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Morning Outlook

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Overnight Highlights

·         The dollar is up nearly 400 points this morning on renewed concerns about Greece, as well as fresh Chinese stimulus.

·         Crude oil prices are modestly lower this morning, despite data released Friday showing that rig counts are the lowest since 2010.

·         Another truckers strike is set to begin in Brazil Thursday, although it would likely need to last several weeks before significantly impacting export shipments.

·         Soybean prices pushed modestly higher overnight on hopes that China’s stimulus package will increase demand, combined with nervousness about the Brazilian truckers strike, but gains were limited by large supplies.

·         Corn prices slid lower on ample cheaper global supplies from South America and the Black Sea.

·         Wheat prices bounced modestly following last week’s big collapse on Plains rains. U.S. wheat missed out again on an Egyptian tender due to our “high” prices relative to other cheaper alternative supplies.

·         The Northwest Midwest was drier than expected over the weekend, with the next opportunity coming in the 11- to 15-day period.

·         Good rains fell over dry areas of the Plains winter wheat belt, but 20% of the belt largely missed out focused on southwestern areas.

·         The Argentine corn and soybean harvest should resume over the next two weeks as fields dry out again.

Commodity Weather Group Forecast

In the U.S., weekend rains favored NE, southeast/far northwest KS, IA, far southeast MN, southwest WI, far southern IL, IN, western KY, central/northwest TN, southeast MO, MS, southern/northeast LA, AL, GA, the Carolinas, northern/southwest OK, and central/eastern TX. The rains in the past week have reduced dry spots in the Plains to about 20% of the winter wheat belt, including parts of southeast CO, southwest KS, far western OK, and northwest parts of the TX Panhandle.

A few showers will be possible Tuesday/Wednesday in these areas, with a broader system on Friday and additional rains in the 6 to 10 day that favor the central/southeast Plains to also aid jointing/early heading. However, drier than normal conditions in the first 1/2 of May will likely still leave about 15% of the belt under stress.

Drier conditions return to the Midwest/Delta through mid-week, with showers picking up in the Delta for the balance of the week and returning to the southern Midwest this weekend. Broader Midwest coverage develops late in the 6 to 10 into the 11 to 15 day (including the northwest Midwest, which was short-changed this weekend). Breaks remain brief in the Delta in the 6 to 15 day and will cause the main possible wetness concerns. Intermittent light frost in the western Plains/northern Midwest in the next 10 days poses no wheat threat.

In South America, rains (.25 to 1.25”, locally 2.5”) benefit the southern 1/2 of Brazil corn but slowed soy/sugarcane harvest. Rains this week continue to aid early corn pollination and ease dryness in coffee areas while still slowing sugarcane/soy harvest. Drier trends next week ease soy/sugar harvest delays and limit damage concerns but still benefit northern corn/coffee.

Argentina weekend rains (.25 to .75”) were limited to southern/northeast fringes. Drier weather persists over the next 2 weeks, with just a few light 6 to 10 day showers. Corn/soy harvest will slowly resume, with minimal damage risks.

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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