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Morning Outlook

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Overnight Highlights

·         The dollar continued higher overnight, trading to its highest level since April 1 after two Fed officials make statements suggesting that a rate hike this year is likely; possibly as early as the June meeting.

·         Crude oil prices bounced more than $1 per barrel after falling sharply on rising inventories on Wednesday.

·         China will stockpile a record 3.149 billion bushels of corn this year, up from the 2.716 billion bushels purchased from farmers the previous year. This will bring its reserves to more than 5.905 billion bushels according to a top Chinese grain-buying official.

·         It’s a wet morning across much of the Midwest. The wet pattern is expected to continue until a break comes in the 11- to 15-day period.

·         The Plains winter wheat belt is expected to see good rains over the next week, although northwestern areas may miss out.

·         Showers are expected to overspread Argentina and Brazil next week, slowing harvest, but providing a boost to safrinha corn.

·         Corn futures are mostly steady this morning, while soybean and wheat prices are 4 to 5 cents lower ahead of this morning’s 11 a.m. CDT USDA crop report. Trade expectations ahead of the report are as follows:

U.S. Ending Stocks

2014-15

Wheat

Corn

Soybeans

billions of bushels

USDA April Report

               

                

                

Average Trade Estimate

0.692

1.854

0.370

Highest Trade Estimate

0.721

1.999

0.399

Lowest Trade Estimate

0.671

1.750

0.347

Previous USDA Estimate

0.691

1.777

0.385

Water Street Solutions

0.693

1.774

0.371

 

South American Production

Argentina

Brazil

Corn

Soybeans

Corn

Soybeans

MMT of Production

USDA Report

    Pre-Report Estimates

Average Trade Estimate

23.90

57.23

74.82

94.18

Highest Trade Estimate

29.30

60.20

77.40

95.00

Lowest Trade Estimate

22.00

55.50

73.00

93.00

Previous USDA Estimate

23.50

56.00

75.00

94.50

Water Street Solutions

26.00

58.00

75.00

94.50

Commodity Weather Group Forecast

In the U.S., scattered storms occurred across the northern/southeast Plains and Midwest yesterday, but favored areas were in central MO, southern WI, northeast/western IA, southwest MN, central/southeast IN, central/southern OH, central/far southeast IL, and central MI.

Midwest rains will cross much of the belt into early tomorrow, favoring parts of MN/northern IA/WI. A brief break occurs this weekend, but scattered showers then move through intermittently through next week and favors the south. The best chance for drier conditions arrives in the 11 to 15 day in the Midwest, helping to ease any wet pockets in low-lying areas. Delta showers will be short-lived and somewhat less organized tonight, but more frequent and heavier rains develop by Monday and continue through the rest of the 15-day period. This will focus wetness concerns for soft wheat and seeding delays on the region.

Showers remain likely to reach much of OK, TX, and southern/eastern KS from Saturday into Monday, with another chance from TX into the eastern Plains in the 11 to 15 day. This will help to limit concerns for jointing wheat in the S. Plains. The 16 to 30 day was similar to wetter, favoring the S. Plains, Delta, and southern/eastern Midwest.

In South America, showers (.25 to .75”) were confined to the northern fringes of the Brazil corn belt yesterday. Rains remain limited to the northwest 1/3 through the weekend, aiding soy/sugar harvest. Rains spread south early next week and slow southern soy harvest by mid-week, while aiding corn moisture. Showers slow sugar harvest in the last 1/2 of next week and could ease dryness in the southern 1/2 of the coffee belt.

Argentina was dry yesterday. Scattered light showers this weekend give way to stronger storms early next week, slowing corn/soy harvest. Rains taper off in the 11 to 15 day and then remain near to below normal in Argentina/S. Brazil and near to above normal in northern/central Brazil in the 16 to 30 day.

N. Russia Benefit from Showers Yesterday, More Possible in 6-10 Day. Rain (.25 to .75”) favored Russia yesterday, including the Volga Valley region, and should benefit spring growth. Rains aid Spain wheat this week and much of Europe/FSU next week, keeping moisture supplies favorable.

Southern Australia Rain Potential Still Limited Next 10 Days, Stalling Early Wheat Planting. Rains favor the western 1/3 of the belt this week, leading to very good germination conditions. South Australia/Victoria are still likely to miss those rains, and seeding delays will persist. Delays into next month could threaten acreage.

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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