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Morning Outlook

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Overnight Highlights

·         Talks between Greece and European leaders ended Monday night, with Euro-zone finance ministers stating that there would be no more negotiations until/unless Greek leaders returned requesting an extension of its existing program, but with no other conditions.

·         The current financing agreement with Greece expires at the end of this month, with Greece’s cash flow expected to dry up by the end of March.

·         As such, the possibility of a Greece exit from the euro-zone has increased dramatically.

·         Currency traders appear to becoming more comfortable with the possibility of a possible exit from the euro-zone, with the euro firming this morning, allowing the dollar to work lower.

·         Money is flowing back into the broader commodity complex as the dollar turns lower, allowing grain and oilseed traders to focus on wetness problems in central and northwestern Brazil.

·         It was a wet weekend in central and northwestern Brazil, with the pattern expected to hold through much of next week before a brief drier period next week.

·         Rains are expected to return in the 11- to 15-day period, again slowing fieldwork.

·         The risk for delayed new-crop soybean availability and the inability to get all of the safrinha corn acres planted has increased significantly, supporting corn and soybean prices as we start this week’s holiday-shortened trade.

·         Ukraine corn area is expected to decline by 7% this year due to low prices and high input costs.

·         This week’s cold air push into the Midwest has also strengthened, increasing the winterkill risk for central areas of the soft red winter wheat belt.

·         The National Oilseed Processors Association is scheduled to release its January crush report at 11 a.m. CST this morning, with the trade expecting it to show its members crushed 162.7 million bushels during the month. We’re looking for something closer to 166.1 million on strong crush margins during the month.

Commodity Weather Group Forecast

In the U.S., snow during the holiday weekend favored CO, northern/eastern KS, and OK in the Plains (1 to 3”, locally 8”), along with the southern 1/3 of the Midwest and northern 1/3 of the Delta (4 to 12”). Rain (.25 to 1.5”, locally 2.5”) also benefited the rest of the Delta/Southeast. A strong cold surge later this week will push lows near winterkill levels (less than -5 F) in the eastern Midwest. A strip in the central 1/3 of IL/IN/OH lacks protective snow cover and could see some spotty winterkill damage.

Snow is likely to remain light next week in the Midwest, and some areas could still be threatened by another cold surge. The S. Plains/Delta are favored to see additional showers in the 6-15 day to improve moisture for spring growth.

In South America, weekend rains favored much of Mato Grosso, northern/eastern Mato Grosso do Sul, far southern Goias, much of Sao Paulo, bordering sections of Minas Gerais, Parana, and Santa Catarina. Rains will remain quite active this week in all but the northeast corner of Brazil, leaving better than 1/3 of coffee with redeveloping dryness concerns and slowing soy harvest/safrinha corn seeding to the west.

Weekend rains were also locally heavy in central port areas (up to 6”) and will remain so this week. A southern shift in rain next week will help to fill in lingering dry patches in Rio Grande do Sul and will also aid corn/soy fieldwork to the north, but interruptions to fieldwork return to central/northwest areas in the 11 to 15 day.

Argentina saw very heavy rains in far northwest Cordoba over the weekend, but mostly outside of major crop areas. Showers will scatter across the north and southwest through tomorrow, and the 6 to 10 day trended slightly wetter for corn/soy areas. While a few dry areas may still develop in the southeast, only 10 to 15% of corn/soy areas appear to be at risk.

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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