The Good: The USDA report was shrugged off by the market yesterday as the prospects for increased stocks of corn did not seem to phase the market. Spring wheat was not featured in the USDA report, but futures have been quietly trying to stage a rally. Planting progress for spring wheat remains behind normal with only 42 pee cent of the crop in the ground at the beginning of the week. This certainly push any concerns about a late season increase in spring wheat acres this year. The weekly spring wheat chart is constructive as the bounds of the 20 and 40 day moving averages are have been tested and have held. There is a seasonal tendency to rally during the spring after planting. The market need to break out of the 40 day moving average of US$5.26 per bushel to open up higher levels. Keep a close eye on the spring wheat close at the end of this week for signs of a potential rally.
The Bad: Senator Lindsay Graham from South Carolina – a pork and soybean producing state, decided to announce yesterday that he would be introducing a bill to censure China if they don’t “come clean” on the COVID-19 outbreak. Of course equity markets moved lower in the overnight session on the news. Just when the impacts of the U.S. trade deal should be kicking in, U.S. politicians seem to want to punish China. Without a trade deal, the numbers that USDA just published are not realistic as China would quickly retaliate to new U.S. measures related to the coronavirus.
The Ugly: Equity markets appear to be poised for a rough week. Ongoing concerns about China and the weak economy continue to roil the markets. The risks of reopening the economy and the impact on the economy is the largest concern. COVID-19 cases have flattened in the U.S., but some areas of the country are reopening the economy as the number of cases moves higher. Market valuations currently seem to projecting a “perfect” reopening of the economy.