Agriculture futures are adjusting to different post-USDA, OPEC+, government stimulus, and weather-related crosscurrents this morning after the long Easter holiday weekend. 

This weekend:

• The OPEC+ group agreed to a 9.7mm barrel/day production cut beginning May 1st.

• Covid-19 hot spots continue to ease: fewer NY patients, fewer Italian and French cases; Fauci sees select openings by May, MN Fed's Kashkari sees 18 months of false starts.

This is a busy week for economic data, with a focus on U.S. jobs, China data, and earnings: 

• U.S. Retail Sales and Empire Manufacturing (New York) data Wednesday

• U.S. Jobless Claims (exp. +5.0mm new claims) Thursday

• Chinese GDP (exp. -6.0%), Industrial Production, Retail Sales on Friday

• Q1 earnings season kicks off: JPMorgan, Wells, Goldman, Citi, Schlumberger this week.

Macro sentiment has improved on the combination of COVID-19 curve-flattening, new CB stimulus (Fed now buys junk bonds), and OPEC+ energy market backstops. The S&P 500's +12% rally last week was the best since 1974. This morning S&P 500 futures are ~flat, brent crude is up +4.0%. 

The U.S. Dollar remains an x-factor; USD has been steady, torn between miserable weekly employment numbers (negative dollar) and flight-to-safety funding flows (positive dollar).

We're approaching an important inflection point for price seasonals in agriculture markets; corn, chicago wheat, soybeans, and meal futures prices tend to rise in May and June. The seasonal spring low for these markets, basis front-month prices the past 10 years: 

• Corn = April 20th (next Monday)

• Chicago Wheat = May 7th

• Soybeans = May 10th 

• Soybean Meal = May 2nd

This weekend's COT positioning report was relatively quiet, showing small net outflows from corn, chicago wheat, meal, and sugar. The two main COT takeaways:

• Recent macro volatility has driven HFs to cut positions and hedge fund gross exposure remains low, near levels last seen in Jan 2012. Long interest in the soy complex is at new multi-year lows (chart below).

• Hedge fund positioning is a ~neutral input overall: white sugar and matif wheat join chicago wheat and arabica as the expensive and overbought markets.

What Matters for Ag Futures This Week:

Covid-19 curve-flattening and massive government stimulus packages have boosted sentiment and last night's OPEC+ decision removes the tail risk of $10/barrel crude.

For our agriculture futures markets, the US dollar is still a missing macro puzzle piece - a weaker US dollar (esp vs BRL) would be a solid tailwind for agriculture futures and would push our macro rating into positive territory.

Price seasonals (still slightly negative for the coming weeks) and market structure (neutral) are less important inputs in light of the massive macro volatility we've been seeing.

Watch data this week - especially China on Friday - and watch the U.S. dollar. USD down = Ags up.

Chart of the Week: Macro volatility, negative China sentiment, big South American production numbers, and a strong US dollar have been big headwinds for soybean, meal, and bean oil prices. Speculative long positions across the soy complex are at multi-year lows.

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