The USDA has reported only 22% of the U.S. Corn crop planted versus the historical average of 50% by the second week of May. The U.S. Soybean crop was only slightly further ahead with 12% planted versus the historical average of 24%.
Ordinarily, such slow planting paints a bullish picture for prices, but the strength of the U.S. Dollar -- reaching levels not seen since the early 2000s -- is weakening export demand for both Corn and Soybeans. Besides the strong Dollar, the Chinese Covid lockdowns are restraining domestic demand and slowing port traffic, which also impacts Soybean imports.
These factors are helping to keep a lid on Crude Oil prices, which have been on a choppy decline since reaching a high in early March.
If the Chinese relax lockdowns as we get into the heavy summer travel months, then I would not be surprised to see Crude Oil prices hit fresh yearly highs, which would stoke ongoing inflation worries despite reports that CPI is leveling off.
Everything is setting up both commodity and stock markets for high volatility.
Actionable insight: Watch U.S. planting progress, Chinese Covid lockdowns, and the U.S. Dollar. And beware of factors flying under the radar -- especially unexpected events in Ukraine and China.
