Headlines:
- Adecoagro upbeat on sugar price prospects, citing Brazil, El Nino
Adecoagro, flagging the potential for a drop in Brazilian cane volumes, said it was upbeat on the prospects for a sugar price recovery – even as futures extended a recovery in New York. Mariano Bosch, the chief executive of Adecoagro – the South American corn-to-milk producer whose major shareholders include celebrated investor George Soros – said that the group was “not worried in terms of sugar prices”, despite a steep drop in values from November highs. “We think that the fundamentals are still there, and we should expect better prices going forward with sugar prices,” Mr Bosch told investors. The group cited the potential for lower sugar cane production in Brazil’s key Centre South region in the 2017-18 season, which started last month.
Summary:
The headlines are suggesting that a weaker dollar propelled the AGs higher today but its timing is in line with our projections for Corn and Soybean to begin running higher for what may be viewed as a summer rally into the middle or end of June. After hitting a 14 year high, the US Dollar finally hit the minimum downside price projection that we published several weeks ago. More rain is on the horizon after growers were able to take advantage of a small window of beneficial weather last week to plant about 23 million acres of Corn. Last week’s aggressive planting pace will come to an end this week with storms rolling through the Corn Belt. Anticipation of an upcoming average crop rating is making for some short covering which also contributed to the strength seen today.
After settling in an oversold position, Wheat has once again started showing signs of trying to rise again. Investors are coving short positions now that it has hit key support levels that we projected weeks ago. The 416 level that the July contract reached appears to be a level that should stand for some time.
