Headlines:

  • Grain markets, ag shares ‘close to bottom of cycle’ – BlackRock
    Ag markets are “at or close to” their nadir, heralding gains which will spur recovery in valuations of farm sector shares from levels that are “close to historic lows”, said Skye Macpherson, commodities expert at BlackRock. Ms. Macpherson, director, natural resources at the fund management giant, flagged the potential for an end to the period of growth in world grain stocks which had fostered falls of some 40% in prices of corn, soybeans and wheat from 2012 highs. “We have never had a fifth year of expansion” in stocks, she said. “That does not mean there will not be one in 2017, but it is interesting to note what we have seen historically.”
  • Glencore approaches Bunge, in quest to ramp-up in agriculture
    Glencore said that its agriculture division it had made an “informal approach” to Bunge over a deal which would fulfill long-held plan to win scale in the farm sector, ambitions restated in February. Swiss-based Glencore said that its Glencore Agriculture business – in which it sold a 50% stake last year to two Canadian pension funds for more than $3bn – had approached Bunge “regarding a possible consensual business combination”. Separately, Bunge – one of the big four “ABCD” group of agricultural trading houses, with Archer Daniels Midland, Cargill and Louis Dreyfus – said that it was not engaged in talks with Glencore. “Bunge is committed to continuing to execute its global agri-foods strategy and pursuing opportunities for driving growth and value creation,” the group said. Bunge shares closed up 16.6% in New York overnight, giving it a stock market capitalization of some $11.5bn, with first reports of the approach released before the Wall Street close. Glencore shares eased 1.6% to 287.4p in early deals in London on Wednesday.

 

Summary:

The US Dollar keeps falling and its weakness continues to offset potential grain and soybean prices. Soybean finished down 2 ticks while Corn and Wheat were up 1 and 2 cents respectively. The Brazilian currency continues to swoon under the weight of its president’s corruption investigation. We recently our research revealed that a covered call recommendation was in order with the most recent rally. It seems that today a major investor did just that given the open interest movement today. That move put a bit of pressure on Corn intraday but it was still able to recover. The sideways movement that has beset the markets might hang around a bit longer. For now, market participants are torn between potential quality issues and a timely planting progress.