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Morning Summary

U.S. stocks are down slightly this morning as macro traders  digest headlines from over the weekend that China has cuts it’s economic growth target. The Chinese government however emphatically denies any rumors of a “hard-landing”. Crude continues to gain traction and is now trading at multi-month highs.  Emerging market equities just chalked up their biggest weekly gains since 2011. It’s also worth noting that both gold and iron ore, though down slightly this morning, are up nearly +20% on the year. All of which has some inside the trade arguing that the commodity markets have bottomed. Bottom-line, I suspect as oil stabilizes investors are going to continue to feel more at ease with adding “risk”. There seems to be more talk about the overall economic landscape becoming much more highly “fragmented” rather than negative across the board. In other words some pockets or areas of the economy are seeing sharp declines and have clearly moved into recessionary territory, while other areas remain strong and robust. Many analyst believe this is why the markets have become extremely difficult to forecast. It seems like whatever direction the  headlines and lights on the stage decide to shine can produce wildly different results. One thing for certain, we are finally seeing more sizable cuts in U.S. oil production as rig counts drop below 400. Keep in mind, U.S. crude production had jumped from just 5.4 million barrels a day back in early-2010 to a whopping 9.7 million barrels per day this past spring. We are also seeing more headlines about Saudi Arabia looking to borrow $10 billion dollars and talk their government may be starting to feel the pain of cheap oil. Russia is also talking more openly about possible production cuts. Here at home this week economic data will be very light, today’s only release being the Labor Market Conditions Index, which isn’t heavily watched by investors but seems to be  something the Federal Reserve officials monitor. Keep in mind the jobs report this past Friday was extremely strong, showing employers added +242,000 jobs in February, well above market consensus. The government also revised upward its estimates for job gains in December and January by a total of +30,000. The negatives in the report were a -0.1% decline in hourly wages and a slight reduction in weekly hours worked. I suspect the main event this week will be the European Central Bank’s latest policy decision, which will be announced on Thursday morning. The trade is expecting the ECB to move rates further into negative territory. Keep in mind that the whole “negative rate experiment” is eyed with a high degree of anxiety as investors and economists alike aren’t sure what the ultimate consequences might be. While central bank stimulus has historically been viewed by Wall Street as a positive, the deeper move into negative territory may not illicit that traditional response. It doesn’t help that the ECB’s stimulus efforts have so far failed to prop up their waning economy, as just last week data showed the the EU block has slid back into “deflation.” Analysts are also expecting the ECB to increase its bond buying by […]

By |2016-03-07T11:22:01-06:00March 7th, 2016|Articles, Newsletter|0 Comments

Too many cooks in the advocacy kitchen? (commentary)

By Kelsey Faivre                                                                                                        February 19, 2016

A friend of mine mentioned that an agriculture professional came to speak with one of her on-campus organizations a while ago, bringing the message that every person involved in agriculture should be actively blogging and participating in social media “agvocacy” efforts. That’s a pretty common message in agriculture circles today.

Despite hearing this message, my friend still hasn’t started up a blog. Her reasoning?

“I’m not that good of a writer. I like plants, not writing, and I don’t have the time it takes to find accurate scientific information to back up my ideas. I don’t want to muddy the waters for people by contributing to an effort in a way that creates more confusion than good.”

That got me thinking. There’s no question that there is a need to educate consumers on the ways of modern agriculture. But I wonder if relative quality of advocacy messages may have an impact on consumer response and therefore the success of efforts to increase overall agriculture literacy.

It seems like everywhere you turn, agriculturalists are being encouraged to tell their stories, to be “agvocates.” In my opinion, it’s time to think a little harder about the ways we champion agriculture.

How can we advocate while recognizing our limitations of expertise?

Each individual in the agriculture industry has a different perspective and a different story to tell. But nobody is an expert on every topic! It seems like sometimes we are quick to jump to the defense of our fellow farmers, even if we don’t know all the facts about their segment of the industry. This creates confusion.

A good example of this is when some agvocates try to defend gestation stalls but confuse them with farrowing crates. This creates more of a problem, requiring experts to step in and try to provide clarification. In the resulting confusion, both the misinformed agvocates and the swine experts risk losing credibility and the industry seems like it can’t agree on a message.

Are we leaving room for more than one right answer?

The agriculture industry is not homogenous. People down the road from each other growing the same crops may make completely different management decisions for equally legitimate reasons. That’s something to celebrate and share. Advocating for a single production method while simultaneously discrediting those who use others creates confusion and resentment within the industry.

Is advocating badly more damaging than no advocacy at all?

I’m not sure there’s a right answer to this question. On one hand, there are a lot of cooks in the “agvocacy” kitchen. On the other, each of us has a different agriculture story and a different perspective, and there should be room for those in the conversation about food and farming.

Agvocacy efforts are fantastic and necessary. But are there times when inaccurate information, lack of scientific grasp, and/or difficulty communicating clearly makes for poor execution. Is it possible that it’s to the detriment of the industry? Certainly something worth pondering I would say.

Faivre was raised on a farm in Northern Illinois, where […]

By |2016-02-22T08:41:54-06:00February 22nd, 2016|Articles|0 Comments

U.S. Crude Supply Hits Highest Levels Ever Recorded

The Energy Information Administration reported crude inventories rose by +8.4 million barrels in the week through January 22, bringing the total in storage to 494.9 million barrels, the highest on record. The build was helped along by refineries only operating at 87.4% of capacity due to maintenance season. Refiners used approximately 551,000 barrels per day less oil than the previous week, with inputs averaging just over 15.6 million barrels per day. The reduced refinery capacity did lead to a reduction of gasoline and distillate production, but total gas inventories still increased, rising by 3.5 million barrels. Distillates (which includes diesel fuel and heating oil) on the other hand saw stockpiles fall by 4.1 million barrels. Much of that drawdown is being equated to colder weather however, so the demand increase may be very short lived.

 

By |2016-01-28T08:17:32-06:00January 28th, 2016|Articles|0 Comments

Morning Summary

Stock markets around the globe are stable this morning as WTI crude oil tries to perform a balancing act at around $30 per barrel. News that Iran made its first post-sanction oil sale to Europe and that Iraq’s oil production hit record levels last month was like pouring water on any type of bullish rally from last week. Also adding to the concern about the global oil glut was a comment made by the chairman of Saudi Arabian Oil Company, who said the company can withstand low oil prices for “a long, long time.” He also noted that the company had not cut investment in new production projects. With the world’s number one oil producer seeming to be content riding out “lower for longer” prices, there’s not much hope that the supply glut will diminish anytime soon. There are also more signs that the rout in oil prices is doing major damage to the economies of oil revenue dependent U.S. states, adding to overall uneasiness about the economy. North Dakota just announced they may be forced to raid their “rainy day fund” to make up million of dollars in budget shortfalls due to declining oil activity. Other states feeling the pinch include Alaska, Louisiana and Oklahoma, all of whom are projecting budget deficits as oil revenues fizzle. As for today, the U.S. Federal Reserve begins their two day FOMC policy meeting, the first since raising interest rates in December. No policy changes are expected when they announce their decision tomorrow (Wednesday, February 27), but investors will be taking a close look at their rhetoric regarding U.S. growth prospects and the lack of inflation. From what I understand, the trade is currently giving the Fed 0% chance of a rate hike this meeting and just over a 50% chance that it could happen by the the September meeting. Outside of a rate adjustment, the trade will also be looking for any changes in the Fed’s language surrounding global economic risks, particularly slowdowns in China and other emerging markets, as well as the possible implications of depressed global currencies versus a strong U.S. dollar. Economic data will pick up a bit today with the S&P Case-Shiller Home Price Index, Consumer Confidence and Richmond Fed Manufacturing numbers all scheduled for release. It will also be an extremely busy day for earnings. Apple, the largest company in the world by market capitalization reports after the close. Analysts are expecting revenue to be slightly below expectations, which would be the first time the company has disappointed in six quarters. Warnings from Apple suppliers indicate the company is cutting iPhone output by as much as -30%, so investors are anxious to see what Apple has to say. Also of great interest will be how the company is fairing in China, especially since the Asian giant has become somewhat of a major economic “unknown” the past several months. Keep in mind earnings are also due from AT&T, Corning, Dupont, Johnson & Johnson, Lockheed Martin, Procter & Gamble, Sprint and 3M, along with over 80 other major corporations. I continue […]

By |2016-01-26T14:21:21-06:00January 26th, 2016|Articles|0 Comments

U.S. Car Sales Set New Annual Record

U.S. vehicle sales broke the all the all-time record in 2015, though they did not finish off the year with quite the strength expected. December’s results still were strong, totaling a seasonally adjusted annual rate of 17.2 million units, rather than the lofty 18 million that many analysts were anticipating. Non-seasonally adjusted, total sales came in at 17.5 million, a +6% increase from 2014 and compared to the 2000 record of 17.4 million. According to Kelley Blue Book, the average transaction price for December sales was $34,428, up about $297 from December 2014. They also note that luxury sales spiked in December, accounting for around 15% of the market, more than 2% higher than the rest of the year’s average. In addition, SUVs and trucks continue to make up a larger share of sales, which is also helping to boost average transaction prices. Some individual company highlights included an +8% year-on-year retail sales increase for GM, boosted by high demand for Silverado and GMC Sierra pickup trucks. Fiat Chrysler’s annual sales were up +7%, with the groups Jeep brand sales up +42% in December alone. Ford’s full year sales rose by +5.3%, led by increased demand for its Lincoln brand MKC and Navigator SUV models.

U.S. Light Vehicle Sales

By |2016-01-06T07:46:18-06:00January 6th, 2016|Articles|0 Comments
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