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Morning Outlook

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Overnight Highlights

·         The dollar bounced very modestly overnight after falling sharply on Friday following a disappointing jobs report, but the bias remains lower near-term, supporting increased money flow into the broader commodity sector.

·         Greece is stepping up its efforts to find funding from Russia and the United States, while additional funding from its euro-area partners is likely weeks away. It owes the International Monetary fund 450 million euros ($494 million) on April 9.

·         USDA will release its updated domestic and global balance sheets on Thursday in its monthly crop report.

·         The agency will release the first of this season’s weekly crop progress and condition reports this afternoon, helping to focus the trade on supply and demand fundamentals through the planting season. The first report is likely to focus on wheat conditions, with corn planting progress possibly waiting another week or so.

·         Corn is again gaining on soybeans on planting delay concerns, dropping the new-crop soybean/corn price ratio to 2.36 overnight, after last week’s USDA data sent the ratio up to 2.4 to 1.

·         Heaviest rains this week will focus on central and southeastern areas of the Midwest, shifting to the Delta in the 6- to 10-day period.

·         Saudi Arabia bought 28.7 million bushels of hard milling wheat on the international market on Friday.

·         Wheat prices extended their gains overnight on drought concerns in the Plains and amid talk that Russia might extend its export tax beyond July 1.

Commodity Weather Group Forecast

In the U.S., weekend rains favored central/southern OH, southern IN, southern IL, central/southern MO, KY, far northern TN, central/northeast LA, southwest MS, eastern TX, and far southeast KS, including locally 6 to 10” in north-central KY and south-central IN that caused flooding.

Widespread Midwest coverage is expected this week from the combination of a system in the far north in the next 2 days and a broader mid-week system, including the chance for locally heavy totals in IL/IN/OH. While a few spots may see flooding, pre-planting moisture will benefit. Scattered thundershowers will slow Delta corn seeding today/Thursday/Friday, but the better amounts/coverage focus farther north this week.

More notable interruptions occur early to mid- next week and again later in the 11 to 15 day, while a break develops after near-term wetness to the north. Models shifted mid-week rains north of much of the Plains wheat this week. While a lack of model consensus keeps confidence low, our outlook does support beneficial rains Sunday/Monday and again in the 11 to 15 day for much of the S. Plains wheat.

In South America, rain in Brazil was extensive (.50 to 2.5”, locally 4”) in the safrinha corn/soybean belts over the past 4 days. Rains were much more limited in coffee areas but did cover the sugarcane. Rains retract to the north this week and slowly return to the central belt in the 6 to 10 day.

Soy harvest recovers well with the drier pattern, and only the far southern corn belt may miss out on rains next week. Rains are only scattered in coffee/sugarcane areas in the next 10 days. This will aid sugarcane harvest but will lead to stress for filling coffee beans in drier areas.

Argentina had showers (.25 to 1.5”) limited to the northern/western fringes in the past 4 days. Showers in the next 5 days remain limited, allowing harvest to progress well. Rains in the 6 to 15 day will slow harvest but are unlikely to be damaging if seasonable 16 to 30 day rains return.

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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