Hello, I'm Mark Pearson.
It would appear inflation is not much of a factor to the nation's economy. Last month wholesale prices slid 1.9 percent, the biggest monthly drop on record. Retail prices fell 3-tenths of a percent, the biggest drop in a year and a half. It's unlikely that interest rates, currently at forty year lows, will rise very soon. Yet the economy doesn't seem to be expanding much. The tax cuts narrowly approved by the senate this week aren't likely to stimulate economic expansion immediately. Meanwhile the low interest rates that weaken the dollar aren't likely to lure foreign capital to finance the expanding U.S. government debt. The Euro hit four year highs this weak against the dollar.
One bright spot in the current monetary situation lies in the export sector. No one knows the domestic upside of a weak dollar better than American farmers. Markets are moving, even as weather has stalled planting progress.
The rip up in the commodity markets already had begun when USDA released its world crop outlook. In fact, market reaction to the report was somewhat muted.
Even so, some of the news was significant. The government says U.S. soybean stockpiles this year will be at their highest in four years. Officials cite an expected slump in exports for the higher carryover. Soybean competitors are cutting into U.S. sales overseas. Argentina likely will export nearly a third more soybeans in the coming marketing year. Brazil, too, is expected to sharply increase soybean exports.
On the flip side, U.S. corn exports are forecast to rise by some 225 million bushels. Worldwide production of … and demand for … corn will increase. Indeed, U.S. corn production is expected to rise by 12 percent this year, with prices as high as $2.30 a bushel.
Wheat production in the U.S. is forecast to explode this year, up 31 percent from last year. U.S. wheat exports should rise by about 1 percent.
And, USDA predicts world cotton inventories will sit at nine-year lows by the end of the marketing year. Forecast U.S. cotton production of 17.2-million bales was at the low end of market expectations, and helped push nearby cotton futures prices higher.