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Morning Outlook

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Overnight Highlights

·         Russia cut its interest rate to 15%, down from 17%, to stimulate an economy that is rapidly sinking toward recession. It’s believed that the central bank did so under pressure from the government despite high inflation.

·         The dollar pulled back modestly in profit taking overnight, with money easing back into the broader commodity sector.

·         Traders are watching for reports from a private industry crop tour through Brazil’s corn and soybean belt. Production estimates for soybeans have been ratcheting back following heat and dryness in January, but still remain well above record levels.

·         Grain and oilseed prices are bouncing modestly this morning after recent sharp losses.

·         Rains in Brazil the next 10 days should leave just spotty areas of stress.

·         Nearly 75% of the Plains winter wheat belt should benefit from showers this weekend.

·         Snowfall amounts have expanded again for the Midwest soft wheat belt, with the bulk of the region expected to get 4 to 8” to protect from winterkill.

Commodity Weather Group Forecast

In the U.S., showers (< .35”) were limited to the northeast 1/4 of Midwest wheat yesterday. Models continue to support Plains showers this weekend in all but the northwest corner to improve low soil moisture. Snowfall chances have expanded back higher in the latest models, with most favoring 4 to 8” for the bulk of Midwest wheat. This would provide protection from sub-0°F readings likely to occur next week.

Delta showers in the 1 to 5 and 11 to 15 day periods should enhance low soil moisture in the north. Dry conditions in the 6 to 10 day will ensure that wetness concerns remain localized and mainly focus on GA. Rain potential has improved in Pacific Northwest wheat areas for the 6 to 10 day, improving low soil moisture.

In South America, scattered showers favored southern Mato Grosso do Sul, southwest Sao Paulo, and northern/western Parana yesterday in Brazil. Rains continue to focus on central areas until the 6 to 15 day, when rains head north. A few spots in southwest Mato Grosso, northwest MGDS, and possibly south-central Parana (15% of soy) appear most at risk to remain short-changed.

Far southern areas see rains early next week and again in the 11 to 15 day to aid growth, and the extensive coverage of coffee/sugar should limit stress for now. While the Euro weeklies did trend wetter in the 16 to 30 day for northwest harvest areas, the preferred forecast remains for a break in mid-February to keep fieldwork interruptions minor.

Argentina is currently dry, allowing wetness concerns to continue to ease in central/northeast areas. The most significant rain chances and greatest risk for wet spots to redevelop remain in the 11 to 15 day and beyond for corn/soy, although the outlook did turn quite a bit more showery Monday/early Tuesday and will now catch nearly 1/2 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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