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Morning Outlook

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Overnight Highlights

·         It was a quieter night in the currency markets, but the dollar reached a fresh four-year high on rising expectations that the European Central Bank is preparing a $1.2 trillion bond-buying program to stimulate the European economy.

·         The U.S. Department of Labor will be releasing its highly-anticipated monthly jobs report at 7:30 a.m. CST this morning.

·         Iraq purchased 7.3 million bushels of hard wheat from Australia and Canada in its latest tender, again showing that U.S. wheat is over-priced on the global market amid a strong dollar.

·         Soymeal pushed to a new one-week high overnight on strong demand amid tight supplies, but it has now backed off and is near its session low.

·         Soybeans are modestly higher this morning, but generally within Thursday’s trading range.

·         Corn and wheat prices are sliding lower this morning on abundant supplies, with Kansas City wheat at nearly four-week lows.

·         Snowfall of 2 to 6” is expected to hamper harvest in a band stretching from Sioux Falls to Detroit early next week as Arctic cold drops into the Plains and Midwest.

·         Expansive rains are expected to reduce most lingering corn/soybean areas in Brazil over the next week.

Commodity Weather Group Forecast

In the U.S., rains were .10 to .50” in the northeast Midwest yesterday. Overall, drier conditions this weekend aid Midwest/Delta harvest progress. The snow potential with the strong cold surge has increased, with 2 to 6” (locally 8”) in a swath focused around a line from Sioux Falls to Detroit early next week.

Immediate damage potential is minor, but late corn harvest delays will increase as snow melt will be slow. Delta wheat seeding and late soy/cotton harvest will benefit from dryness in the next week, but a wetter pattern late in the 6 to 10 and into the 11 to 15 day will slow very late fieldwork.

In South America, thundershowers increased in the past dry across northern Rio Grande do Sul, Santa Catarina, and southern Parana, while showers remained spottier farther north in Brazil and into southern Buenos Aires in Argentina.

Expansive rains will reduce most lingering dry patches in corn/soy areas of central/northwest Brazil in the next week, and coffee/sugar areas will also benefit greatly. The rains do start to slide north of many crop areas in the 11 to 15 day to avert notable fieldwork delays.

Showers should dissipate today along the southern edge of Argentina, but a few showers are possible in the far southwest on Monday and then farther east on Tuesday night. This will be followed by at least a week of drier weather again for wet fields in Buenos Aires, but a notable storm is expected for late in the 11 to 15 day. 16 to 30 day guidance tends to run at or above normal for rain as well. This will threaten to keep at least 1/2 of wheat unfavorably wet and prone to losses/disease, along with late corn seeding impacts for 10 to 15% of Argentine corn.

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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