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Morning Outlook

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Overnight Highlights

·         The euro rallied and the dollar fell overnight after data showed that economies in China and Europe are strengthening. Europe’s economy remains anemic, but the data raised hopes that the region “may” be able to avoid recession.

·         In addition to better-than-expected manufacturing data, Spain’s unemployment rate dropped to 23.7% in the third quarter, down from 24.5% the previous quarter.

·         Commodity and equity prices firmed overnight on the European data, although money flow thus far doesn’t inspire a great deal of confidence in the move.

·         Grain and oilseed prices have traded on both sides of unchanged overnight, lacking clear direction.

·         Scattered showers stretch from western Wisconsin to eastern Kansas this morning. These showers are expected to taper off in the western half of the belt today.

·         Otherwise, dry weather dominates the belt through Monday. Showers again move across the belt Tuesday before another 4 to 5 days of mostly dry conditions.

·         Broad rain coverage develops in Brazil’s northwestern corn/soybean belt tonight and continues for much of the next two weeks, aiding the start of the growing season. Remaining dry spots should encompass 10% or less of the belt.

·         Rains taper off in southern FSU wheat areas ahead of a strong cold push that will cut growth short for the northern third of the Russian wheat belt. This will necessitate good snow cover through the winter to protect the small wheat from the region’s harsh cold.

Commodity Weather Group Forecast

In the U.S., rains (.25 to 1.0”) favored the western 1/4 of the Midwest yesterday. Lighter showers taper off in the western half of the belt today. Dry weather dominates through Monday. Showers move across the belt next Tuesday but another spell of 4-5 dry days should keep damage potential minor. Delta/Southeast harvest remains favorable with just brief showers the middle of next week. S. Plains wheat could see needed rains in 11-15 day. Pacific NW rains improve wheat growth next 10 days.

In South America, showers scattered from northwest to southeast in Mato Grosso yesterday as well as from far northeast Mato Grosso into Goias, far western Bahia, and far northwest Minas Gerais. Broader coverage develops in northwest soy areas tonight and continues for much of the next 2 weeks, aiding germination prospects and encouraging better planting progress in between showers. Remaining dry spots should encompass 10% or less of corn/soy by the middle of next week.

Coffee/sugar areas will see the best chance for rain from Saturday night into Tuesday. Coverage has been increased and should be widespread but mostly .50 to 1”. This would still help to somewhat ease concerns for coffee flowering delays and new cane growth, although confidence remains quite low. Showers inch back into coffee/sugarcane areas very late in the 11 to 15 and into the 16 to 30 day, and follow-up showers will be needed.

Argentina picks up extensive rain from late Sunday into Tuesday, slowing corn seeding after good progress this week. Showers then diminish again for nearly a week, although disease risks will persist in wet pockets of southern/eastern Buenos Aires and Entre Rios (less than 1/4 of wheat).

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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