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Morning Outlook

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Overnight Highlights

·         Government offices in Washington, D.C. are closed today due to forecast snow in the area, although USDA is expected to release export sales data this morning.

·         China sets its growth target for 2015 at 7.0% GDP growth, its lowest target in 15 years.

·         The dollar continued to new highs overnight amid lingering global economic problems and as the markets await the details of the European Central Bank’s bond buying program later today.

·         China’s finance minister said that country will spend $24.66 billion on stockpiling grains and other commodities, which is up one-third on the year.

·         China will also return 1.65 million acres to forest and grassland this year to improve the environment. China has a significant land pollution problem.

·         Soybean prices saw modest pressure overnight as the flow of newly harvested supplies continues to increase in Brazil.

·         Wheat prices slid lower overnight and are just above contract lows on reports of favorable crop prospects from Russia and the Black Sea region.

·         Most wet areas of Argentina dry out until Friday, before two storm systems reach the region.

·         A limited downturn in showers is expected in northwestern Brazil through the weekend before the pattern turns wet again.

Commodity Weather Group Forecast

In the U.S., a band of heavy rain/snow (.50 to 1.5”, locally 3”) fell in the southeast Midwest/northern Delta yesterday, exacerbating flooding in the OH Valley. Snow accumulations of 4 to 12” (locally 18”) have occurred in that band. Low-lying wheat areas will be subjected to standing water.

Warming over the next week will lead to snow melt and additional excess wetness issues in AR/KY/TN. Sub-0°F readings in the eastern Midwest tonight do not look damaging, given extensive snow cover. Eastern Plains wheat has better rain potential in the 11 to 15 day, which could benefit drier areas in OK. Potent 11 to 15 day showers in the Delta are likely to delay early corn planting, and cool, showery 16 to 30 day will likely keep progress slow.

In South America, thundershowers scattered across southern/northwest Brazil yesterday, mostly in northern Rio Grande do Sul, western Parana, central Mato Grosso do Sul, central/southeast Mato Grosso, eastern Goias central Minas Gerais, and Espirito Santo.

A bit of a reduction in showers occurs through the weekend in northwest Brazil to offer slightly better opportunities for late safrinha corn seeding, but the pattern is too showery in the rest of the 15-day period to see any notable recovery from current delays. Soy harvest and port loading will mainly slow in central Brazil through the weekend and to a lesser extent in the 11 to 15 day. Coffee/sugar rain chances remain quite good.

Argentina will see showers limited to the western edge of the belt until next Friday, but two frontal passages then occur by the end of the 15-day period. The break is welcome for wet corn areas in the northwest ¼ of the belt, but the subsequent rains may still prevent concerns from easing quickly. Early harvest progress will be sluggish in Cordoba/Santa Fe, with some localized losses occurring.

China Wheat Still Likely to See Rains Expand Into Belt From South in 11-15 Day. Showers will be active in rapeseed and far southern wheat areas over the next 10 days. Most models support an expansion of showers into at least the south 1/2 of the wheat that would boost spring growth.

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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