After witnessing another panic washout to the downside in the equity markets yesterday, I was feeling cautiously encouraged that the “get me out now” mentality had not bled over to the grain markets. Of course, we still had the evening session as so by no means was the all-clear horn sounded, but as it has turned out, we only witnessed minor pressure into this morning. Again, maybe it would be premature to claim the worst is behind us, but for the ag sector, but for now, at least we can take a sigh of relief. I am not so sure that the same can be said for our cousins in the equity trade. Yes, prices have rebounded from initial overnight pressure, but as it stands right now, those markets are staring what should be a huge outside lower monthly reversal, from a record peak no less. Yes, we could see a rebound before Friday, and if spot S&P 500 futures are back above 3181, it will have turned out to be nothing more than a volatile month. That said, if we fail to reach back above that point, such price/chart action is often a good indication that the party is over.
Ag-specific news is really quite sparse this morning, which is not all that unusual at mid-week, particularly when there are only a few days left in the month. News from Ukraine is almost like rubbing salt in the wounds of the US export trade. Cumulative grain exports for the 2019/20 marketing year has just topped 40 MMT, which would be up 23% over the same period last year. Of this total, 19.1 MMT is corn and 16.5 MMT wheat.
Of course, it might help if we finally see the US Dollar begin to stumble, and there could be early signs that may not be too far off. During the past few weeks, as the Covid-19 alarm bells began to ring, investors rushed in the Dollar (and gold) looking for a safe harbor, and we witnessed as push up and through the 2019 peak. Be that as it may, the strength could not be sustained for the Friday close and even with all the other frantic action in other markets this week, the Dollar remains lower. By the way, the number of confirmed recoveries from Covid-19, now outpaces new ones. I recognize that it seems like it has been forever that we have been waiting for a reversal lower in the Dollar, and I suspect once we have moved beyond this current health panic, we will begin to discover the real value of our currency.
