Home Market Market Watch Morning Outlook

Morning Outlook



Overnight Highlights

·         Global stock markets fell overnight, led by China, where stocks fell those most since 2009 after the government tightened collateral rules for short-term loans.

·         Crude oil dropped to a new low for the move of $62.25 per barrel, before bouncing as the dollar pulled back from recent gains.

·         Soybean shipments since September 1 are up 24% from the previous year, mostly led by China, but Gulf basis dropped 7 cents overnight trying to sustain that demand.

·         Representatives of six Chinese soybean buyers will be in Chicago next Tuesday and are expected to sign agreements to purchase unspecified amounts of soybeans while there in a signing ceremony. Such events in the past generally led to significant export sales in the days following.

·         Australia cut its wheat export target to 624 million bushels overnight, following its recent production cut due to dryness in southern areas. USDA’s Australian export target is currently at 643 million bushels. This move should not be a surprise to the trade.

·         Russian grain exports are moving out the door at a record pace, with active movement expected to continue through the month of December. The government now says that it won’t discuss possible export restrictions, but Reuters reports that it may use rolling tariffs to defend domestic prices, where inflation is a prime concern for President Putin.

·         Traders are positioning for tomorrow morning’s USDA crop report, which is expected to show rising corn and wheat stocks and modestly tighter soybean stocks due to adjustments in demand estimates. Grain and oilseed prices were generally weaker overnight.

U.S. Ending Stocks





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USDA December Report

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·         Weather remains favorable for high yields in South America over the next two weeks.

·         The outlook is improving for beneficial rains in the Southern Plains in the 6- to 15-day period.

Commodity Weather Group Forecast

In the U.S., very light showers (.10 to .35”) were limited to the Great Lakes yesterday, and the next notable shower potential in the central U.S. arrives Sunday to Tuesday. The storm track has shifted a bit farther north today, giving better shower potential into the Central Plains and western Midwest. Additional disturbances late in the 6 to 10 day and again in the 11 to 15 day appear to focus just slightly farther to the south.

The combination of these systems will give better chances for slight improvement to moisture reserves in the central/southeast Plains wheat belt, and interruptions to any late harvest activities should remain minor. Mild temperatures next week allow some additional germination for late-seeded soft wheat in the southwest Midwest, but slow growth will largely be focused on the S. Plains/South.

In South America, rains favored southern/eastern Rio Grande do Sul, central/southeast Mato Grosso, southern/far eastern Goias, and northern Minas Gerais in Brazil yesterday. Rains will be widespread in the next 2 weeks, but risks for excessive rainfall in the wettest northern areas remain limited. The moisture will aid crop growth.

Argentine showers lingered from far northwest areas into northern Santa Fe and Entre Rios yesterday, but broader coverage returns to central areas in the next 2 days. Showers should then favor the south/west in the 6 to 10 day, but the 11 to 15 day has shifted drier. The lack of persistent rain will keep interruptions to late corn/soy seeding fairly short-lived. The showers next week in Buenos Aires will maintain some quality concerns due to long-term moisture surpluses, but concerns should not expand.

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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