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Morning Outlook

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Overnight Highlights

·         The dollar has traded nearly 500 points lower this morning as the euro gains a bit more upward momentum on positive economic data.

·         A senior OPEC official stated overnight that rising global demand should support crude oil prices between $55 and $60 per barrel, despite a rising glut in the United States.

·         The chief analyst for CWB, the old Canadian Wheat Board, states that he expects global wheat production to fall 21.5 million metric tons to 703.4 mmt this year, while corn production falls 16.2 mmt to 973.5 mmt. However, other analysts speaking at a global grain conference see the global wheat crop as high as 720.8 mmt, with corn at 984.9 mmt.

·         Ukraine expects its wheat production to fall by roughly 75 million bushels this year due to unfavorable weather at planting and due to lower acreage.

·         A Reuters’ poll of trade participants reveals expectations that U.S. corn area will drop to 88.7 million acres this year, down 1.9 million from the previous year.

·         That same poll revealed expectations that soybeans will rise to 85.9 million acres, up 2.2 million acres from 2014.

·         Corn attempts to add to its gains this morning, with the December contract probing above the 100-day moving average on expectations of fewer acres this year.

·         Soybeans and wheat are modestly weaker in this morning’s trade.

·         Delta rains are limited over the next week, allowing corn planting to progress, but rains expand across the area again in the 6- to 15-day period.

·         Moisture relief is expected to be patchy at best across dry areas of the Plains winter wheat belt the next two weeks.

·         Corn and soybean harvest should benefit from a drier pattern across Argentina over the next 10 days.

·         Rains are expected to expand across much of the Russian wheat belt next week.

Commodity Weather Group Forecast

In the U.S., showers scattered across northern/western ND, IA, far eastern NE, northern/western IA, WI, far southeast MN, MI, OH, IN, IL, and MO yesterday, including light snow (mostly 1 to 4”) in northernmost areas. Rains will focus from the southeast Plains into the southern Midwest in the next 2 days, with 6 to 15 day rains then favoring the Delta/southeast Midwest.

Early corn seeding should make progress over the next week, but delays then increase in the South. This also causes wetness issues to rebuild in the northern Delta soft wheat areas and along the OH River. Light showers are offering slight improvement in pre-planting moisture from Canada into ND/MN/Great Lakes, leaving southwest MN/SD/NE as the most likely drier spots to persist in the corn belt.

Patchy relief in the Plains wheat will occur with occasional passing disturbances, with the best shot early in the 11 to 15 day. However, notable relief remains unlikely in driest sections of NE//KS/western OK, and near to above normal temperatures will draw down moisture. Showers did aid Pacific Northwest wheat in the past two days.

In South America, rains (.25 to 1.5”) in Brazil scattered across Mato Grosso, Minas Gerais, and northern Goias yesterday. Showers are limited in the next 2 days but increase for the west 1/2 of Brazil crop areas through the weekend. This should ensure that the majority of the safrinha corn receives a needed boost to low soil moisture currently noted in the southeast 1/3 of the belt.

Rains return to the northeast in the 6 to 10 day, aiding late coffee/sugar development, and then shift to the south in the 11 to 15 day for corn once again. 16 to 30 day rains are near to above normal in all but the south 1/4 of the corn belt. Soy harvest delays are expected next week, but damage potential is minor.

Rains favored the northwest 1/2 of Argentina yesterday. A drier pattern in the next 10 days will aid early corn/soy harvest but hamper late soy filling in 15% of the belt.

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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