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Morning Outlook

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Overnight Highlights

·         The dollar firmed overnight as the euro weakened on concerns of a potential Greece default. It’s unclear if Greece has enough cash to pay its state workers this week.

·         Crude oil prices firmed modestly, holding near four-month highs on fears that fighting in Yemen could spread to impact oil shipments from the region.

·         This week is expected to warm up and dry out across the Midwest, facilitating rapid corn and soybean planting progress across much of the region.

·         Corn prices added to last week’s losses on expectations of rapid planting progress, combined with fears that avian flu will curtail demand.

·         The new-crop soybean/corn price ratio pushed to 2.46 to 1 overnight, effectively working to buy more soybean acres at the expense of corn.

·         Kansas City wheat prices were fractionally higher overnight on Friday’s stripe rust announcement from Kansas, while Chicago and Minneapolis were 2 to 3 cents weaker on the firmer dollar amid abundant supplies of cheaper alternatives on the world market.

·         Multiple rain events are expected over the Plains, with rains expected to return to the Midwest in the 6- to 15-day period.

·         Rains are expected to return to Brazil’s safrinha corn belt next week to aid pollination.

Commodity Weather Group Forecast

In the U.S., weekend rains favored southern AR, northern MS, northern AL, central/southeast GA, southeast IA, northern IL, northwest IN, south-central OH, north-central KS, northeast CO, the NE Panhandle, central/eastern TX, southeast/western OK, and northern parts of the TX Panhandle. Rains will linger for another day in the S. Plains, with the greatest benefit to TX/OK wheat.

Follow-up rains in the 6 to 15 day will also benefit jointing/heading wheat, with dry spots limited to a few spots in southeast CO/southwest KS (about 10% of the belt). Somewhat cool but mostly dry weather will prevail this week for nearly all of the Midwest, with a similar break starting at mid-week in the Delta. This will allow an acceleration in seeding progress ahead of a gradual return of more notable rain in the 6 to 15 day.

The break will also ease quality concerns a bit for wetter soft wheat areas in the Delta. 16 to 30 day rains will be most abundant in the Plains and Delta, aiding hard red winter wheat but raising possible wetness concerns again in the Delta. Showers will favor the western Midwest but should be limited enough to limit delays. Spring wheat seeding interruptions will be minor over the next few weeks.

In South America, rain (.25 to 1”, locally 2”) was confined to the northern 1/4 of Brazil corn/coffee over the weekend. Rains are confined to northern fringes of these areas this week, aiding soy   harvest. Showers extend back across the soy/safrinha corn next week and favor the south, ensuring favorable pollination. Coffee areas look drier in the next 10 days, which would still stress filling in 1/4 of the belt but will aid sugarcane harvest.

Argentine rains are confined to the south 1/4 at mid-week but increase next weekend, slowing corn/soy harvest progress before drier 11 to 15 day trends 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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