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Morning Outlook

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Overnight Highlights

·         Russia lowers its key interest rate to 14% as inflation pressures ease.

·         Crude oil drops below $46 after the IEA warns of lower oil prices as U.S. storage facilities fill up amid burgeoning supplies.

·         The dollar traded both sides of unchanged and is currently posting modest gains as the currency market consolidates.

·         Wheat prices continue their recent gains on short-covering amid Plains drought concerns despite improving weather forecasts for the region.

·         Soybeans remained under the pressure of rising South American supplies that are drawing demand away from U.S. shores.

·         Corn prices consolidated in a very tight range while waiting for clearer direction.

·         Rain continues to focus on northern Brazil, resulting in minor harvest interruptions.

·         Rain chances improve for the Southern Plains for next week.

Commodity Weather Group Forecast

In the U.S., rains (.25 to 1.5”) favored the western 1/2 of the Delta yesterday. Showers cover the Delta/southeast Midwest today and then taper off tomorrow. Rains return to the Delta faster now at the middle of next week, which is likely to keep early corn planting very limited. Wetness in wheat fields lingers as well, but expected rains should not be enough to increase damage threats.

Rain potential increases for S. Plains wheat next week and would bring much needed rains to support early growth in the drier areas. C. Plains wheat is not favored for showers until the 11 to 15 day, but those rains could still provide a timely boost to that area as well. Midwest cooling holds off until late in the 11 to 15 day, and wheat should be able to break dormancy with minimal damage threats. The 16 to 30 day trended wetter for the Midwest, which could slow early fieldwork.

In South America, showers occurred in mainly northwest/far eastern Mato Grosso, central/southeast Goias, west-central/far southeast Minas Gerais, Sao Paulo, and eastern Parana yesterday in Brazil. Central/northwest areas remain favored in the next 10 days, with a chance for rains to expand through all of the north by the 11 to 15 day. This will aid moisture for safrinha corn/coffee/sugar growth but will hinder soy harvest a bit in mainly Mato Grosso/Goias/northeast Mato Grosso do Sul/Sao Paulo.

Argentina saw rains favor southwest Buenos Aires overnight, with a chance elsewhere in the west/far south into tomorrow. While much of the guidance does lean drier in the extended outlook (particularly in the 11 to 15 day), our forecast added some rain to the 6 to 15 day outlook. Late February wetness has been easing slowly in Cordoba/Santa Fe with recent drying, but these showers may continue to hinder early corn harvest slowdowns and threaten some minor soy losses.

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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