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Morning Outlook

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Overnight Highlights

·         South Korea’s central bank joins a plethora of other countries that have cut interest rates this year.

·         The dollar reaches a nearly 12-year high at 100.060 overnight before pulling back in profit taking as global investors speculate that the Fed will take steps to move toward raising interest rates when it meets next week.

·         The European Union passes a low that clears the way for new strains of GMO crops to be approved in the future.

·         U.S. crude oil inventories are the highest in at least 80 years, with analysts worrying that we will run out of places to store surplus supplies.

·         Wheat adds to short-covering gains on Plains drought concerns, while corn and soybeans post modest gains as well on profit taking in the currency markets.

·         Crop analyst Lanworth, using ground truth analysis, weather forecasts and satellite imagery pegs Argentina’s corn crop at 29.4 million metric tons and soybeans at 60.2 mmt, up from USDA’s latest estimates of 23.5 and 56 mmt respectively.

·         Lanworth pegs Brazilian corn at 76 mmt and soybeans at 94.4 mmt, versus USDA at 75 and 94.5 mmt respectively.

·         More export restrictions are likely on U.S. poultry, backing up supplies of cheap alternative meat that is likely to pressure pork prices after bird flu was confirmed in Arkansas.

·         Rains in central and northwestern Brazil are expected to slow soybean harvest over the next couple of weeks, but those same rains are now expected to boost production prospects for the safrinha corn.

·         Plains wheat is likely to pick up beneficial showers next week.

Commodity Weather Group Forecast

In the U.S., rains (.25 to 1”) scattered across the Southeast yesterday. Showers expand across the Delta/eastern Midwest in the next 2 days but then do not return to the Delta until late next week and are likely to be more limited. This should allow some Delta corn planting to begin. Wetness in wheat fields should diminish, minimizing damage.

Rain potential increases for C. Plains wheat late in the 6 to 10 day. While confidence is limited due to drier GFS forecasts, most model output supports a timely event that would benefit early spring growth that will be getting underway in the next 10 days as temperatures moderate. Colder Midwest 11 to 15 day trends are not strong enough to keep wheat from breaking dormancy, and there are no damage threats. The 16 to 30 day trended drier for Plains wheat, raising concerns for areas missing out on short-term rains.

In South America, scattered showers favored northern/eastern Mato Grosso, northern/eastern Goias, central/southeast Minas Gerais, western Bahia, northeast Parana, and southeast Sao Paulo in Brazil yesterday. Rains will favor Mato Grosso, Goias, northeast Mato Grosso do Sul, and Sao Paulo in the next 10 days, focusing north in the 11 to 15 day. While soy harvest will slow in affected areas, the moisture will aid safrinha corn, coffee, and sugar growth.

Argentina picked up showers in only the far southwest yesterday, with a front on Friday/Saturday and another next Thursday/Friday favoring southern Cordoba/northwest Buenos Aires. Showers will also be possible in the wettest sections of central Cordoba, but the bulk of the rains should focus south of the concern areas in the northern 1/4 of the corn/soy belt.

The 11 to 15 day also trended favorably drier, although confidence is low. Occasional warmer spells are only leading to highs in mostly the mid-80s to low 90s.

Showers Starting to Expand Across Ukraine and Spread Into S. Russia This Weekend. Rains of .25 to .50” fell in southwest Ukraine yesterday and continue to expand into much of Ukraine/South Russia in the next 3 days. The northeast 1/4 of the belt is unlikely to see showers and will need rains in early April to avoid stress.

Showers Still on Track for China Wheat Early Next Week, Aiding Spring Growth. Rains favor at least the southern 1/2 of the belt early next week, with at least scattered showers in the north as well.

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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