Play Turner’s Take Podcast Episode 227

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I am working from home while IL has a Stay at Home order in effect until April 30.  My office phone 312-706-7610 will roll over to my home office if you call my trade desk.  This week we go over the the latest jobless claims and implied unemployment rate.  We take a look into the energy, grain, and livestock markets too. Make sure you take a listen to the latest Turner’s Take Podcast!

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Macro Markets

Weekly initial unemployment claims were 5.2 million this week, bringing the four week total to 22 million!  This implies the unemployment rate is over 15%.  The next monthly unemployment report is May 8th (for the month of April) and their is a chance unemployment is 20% by the end of the month.  Below is good chart of the initial claims from CNBC.

The Small Business Loan Program was only funded with $349 billion out of the $2 trillion stimulus package.  Small business employ about 50% of the US workforce. That loan program is out of money and it will probably be the next part of the economy that gets further monetary support.

CNBC | Small Business Loan Program Is Now Out of Money

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Energy

Below is a great visual of global crude oil demand as a result of coronavirus.  April will see a demand decrease of 30 million barrels/day.  May is estimated to be around a 26 million deficit before the curve starts to recover significantly.  Keep in mind OPEC+ is only cutting production by 10mm barrels/day so we don’t it an equilibrium and start working off over supply until July.  Until then expect the front months of crude to be in the $20s and the back months in the $30s.

If the demand growth is anything close to this chart then the lows are probably in for crude oil and we would expect a rally to start in May.

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Ag

As we talked about on the podcast, I think there is a lot of value in Dec LC under $100 and depending on where soybeans in a few weeks, I might want to be long beans heading into the May 12th WASDE.

As for corn, I think FND for May Corn is going to put a lot of selling pressure on that contract.  If we get a rally in the next few trading sessions I like selling May and being short into FND.  When we do get to FND I want to exit May and if prices have fallen steep enough we may look at buying some July and look for a short covering pop or a spring planting rally.

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