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Morning Outlook



Overnight Highlights

·         The euro firmed and dollar pulled back from near 11-year highs early this morning after German lawmakers approved conditions for an aid extension for Greece.

·         Rains began to increase across northern Mato Grosso yesterday as expected.

·         A wetter pattern is expected to slow fieldwork across areas of northern Brazil for much of the next two weeks and across central areas in the 6- to 15-day period.

·         The new-crop soybean/corn price ratio strengthened to 2.41 to 1 this morning as soybeans continue to gain on corn.

·         Soybean prices are rising, led by old-crop, due to the combination of harvest delays and lingering trucker strikes, on expectations that the U.S. export season will be extended.

·         The truckers strike spread to 91 blockades across 9 Brazilian states on Thursday, so reports of its end have proven to be false.

·         Longer-term, the South American soybean crop is getting bigger, led by Argentina. Private consultant AgroConsult pegs Brazil’s crop at 94.7 million metric tons, up from USDA’s latest estimate of 94.5 mmt.

·         The Argentine government pegged its crop at 58 mmt, up from 53.4 mmt the previous year and up from USDA’s latest estimate of 56 mmt. Both the Argentine and Brazilian crops far exceed previous records.

·         Meanwhile, the International Grains Council expects the global 2015-16 to fall by 5% from the previous year’s level as low prices and high input costs shift acreage toward soybeans and other alternative crops.

·         Russian February wheat exports dropped 57% from the previous year after implementation of export tariffs on February 1.

·         China imported 22.8 million bushels of corn in January, with 18.5 million of that total coming from Ukraine.

Commodity Weather Group Forecast

In the U.S., only light snow showers fell in West TX and southern IL yesterday (1 to 2”). Sub-0°F lows this morning led to spotty winterkill in northern parts of IL/IN. Snow scatters across the Plains over the next 5 days, bringing needed moisture for nearly all of the belt. Colder conditions next week should not be strong enough to produce sub-0°F readings except in snow-protected areas.

Midwest wheat also sees widespread snow/rain in the next week, keeping moisture abundant. There is still the chance for some spotty winterkill in northern parts of IL/IN tonight, but gradually moderating temperatures over the next 2 weeks then end cold threats. Rains in the Delta next week should eradicate most remaining moisture deficits.

In South America, showers increased in northern Brazil yesterday, favoring northeast Mato Grosso and northern Goias. Scattered showers were also noted in southeast Brazil and the northeast edge of Argentina. Brazil rains remain active through most of the next 2 weeks in northwest corn/soy areas, raising the odds notably for further safrinha corn losses this season due to the delays. Rains will also return to central areas in the 6 to 15 day, slowing soy harvest/port loading. Coffee/sugar areas will see plenty of moisture to support development.

Argentina will pick up showers in the north again on Sunday and Tuesday, resulting in some additional flooding concerns for mainly central/northeast Cordoba and northern Santa Fe (10 to 15% of corn/soy). However, a needed break is then expected for much of the 6 to 15 day. Developing dryness in far southern Santa Fe, southern Entre Rios, and northern Buenos Aires (1/4 of soy) may ease slightly in Entre Rios on Tuesday. The bulk of the area though will rely on a wetter 11 to 15 day to ease concerns, and confidence remains low.

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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