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Morning Outlook

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Overnight Highlights

·         Global commodity and equity markets rebounded overnight, despite a stronger dollar trading near four-year highs.

·         Firming palm oil prices on strong demand supported another round of buying in the U.S. soyoil market.

·         Corn prices drop to new contract lows overnight, before firming modestly on oversold conditions.

·         Favorably dry weather is expected to support the Midwest harvest until late next week.

·         Strength in soyoil helped soybeans consolidate modestly higher overnight in correcting an oversold condition.

·         Lack of selling in corn allowed wheat to add to recent gains as the food grain appears to have found an area of value on the global market.

·         Heavy rains cause local flooding in Ukraine, but mainly benefit winter wheat.

·         The trade expects Friday’s USDA quarterly hogs and pigs report to show all hog numbers at 96.7% of year ago levels, with animals kept for breeding at 101.7% of the previous year, while market hogs above 180 pounds are expected to be at just 94%.

Commodity Weather Group Forecast

In the U.S., showers improved moisture for wheat seeding in central/eastern KS and far northern OK yesterday. Rains in the western 1/4 of the Midwest delayed early corn/soy harvest. This will change quickly, as warm and dry conditions are likely to dominate for nearly a week across much of the Midwest. The rain event late next week will slow harvest, but most models keep rains moderate and damage potential minimal.

The latest GFS did show a freeze early in the 11 to 15 day, but it remains an outlier and is very low confidence.

Cotton/soy harvest is likely to be disrupted by showers in the Delta early and again late next week. Damaging wetness is still a very limited threat.

Rains in wheat areas next week could reach dry spots in OK, which would improve germination. Canadian spring wheat harvest will slow early next week but then dries out quickly.

In South America, showers did scatter into a few spots in central Mato Grosso and northwest Goias but favored northern Rio Grande do Sul through southern Parana overnight. Very heavy rain (locally up to 10”) will occur in southern Parana wheat areas this week, lowering quality and causing some losses (harvest currently estimated at 40% complete). Rains are not as heavy in the 6 to 15 day but will still slow harvest in southern Brazil. Weak frontal passages this weekend, Tuesday/Wednesday, and in the 11 to 15 day focus mainly on the southern 1/4 of Brazil coffee, with flowering still delayed elsewhere. However, some models pose a wetter risk with the system at the middle of next week.

Argentina should see stable conditions for corn/wheat following light showers in the past 2 days, with the best next rain chance in the 11 to 15 day.

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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