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Morning Outlook

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Overnight Highlights

·         Maltese’s finance minister reports that a German-led bloc of countries is willing to allow Greece to exit the euro-zone.

·         Data released overnight shows that the Euro-area manufacturing and service industries are growing modestly despite the Greek crisis, beating expectations.

·         The dollar pushed to one-week highs overnight as the euro slipped lower, while crude oil consolidated higher in a tight trading range.

·         USDA projects that the U.S. corn crop will reach 13.595 billion bushels this year, with ending stocks at 1.687 billion.

·         USDA projects that the U.S. soybean crop will drop to 3.800 billion bushels, but with ending stocks rising to 430 million bushels.

·         Corn and soybean prices are modestly lower on the data release this morning, while wheat is a penny higher.

·         USDA will release its February cattle-on-feed and cold storage reports this afternoon. The data is expected to show on-feed numbers at 99.9% of year ago levels, with January placements at 87.3% of year ago levels.

·         Forecast models show rains diminishing in northwestern Brazil by Sunday, but returning again by late next week. Safrinha corn acres are expected to decline by 10 to 15% in Mato Grosso.

·         Much of the Midwest should see another 2 to 6” of snow this weekend to help protect winter wheat in the region from next week’s cold.

Commodity Weather Group Forecast

In the U.S., light snow (1”) fell in central MO yesterday. Lows below -5°F occurred in a few spots in central IN and central OH this morning, leading to spotty winterkill. Snow this weekend drops 2 to 6” across much of the Midwest, which should help to protect much of the wheat from additional winterkill with cold air next week.

Plains wheat is likely to see beneficial snow in the northwest this weekend and across belt in the 6 to 10 day, which should protect the crop from colder temperatures likely next week. Delta wheat should see further improvements in moisture, as several rain/snow systems cross the belt over the next 2 weeks. Pacific Northwest wheat will see showers benefit most areas next week, but WA remains short of moisture.

In South America, showers scattered across mainly far northern/eastern Rio Grande do Sul, central Parana, northern/far southwest Mato Grosso do Sul, eastern/far western Sao Paulo, western Minas Gerais, western Bahia, western Goias, and southern/western Mato Grosso yesterday in Brazil. Rains will diminish by Sunday in the northwest and otherwise favor the south next week to aid late soy growth in RGDS and give a break for soy harvest and safrinha corn seeding to the north.

However, models are increasingly supportive of a return of showers to the north from late in the 6 to 10 into the 11 to 15 day, which will prevent much improvement in delayed safrinha corn seeding and will threaten additional port delays. However, the rains will also provide welcome follow-up moisture to coffee/sugar areas. Intermittent 16 to 30 day showers are possible in the north, but more frequent showers are expected to shift back south.

Argentina will pick up rains Tuesday/Wednesday and again in the 11 to 15 day to maintain high yield potential for corn/soy. Only localized flooding issues should arise.

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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