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Morning Outlook

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Overnight Highlights

·         NATO confirms that Russia is moving troops and equipment across the border into Ukraine, even as it prepares to attend a G-20 group of nations meeting in Australia.

·         The dollar pushed higher, near four-year highs overnight, while crude oil plummeted to a new four-year low of $73.25 before bouncing back on bargain-hunting buying.

·         Strategie Grain boosted its estimate of European Union wheat exports again, following a big crop and good demand on a weak euro.

·         Monday’s National Oilseed Processor Association October soybean crush report is expected to show that processors increased crush activity by more than 50% over the previous month to 150.8 million bushels as new-crop supplies came in, but that number would have been much higher if delivery of new-crop supplies would not have been delayed.

·         Reuters reports that China completed a deal to purchase 45 million bushels of corn from Ukraine in a loan-for-grain agreement, bringing this year’s total purchases from Ukraine to 52 million bushels.

·         Grain and oilseed prices pulled back overnight, led by losses in soymeal and soybeans as new-crop soybeans were posted for delivery in Indiana and traders fear another week of big cancellations for soymeal in this morning’s USDA weekly export sales report.

·         Rains are expected to shift back south into Brazil’s central grain belt in the latter half of next week, benefiting crops across most areas of the region.

·         Snow in the western Midwest this weekend is expected to provide minor harvest delays.

·         Cold temperatures are expected to remain across much of the Plains and Midwest, but normal readings are expected to return in the 11- to 15-day period, allowing some additional growth for wheat.

Commodity Weather Group Forecast

In the U.S., minimal showers occurred yesterday. Temperatures moderated, with no winterkill overnight. Colder than normal temperatures keep Midwest wheat growth stalled, but normal 11 to 15 day readings could still allow for some germination. Western Midwest snow this weekend could be 2 to 4” and slow corn harvest, but limited showers otherwise in the next 10 days keep any delays minor. Delta rains increase and slow very late soy/cotton harvest and wheat seeding in the next week, but dryness this week has aided progress. Plains wheat will be stable, with minimal winterkill risks in the next 2 weeks.

In South America, Brazil showers stretched from central Mato Grosso into southwest Goias, although spotty activity did occur to the east (mainly in south-central Bahia, Espirito Santo, and far southeast Minas Gerais). Rains will focus on far northern Brazil until the latter 1/2 of next week, but rain chances do then improve in central areas as well before shifting back north in the 11 to 15 day.

While confidence is relatively low, this would give a better chance for relief to areas from Parana into Sao Paulo and central/southwest Minas Gerais that have missed rain this week. The northern rains should not be significant enough for major delays to late seeding.

Warming (peaking in the 90s west) and dry weather remains in Argentina until the middle of next week. Models then disagree on the details, but our forecast favors central areas mid to late next week and the west in the 11 to 15 day. While wet areas in Buenos Aires/Entre Rios are easing somewhat currently, a more sustained dry period is needed to eliminate concerns for the southeast 1/3 of wheat and 15% of corn.

China Wheat Continues to Struggle With Limited Moisture for Ongoing Growth. Dryness is hampering wheat growth in much of the North China Plain. The lack of rain is only partially offset by irrigation (available in about 60% of total acreage). Above normal temperatures keep stress in place over the next 2 weeks.

Morning Market Snapshot

 

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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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