This week we see the USDA's stock and acreage reports tomorrow (March 31st), followed by two big U.S. employment reports: weekly U.S. jobless claims Thursday, monthly U.S. nonfarm payrolls data Friday.

Markets have priced in a lot of positive government stimulus over the past week (S&P rallied +10.0%, best week in 11 years), including the Fed's interest rate cuts and the $2T fiscal stimulus package signed Friday.

Investor focus will now shift back towards the duration and severity of the Covid-19 outbreak, extended business shutdowns, and impact on the global economy. Headlines were negative this weekend: Confirmed Covid-19 cases in the U.S. are approaching 150k (globally 750k), Trump has backed off his Easter opening push, U.K. might be on lockdown for six months, Italian Covid-19 deaths > 10k. 

Beyond the negative macro environment, price seasonals remain bearish for agriculture futures in April (exception cocoa and canola seed) before turning more positive in May. Most agriculture futures seasonal price patterns point to selling in April.

This weekend's COT positioning report was relatively quiet: we saw small short-covering inflows in chicago wheat, kansas wheat, soybeans, and meal...all markets with fundamental stories (U.S. wheat/pasta stockpiling, potential Russia export quotas, Argentina port closures). Chicago wheat, soybean meal, matif wheat, arabica coffee, and white sugar look expensive & overbought vs data from the past 24 months; cattle, cotton, and corn stand out as cheap & oversold.

What Matters This Week:

Tomorrow's USDA stocks & acreage reports will be a significant fundamental driver as the market prices new farmer-projected planted acreage and production numbers.

The macro environment will again be the main non-fundamental input for ag markets and we're getting deeper into Covid-19 impacted data this week. This Friday's NFP jobs report will likely be the first negative print since Sep 2010 (-100k jobs expected). Tomorrow is also quarter end, which could lead to additional funding market and macro volatility.

Aside from the negative macro environment, seasonals are still a headwind for prices in our markets and structure looks bearish for overbought markets like chicago wheat, arabica coffee, and soybean meal - these markets have plenty of headwinds, especially if fundamentally-driven buying pressure abates.

Bottom line: Beyond the USDA stock/acreage #s tomorrow, watch market sentiment via S&P 500 / crude oil / U.S. dollar and trader reaction to the two big job reports on Thursday and Friday this week. USD weakened a lot last week, any restrengthening on this week's job reports would negatively impact our markets. 

Chart of the Week: Covid-19 is causing dislocations in agriculture markets. Flour and pasta stockpiling has driven wheat futures to five-year highs vs corn futures.

For a trial of our industry-leading agriculture research, reach out to us: insight@peaktradingresearch.com.