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Morning Outlook

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Overnight Highlights

·         The European Central Bank began its highly-anticipated bond-buying program early today by purchasing German and Italian bonds.

·         The dollar pushed to a new 11-year high early in the session, before pulling modestly lower in profit-taking.

·         Grain and oilseed prices firmed as the dollar pulled back, with traders covering short positions ahead of tomorrow morning’s USDA crop report.

·         Corn prices continue the trend started late last week of gaining on soybeans to secure acres, with the new-crop soybean/corn price ratio dropping to 2.33 this morning.

·         Bargain buying resumed in the wheat ahead of tomorrow’s report, where speculative hedge fund managers hold large short positions and end users see value at current levels.

·         There are 82 ships waiting to load soybeans at Brazilian ports, up from 51 ships the previous week, which could end up sending more business our way.

·         China imported 157 million bushels of soybeans in February, down 38% from the previous month.

Commodity Weather Group Forecast

In the U.S., rains (.25 to 1”) developed yesterday in the southern 2/3 of the Delta. Another surge of showers will cover much of the Delta and far southern Midwest over the next 2 days, with yet more showers to push across the Delta and eastern Midwest later this week. Standing water remains a concern for wheat in low lying areas, and early corn planting will be on hold.

Drier/warmer conditions next week will ease wheat problems but may not last long enough for corn seeding to make much headway, as more showers are possible early in the 11 to 15 day. This system could bring some needed moisture to the Plains wheat (especially OK), as early growth begins to accelerate given warmer temperatures in the next 2 weeks.

In South America, scattered weekend showers occurred in southwest/far northwest Argentina and central/northern Brazil, favoring central/southwest Mato Grosso, far southwest Goias, southern Minas Gerais, central/northeast Mato Grosso do Sul, western/southeast Sao Paulo, northern/eastern Parana, northwest Santiago del Estero, southern La Pampa, and southwest Buenos Aires.

Argentina remains in a drier pattern for most of the wet spots in central/northeast Cordoba and central Santa Fe (1/4 of corn/soy) until the weekend. While the wettest areas may then focus just south of these areas, three rain chances in the balance of the 15-day period will still limit improvement and keep early corn harvest slow, particularly in Cordoba.

Brazil rains will be most active in the north through the next 2 weeks, slowing soy harvest and late safrinha corn seeding. However, recent advances have helped to limit concerns regarding delays, and the rains will also aid corn growth. A subtropical storm at mid-week near the Brazil coast may bring heavy rains/gusty winds but should focus south of the main ports.

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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