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Morning Outlook

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Overnight Highlights

·         The dollar pushed higher early this morning as the euro fell after Germany rejected an extension of aid request from Greece, saying it doesn’t meet EU requirements.

·         Crude oil prices are dipping below $50 per barrel once again this morning amid rising supplies and sluggish global demand.

·         Egypt released a broader tender to buy wheat late Wednesday, after rejecting all offers as too expensive in a U.S. only tender earlier in the day. The results of its latest tender are expected later this morning.

·         Russia states that it may impose an export duty of up to 35% on fertilizer.

·         USDA’s annual Outlook Forum begins this morning. The conference is expected to create headlines for traders over the next couple of days as various economists step up to the podium to speak. It is expected to update planting expectations this morning.

·         A data release this morning indicates that USDA anticipates that farmers will plant 89 million acres of corn, down 1.6 million from 2014 and matching our expectations.

·         Reuters reports that USDA expects soybean acres to come in at 83.5 million acres, which would actually be down from 83.7 million in 2014. That estimate will be rejected by the trade.

·         USDA sees 1.3 million fewer wheat acres in 2015.

·         USDA sees average cash marketing year prices for the 2015-16 year at $3.50 per bushel for corn and $9.00 for soybeans, even with the low acreage.

·         The outlook is turning wetter for northern Brazil in the 11- to 15-day period, although confidence is still low that far out.

·         Spotty winterkill is expected in parts of Indiana and Ohio.

Commodity Weather Group Forecast

In the U.S., light snow (1 to 3”) fell in southern OH, KY, and NC yesterday. Lows below -5°F in a few spots in central IN this morning will lead to spotty winterkill. Central sections of IN/OH will see similar cold and spotty damage tonight. Snow this weekend drops 2 to 6” across the northwest 1/2 of Midwest, but rains may decrease snow cover in southern parts of IN/OH, leaving wheat vulnerable to spotty winterkill next week.

Plains wheat is likely to see beneficial snow in the next 10 days, and damaging cold likely stays east of the area. Delta rain/snow are likely to be active over the next 2 weeks, eradicating most soil moisture shortages. Florida citrus will see a frost tonight cause leaf burn, but tree damage should be minor.

In South America, thundershowers scattered across Mato Grosso, Bahia, southern/western Minas Gerais, Sao Paulo, eastern Parana, northern/eastern edges of Mato Grosso do Sul, and spotty sections of Goias in Brazil yesterday. Showers should begin to taper off in central areas by tomorrow and the northwest this weekend, with the best rains then shifting to recently drier soy areas in Rio Grande do Sul through the middle of the 6 to 10 day.

This will ease interruptions to safrinha corn seeding and soy harvest in the northwest for a brief period, but showers are still expected to then return from late next week into the 11 to 15 day. While confidence is very low, guidance also continues to trend wetter in the 11 to 15 day for coffee areas in northeast Brazil.

Lingering showers scattered across the northern 1/3 of Argentina corn/soy yesterday but were also more than expected in drier sections of central/eastern Buenos Aires. With about the northwest 3/4 of corn/soy projected to pick up notable rains at the middle of next week, dryness concerns should remain very limited.

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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