Bobby Coats and Bert Greenwalt attend Ag council of Arkansas meeting
Bobby Coats and Bert Greenwalt, agricultural economists with the University of Arkansas and Arkansas State University, catch up at the Agricultural Council of Arkansas annual meeting in Little Rock.

Strengthening foreign equity markets supportive of commodity market complex

U.S. equity markets have been consolidating gains during the first quarter while foreign equity markets have been outperforming U.S. markets.

The end of the first quarter of 2017 finds the U.S. equity market consolidating gains and many foreign equity markets starting to outperform U.S. equities, all being a good sign for building global economic momentum and demand for commodities.

First quarter market performance for select markets:

  • India up 19.44%
  • Mexico up 16.37%
  • Emerging Markets up 12.51%
  • Brazil up 12.36%
  • Australia up 11.76%
  • China up 10.89%
  • Technology Sector up 10.66%
  • Nasdaq Composite up 9.82%
  • Cotton up 9.46%
  • Consumer Discretionary Sector up 8.37%
  • Health Care Sector up 8.25%
  • Global Equities Excluding U.S. and Canada up 7.90%
  • Utilities up 6.44%
  • Consumer Staples Sector up 6.11%
  • Australian Dollar up 5.91%
  • Copper up 5.87%
  • Materials Select Sector up 5.78%
  • S&P 500 up 5.53%
  • Japan up 5.04%
  • Industrial Select Sector up 5.04%
  • Japanese Yen up 5.02%
  • Dow Jones Industrial Average up 4.56%
  • Wheat up 4.53%
  • Corn up 3.48%
  • Canada up 2.79%
  • Financial Select Sector up 2.43%
  • British Pound up 1.66%
  • EURO up 1.27%
  • Canadian Dollar up .90%
  • Dow Jones Transportation Average up .80%
  • S. Dollar down 2.02%
  • 10-year U.S. Treasury Yield down 2.04%
  • Russia down 2.59%
  • CRB Commodity Index down 3.44%
  • Soybeans down 5.78%
  • Light Crude Oil down 5.81%
  • Energy Select Sector down 6.64%
  • Natural Gas down 14.34%

For the next one to two months:

  • S. equities likely need some minor corrective activity
  • Global equities in general likely show more strength than weakness
  • Dollar more weakness than strength
  • 10-year Treasury yield more bullish than bearish with a lower yield
  • Oil prices must hold current levels or commodity complex in general faces building headwinds
  • Corn and wheat finishing a corrective period and move higher
  • Major soybean correction still underway
  • Rice: March 31, 2017 prospective planting report neutral
  • Cotton still has price potential to 84-cents per pound
  • Lean Hogs and Live and Feeder Cattle all building price strength
  • Natural gas prices have found support

To see this week’s charts – Click on http://www.deltafarmpress.com/cotton/market-price-considerations-week-april-3-2017

Today’s global reflation trade, which seems to be on-again and off-again, remains in motion with building domestic and global economic momentum.

Near Term Market Summary Considerations Week Beginning April 3, 2017

See link above.

  • 10-Year US Treasury Yield:
    • Slightly bullish with a potentially lower yield
    • Yield remains in a sideways range between 2.3 – 2.6
  • US Dollar Index:
    • More weakness than strength
    • Trading range developing between 95 -104
  • CRB Index:
    • Cautiously bullish as the index ever so slowly builds a base to move higher
    • Between Fed off-again and on-again accommodation and building uncertainties surrounding fiscal, trade and regulatory policy stimulative activities, this key economic indicator has struggled
    • Bigger Picture: Global macro forces in general remain supportive
  • $WTIC Light Crude Oil:
    • Light Crude Oil is presently defining a near term price floor
    • Global economic, social, political, and military uncertainties remain supportive of prices
    • Additional price weakness will likely send shockwaves through the commodity sector
    • 2017 – Likely primary range $40 to $60 with possible high in $72 area
  • Soybeans:
    • A move to $9.31-area maybe lower is now in play
    • Fundamentals and fiscal, monetary, trade and regulatory policy are presently all problematic for soybean prices until a price floor is in place
    • Simply stated watch the price action to define a bottom In soybean prices
  • Corn:
    • Corrective price action should or be close to concluding with pricing opportunities improving
    • Price action should start defining our upside potential
  • Rice:
    • Given fundamentals, price will move in sympathy with grain prices and global economic momentum and agronomic outlook
    • March 31, 2017 USDA Prospective Planting Report supportive of infrastructure, but lagging demand problematic
    • Rice producers’ overriding consideration for 2017 should be managing for a quality grain kernel
  • Cotton:
    • Complex price action underway with a bullish price objective into the 84-cent area still remains in play
  • Wheat:
    • Corrective price action completing, but bullish price potential to $4.95 still a possibility
  • SPY SPDR S&P 500 ETF:
    • Consolidation underway
    • Price trend remains up
  • QQQ NASDAQ Power Shares:
    • Consolidation likely
    • Trend remains up
  • EFA iShares ETF - Global Equities Excluding U.S. and Canada:
    • Building momentum and price strength
  • EEM iShares ETF, Emerging Market Equities:
    • Momentum remains positive
  1. Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, Division of Agriculture, University of Arkansas System. E-mail: [email protected].

DISCLAIMER-FOR-EDUCATIONAL-PURPOSES

 

 

 

 

TAGS: Cotton Corn Rice
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