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Morning Outlook

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Overnight Highlights

·         China’s central bank lowered key interest rates for the second time in three months on Saturday as it tries to stimulate the Asian economy. Seventeen central banks have cut interest rates since the first of the year.

·         The dollar pushed to a fresh 11-year high on the news, but turned lower when it found little buying interest at the new highs.

·         Crude oil traded back below $49 per barrel overnight and has thus far not been able to post much of a recovery despite the dollar’s turn lower.

·         Brazil stepped up enforcement on its roads and highways over the weekend with arrests and fines, removing most blockades.

·         Soybeans firm overnight on solid upfront demand amid harvest delays.

·         Wheat futures firmed on follow-through buying following last week’s reversal as traders wait to see monthly condition scores later today for key production states.

·         Corn prices were modestly lower on increased farm deliveries.

Commodity Weather Group Forecast

In the U.S., weekend snow (1 to 5”) fell in the southern 2/3 of the Plains, and 2 to 10” covered the southern 2/3 of the Midwest. Snow focuses on the northwest Midwest corn belt today, but the main storm this week produces snow (2 to 8”) in the northern 1/2 of the Delta and far southern Midwest wheat at mid-week and rain across the rest of the Delta/Southeast (.50 to 1.5”, locally 3”).

The moisture will continue to eradicate moisture deficits in the Delta, with only isolated ponding. There is one last cold push capable of sub-0°F readings in the eastern Midwest late this week but only in snow-protected areas. Showers in the 11 to 15 day period could benefit much of the C. Plains and Midwest wheat, as temperatures moderate.

In South America, weekend thundershowers scattered across mainly Mato Grosso, southwest Goias, northeast Minas Gerais, western Espirito Santo, Bahia, western Parana, southeast Sao Paulo, and northwest Mato Grosso do Sul in Brazil. Showers will remain active until at least Friday in northwest corn/soy areas, with a bit of a downturn in the 6 to 10 day but a return of 11 to 15 day rain.

The lack of a sustained break will keep safrinha corn seeding slow and raise risks for reduced output. Interruptions to fieldwork in central Brazil will be less persistent but occur in the 6 to 10 day. Coffee/sugar concerns will continue to ease.

Argentina was wetter than expected, with showers in much of Cordoba, Santa Fe, and north-central/southern Buenos Aires. This helped to reduce dry central soy areas, and additional relief is possible at mid-week. However, the mid-week rains will also bring locally heavy totals (up to 4”) and minor flooding in already wet fields across the northwest 1/4 of the corn belt. While there will be some breaks for these areas in the 6 to 15 day, the outlook has trended wetter.

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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