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Morning Outlook

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Overnight Highlights

·         Sources close to the European Central Bank say that the ECB is considering tighter rules for the liquidity of Greek banks as the crisis worsens, further increasing the risk that Greece will fall out of the Euro-zone.

·         The dollar is trading near last month’s lows, while crude oil pushed above $62 overnight to trade at its highest level since December 10.

·         The weaker dollar supports money flowing into the broader commodity sector.

·         Corn sees follow-through buying on short-covering ahead of next week’s USDA crop report on the weaker dollar after posting a friendly reversal on Tuesday.

·         Soybeans see modest gains on concerns of supply disruptions in Argentina.

·         Wheat prices firm on reports from the Wheat Quality Council tour of Kansas and surrounding areas.

·         The average yield for the first day of the tour came in at 34.3 bushels per acre, down from 34.7 bpa last year and the second lowest on record for Day One.

·         Locally heavy rains are expected to continue in the previously dry Plains into the weekend, before drying out.

·         Near-term rains favor the western Midwest, but we should see several dry days next week.

·         Argentina should dry out over the next week to allow continuation of corn and soybean harvest.

Commodity Weather Group Forecast

In the U.S., rains were heaviest in the southeast Plains yesterday but also occurred in the northern/western Plains/far western Midwest/Great Lakes. Showers will favor the western Midwest through the weekend, with occasional showers extending farther east. Showers then exit the northern/eastern Midwest and Delta at the start of the 6 to 10 day, with about 4 drier days ahead of the arrival of the next rains from the end of the 6 to 10 into the 11 to 15 day. While the rains will slow seeding progress at times (particularly in the western Midwest), serious concerns are not anticipated.

Plains rainfall will increase again from Thursday to Saturday, with locally heavy amounts in the northeast 1/2 of the winter wheat belt. While pockets of excess moisture will be possible, the rains will help to stabilize conditions for heading wheat, with additional showers later in the month as well. However, crop conditions have still been slow to recover thus far in poorly rated sections of NE/KS/OK. Cold conditions early next week pose only a marginal damage threat to western NE/northeast CO.

Spring wheat seeding delays occur in the near-term, with drier weather otherwise aiding fieldwork but allowing Canadian moisture to slip this month.

In South America, rain in Brazil (.25 to 1”, locally 2”) scattered across the northern 1/4 of corn, 3/4 of coffee, and most of sugarcane yesterday. Rains linger in the northern 1/4 of corn and 1/2 of coffee until the weekend, when rains shift to southern corn/coffee areas and spread north again early next week to ensure adequate moisture. Sugar harvest will see another surge of showers early next week slow progress but should then be favorably drier.

Argentina remains dry until at least late in the 6 to 10 day, with showers then likely to linger into the 11 to 15 day and slow corn/soy harvest progress once again.

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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