What We're Watching This Week - March 20, 2017

COMMODITIES

Are Cotton Futures In Correction Territory?

Cotton futures hit a multi-year high in March, due, in large part, to near-term supply tightness in the export markets and speculation over the quality of China’s cotton stockpiles. Whether or not futures are entering correction territory will also be driven by the final size of Australia's harvest—the world’s third-largest exporter—during the next few months. Given that Eastern Australia faced a sweltering summer, we will be monitoring initial yield reports as the harvest starts rolling in across Queensland.

CLIMATE-WEATHER

Cold Front Sends Shivers Through Wheat Markets:

Due to a cold snap across the Ohio Valley, there has been some concern that #Snowmageddon may have damaged soft red winter (SRW) wheat fields. While Chicago SRW wheat futures bounced upward this past week, the market seemed to mostly brush off the potential weather impact as global stocks remain flush. Still, we will be keeping an eye on winter wheat crop ratings from the USDA in the coming weeks, especially with wheat also facing dry conditions in the US Plains.

LIVESTOCK

Reduced Profitability May Trim Cattle Placements:

The USDA will release its monthly Cattle on Feed report Friday. After a 11 percent jump in cattle placements on feedlots in the US during January 2017, ample cattle supply may have dampened placements in February. Beef packer margins have been volatile, so sales from cattle lots likely behaved the same in the past month. Given the potential for slower US cattle placements, we will also keep a close watch on feeder cattle imports from Mexico and Canada.