The Good: It has always fascinated me that the market spends so much time”reading between the lines” of the U.S. Federal reserve policy document that accompanies the interest rate decision. The text today in the markets mind pointed the way to unchanged interest rates for the foreseeable future. This pressured the U.S. dollar with the nearby U.S. dollar index trading down sharply today at 91.44 points. The strength of the U.S. dollar has been a concern for commodity markets, including the agricultural commodities.
The Bad: The canola markets turned sharply lower today as the market continues to adjust to the relative value when compared with other commodities. May canola futures dropped to C$784.50 per tonne during today’s trading session. The reason for the drop in values is likely the fact that canola futures had stretched values to C$155 per tonne above May soybean futures. With the large divergence between canola and soybean values, periodic corrections will occur to bring the canola futures back in line.
The Ugly: The corn and soybean markets were pressured today by the rains that have fallen in Argentina this week. The forecast is calling for precipitation to fall mostly in the northern growing areas of Buenos Aires, Entre Rios and Santa Fe. The problem is that the harvest is already underway in these northern growing areas. The rains are needed in the south and the current forecast is calling for mostly dry weather in the region. These rains are going to cause harvest delays rather than add any measurable bushels to corn production.