Friday morning musings……

Global currencies remain depressed at multi-year or record lows vs the US dollar. Stated another way, the US dollar posted new 10-year highs this week. As for ag commodity markets in various currencies, Chicago corn, wheat and soybeans have performed the worst. Corn is down 21% from last year; wheat is down 25%; soybeans are down 33%. This year’s decline, as well as lower projected prices in 2015, was cited in the reduction in farm income and acres revealed by the USDA’s 2015 Outlook Conference. Outside the US, the decline in price has been much more subdued – or even reversed. Soybeans in Brazilian reals are down just 14%, which is comparable to $12.50/Bu. Russian wheat is up 25%, comparable to $8.00. Aussie wheat is down 13%, comparable to $5.50. Ukrainian corn is nearly double March of 2014 – comparable to $9.00/Bu. We should be mindful that non-US producers will be more willing sellers relative to their US counterparts amid better local currency values.

This week it was reported that US crude oil stocks are record large for late February – and still growing. The chart below reflects that crude oil bounced off a weekly uptrend line that connects the 1998, 2002 and 2009 lows (long term support?). The break in 2009 was produced by a sharp contraction in US domestic demand, while the bottoms in 1999 and 2002 were on an abundance of supply. There is a possibility that the trend-line could be broken in the next few months with spot oil dropping to test the 2009 lows at $32.50.