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Morning Outlook

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Overnight Highlights

·         Observers speculate that Greece may request a six-month expansion of its current funding program as early as today to buy it time in its battle with creditors.

·         The dollar consolidated modestly higher overnight, with the euro modestly lower while waiting for direction, even as crude oil retracts from Tuesday’s two-week high.

·         Wheat garnered support overnight after Egypt tendered to buy U.S. soft wheat late Tuesday, as it seeks to utilize its $100 million grant. The tender is for mid-April delivery. However, Egypt’s quality specs may be a problem, as much of the old-crop has vomitoxin problems.

·         Soybeans pushed to fresh one-month highs overnight on strong demand and South American harvest delays before buying interest dried up, allowing prices to pull back once again on profit taking.

·         Biofuel prices around the globe are trading near historical lows amid an oversupply, leading to speculation of reduced demand for corn and soybeans in the months ahead.

·         Critical areas of central and northwestern Brazil are expected to be wettest through Friday, and again in the 11- to 15-day period.

·         Forecasters at Commodity Weather Group expect 75% of the safrinha corn crop to be planted in the region by March 5, below the typical level of 90%, leading to some acreage reductions.

·         A cold pattern the next 10 days should be capable of producing spotty winterkill in the central Midwest wheat crop focusing on central areas of Illinois, Indiana and Ohio.

·         USDA’s annual Outlook Forum takes place on Thursday and Friday of this week.

Commodity Weather Group Forecast

In the U.S., light snow (1 to 3”) fell in eastern parts of NE/KS, central MO, southern parts of IL/IN, and western KY yesterday. Lows dip near winterkill levels (less than -5°F) during the next 2 nights in a strip through central parts of IL/IN/OH and threaten spotty damage. Snow is likely this weekend, but some spots in MO/IL may still not pick up enough to avert spotty winterkill from the very cold pattern next week.

The C. Plains is likely to see the snow benefit wheat and minimize winterkill threats. Additional snow in the 6 to 10 day in the Plains will add needed moisture prior to spring growth. Delta rains are likely to be active over the next 2 weeks, eradicating most soil moisture shortages and causing only minor issues with standing water.

In South America, thundershowers in central/northwest Brazil in the past day favored southern Mato Grosso, far northwest Mato Grosso do Sul, northwest/far southern Goias, far southwest Bahia, central Sao Paulo, and northern Parana. Similar activity is likely through Friday, with rains then shifting focus to the south for a week.

This should allow for some better soy harvest and safrinha corn seeding next week, but 11 to 15 day showers do appear to return to the northwest and will also pick up again in central port areas. Some guidance also expands showers across coffee areas in the 11 to 15 day. However, our forecast still keeps the northeast 1/3 of the belt mostly dry in the next 2 weeks.

Argentina picked up showers in the west yesterday, with rains focusing on the northern 1/3 of the belt tonight. The broadest coverage arrives next Wednesday/Thursday, with good model agreement for over 2/3 of corn/soy to see beneficial rain. Buenos Aires could still struggle and see some dry patches develop, but only 15% of the belt appears at risk for minor stress.

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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