Home Market Market Watch Morning Outlook

Morning Outlook



Overnight Highlights

·         After strong gains yesterday, Ag markets are mixed this morning with little fresh news overnight

·         U.S. stock futures are sharply higher this morning after it was announced that China’s Central Bank would cut its one-year loan rate by .4 percentage points, and one-year deposit rates by .25 percentage points, and also said it would allow more flexibility in deposit rates.

·         In addition to the Chinese rate cut, European Central Bank President, Mario Draghi, said that the central bank will do what it must to raise inflation and inflation expectations as fast as possible, a sign that the ECB will step-up asset buying.

·         These announcements also have crude oil and the U.S. Dollar sharply higher, again, as it remains the flight to quality compared to other currencies around the World.

·         The outside market activity doesn’t seem to be applying any knee-jerk reactions in the grains, but the continued strength in the Dollar has to be noticed for the longer-term, big-picture thinking as our commodities become more and more expensive to World buyers.

·         December option expiration is today. The largest open interest per strike price is as follows: 520/530 strike prices in Chicago wheat, 340/350/360 strike prices in Corn, the 1000 strike price in soybeans, and the 370 strike in soy meal. With the exception of soy meal, the markets will have to do some work today to match these price levels.

·         The monthly Cattle-on-Feed report will be after the close with expectations to see the following: 99.8% on-feed compared to last year, placements at 96%, and marketings at 93%.

·         Several rain events are seen for Argentina in the near-term, as well as Brazil, leaving no reason for concern at this point for the South American crops.

·         Corn is down 2 cents this morning on some profit-taking towards resistance levels, soybeans are up 2-3 cents on follow-through strength with next resistance at $10.45, and wheat is down 3-5 cents as of this writing.

Commodity Weather Group Forecast

In the U.S., mainly dry conditions prevailed yesterday. Showers are developing in the Delta and will expand into the eastern

2/3 of the Midwest this weekend. Models are now notably drier after that storm, with showers holding off for the Delta/eastern

Midwest until late in the 6 to 10 day which should allow some late harvest progress next week. Midwest temperatures remain

too cold for late wheat germination in the next 10 days, and the moderation to normal in the 11 to 15 day is even only borderline to support growth. Light snow is likely in the eastern Midwest late next week, but damage potential is limited.


In South America, showers lingered in mainly northern/southwest Cordoba, northern Santa Fe, southern Santiago del Estero, and Entre Rios yesterday in Argentina, and light showers may linger in northern Buenos Aires and far northeast Argentina today. However, the best rain chances are with a frontal passage in the southwest and far north Monday and particularly with a larger storm that is possible to finish next week. While there is still model debate whether enhancement from tropical

influences will come together for the late-week storm, our forecast shows a significant event that would keep spring seeding well behind normal and hinder wheat quality/yields further (primarily in Buenos Aires). About 20% of corn/soy and 1/3 of wheat remain of main concern for persisting wet pockets.


Brazil showers favored northern Parana, northern Mato Grosso do Sul, southwest Goias, and parts of southwest/eastern Mato Grosso yesterday, but widespread coverage in the next 2 weeks will return. While a few areas of excess moisture cannot be ruled out, the rains will largely aid late spring crop development.


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.




or 1-866-249-2528





Samuel Hudson | Market Strategist
WATER STREET ADVISORY® | www.waterstreet.org
(309) 680-1200 | shudson@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.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.