The week of September 24, 2018 has the potential to be a Risk-On week for many equity and commodity markets. This implies likely near-term price firmness to strength for several hard-asset equity and commodity markets.

Will rice, grain and cotton producers be beneficiaries? Short answer, near term seems price supportive.  Grains and soft commodities likely need a period of three to six months where market participants’ risk appetite is the dominate trend. Presently, one can make an argument that the current emerging Risk-On trend lasts four to eight weeks.  

Policy Intervention. For this discussion, simplistically we have two ways to look at fiscal, monetary, and trade policy intervention market impacts. First, global economic momentum will be maintained no matter the costs through orchestrated intervention, though this ongoing activity faces increasing headwinds and uncertain outcomes, so expect varying levels of market impact and turbulence.  Second, a massive global financial storm is brewing that will result in escalating financial tensions between countries globally. This will result in escalating, first, trade friction and, second, fiscal and monetary policy tensions. It also implies major periods of stimulative intervention followed by corrective periods.

Glass Half-Full. Finding a resolution to ongoing collective policy disputes will take time, but the current Risk-On market appetite indicates market participants see many more positives than negatives remaining in the current business cycle.

Cross Currents and Misdirection Norm. The global currency, bond, equity, and commodity market crosscurrents and misdirection continue presenting huge navigational challenges for market participants. This likely will not change until the end of the current business cycle. The market cross currents and misdirection are a function of ongoing fiscal, monetary, and trade policy actions that direct and fuel stimulus driven global growth. These elevated levels of market uncertainties are likely to be the norm for market participants until the next recession, and the next recession may not emerge until mid-2023.  

Market expectations over the next several weeks.

Of Interest

 Rice Outlook Webinar:  Larger Supplies, More Competitive Prices, and Record Global Trade Are Projected to Boost U.S. Rice Exports in 2018/19 with USDA’s Agricultural Economist Dr. Nathan Childs, Thursday, September 27, 2018. The September 27 Webinar will analyze the most current USDA forecasts for both the U.S. and global rice markets. For the U.S., a substantial increase in supplies, more competitive prices, and record global import demand are expected to boost U.S. rice exports 13 percent. Despite larger exports, U.S. ending stocks are projected to increase 53 percent. In the world market, smaller crops in India and China are projected to pull global production down 1 percent from the 2017/18 record. World rice trade is projected to again reach a new record, led by increased demand from Sub-Saharan Africa and the Middle East, as well as by continued strong purchases by China.

Link to Register:   http://bit.ly/UAEX-Rice-Childs-Sept27

New Video: Climate Change, CO² and Rice Production in the 21st Century: Now what? Dr. Ziska, Plant Physiologist with the USDA’s Agricultural Research Service in Beltsville, Maryland, September 20, 2018.Rice is widely recognized as a major caloric source globally. What challenges do rising carbon dioxide and climatic uncertainty pose for global rice production? From threats, to consequences; from challenges to promise, Dr. Lewis Ziska, former project leader for climate change at IRRI, discussed a range of issues related to quantifiable and qualitative rice impacts; from pollen sterility, to increased weed pressures; but also stressed opportunities, with a focus on genetic and management adaptation.  Video Link: https://youtu.be/zdfUpJEfkoo

 Bobby Coats is a professor in the Department of Agricultural Economics and Agribusiness, University of Arkansas System, Division of Agriculture, Cooperative Extension Service. E-mail: [email protected].

 Download Slide Show for charts and expanded details, Click Download Link

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