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Morning Outlook

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Overnight Highlights

·         The dollar traded to fresh four-year highs on the global currency market overnight, a seven-year high against the yen, as the U.S. economy goes in a different direction from both Europe and much of Asia.

·         Crude oil is modestly higher this morning, after again bouncing off support at $80, but much of the rest of the commodity sector is down on the stronger dollar.

·         The equity markets are lower as the dollar rises and the global economy struggles.

·         A few showers are again moving through southern Illinois this morning, as well as scattered areas of the western Midwest.

·         This morning’s forecast is much lighter for this week in the Midwest, reducing harvest delays.

·         Showers in the 6- to 10-day period are also very limited for the Midwest.

·         Southern Plains wheat should benefit from rains early this week, but dryness is expected to linger in the northwestern quarter of the belt.

·         Rains are expected to favor southern areas of Brazil’s corn/soybean belt this week, but to shift north next week, providing relief to lingering areas of dryness.

·         Soybean seeding in Mato Grosso is at 40%, about a week behind normal, due to that lingering dryness.

·         Soymeal was the strength of the grain complex in recent days, but it broke lower overnight, allowing the rest of the grains to sink on a rising dollar.

·         The results of Egypt’s latest tender to buy wheat are expected this morning, but U.S. wheat is not expected to be competitive.

Commodity Weather Group Forecast

In the U.S., showers were limited to the southwest Plains wheat yesterday (<.25”). Rains early this week are lighter in the Midwest, keeping harvest delays brief. Delta rains will mainly slow wheat seeding. Showers are very limited in the 6 to 10 day. While some snow is possible due to colder conditions, damage potential is minimal. S. Plains wheat will benefit from rains early this week, but the northwest 1/4 remains unfavorably dry.

In South America, weekend thundershowers scattered across southern/western Brazil but favored central/southwest Mato Grosso, southeast and far northwest Mato Grosso do Sul, western Sao Paulo, northern/western Parana, Santa Catarina, and western/far northern Rio Grande do Sul.

Rains will favor southern Brazil this week but then slide north again next week, limiting either wetness or dryness concerns for corn/soy/coffee/sugar. This should include improved rainfall for remaining dry pockets in the soy belt that still have poor germination conditions, mainly in east-central Mato Grosso. Mato Grosso seeding (40% complete) remains about a week behind normal but is advancing in other parts of the state with recent showers.

Argentine rains (mostly .50 to 1.5”) were widespread in all but the southwest during the weekend, although the heaviest amounts were north of many recently wet spots in Buenos Aires. Showers exit the far south/northeast today and are limited to the far south again on Friday. However, additional rains at the middle of next week and particularly in the 11 to 15 day may still keep wheat disease threats elevated and slow late corn seeding in already wet sections of Buenos Aires.

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

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