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Morning Outlook

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Overnight Highlights

·         Greece’s new leader will deliver his new plans for debt relief Sunday after talks with Germany failed this week and the European Central Bank cutoff preferential funding for the nation’s lenders.

·         The dollar and crude oil have been strong indicators of grain prices over the past week. The dollar consolidated in a narrow trading range overnight, but crude oil built on Thursday’s gains.

·         As such, grain and oilseed prices posted modest gains overnight.

·         This week’s bullish island reversal remains intact on the continuous commodity index chart, attracting fresh money into the broader commodity sector.

·         Wheat prices led the way higher overnight on hopes that Egypt will soon use a $100 million U.S. grant to buy some of our wheat, although they are not likely to do so until/unless they are happy with the price/quality of the wheat offered.

·         Rains continue in northern Brazil through Monday, before shifting to southern areas for the 6- to 15-day period.

·         Showers should benefit drier areas of southeastern Argentina Sunday and Monday.

·         Snow cover should protect Midwest wheat from another cold surge late in the 6- to 10-day period.

Commodity Weather Group Forecast

In the U.S., showers were confined to the Pacific Northwest wheat yesterday (.10 to .50”, locally 1”). Rains focus there in the next 5 days and should ease moisture deficits. Midwest snow will be confined to northeast fringes of the belt in the next 2 weeks. A strong cold push late in the 6 to 10 day extends sub-0°F readings into the NE 1/4 of the belt. With some snow melt, there could be limited areas at risk, but the Euro is not as cold and the damage threat remains low. Showers are still forecast for drier sections of the Delta in the 11 to 15 day, but drier areas of the S. Plains still lack rain potential in the next 2 weeks.

In South America, showers scattered across Mato Grosso, western Mato Grosso do Sul, northern/far southeast Goias, central/northern Minas Gerais, and southern/eastern Bahia yesterday in Brazil. Rains will continue in the north through Monday, with the most notable rains (2 to locally 6”) in the northeast 20% of the soy and the heart of the coffee belt (which were the driest areas last month).

A strengthening subtropical storm still poses no threat to land as it moves into the open Atlantic this weekend. Rains otherwise shift focus to the south in the 6 to 15 day, although a few scattered 11 to 15 day storms may develop to the north. The southern shift will aid late soy growth, while giving the northwest favorable conditions for soy harvest and safrinha corn seeding. Moisture supplies will begin to slip again in coffee/sugar areas, although the current rains will limit concerns for now.

Showers were very limited in Argentina but increase by Sunday/Monday in much of the corn/soy belt. Occasional showers are then possible in the 6 to 15 day around the edges of the belt but will be more limited overall. The main risk for any building dryness concerns this month should be limited to the southeast 15% of the belt in Buenos Aires.

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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