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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/4, soybeans -3 1/2, wheat even, crude +.25, dollar +.02, gold +7.0 and the Dow +15.

* Global equities generally lower overnight.

* Chemicals and seed producer DuPont reported lower quarterly sales largely due to a strong dollar.

* Northern Argentina is watching the development of one of the largest locust swarms in 60 years. Farmers in the norther region near the dry forests are on alert to the threat.

* China’s customs reported that DDG imports in 2015 were a record 6.82 mln mt but the trade expects a drop of more than 50 percent as officials proceed with anti-dumping investigations against US suppliers.

* High water continues to cause problems for logistics on the lower Mississippi.

* China was active buyer of several Brazilian cargoes yesterday.

Commodity Weather Group Forecast

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In South America, showers exited southeast Buenos Aires, northeast Cordoba, northern Santa Fe, northern Entre Rios, and minor production areas in northeast Argentina in the past day, with additional showers late Wednesday into Friday and next Wednesday/Thursday. While each of these events has the chance to reach up to 1/2 of the corn/soy, the best rain chances are likely to remain in northern/western areas. This should allow current dryness concerns (focused on 20 to 25% of corn/
soy) in central Cordoba and bordering sections of Santa Fe as well as central/northeast Buenos Aires to largely persist and threaten minor reductions in yield potential, although heat has subsided. Brazil showers were patchy in the past day and occurred in mainly western Rio Grande do Sul, central Parana, northern Minas Geais, central/southwest Bahia, northwest Goias, and northern Mato Grosso. Rains will expand across most areas this week, aiding corn/soy growth in southern/northeast
areas and even reaching many coffee/sugar areas. Early soy harvest will slow in the Center-West (particularly Thursday to Sunday), but more limited rains in the 6 to 15 day aid fieldwork and limit concerns given that the wettest spots recently have focused east of main harvest areas. Little change is expected through mid-February in the pattern. While the Euro weeklies shifted 16 to 30 day rain northward in Brazil, tropical support for such an event is more likely delayed until late February.

In the U.S., rain (.25 to 1″) fell in the southeast delta in the past day, with 1 to 3″ snow totals in the northwest Midwest. Rains taper off in the South today. The storm early next week is on track to bring rain/snow to the C. Plains/Midwest/Delta. Wetness threats to wheat are minimal, as most areas have been favorably dry in the past two to three weeks. A colder 11 to 15 day trend raises winterkill concerns for the northern fringes of Midwest wheat, but confidence is very low.

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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