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Morning Outlook

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Overnight Highlights

·         Grain markets slightly lower overnight on light volume trade on another shortened trade week.

·         Decent weather and forecast for South America weigh on yesterday’s early strength.

·         Corn export sales now equal 59% of the total USDA estimate which matches the five year average for this date.

·         Sorghum sales posted the largest weekly sales number since 1995 and the second largest on record.  China being the main buyer.

·         Report from the floor yesterday is that funds sold 5,000 contracts of corn and 4,000 of soybeans.

·         Crude, Dollar and Equities somewhat weak overnight. Metals are steady to higher.

·         Cash Soy Meal is weakening this week with rail markets in the east off $3-$5 and truck markets off $5-$20 in the east and west.

Commodity Weather Group Forecast

In the U.S., rains yesterday were confined to the Southeast (.25 to 1”), and snow (1 to locally 3”) fell in the C. Plains. Mainly dry conditions dominate until Friday/Saturday, when rains return to the Delta/Southeast/E. Midwest. The dry spell will allow wet fields to drain and minimize damage this week, but weekend rains raise new threats in LA/MS. Dryness again sets up for the 6 to 10 day before showers return to the Delta/Southeast in the 11 to 15 day, with another potential for excessive wetness. The Arctic air is pushing across the Plains, and most snow accumulations are only 1 to 3”. This is not likely to be enough to avert winterkill damage tonight in nearly 1/3 of the belt (CO, NE, and northwest KS). There are no additional winterkill damage threats of note over the next 2 weeks, but the risk remains elevated due to colder than normal temperatures.

In South America, scattered showers in Argentina in the past day favored the central 2/3 of Cordoba. While eastern areas are not as wet in the next 2 days, additional showers are expected in the heart of the corn/soy belt, with rains then favoring the northeast 1/3 of the belt in the 6 to 15 day. The combination of recent and expected showers should leave less than 10% of the belt with notable dry spots. Brazil showers favored parts of northern/western Parana, Sao Paulo, northeast Mato Grosso do Sul and western Rio Grande do Sul, yesterday, with the south favored (locally up to 6” in RGDS) this week. A break this weekend and through the middle of next week then eases wetness in RGDS, with occasional 6 to 15 day shower chances extending into northwest Brazil. Notable moisture declines should be limited to the northeast 10 to 15% of Brazil soy, although expected 16 to 30 day showers will be important in the north to prevent more extensive dry spots.

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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