel to begin with anyway until you know ship owners and more importantly insurers are willing to let traffic resume.

[00:02:48]Just because everything seems to be calming down doesn't mean it's going to have a big impact on the energy market more than it already has. Keep an eye on that one.

[00:02:57]Third and final thing I want to hit on today and this is kind of a you know interesting in my part. I thought it was. This came out of the Fed decision yesterday and while the decision was to leave interest rates unchanged some of the Fed's comments jumped out at me.

[00:03:15]Number one that they don't feel that the full effects of inflation have hit the market yet. They feel energy inflation has but the rest of the consumer costs had not and they feel that is yet to come.

[00:03:28]Another and this was the one that really kind of jumped out at me.

[00:03:32]Back in COVID when everybody was you know we were didn't know what was going on people losing jobs a lot of homeowners refinanced their houses on adjustable rate mortgages at very low interest rates so they could keep them.

[00:03:50]Those loans are starting to come due.

[00:03:53]And they will not be at heavily discounted interest rates, or at least not at the rates that they were were put in on those adjustables. Um even if it's three, four points higher, you're going to see that noticeable shift in the consumer spending. That is is a jump.

[00:04:12]This is might not be widespread, but it was in the Fed's comments yesterday, which tells me the Fed is a little bit worried about it.

[00:04:21]Watch that one. Could be kind of interesting moving forward.

[00:04:24]Those are the three things I'm watching today.