- It is reported that Brazilian farmers have held and/or stored a larger share of their recent harvests due to the rising value of their currency, the Real. The Real has rallied 19% to 0.335 since late 2015. The ending of the Dilma Presidential political crisis and lowering Central Bank interest rates in late 2016 due to improved economic activity has helped support the currency, yet US farmers should be asking when or can a larger rally in the value of the Real unfold? Such a rally is needed to limit further acreage/seeding expansion. It feels doubtful that a sustained rally in the Brazilian Real can unfold until a commodity bull market is confirmed.
- Chicago markets have been, and are, trading either side of unchanged today with little impetus seen to place bets on long or short positions ahead of Friday’s report. Post-report will see focus shift towards weather for the new growing season. Current fear is that Friday will reveal record US corn and soybean plantings, but, as we wrote yesterday, we have yet to be convinced this will be the case and remain sidelined.
- Slightly weaker Chicago values are based upon renewed fund selling as the saying goes, “the trend is your friend”. However, with the end of the quarter dead ahead and funds’ holding their largest net short position at the end of March on record, it is no place to be a seller. Our hope is that Friday’s report comes out slightly bearish (larger US March stocks) and that futures have one final push downwards. The odds are high that the world will have at least one major weather scare into summer.