AM Comments 03/06/15
Friday, March 6, 2015, 8:03 AM
Submitted by: Dustin Weiner
For the most part, the overnight session was quiet. Although, there is one chart that is sticking out this morning: the US Dollar. The $US rallied hard again last night and is now at a 12-yr high. This of course is not friendly - as a general statement: strength in the dollar is negative for commodity prices that are based in US Dollars. Example… the dollar is 22% stronger today than it was at this same time last year (compared to the Euro). That means that when looking at a $9 soybean – that same $9 bean is actually 22% higher (pushing it to approx. $11.00) this year than last year when converted to Euros. (AKA, the US soybean it looks more expensive to potential buyers). The $US has also rallied against the Brazilian Real – which means that even on a day where the Chicago Board of Trade is steady/weaker, farmers in Brazil are receiving higher prices for their soybeans and of course are rewarding that with sales which weakens basis.
Normally if I spend the whole “AM Comments” writing about something like the US Dollar – you can assume the rest of the markets are quiet and I really don’t have much to talk about… and that holds true today, you caught me! While long term a strong dollar is bearish to commodities, in the short term we do have a lot of information left to gather (just not today) before forming better opinions/guesses on price through the summer. The next stab of fundamental news comes Tuesday with the March S&D, another projection at carryouts for this summer. Normally the March S&D doesn’t hold a lot of surprises – the real excitement comes at the end of the month with quarterly stocks and planting intentions…
Corn 2 to 4 cents lower
Soybeans 1 to 3 cents lower
Have a great day!
Monthly $US Index chart for the last 5+ years: