CME's Scott Shellady on the Volatile Grain Markets and the Back and Forth Hog MarketMon, 12 Oct 2020 12:23:38 CDT
Scott Shellady knows as the Cow guy with the CME group. Its been a pretty volatile summer for all the markets, but the wheat prices have been pretty good this past week. Associate Farm Director, KC Sheperd spoke with Shellady on Friday and he says, 'there are a lot of traders out there that trade the relationship between wheat and corn, and you cannot have any reason for wheat and corn to rally, but if corn and soybeans are skyrocketing around you, those relationships, they try to keep those ratios the same, and that will also drag it up, so we've had a lot of other reasons out there."
Producers have been worried about the prices of corn lately, and Shellady says they do have a cause for concern, "That's going to be a big issue if corn gets that expensive." However, Shellady says the good news is that we have seen our biggest customer come back in China, and we have also seen some other parts of the country open back up, so we've seen some demand come back that way, "There's a lot to talk about, and for the first time in a long time its all pretty good,"
The hog market has been pretty volatile this summer as well. Shellady said he would love to see something come out from the government supporting the prices right now, "just solidify things. Just take a little bit of the volatility out and give people a chance to grieve and decide how we will take the next step higher, and how we are going to attract those new customers to the market.' He says it can get quite dangerous when the numbers move too fast because you can't get a solid footing.
Some will say it matters with an upcoming election around the corner, and some will say it doesn't. Shellady says he disagrees because they are looking at an efficacy of a vaccine, to get all those people to go back into restaurants and spark that demand, "They are also looking at how well the economy is doing running at only 25% restaurant capacity, but even with only 25% full, we still see this demand comeback." Lastly, Shellady reminds us that we have a federal reserve that says they will stick behind the markets, "and so those three things all, especially the last one, would be good for our markets because you are going to see more capital out there and you will see folks trade in our markets for products because the more capital, that might be inflationary, boy oh boy, inflation is going to have an impact on the things we trade."
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