Everyone loves to talk about oil… and artificial intelligence.
It’s either the focus on the global commodity driving transportation systems or the latest hot momentum trend in the tech space. For the life of me, I can’t seem to get many people to focus on the things that matter.
You can get by without oil and natural gas. It might be difficult, but it’s possible.
But you can’t get by without water and food.
And right now, we have a severe problem on the U.S. food front. Let me take you through the latest in the world of agriculture – and why there’s a problem brewing in America today.
Hot, Hot, Hot
The map below is the heat map of the United States Department of Agriculture’s Drought Monitor. Right now, things are scorching in Nebraska, Kansas, and Oklahoma. The darker the image, the worse the drought.
That yellow stretches from the Texas panhandle all the way up through Missouri, Iowa, Indiana, and Minnesota. That’s corn and soybean country. In simple terms, the USDA says the U.S. is experiencing its worst drought in 30 years; about 34% of the U.S. corn crop is experiencing drought, and 28% of all soybeans. Places in Nebraska and Iowa are running low on water – a major drought trend that will likely extend into the foreseeable future.
But those planting numbers are just an appetizer for something much bigger.
On Friday, the USDA will release its critical monthly report, the WASDE (World Agriculture Supply & Demand Estimates). While it’s still very early in the season (planting is nearly complete), it can guide us on global supply and demand expectations.
More importantly, the USDA will release its quarterly Stocks and Planted Acreage Report at the end of this month. And that is by far the most important report in the agricultural space.
The June Stocks and Acreage report is the final estimate of what is coming for America for its 2023 harvest. Why does it matter? Because we’ll be looking at the expected bushels per acre when drought is picking up.
When analysts increase or reduce planted acreage by one million acres, that’s like saying that the number of bushels per acre has increased or decreased by 2 bushels. That’s a huge increase or decrease in U.S. supplies.
But there’s another important number in that report that you need to understand – the meaning of “stocks” here.
“Stocks” in the equity market and “stocks” in the agricultural market differ greatly.
You might know stocks as the shares in a company that people buy and sell – giving them the right to equity in a company. In agriculture, however, “stocks” are stored grains on farms and within the supply chain. It’s the existing inventory of that grain.
So, if the “stocks” number comes in lower than estimates, which signals that there is less available supply than expected. This could lift prices higher – assuming no dramatic uptick in planted acres and expected supply during the harvest later this year.
Looking ahead, farmers will use this report to plan their harvest and activities on their properties. They’ll decide how much of their expected harvest they want to sell on the futures market – and how much they might let sit in inventory in the future. Traders will also speculate on the price shifts and try to speculate on whether corn prices go up due to acreage or drought conditions.
But investors – for the long-term – should recognize that farm investment is critical in the future – and that there is an entire world of opportunity in the agricultural supply chains. Tomorrow, we’ll look at various parts of this supply chain and give you a starting point on how to succeed in the commodities we need to survive.
Today’s Momentum Reading
WORLD’S BIGGEST INDICATORS
Recap: The World’s Biggest Indicator (Momentum) is Green
Markets initially popped this morning with gains in the technology and commodities sectors; however, the advance proved fleeting as the chances of a quarter-point hike grew for June and July. As a result, the Nasdaq 100 (QQQ) has seen a decline of over 1%, primarily influenced by the downward pull of tech giants Amazon (AMZN), Google (GOOG), Apple (AAPL) and Microsoft (MSFT). Now the question remains: Can the afternoon Dip Buyers Club save the day?
Wednesday’s #1 AI pick
Shah Gilani, our Chief Investment Strategist here at Money Map, is eyeing an AI hotshot that’s set to rock the financial stratosphere. Why? The word on the street is this company’s on the edge of a revolution, with a flurry of potential contracts that could add billions to their coffers.
But, time’s ticking! There’s a lean allotment of shares up for grabs. Miss this wave, and it’s gone for good.
Remember Monzo? Their shares were snapped up in a blink – 96 seconds, to be precise. Today, they’re towering at a $4.5 billion worth. Early adopters saw an eye-popping peak return of up to 32,600%. A $2,000 investment could have brought back a cool $1.6 million.
Then there’s Pax8, the $5 million newbie of 2012, that sprinted to a billion-dollar value in a few short years. Their rocketing success story represents a whopping 34,000% gain. These gains aren’t unicorns; they’re more common in this playground than anywhere else.
Now, Shah’s hot on the trail of this new contender. Find out why this AI prodigy’s got his full attention. Discover more here.
June 07 2023