After being repeatedly thwarted by the pandemic, I finally made it to Mexico for a family vacation recently. Hot temperatures, cool drinks, and not a thought of the commodity markets — until the flight home.
Crop report
There’s not much to the crop report from above 30,000 feet. Most of the southern United States looked more brown than green on April 2, although there were a few signs of life as winter wheat breaks dormancy.
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Pockets of snow appeared over Iowa, while Minnesota was fully white. Cloud cover limited what brief Canadian view there was, with those clouds bringing a bit more snow to Manitoba as the plane touched down.
Snow in April is nothing new to southern Manitoba. It won’t be long until it’s all melted and seeding is underway for the next crop. A late melt could shift some planted area, with talk of reduced spring wheat area in the northern U.S. already propping up Minneapolis wheat bids, so as always, the weather remains a key market moving factor to watch.
Ocean waves
Living on the Prairies, the ocean is usually more of a distant thought than an actual reality, although I have heard it said that Prairie folk make good sailors because we’re used to wide open spaces of nothingness.
However, just as anyone from the Prairies knows there are multitudes of variety within that flatness, the ocean is also in constant motion. After swimming in the ocean, I could still feel that motion lingering when lying in bed at night.
That ebb and flow is reminiscent of technical charts. Prices move in waves, with the canola market hitting a trough in late March before climbing back up and dipping again to start April. The movement of speculative fund money has been a major feature in that chart activity, with the buildup of a large short position finally starting to be covered. The fund position remains large and will continue to influence the chart waves.
Turbulence
The flight home from Mexico was relatively calm, although there were some spots of turbulence. Commodity markets can be like that too. Everything seems to be going smoothly, until it’s not.
Most recently, OPEC+, the Organization of Petroleum Exporting Countries and other nations, made the surprise announcement on April 2 that its members would start curtailing oil production beginning in May. The stated reasoning had to do with stabilizing volatile energy markets, but the immediate reaction saw crude oil prices climb sharply higher.
Oil is the blood of the world economy, with adjustments in the crude market influencing currencies and commodities as well. Developments in Ukraine, news out of China, and other unknown factors can also disrupt the smooth flight.
