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Agricultural Commodities Pre-March WASDE


  • Risk-off pushes prices lower.
  • Soybeans and corn under pressure into the WASDE report.
  • Wheat moves lower from the recent high.
  • Cotton remains weak from Coronavirus-related selling.
  • Animal proteins near the bottom of trading ranges.
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The prices of most of the agricultural commodities were not immune to the risk-off action in markets across all asset classes over the past weeks. Meanwhile, it is the wrong time of the world for market participants to become overly bearish when it comes to the products that feed and clothe the world. Each year is a new adventure in agricultural markets as the weather conditions in the United States, and other producing nations of the world are the chief determinate of the direction of prices. A drought or weather event that wreaks havoc with supplies can cause extreme upside volatility in agricultural markets, as we witnessed in 2012 when drought conditions took corn and soybeans to all-time highs and wheat to a lofty level. Uncertainty over the annual crop tends to peak during the spring and early summer months.

On Tuesday, March 10, at noon EST, the US Department of Agriculture will release its March World Agricultural Supply and Demand Estimates report. The WASDE is the gold-standard when it comes to market fundamentals. Farmers often use the monthly report as a guide that drives their choices at the beginning of the crop year.

The Invesco DB Agriculture Fund (NYSEARCA:DBA) holds futures contracts in many of the products covered by the USDA's WASDE report.

Risk-off pushes prices lower

The final week of February was the most significant risk-off period since the 2008 global financial crisis. One thousand point moves in the Dow Jones Industrial Average have become the norm rather than the exception. The spread of Coronavirus around the world has caused fear and uncertainty to grip markets across all asset classes. At a time of the year when uncertainty over the 2020 crop year should be rising, agricultural futures markets have been sensitive to the increased price variance.


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This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website about.com and blogs on his own site dynamiccommodities.com. He is a frequent contributor on Stock News- https://stocknews.com/authors/?author=andrew-hecht

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

The author always has positions in commodities markets in futures, options, ETF/ETN products, and commodity equities. These long and short positions tend to change on an intraday basis.

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