Miller Magazine Issue: 149 May 2022

72 COVER STORY MILLER / MAY 2022 •Excessive rain in parts of Australia might be ben- eficial in the long term, but short term it causes con- cerns for potential planting and early germination. •US corn planting delays have raised some con- cern, however, about 70% of the US belt is set to benefit from wet weather and warmer tempera- tures. Will above logistical constraints coupled with per- sistent weather concerns have a lasting impact on the trade and how does one trade these extremes? Well, US corn futures posted new highs last week: old- and new-crop posted contract highs amid another large daily export sales announce- ment to China (the 4th in excess of 1 million tons in April) and the slowest planting pace on record since 2013. China also continues to buy US old-crop soybeans, which is keeping the market well supported, despite talk that corn planting delays could switch some additional acres to soybeans. Poor HRW crop condition rat- ings and spring wheat planting delays offset a surge to a 20-year high in the US dollar index, which adds concerns with already-sluggish US wheat export demand. Pricewise US nearby wheat futures (July 2022) are trading at $11 after breaking the downtrend on Indian ban rumors following extreme heatwave there and on the US weather outlook. Matif wheat futures also continue to show the uptrend. September futures reached 400 Euros on very dry weather in France and elsewhere in Eu- rope. Alarmingly, the northern part of the country is to remain dry in the next coming two weeks ac- cording to EU weather models. It should be noted that the current strength in the grains futures plays off against robust inflation. Staggering PPI inflation numbers out of the Euro- zone include a 5.3% month-on-month reading. And US inflation rate hit new 40-year high with the US consumer price index rising to 8.5%, the highest rate since December 1981. Hence, recent interest rates hikes by the Federal Reserve as well as firm market expectation of further more aggressive tightening in the US as well as in Europe. Not sur- prisingly, stock markets are not living their best days: this week Dow Jones tumbled 1,000 points for the worst day since 2020, Nasdaq dropped 5%. At the same time, there is a problem in the bond market. The sell-off in bond prices over the last six months has been nothing short of an ex- treme. As shown be- low, the Bloomberg US Aggregate Bond Mar- ket Total Return Index is currently 8.5% below its 200-day moving av- erage. Commodities in general and grains in particular offer a safer bet investment-wise. Taking above into consideration, grains remain an attractive investment focal point, nothing short of a safe haven investment-wise in current tumultu- ous times, and consequently, whether we like it or not, the fireworks in the grains’ prices are long from being over yet.