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Morning Outlook

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Overnight Highlights

·         Crude oil dropped to $56.25 per barrel overnight, its lowest level since May 2009, before erasing losses after fighting closed two ports in Libya.

·         Russia’s ruble fell to its lowest level against the dollar ever recorded overnight.

·         The sell-off in crude oil sent emerging markets lower and the dollar higher as money flowed from the developing countries toward the safety of the dollar.

·         The dollar also firmed overnight ahead of this week’s meeting of the Federal Reserve’s monetary policy committee. Stock futures rallied overnight with the turnaround in crude oil prices.

·         Wall Street is looking for the Fed to remove the words “considerable time” from its discussion of keeping interest rates near zero when it releases its statement at midday Wednesday.

·         The National Oilseed Processors Association is scheduled to release its tally of member November soybean crush at 11 a.m. CST this morning. A Reuters’ survey of trade participants reflects expectations that it will show NOPA crush of 165.404 million bushels, while I’m looking for 162.4 million bushels.

·         Northern Brazil continues to be favored for rains the next several days, before drying out in the 6- to 15-day period, while southern Brazil will see needed rains return.

·         The forecast has turned colder for the Plains wheat belt in the 11- to 15-day period, but the winterkill threat remains low.

·         Grain and oilseed prices saw follow-through strength overnight, but much of that strength has evaporated as U.S. desks open up this morning.

Commodity Weather Group Forecast

In the U.S., showers fell across the Plains wheat belt yesterday with .25 to 1.0” amounts favoring SW NE, NE CO and much of KS. The area will see additional rains later this week add to moisture supplies. Colder trends in the 11-15 day will begin to push Plains/SW Midwest back into dormancy but there are no winterkill threats indicated.

The Midwest will see rains slow very late corn harvest in WI/MI today/tomorrow, but snow is unlikely. Rains then focus in the Delta later this week and next week. Some standing water could develop with some areas potentially picking up 2-4”, but damage threat is limited as soils are dry enough to soak up much of the rains. The rains focus more on the Southeast by 11-30 day shifting potential wetness.

In South America, showers favored W. & SE Mato Grosso, SW Goias, Sao Paulo, S. & E. Minas Gerais N. & E. Parana, Santa Catarina, far northern Rio Grande do Sul in Brazil over the weekend. Showers are confined to the north early this week but then then shift focus to western and southern areas later in the week. Best rains in the 6 to 10 day favor S. 1/2 and then S. 1/4 in the 11-15 day.

This continues to improve moisture for drier central areas and most importantly for RGDS. The drier trend in N. Brazil continues into the 16-30 day and needs to be watched for possible dryness developments.

Argentine showers favored La Pampa, N. Cordoba, and NW Santa Fe over the weekend. Scattered showers favor the north early this week and then strong rains favor north/east areas next weekend as a strong cold front moves through and dries the area out for the following week. The bulk of the corn/soy will have adequate moisture and a lack of heat, aiding crop development. Shower delays for wheat harvest are minor.

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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