Fundamentals and Techs lean friendly heading into the Fed announcement.
Ag markets posted gains for the week, with wheat and cotton being the strongest movers.
55% of US corn area and 50% of soybean area is currently reported as being under drought, but crop-condition scores for both crops were unchanged on the week. Cotton condition scores continue to reflect Texas stress, with 40% of the state’s production rate as poor to very poor.
The 6-10 day outlook calls for well above normal temperatures, centered in the Texas gulf region, gradually moderating, moving north toward the central corn belt. The outlook for moisture is slightly more favorable, with most regions assessed with near- to above-normal rainfall prospects.
The tech picture continues to look friendly for most major crops.
Corn achieved a bullish moving average cross this week, so all three grain markets are now in that phase. Cotton posted new highs for 2023 as it topped 87 cents per pound. CFTC reports showed an increase in open interest across all markets and managed money traders added length in all markets, further supporting the friendly vibe.
Output from today’s Federal Reserve Board meeting is the most significant macro event this week.
A rate hike is widely presumed, but most market attention will be given to reading the Fed’s plans for later this year – i.e. will rates continue to climb in the second half of 2023?
The Black Sea grain transit agreement ended and both sides in the Russia-Ukraine conflict subsequently announced their intentions to stop and inspect any unknown vessels. Market watchers are guardedly optimistic that seaborne shipments will resume as weeks go by, but for now the lane appears to be closed.
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