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Morning Outlook

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Overnight Highlights

·         Euro-area manufacturing and services slowed in April, indicating that the European Central Bank’s bond buying program has not yet had its desired effect on the economy.

·         A Chinese manufacturing index fell to a 12-month low this month as well. First quarter economic expansion was the weakest since 2009.

·         The European Central Bank has almost doubled an increase in emergency funding to Greek banks from last week, but officials expressed doubt whether sufficient reforms had been agreed to in order to unlock emergency loans.

·         The dollar is breaking lower this morning, with energy prices pushing higher.

·         China DDGS imports tripled February levels in March as restrictions begin to lift, although they were still down 44% from the previous year.

·         Brazilian truckers began a somewhat disorganized strike at midnight, but locals suggest that we will not likely see the scope of road blockages that we saw in February, with the government already positioning police to break up blockages.

·         Chinese farmers may slash soybean acreage by as much as 15% due to confusion over how a new subsidy program will work.

·         Soybean prices are 5 cents higher this morning on the above, while corn and wheat are showing smaller gains.

·         Midwest showers are expected to be very limited next week, with moderating temperatures.

Commodity Weather Group Forecast

In the U.S., scattered storms favored east-central parts of the TX Panhandle, south-central OK, central/far northeast TX, and spots near the AR/LA border in the past day. Weekend rains favor southern/eastern IA, northern MO, northern/central IL, and IN, but very limited showers and moderating cool temperatures next week aid seeding. Rains returns in the 11 to 15 day and favors the west, with 16 to 30 day interruptions most likely in the far west and near the OH River.

Occasional frost continues in the next 5 days (upper 20s in northern parts of IN/IL this morning), but freeze damage remains unlikely to jointing wheat. Delta rains will diminish from the middle of next week into the following week, although a return of 16 to 30 day rain could still slow fieldwork again and needs to be watched for soft wheat quality.

Plains wheat will see a few showers into Friday, but the best rain chance is Sunday/Monday. While 20% of the belt remains under stress at the moment, this should be reduced again early next week, with expanding showers in the 16 to 30 day also aiding heading wheat. Occasional showers in the Northern Plains/Canadian Prairies will aid moisture without threatening any major seeding delays over the next 2 weeks.

In South America, rain (.25 to 1.25”, locally 2.5”) continued to add beneficial moisture to the south 1/3 of Brazil corn yesterday. Rains shift north the rest of the week but expand back to all but the far south next week to ensure favorable pollination. Coffee areas are seeing rains expand now and will eradicate most stress in the next 10 days. Sugarcane harvest will see occasional delays in the next 10 days, but soy harvest delays stay very limited.

Argentina was mostly dry yesterday. Showers later next week will slow corn/soy harvest, but lesser 11 to 15 day rains will limit harvest delays.

China crop areas still on track for more timely rains late in 6-10 day. Limited showers over the next week will aid early corn/soy seeding. Wheat has adequate moisture for now, and most models support timely rains next week that would coincide with the key heading period and enhance yields.

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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