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Morning Outlook



Overnight Highlights

·         The dollar made new highs overnight, but paused just below March 2009 highs as global investors wait for statements today from the European Central Bank and for tomorrow morning’s U.S. monthly jobs report.

·         There is some sense that the markets may be over-anticipating action from the ECB today, so a pull-back in the dollar is possible.

·         The ECB left interest rates low as expected, but the markets are waiting for Mario Draghi’s statements at 7:30 a.m. this morning.

·         This morning’s Stats Canada report is expected to show larger wheat and canola crops. The trade expects all-wheat production to come in at 27.8 million metric tons, up 1% on the month. Canola output is expected to come in at 14.6 mmt, up 4% from its previous estimate.

·         Extensive selling of wheat by European farmers is being reported following the recent price rally.

·         U.S. export sales data for the week ending November 27 will be released at 7:30 a.m. CST this morning.

·         Corn prices continue to hold just above key chart support as we approach the end of the tax year.

·         Soybean and soymeal prices worked lower again overnight as traders look ahead to a big South American crop around the corner.

·         Wheat prices extend their losses as traders begin to look past rumored reductions in Russian exports amid weak demand for U.S. wheat.

·         Brazilian rains are limited this week, but expand again in the 6- to 15-day period, favoring good crop development.

·         Showers are slightly more extensive for dry areas of the Southern Plains wheat belt.

·         Sub-zero readings likely causing some patchy winterkill in FSU wheat.

Commodity Weather Group Forecast

In the U.S., showers were very light (<.25”) in the northern Delta yesterday. At least 1/3 of Plains wheat is likely to see needed rains on Friday. Warmer temperatures and additional 11 to 15 day showers should allow beneficial growth. Rains this weekend miss the late harvest areas of the northern Midwest and Southeast, allowing favorable progress. Snow melt later next week in the northwest Midwest may allow late corn harvest to resume.

The warmer conditions should also aid prospects for germination in late-seeded wheat areas of the southern Midwest in the 11-15 day. Rains for Pacific Northwest wheat should continue to improve limited soil moisture levels (especially in the next 10 days), aiding germination in southern areas.

In South America, dry weather continues to allow some recovery from the notable weekend rain in Argentina, but showers will occur in mainly the southern 1/2 of the wheat belt again this weekend. Corn/soy areas should avoid much of the shower activity until Tuesday, when some interruptions to fieldwork return. The Euro is wetter with this event but was not preferred.

Another break will then allow some brief drying ahead of 11 to 15 day showers, particularly late in the period. However, confidence is low, as much of the guidance is drier than our forecast with this event. While the forecast is not as bad as it could be, showers should tend to keep seeding (mainly corn) behind normal and will hinder maturing wheat (particularly in the southeast 1/3 of the belt).

Brazil showers were very limited again yesterday, and activity should remain well below model expectations this week. However, more widespread rains return in the 6 to 15 day to maintain favorable soil moisture.

Sub-zero Readings Centered Over Snow Band in FSU Wheat Belt, With Patchy Damage Likely. Coldest readings last night/tonight center on a 1 to 4” snow band in eastern Ukraine/northern South Russia before turning milder. Deeper snow cover allows protection for some areas, but patchy damage is likely in at least 10% of the belt.

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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