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Morning Outlook

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Overnight Highlights

·         Russia comes under increased international pressure as the war reignites in eastern Ukraine.

·         Greece raises risks for Europe after weekend elections put an anti-austerity coalition into power.

·         The dollar pushed higher overnight on uncertainty created by the Greek elections, but remained below Friday’s new 11-year high against a basket of currencies, although the dollar did reach a new 11-year high against the euro.

·         The currency market could become volatile once again Wednesday, depending on the Federal Reserve’s updated policy statement following two days of meeting. The Fed’s statement could propel the dollar higher, trigger a significant pull-back or something in between.

·         Crude oil dropped on the strong dollar, along with much of the rest of the commodity sector, but remained just above the recent 5-1/2 year low of $44.20 per barrel.

·         Wheat found support from the rising conflict in Russia, but gains are limited by the belief that U.S. wheat is too high-priced to garner business lost by the region.

·         Soybeans slipped to a new three-month low as traders gain confidence in the size of the crop.

·         Corn followed soybeans lower as the focus shifts from strong demand to the large supply available.

Commodity Weather Group Forecast

In the U.S., rains fell across the Southeast early in the weekend (.25 to 1.25”), and rain/snow fell in the Midwest yesterday (.10 to .75”). There will be additional light rain in NC today and light snow in the northeast Midwest mid to late this week, but accumulations will be light.

The cold push next week is capable of sub-0°F readings in the northeast Midwest but mainly in snow-covered areas to limit damage potential. S. Plains wheat should benefit from showers again in TX/OK next weekend and possibly next week as well. Delta/Southeast wheat will be drier until late in the 6 to 10 day, allowing wetter fields to drain. The 11 to 15 day showers remain focused in the South and should bring needed moisture to the northern Delta.

In South America, weekend rains scattered across nearly all of Brazil but were most organized in northern/western Mato Grosso, northern Goias, western Bahia, central/southeast Minas Gerais, southeast Sao Paulo, and northwest Rio Grande do Sul. The most notable rain deficits remain in patchy sections of Mato Grosso do Sul, Sao Paulo, Parana, northern/eastern Minas Gerais, Espirito Santo, central/eastern Bahia, and northern Goias (nearly 1/2 of coffee, 1/3 of sugarcane, and 20% corn/soy) for January, but scattered showers in the next week and expanding rains in early February should reach nearly all areas to ease any building stress.

Showers scattered across northern La Pampa, western Cordoba, and central Buenos Aires during the weekend, aiding soil moisture. Wet fields just to the north missed showers. The Euro shows extensive midweek rains, but our forecast keeps activity more limited. Wetness concerns should be able to ease in eastern Cordoba, Santa Fe, Entre Rios, and far northern Buenos Aires in the next 2 weeks as long as the wetter solutions do not verify.

Morning Market Snapshot

 

All opinions expressed in this commentary are solely those of Water Street Advisory. This data and these comments are provided for information purposes only and are not intended to be used for specific trading strategies. Although all information is believed to be reliable, we cannot guarantee its accuracy or completeness. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors.

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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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