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Sunday Outlook

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Weekend Developments

·         Reminder: The markets are closed today for Martin Luther King, Jr. Day. Electronic trade will reopen at 7 p.m. CST tonight.

·         The Chinese stock market broke sharply overnight, with losses near 8%, after the government reportedly suspended activity by three major brokerage firms for rules violations. In the absence of the U.S. markets, traders turned to the relative safety of the Japanese yen.

·         Russia’s Ag Minister reports that the country can still safely export another 60 million bushels in the current marketing year, so the export duties will likely allow these bushels to move.

·         Russia’s Deputy Prime Minister sees no need to introduce an embargo on grain exports for now, based on statements quoted by Interfax, but kept that door open for the future.

·         Showers remain on track to reach all but far northeastern Brazil starting mid-week. These rains are expected to go a long ways toward helping crops reach the finish line with above-trend yields still anticipated.

·         Weekend showers aided drier southern Argentine corn and soybean areas and are expected to return on Thursday and Friday.

·         Weaker cold pushes in the Midwest over the next two weeks minimize the winterkill threat.

Commodity Weather Group Weekend Summary

In the U.S., weekend showers were confined to NC (.25 to 1”) and the Pacific Northwest (.25 to .75”). While snow showers are possible in the Midwest on occasion in the next 10 days, accumulations will be light. The only significant precipitation in the next 10 days comes later this week across the South.

Needed moisture in the Plains is likely to be limited to TX. Only the far southern Delta/Southeast sees much rain, and excessive amounts are unlikely. Best precipitation chances come in the 11 to 15 day, which should provide beneficial moisture to Midwest/Delta wheat and possibly the eastern half of the Plains. Pacific Northwest wheat will also benefit from rains in that period. Cold pushes have diminished in intensity, with no notable winterkill concern.

In South America, weekend rains in Brazil favored northern Rio Grande do Sul, Santa Catarina, southern/western Parana, far southern Mato Grosso do Sul, northern/eastern Mato Grosso, and northwest Goias. Rains should become more widespread into central/northwest Brazil by Thursday/Friday and then continue into the extended outlook.

The focus for the best rains should start to shift back southward by the 11 to 15 day, but all but the northeast 10 to 15% of corn/soy/sugar should see some welcome showers in the meantime. Coffee areas will see best shower potential in the southwest 1/2 of the belt. A quieter start to February in the north should aid soy harvest/safrinha corn seeding but will continue to hinder dry coffee areas, with follow-up showers remaining critical for softs next month to ease long-term moisture deficits.

Argentine showers scattered across central/northwest Buenos Aires, northern La Pampa, central/southern Cordoba, and far southern Santa Fe, with intermittent chances over the next 2 weeks continuing to favor the edges of the corn/soy belt. This will help to ease drier spots in the south and should limit the chances for heavy rains in wet spots in the heart of the belt.

 

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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