Headlines:

  • Hedge funds wrong-footed in ags by Trump biofuels shake-up talk
    The rumor mill surrounding US President Donald Trump squeezed ag speculators – spurring a sharp rally just after hedge funds had undertaken a major sell-down, including their biggest turn bearish on softs in more than a year. Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from corn to sugar, by nearly 123,000 contracts in the last week of February, analysis of data from the Commodity Futures Trading Commission regulator shows.
  • China sales help cotton to 3-year top. Dry Plains lift wheat
    Chinese demand, or US dryness, proved strong cards for agricultural commodity bulls to start the week. Without the support of one or the other factor, well, the prevailing trend for prices was downwards, little helped by strength in the dollar, which gained 0.3% against a basket of currencies to recoup some of its losses of the last session. (A firmer dollar cuts the competitiveness of dollar-denominated assets, such as many agricultural commodities.)

    As for the US dryness factor, that referred to the dearth of rain on the US Plains, which is again beginning to attract attention, now that winter wheat crops are breaking dormancy, lifting their moisture requirement. “The wheat market continues to be supported by the lack of rainfall in the Plains,” said Darrell Holaday at broker Country Futures. “The increased dryness is in the western one-third of Kansas and eastern Oklahoma,” states in which 37% and 73% of area, respectively, are rated in drought by the US Department of Agriculture. There is “no indication of a [weather] pattern change in the next couple of weeks”, Mr Holaday said. While the latest GFS weather model run “is projecting a large amount of rain in the Midwest and South East in the next couple of weeks, the western Plains remains dry

Summary:

The end result for both Corn and Beans was pretty neural when the dust settled today. Corn finished the day down marginally and Soybean was up a couple of tics. After rumors swirled last week, the White House announced today that it was reviewing the possibility of key changes to the US biofuels policy. The review of the policy can from billionaire investor Carl Icahn. The administration officially has “no position” on the issue at this time. Dryness and warn weather across key regions sparked a 5.25 cent gain in Wheat market. The lack of movement today should probably be attributed to the upcoming USDA report that is scheduled for March 9th. There are still plenty of bearish supply data the suggests the downward pressure is forthcoming, especially for Beans. But there are still offsetting factors such as the bullish positon of Managed Money. The demand scenario for both Bean and Corn will be very important indications as well. We look for the upcoming report in a few days to be a market mover.