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Grains were Subdued in the Overnight Trade Session

Crude oil added to its winning streak overnight trying to make a third-day in a row of gains

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Grains were subdued overnight as corn and wheat were mostly unchanged, while soybeans recovered to above $9 a bushel on front month May. Crude oil added to its winning streak overnight trying to make a third-day in a row of gains, and up $11 a barrel since its low on Feb 11. The US dollar index also found some modest support after two days of an intense sell off.

The slide in the US dollar is starting to have a noticeable impact on FOB grain price comparisons around the globe. Yesterday, the US soybean FOB price dropped below Brazil’s price for the first time since the US harvest in October. For most of the US post-harvest season, the strong dollar has put US soybeans at a $0.40 a bushel premium to Brazil, but that quickly reversed in the last week thanks to the falling US dollar and strengthening Brazilian Real.

In wheat yesterday, markets sold off sharply in Kansas City with somewhat of an improved outlook this weekend’s weather. Forecasters see temperatures not as cold as originally expected in the Plains. Previous forecasts of a hard freeze in Kansas and Colorado had put a bit of a weather premium into wheat in recent days.

The corn market came close to overhead resistance early Thursday at $3.73 and quickly turned lower on wheat’s sharp retreat. However, there is still gap support at $3.65 which is the key to shifting this pattern back down. Right now, it looks like that will be our near term range.

In oil, anticipation has grown that major oil producers, including countries outside the Organization of the Petroleum Exporting Countries, will join a production freeze at January levels. A meeting is set in Qatar on April 17 to discuss an output freeze. Many analysts say the market needs to see more a definitive reduction in supply in order for crude to continue its rally. Some countries indicated that participation by Iran wasn’t required for a deal. Iran is set to ramp up output following the removal of international sanctions.

The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a dba of Foremost Trading LLC (NFA ID: 0307930)

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