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Morning Outlook

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Overnight Highlights

·         Snow in Washington, D.C. this morning is slowing the release of scheduled government reports, while much of the rest of the country remains cold.

·         Consumer prices fell 0.7% in January, although the core rate that removes food and energy rose 0.2%.

·         The dollar is solidly stronger this morning and crude oil back below $50 per barrel, setting a negative tone for the commodity sector.

·         Rains were very limited and scattered favoring mostly northern/eastern Mato Grosso and far northern and southern Mato Grosso do Sul yesterday.

·         Rains increase again from this point forward for much of the next 15-day outlook, delaying harvest and keeping safrinha corn planting delays a factor.

·         A look at similar years suggests that we could see Brazilian corn production drop to 70 mmt, reducing exportable supplies by 160 to 200 million bushels from current projections.

·         The Plains are colder for next week, but a fresh coat of snow is expected to protect the wheat crop that has come out of dormancy.

·         Argentine soybean prices are dropping as harvest approaches, with supplies at the Rosario grain market at $7.32 to $7.59 per bushel yesterday.

·         The International Grains Council raised its world wheat crop estimate by 2 mmt when the trade had expected a modest decline.

·         Export sales for the week ending February 19 included 28.2 million bushels of old-crop and 5.8 million bushels of new-crop corn, 2.1 million bushels of mostly new-crop grain sorghum, 16.9 million old- & 1.3 million new-crop soybean bushels and 12.1 million old- & 4.8 million new-crop wheat bushels.

·         Corn and soybeans are 2 cents higher and wheat 1 to 3 cents lower this morning. All are weaker following release of the export sales data.

Commodity Weather Group Forecast

In the U.S., showers covered the southern 1/2 of the Delta and Southeast yesterday (.50 to 2”), with snow in northern IL/MO (1-3”). Showers end in the Southeast today, and the main precipitation shifts to the Plains and Midwest. Two systems cover much of the area with snow by the middle of next week, with 3 to 8” common and up to a foot possible in some areas in the central Midwest.

The snow should protect the Plains wheat from colder trends next week. The added moisture in the Plains wheat will benefit spring growth over the next month. Additional showers in the Delta and Southeast next week should eradicate most of the remaining soil moisture deficits. Lighter rains in the 11 to 15 day in the Delta should keep ponding minimal.

In South America, showers were limited in Brazil yesterday but scattered across northern/eastern Mato Grosso, far northeast/far southern Mato Grosso do Sul, central/eastern Sao Paulo, central Minas Gerais, and southern Rio Grande do Sul. Rains will increase in northern Brazil for the rest of this week and through much of the 6 to 15 day, particularly for northwest areas. This will continue to hinder any improvement in the safrinha corn seeding pace and will slow soy harvest, with 6 to 15 day rains also likely to slow port movement in central areas.

The continued corn seeding delays are significantly raising the risk for additional acreage and/or yield loss in Mato Grosso. Coffee/sugar areas will benefit from expected rains.

Argentina was drier than expected yesterday, as rains favored central/northern parts of Cordoba and Santa Fe and northern/western Entre Rios. Showers have underperformed in far southern Santa Fe and northern Buenos Aires in the past 2 days, and rain chances remain somewhat limited. This could threaten some minor stress in early March for up to 1/4 of the soy.

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

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