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Sunday Outlook

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Weekend Developments

·         The Federal Reserve will meet Tuesday and Wednesday of this week to consider changes to its monetary policy. Look for it to remove the word “patient” from its statement about the timing of raising interest rates.

·         The Fed is expected to release its updated policy statement at 1 p.m. CDT Wednesday, with Chair Janet Yellen hosting a press conference 30 minutes later.

·         Grain and oilseed prices have experienced much greater influence from movement in the dollar in recent weeks. This week’s Fed statement could trigger another move higher, or an overdue correction lower. A strong dollar is bearish commodities, while a correction lower could bring some money back to that sector.

·         The dollar is posting very modest losses in early trade this evening, while crude oil is trading near $44 per barrel and sinking.

·         USDA confirmed a positive case of avian flu in northeast Kansas, to go along with recent confirmations in Minnesota, Arkansas and Missouri.

·         The National Oilseed Processors Association is scheduled to release soybean crush data for its members tomorrow at 11 a.m. CDT.

·         Farm Futures will release the results of its producer planting intentions survey Wednesday morning at 8 a.m. CDT.

·         More than a million protestors filled the streets in Brazil over the weekend, but soybeans continue to flow to the ports.

·         Rains continue to slow harvest in northwestern Brazil, but the showers are boosting yield prospects for safrinha corn.

·         Timely rains are enhancing spring growth in China’s winter wheat crop.

·         Dry areas of the Southern Plains should see beneficial moisture this week, with central Plains fields getting relief early next week.

·         Cooler temperatures return to the Midwest in the week ahead, while rains continue planting delays in the South.

·         Speculative hedge fund managers still hold large short (sold) wheat positions that make them nervous in late-March, which should lead to more short-covering. However, rains in the Plains this week and continued weakness in corn would leave wheat vulnerable to a resumption of selling, especially if the dollar remains strong this week.

·         Soybeans should see follow-through weakness, but then test key chart support just below the market.

·         Corn charts look much weaker following Friday’s action, with traders closely watching the dollar and crude oil markets.

Commodity Weather Group Weekend Summary

In the U.S., rains covered the Delta, Carolinas, and southeast 1/4 of the Midwest (.50 to 1.5”, locally 3”) in the past 2 days. Rains favor the Pacific Northwest today, with beneficial .25 to 1” rainfall for the wheat. Showers return to the Delta at the middle of this week, again on the weekend, and again in the 11 to 15 day. This keeps early corn planting slow, but rain amounts are not expected to be heavy enough to increase standing water damage significantly for wheat.

Showers favor the S. Plains this week and the C. Plains early next week. These rains are needed, as milder temperatures spur early wheat growth. Soil moisture supplies are still limited, especially in OK. Midwest rains are likely to pick up in the 6 to 15 day, adding pre-planting moisture to drier areas of the belt and still too early to pose planting delays. ND and northwest MN are not favored and may remain the one dry spot in the Midwest.

In South America, weekend showers in Argentina were near expectations and scattered across southwest Santa Fe, central/southern Cordoba, and central/northwest Buenos Aires. Guidance has scaled back showers to some extent with a frontal passage on Thursday/Friday. Many wettest fields in central/northeast Cordoba and central Santa Fe have seen little to no rain this month, and this will allow for further draining and prevent any expansion of earlier minor damage. However, the wetter Euro guidance is favored at the middle of next week, with the chance for more notable rain to return and keep early harvest slow.

Brazil showers scattered across mainly northwest/eastern Mato Grosso, Goias, far northeast Mato Grosso do Sul, southern/western Minas Gerais, Sao Paulo, and eastern Parana. Rains remain most active in the north, particularly in the next 10 days. This will slow late soy harvest but aid moisture for safrinha corn and late coffee/sugar growth.

 

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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