Home Market Market Watch Morning Outlook

Morning Outlook

SHARE

http://www.hoosieragtoday.com//wp-content/uploads//2015/01/image00911.jpg

Overnight Highlights

·         The Federal Reserve released the minutes of its latest policy meeting Wednesday afternoon, holding few surprises. Federal funds futures trade since then suggests that Wall Street continues to anticipate interest rate hikes beginning in September of this year.

·         The euro continued to fall overnight, pushing the dollar to fresh 9-year highs, as investors increasingly worry about deflation in the broader euro-zone.

·         Chinese officials state that no additional stimulus is needed, but they continue to support existing programs to pump capital into its economy.

·         The Department of Labor will release its highly-anticipated December jobs report Friday morning.

·         Crude oil consolidated modestly higher overnight as traders brace for index fund portfolio rebalancing that begins today and continues for five trading sessions. The rebalancing is expected to support the energy sector, while applying some degree of pressure to grain and oilseed prices, with more significant pressure on the beef sector.

·         South Korea’s Major Feedmill Group MFG is tendering to buy 16.5 million bushels of corn for delivery in April and May.

·         Egypt is tendering to buy wheat for mid-February delivery. This tender should tell us a great deal about where U.S. prices sit on the global market, as well as whether Russian wheat will be offered. The cheap euro should help French offers in the tender.

·         Palm oil prices rise to six-month highs overnight as monsoon rains continue to threaten supplies.

·         Northern Brazil remains warm and dry the next 10 days, but late month shower potential remains in the forecast.

·         An active weather pattern continues to provide moisture and keep yield potential high in Argentina.

·         Winterkill damage likely in Midwest wheat crop last night and again on Friday night.

·         Some winterkill damage likely occurred last night in central Ukraine as well.

·         USDA will release its highly-anticipated January crop reports Monday that are known for their surprises. Trade expectations are as follows:

USDA January 12

2014-15

Quarterly Stocks

Wheat

Corn

Soybeans

billions of bushels

USDA December 1 Estimates

    Pre-Report Estimates

Average Trade Estimate

1.499

11.123

2.590

Highest Trade Estimate

1.585

11.325

2.742

Lowest Trade Estimate

1.400

10.820

2.400

USDA December 1 2013

1.475

10.453

2.154

Water Street Solutions

1.497

11.219

2.622

 

U.S. Yields & Production

2014-15

2014-15

Corn

Soybeans

Corn

Soybeans

Yield in bushels per acre

Production in billions of bushels

USDA January 12

    Pre-Report Estimates

Average Trade Estimate

173.300

47.600

14.349

3.956

Highest Trade Estimate

174.300

48.200

14.554

4.020

Lowest Trade Estimate

171.300

46.800

14.171

3.844

Previous USDA Estimate

173.400

47.500

14.407

3.958

Water Street Solutions

174.100

48.000

14.415

3.994

 

U.S. Ending Stocks

2014-15

Wheat

Corn

Soybeans

billions of bushels

USDA January Report

Average Trade Estimate

0.666

1.927

0.393

Highest Trade Estimate

0.699

2.081

0.452

Lowest Trade Estimate

0.636

1.710

0.355

Previous USDA Estimate

0.654

1.998

0.410

Water Street Solutions

0.668

2.081

0.394

 

Winter Wheat Seedings

2015-16

Total Winter

Hard Red

Soft Red

White

millions of acres

USDA January 12

    Pre-Report Estimates

Average Trade Estimate

42.564

31.023

8.039

3.502

Highest Trade Estimate

44.000

32.115

8.739

3.823

Lowest Trade Estimate

41.000

29.800

7.432

3.200

USDA 2014 Seedings

42.399

30.471

8.498

3.430

Water Street Solutions

43.068

32.115

7.432

3.521

Commodity Weather Group Forecast

In the U.S., other than snow flurries in the northern Delta yesterday, most areas were dry. Temperatures currently range from -5 to -12°F in the northern 2/3 of the Midwest wheat, with winterkill damage focused in areas lacking adequate snow in northern parts of IN/OH, southern MI, and central IL. Similarly cold air is likely tomorrow night, adding to damage potential in those areas. Moderating temperatures next week end winterkill threats.

Delta wheat continues to be favorably dry through Saturday, and rains early next week are too light to be damaging. Excessive rains remain a threat in the 11 to 15 day. Plains wheat winterkill risks remain minimal in the next 2 weeks. There is a better chance for light showers in the 6 to 15 day that would be beneficial in the southern 1/3 of the belt. The 16 to 30 day keeps chances for needed moisture in that area as well.

In South America, showers favored Rio Grande do Sul/Santa Catarina yesterday, with scattered activity in southwest/northeast Mato Grosso, Sao Paulo, and Parana. Rains favor the south in the next 10 days, with warmer/drier weather drawing down moisture in the northern 1/2 of corn/soy and much of coffee/sugar.

Showers are projected to pick up to some extent in late January, reaching central/northwest areas in the 11 to 15 day. However, confidence is low due to a lack of model consensus. The showers would limit most stress to the northeast 10 to 15% of corn/soy in the next 2 weeks, but coffee/sugar may still struggle due to modest long-term rain deficits.

Argentine showers were limited to far northern areas yesterday, but showers in the next 5 days reach about 2/3 of corn/soy. The southern 1/4 will be driest in the next 2 weeks, but rains this week have helped to keep concerns very limited. Excess rain should be limited to the northeast 10% of the belt.

Cold in Ukraine More Extensive Overnight, Leading to Winterkill in Central 1/3 of Belt. Snow cover was too light in central Ukraine to protect wheat from lows of -2 to -7°F. Losses will be limited, but damage is likely since the crop was not well-established. Elsewhere, damage was limited to 15% of the belt in South Russia.

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.

http://www.hoosieragtoday.com//wp-content/uploads//2015/01/image01010.jpg

http://www.hoosieragtoday.com//wp-content/uploads//2015/01/image01111.jpg

http://www.hoosieragtoday.com//wp-content/uploads//2015/01/image01211.png

www.waterstreet.org 
or 1-866-249-2528

 

 

http://www.waterstreet.org/s/ws-80x70.png

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.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.