Payroll Lull

Spooz  during pit hours have a 4.5 handle range!!pre payroll Lull for sure.Corn Having biggest down day  in months.The magnitude of the drop is not going unnoticed by the feeder cattle market as it now touched limit up as its cost of production drops. Soy and Wheat are trading little changed as are  Crude and  Brent.Outside of Corn and feeder,  markets appear to be waiting  for tomorrows payroll data.

USDA report

Soybean Numbers in line with consensus but  may lean to the bearish side  as Quarterly Stocks  are +15% higher   vs. last year and Planting intentions were higher than USDA reported 1 month ago.

Corn did have a bearish Surprise as Planting intentions were higher  then all forecasts.Corn Quarterly stock were 1% higher than last Year   and  dead on with Consensus.Plenty of people already short corn so downside may be limited. may Corn  down 50 ticks on a new contract low.

Wheat had a bullish Surprise with planting intentions down 9% vs. Last year and  well below what USDA reported last month(49.6 Mln  vs 51 mln.),What has offset  this bullishness  is that Quarterly stocks were  some 20% above last years number.

The quarterly numbers are more pertinent because we can actually count it,whereas plantings will change weekly.So thus muted reaction in grains as the surprises were in the Planting Intentions.

Quarter End

Jobless claims came in a bit above consensus,Chicago PMI was better than expected but neither had a lasting impact on trade.WE have seen some erratic movements today in the trade.In the cattle complex  we have some some hefty short covering activity,Treasury curve Unwinding or profit taking from the steeping trades we have seen last few days.Dow and russell in the red Spooz trying to stay above the gap ,which is below 2052,nasdaq up small.So far no real rhyme or reason for movements so  I will blame the Quarter end adjustments for the “themeless” trade so far today.

Grains heavy as We await crop report at 11:00.

Looking towards Europe and london Close to see if volatility kicks up a notch due to the Quarter end.

Cattle and Evans Comments

Feeder  Cattle  limit down.The  Box beef values took a big hit this morning, down over 1.1%.The breaking of Support and Seasonal weakness all played a part in lower prices cattle not yet at limit but down 2.5 handles.

The weakness In gasoline and strength in Dollar could not be ignored  and crude Oil continued to  trade lower with less than 1 hour to go in pit session.Weakness in  Crude has put a dent into the Equity rally ,but as long as Spooz can stay above yesterday’s pit high 2047 very short term uptrend intact.

Feds Evans answering Questions after his speech.A few Dovish comments I see:

  • Don’t fear pushing Inflation above 2.5% for awhile( They can stay lower for longer w rates)
  • Fed could get in trouble trying to prick Bubble
  • Feds’s caution gives US economic fundamentals  time to take hold.

All above comments  lean towards   A FED in no hurry to raise rates.Echoing what Yellen said yesterday, Dollar moving lower.

Rollercoaster Ride

The Ups and downs of US dollar driving the action today.Dollar stayed  lower  most of day but caught a decent bid into  The London currency  Fix at 10:00.The  higher Dollar caused an unwind of Long Stocks,Short bonds trade.Gold which  has been struggling to stay positive all day surrendered gains  as did Silver.Without the threat of negative rates Gold  has very little in the way of Bullish Support.Yellen in her speech yesterday hinted at Easing Measure the Fed has available to them,negative rates was not mentioned.

Weekly EIA numbers did nothing to stop the Bullish move in crude oil as the Numbers leaned bullish. Whereas  gasoline was the exception as the Demand for it last week dropped.Crude Oil and Brent have followed the move lower in gasoline after initial pop on storage numbers.

The European /London close time frame of 10:00-11:00  usually is a period of increased activity,Today no exception. Profit taking / position squaring did ensue  as a  short-term risk off trade took place.Reminder payroll on Friday will keep most speculators shortening their time frame for trades.

I am curious to see the trade post 11:00 to see if the mini risk off trade is just due to European close.European Stocks markets still closed with solid gains  with Dax +1.6%

Wrap up

Risk On Sentiment prevailing into close.In the Spooz looking at 2047 the highs from last week and a multi week high,I wouldn’t think it is stiff resistance but  a level to keep an eye on. Euro +104 ticks as the dollar drops for a second day.Dollar was up for 6 consecutive days  and now is down for 2, the Trend is your friend.Fridays payroll number could easily turn this all around if wage data proves  to be strong. .The yield curve has  traded steeper as the front end yields drop  more than the back-end.

Oil, surprisingly stayed offered throughout the afternoon as  worries about a hefty Stock build could not be ignored.API this afternoon predicting  a build of 3.3 Mln barrels


Yellen Follow up

yellen did not give any hint towards an April hike,as did  4 Regional bank presidents. her words are the one’s that count. In her Q & A   portion . Yellen said   still worried about global slowdown impacting US Growth.This seems to be what is holding them back from raising rates aggressively.Yellen also said that there is more slack in the labor market than Unemployment rate indicates.Thus saying that even though UE rate is low by historical standards  it has more room to drop to achieve full employment.Thus  less rate hikes,and the  cautious approach to raising rates.Inflation while  low appears to be moving up.

Still more dovish than hawkish language.the question is do Stock Markets take this as a negative? or rally because of goldilocks scenario?  I think they  rally as commodities should catch a bid  and help  rally the sector.


Dovish Comments from fed chairwoman.

  • will proceed cautiously in adjusting policy
  • too early to tell if inflation pickup is lasting
  • Inflation outlook become uncertain
  • Global developments pose ongoing risks to US economy
  • reading on US economy Somewhat mixed in 2016
  • ..AND  she mentioned QE and Forward guidance if needed to stimulate economy

Follow up Wheat


Kansas firefighters are, hopefully, close to extinguishing what is the biggest ever brush fire in the top US wheat-growing state, claiming 400,000 acres of land in an area including Oklahoma too.

OK, the damage from the blaze to potential wheat production is not huge. Commodity Weather Group estimated that only about 20,000 acres of hard red winter wheat (the type grown in the southern Plains, and traded in Kansas City) was hit.