Headlines:

  • The FOMC did raise the interest rate by 0.25% as expected. The current data shows that there will likely be two additional rate hikes in 2017 as long the US economy remains strong.
  • President Trump has hit yet another roadblock in his revised travel ban by US District Judge Derrick Watson of Hawaii. Watson put a restraining order on the travel ban, but Trump is willing to take it all the way to the Supreme Court to push the order through

Summary:

Short covering and technical buying helped Corn post another positive day after receiving a boost from a new export sale report from Mexico yesterday of 120k tons for Corn. The May contract breached new lows for 7 consecutive trading days and it is not uncommon for markets to pause after declining for about 7 days. The window between now and when export competition becomes fierce makes for an opportunity for Corn to pullback off of its recent 10-week low. May Beans “technically” finished higher but the range of the day’s move was an inside day. The trade continues to anticipate pressure from the looming competition from the South American harvest. July Wheat was flat finishing the day down 1 tick.

A few weeks ago, we suggested that the ideal area for the US Dollar find resistance would be at either 62% or 78.6% retracement of the January 3rd to February 2nd decline. It has since retraced to that level and as mention then we also pointed out that a short would best be played by waiting for it to hit one of those levels. As evidenced in the USD chart, you will find that the Greenback has been making a beautiful decline from the 62% level. Look for the USD to reach about 98.65 at a minimum with the possibility of reaching as far down as 97.50.

The recent weakness in the USD can be said to be a factor in price stability but in the case of Wheat, poor export sales killed any momentum that the currency might have added. We are at levels that often draws bargain hunters but long term plays to the upside may be suspect.