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Sellers Push Risk-Off Move Friday

USDA report has long, bearish tail.

Wheat finished lower this week, behind the weakness of the recent USDA report. In a day when soybeans washed out after negative trade news and improving Argentina weather, wheat and corn found a bid lower as well. The weather situation has not changed in the Plains, and this week’s updated drought monitor worsened. But, money inflows saw today as a risk off type of day, as we reposition ourselves into the weekend.

Yesterday’s USDA report wasn’t much of a surprise to the wheat market as global inventory remains at a record level.  Russian exports have continued at a feverish pace and the increase transferred extra stocks back into our balance sheets.  Our own weather concerns for wheat may not rally wheat that much just yet as the increase in global stocks and Russia’s firm grip on wheat exports have kept a lid on the upside.

Drew Lerner reports that there will still be only one notable disturbance that impacts portions of the region in the first week of the outlook (mostly Saturday). Southwestern production areas will remain mostly dry. There may be some opportunity for showers in the drought-stricken southwestern areas March 16-17; however, the most meaningful precipitation will likely occur in the east and north again.

While the weather concern holds firm, this is the opportunity for producers to place hedges on the board – while the end user will want to consider the impact to their bottom line in wake of the CPTPP, and EU Protective Tariffs on bourbon as President Trump moves forward on aluminum and steel tariffs. These are supposed to begin in 15 days, and the world will begin to respond soon enough.

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