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Morning Outlook

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Overnight Highlights

·         The dollar pulls back and commodities firm overnight as global traders consolidate positions ahead of tomorrow’s policy statement from the European Central Bank.

·         The ECB is expected to announce 550 billion euro bond buying program to stimulate the European economy tomorrow.

·         The U.S. Federal Reserve monetary policy committee meets next Tuesday and Wednesday to discuss to discuss potential interest rate hikes later this year.

·         Showers are expected to expand over most corn/soybean areas of northern Brazil during the next two weeks. Forecast models suggest nearly 3” of rain in the region during the remainder of the month.

·         The rains will go a long ways toward bringing many crops in the area to the finish line, with drier weather then favored beyond the two-week period for harvesting and planting safrinha corn.

·         Showers are expected to benefit southwestern Plains wheat today, with minimal cold threats over the next two weeks.

·         Wheat prices bounced from oversold conditions overnight as tensions rise in Ukraine once again, but exporters warn that U.S. wheat remains uncompetitive on the global market.

Commodity Weather Group Forecast

In the U.S., light showers (<.25”) were confined to northeast CO and western/southern KS. A storm will push across the South over the next 2 days. The moisture will benefit the southwest 1/4 of Plains wheat. The rains in the southern Delta will not cause wetness problems in the main wheat belt but could keep the Southeast unfavorably wet.

The next significant showers are then not until early in the 11 to 15 day. The GFS then has  extensive showers for the Midwest and Plains, but our forecast favors a more southerly track focused on the Delta which would still benefit northern areas where soil moisture is still low. The Southeast rains are lighter, keeping wetness damage threats low. Winterkill risks remain low in the next 2 weeks.

In South America, showers favored far northern Rio Grande do Sul, western Parana, southeast Sao Paulo, northwest Mato Grosso do Sul, and north-central/southwest Mato Grosso in Brazil yesterday. Expanding showers in the next 2 weeks in northern Brazil will aid most corn/soy/sugar areas, including areas in western Sao Paulo and northeast MGDS that have recently reached the low 100s. Rains are also increasingly likely to reach much of the coffee belt with some near-term relief, although February may still revert drier on the whole. Bahia is most at risk to remain short-changed.

Argentina trended drier yesterday, and showers Thursday/Friday and again Sunday/Monday should favor drier spots in the far southwest corn/soy belt. Showers may scatter into the heart of the belt early in the 6 to 10 day, but the otherwise quieter pattern should allow recently wet fields in northern Buenos Aires, eastern Cordoba, Santa Fe, and Entre Rios to drain a bit. The GFS is frequently much hotter than the preferred Euro in the next 2 weeks but is considered a very unlikely outcome.

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

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.

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