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Morning Outlook

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Overnight Highlights

·         The markets will be closed on Monday for President’s day, reopening at 7 p.m. CST on Monday. This leaves trade positions at risk of changing developments in Greece, Ukraine or other areas.

·         Greek GDP fell 0.2% in the fourth quarter of 2014 as the country moves toward recession, while the Euro-Area at large grew by 0.3%, beating expectations of 0.2%.

·         Germany’s stock index passed 11,000 for the first time after data showed its economy expanding at 0.7% in the fourth quarter, beating expectations of 0.3%.

·         The markets were largely “risk on” overnight with money flowing into a broad sector of commodity and equity markets, including grain and oilseeds.

·         However, grain and oilseed prices pulled back from their highs toward morning as the dollar rallied and the euro fell.

·         Weekend rains are expected to favor central Brazil, temporarily expanding into northwestern areas to stall harvest next week.

·         Widespread rains are expected in Argentina to aid crops in the 11- to 15-day period to keep yield prospects high.

·         Forecasters do not see a significant winterkill threat for wheat in next week’s cold surge into the Plains and Midwest.

Commodity Weather Group Forecast

In the U.S., snow showers (around 1”) were confined to MO, IN, and OH yesterday. The pattern will remain in place, with coldest readings focused on the Midwest. However, most models have weakened the intensity of highs pushing into the Plains/Delta, resulting in less intense cold and lower threats of winterkill (which are limited to a small portion of southern OH for now).

Snow is still likely to fall across the Plains, northern Delta, and southern Midwest early next week, with totals of 2 to 8” possible. The snow/rain activity for the Delta and Southern Plains over the next 2 weeks should help ease soil moisture deficits prior to spring growth. Pacific Northwest wheat areas next chance for needed showers arrives in the 11 to 15 day.

In South America, very spotty showers were noted in northern Brazil (including Mato Grosso) yesterday, but rains favored much of Parana except for northwest areas as well as far southeast Sao Paulo, Santa Catarina, and the northern edge of Rio Grande do Sul. Rains continue to favor central areas through the holiday weekend, expanding to the northwest for the rest of next week and retreating south in the 11 to 15 day.

While the rains will slow soy harvest and safrinha corn seeding in the northwest next week, interruptions should remain minor. The late-month rains in the south will be needed to recharge topsoil moisture in RGDS. Port areas will see frequent rains in the next 10 days but then see a break. Follow-up rains will be widespread in the next 10 days for sugarcane, but 1/3 or more of coffee may still struggle.

Argentina will pick up scattered showers (favoring the north and southwest) by early in the 6 to 10 day, but the wettest weather is still in the 11 to 15 day. This event should help to maintain high corn/soy yields, with dry spots limited to the southeast 10 to 15% 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

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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