Play Turner’s Take Podcast Episode 225

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New Podcast

I am working from home while IL has a Stay at Home order in effect until April 30.  My office cell is 312-651-4621.  My office phone 312-706-7610 will roll over to my cell phone if you call my trade desk.  This week we talk about jobless claims, unemployment expectations, and how bad economic reports can get in for Q2 of 2020.  We then take a look at what the Planting Intentions and Stock Report means for corn and soybeans.  Make sure you take a listen to the latest Turner’s Take Podcast!

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Macro Markets

Jobless claims on Thursday were over 3 million, which was four times the previous record.  The US has been tracking jobless claims since the 1960s.  Unemployment is going higher but the big question is “how high”?  Conservative estimates are coming in around 10%.  Much more aggressive analysts are saying between 20% and 30%.  Goldman Sachs just came out this week and says unemployment could be 15% this year.  No one knows how bad it will get but it certainly seems unemployment will be over 10% some time in the near future.

Economic reports in April and May will be historically bad.  Corporate earnings reports will be much lower compared to prior quarters.  The market is pricing all of this now but it all still has to play out.  The reports will have surprises and create some big headlines.  This is all part of the wide ranging consolidation bottom we have been talking about.

CNBC | Fed Sees 30% Unemployment Possibility in 2020

The Hill | Goldman Sachs Says Unemployment Could Hit 15% in 2020

If you are not a subscriber to Turner’s Take Newsletter then text the message TURNER to number 33-777.  You will receive the newsletter and podcast notifications for free!

Grains & Oilseeds

The Planting Intentions report has corn acres at 97 million and soybean at 83.5 million acres.  Keep in mind these surveys were completed weeks ago.  If you asked farmers today I bet the corn number is lower and the soybeans are higher.  We’ll get into corn here and then soybeans below

Corn stocks were lower than expected today due to better feed numbers combined with the USDA most likely underestimating last year’s crop.  In a vacuum the stocks report was bullish.  Unfortunately the loss in demand from ethanol and the higher than expected new crop acres will weigh on corn.

In our table below we have old crop highlighted in yellow.  We add 200 million to demand for Feed & Residual as a result of the Stocks Report today.  We also take off 350mm of ethanol demand.  That puts old crop around 2 billion ending stocks.

New Crop looks bad.  We estimate we lose another 150mm in demand from low energy prices in the 2020-21 marketing year.  With 97 million acres and a trend line yield we see ending stocks blowing out to 3.4 billion.  This puts cash prices and harvest lows under $3.  Even if corn acres go down to 94 million ending stocks are just under 3 billion.  Our 91 million corn acres are not realistic but we even if we had late planting and a lot of prevent plant, ending stocks still are at 2.4 billion.  Rallies in new crop corn should be sold.