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Morning Outlook

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Overnight Highlights

·         Grain and oilseed prices rose early in the overnight session, but then turned lower as the euro fell and the dollar rallied through the night.

·         The euro weakened as fears rise ahead of Wednesday’s emergency meeting in Brussels to discuss Greece’s demands to renegotiate its debt while slashing austerity.

·         The stronger dollar saw money flow back out of the broader commodity complex.

·         The exception was crude oil, which added to last week’s gains after OPEC cut its forecasts for global supply growth as U.S. rigs turn idle.

·         Weekend rains favored northern Brazil, but now shift to central and southern areas, allowing harvest to progress, as well as safrinha corn planting.

·         Showers favor central Argentina corn and soybeans tonight before refocusing on drier western areas into next week.

·         Midwest winterkill threat to be limited by snow cover.

·         USDA releases its February crop report on Tuesday. Trade expectations for the report are as follows:

U.S. Ending Stocks

2014-15

Wheat

Corn

Soybeans

billions of bushels

USDA February Report

Average Trade Estimate

0.689

1.879

0.398

Highest Trade Estimate

0.730

2.002

0.440

Lowest Trade Estimate

0.595

1.817

0.356

Previous USDA Estimate

0.687

1.877

0.410

Water Street Solutions

0.697

1.817

0.369

 

South American Production

Argentina

Brazil

Corn

Soybeans

Corn

Soybeans

Yield in bushels per acre

Production in billions of bushels

USDA February Report

    Pre-Report Estimates

Average Trade Estimate

22.54

55.58

74.56

94.67

Highest Trade Estimate

28.50

59.50

76.00

96.50

Lowest Trade Estimate

21.20

54.40

72.80

93.00

Previous USDA Estimate

22.00

55.00

75.00

95.50

Water Street Solutions

22.50

55.50

75.50

94.50

Commodity Weather Group Forecast

In the U.S., weekend showers favored the Pacific Northwest wheat (.10 to .75”, locally 2.5”), with only very light showers (<.25”) in the northeast 1/2 of the Midwest yesterday. Light snow is possible in the Midwest (1 to 3”) later this week and again on the weekend.

Cold pushes will follow these snow events and will need to be watched for winterkill threats, mainly in southern parts of IL/IN/OH. Currently, the cold events should not be quite strong enough to cause damage, and snow cover will increase. Showers are possible in the Delta in the 6 to 15 day, which would ease dryness and improve spring growth.

In South America, weekend rains were substantial in northern Brazil and favored Mato Grosso, Goias, central/northern Minas Gerais, Espirito Santo, and Bahia. Most areas averaged 1.5 to 3”, but locally 4 to more than 6” were reported (heaviest in central Minas Gerais). The rains did slow soy harvest and safrinha corn seeding in the northwest, but showers focus back to the south until the end of the 10-day to allow fieldwork.

The southern rains will maintain favorable moisture for southern soy growth. Recent rains also have eased stress for coffee/sugar areas for now, with only about 15 to 20% of the region still short -changed. 6 to 15 day rains will likely return to most sugar areas but focus on the southern 1/2 of coffee, with a similar pattern possible in the 16 to 30 day.

Argentina picked up rains in mainly central/far southwest Santa Fe, southern Cordoba, La Pampa, and far southern Buenos Aires during the weekend, with the wettest weather tonight/tomorrow as rains head into the heart of the corn/soy belt. Showers otherwise focus on the west in the balance of the 15-day period. Eastern areas will need to be watched for developing dry patches, but concerns should be limited to no more than 15% of the belt for now.

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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