Traders are gearing up for U.S planting season. Bulls are pointing to overly wet conditions and the possibility of extreme flooding in many parts of the U.S. Traders are specifically keeping a close eye on the banks of the Mississippi River in parts of Illinois and Iowa, as well as the Red River and Sheyenne Rivers that could impact parts of Minnesota and North Dakota, and the rivers that run through eastern South Dakota. There are many other important areas that seem to be overly wet so I suspect the market will start paying more close attention. We are certainly keeping an eye on the overly wet conditions, but it’s somewhat a double-edged sword for soybeans as early-Spring wet weather generally prompts the market to think fewer corn acres and more soybean acres as planting will be delayed. In my opinion, weather really isn’t a factor in the market at this moment, but early on it might be a better bet made for the corn market? There are also some heavy rains falling in parts of Argentina that are now being monitored perhaps causing some yield loss and harvest complications. Overall, SAM weather isn’t extreme enough to worry the trade. Unfortunately, weather worries are taking a backseat to the more dire macro concerns surrounding corona and crude oil. We are seeing China come back online and in the market for some U.S. ag products. But the massive headwinds being created by crude and corona is making it very difficult for both corn and soybean bulls to gain much meaningful traction. Wheat continues to struggle as well with bulls finding it extremely difficult to hold rallies. U.S. exporters remain ancillary suppliers and not very competitive in the global marketplace with lower-cost providers in Russia and parts of the EU. Bears also point to a very difficult macro space and a massive amount of uncertainty amongst the funds. I can certainly argue some U.S. weather worries but that seems minuscule in the grand scheme of the quant and algo world. The computer models clearly digest and score the negative and more widespread macro headlines with a much greater ranking than the current weather hiccups in play. Bottom line, not a lot of sustained buying taking place in these troubled and worrisome waters.

To receive my daily commentary and updates on how I’m navigating the current market conditions, sign up for a free 30-day trial HERE.

Leave a Reply

Your email address will not be published. Required fields are marked *