Headlines:
- The USDA reported yesterday that US net farm income was down 17.2% in 2016 and at a 7 year low. The largest loss overall came from the livestock sector
- The European Commission has proposed a law to reform the EU energy market’s use of biofuels. It is attempting to reduce first generation biofuels use from a projected 7% in 2021 to 3.8% in 2030
- Booming grain output to stress Argentina’s infrastructure
Argentina’s growing agricultural productivity will demand large-scale investment in inland transport capacity, Roberto Viton from at agricultural advisory firm Valoral, told the AgriRisk Forum. The election of Argentina’s new president Maurico Macri at the end of last year will be a boon to farmers, boosting agricultural exports over the long term, Mr Vitton said. Mr Macri’s administration has removed with export quotas and tariffs for a range of commodities, from corn, to beef, to soymeal, while soybean tariffs are expected to be reduced over coming years. And the devaluation of the currency has improved farmer incomes, encouraging production and exports.
- Grains, coffee, sugar tumble as ‘bears look back in charge’
The bears look to be back in charge.” So said broker Benson Quinn Commodities, thinking in particular of the soybean market, but with grains, coffee and sugar markets looking firmly in sellers’ grasp too. Chicago wheat, the world benchmark, for March settled down 1.8% at $3.96 a bushel, ending below $4 a bushel for the first time (for the March contract). Chicago corn futures for March, also the best-traded lot, finished down 1.5% at $3.43 ¼ a bushel, the weakest finish for the contract in two months.
Summary:
The OPEC agreement for production reduction continues to make waves across the Crude Oil market space. The March Crude contract is testing highs from early October and seems primed to exceed them without issue. Upon breaking the June highs Crude should be off to the races. Breakout traders will assuredly try to capture a move through the June 8th high but often times the 1st attempt through an obvious breakout level will trap novice traders. The US Dollar took a small breather today and was down about 50 basis points late in the day.
As would be expected both Corn and Wheat struggled today. March Corn lost 5.25 cents and March Wheat surrendered 7.25 cents. March Beans was down as much as 10.50 cents intraday but managed to recover when the regular session bell rung. March Beans finished the day flat. Concern over export demand moving the US to South America has been part of the reason accredited to the recent weakness in the grain markets. Today’s export sales that Beans was closer to the higher end of trade expectations but Corn was at the bottom end. Wheat was shy of reaching the middle of its expectation range.
