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Morning Outlook

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Overnight Highlights

·         Grain markets lower in very light volume trade.

·         Traders prepare for 2015 crop reports; Brazil government report on January 9th and the USDA on January 12th.

·         Malaysian Palm Oil Board Director-General says severe flooding that continued through December will lower December production by as much as 20% from a year ago.

·         Chinese officials from Zhejiang Province confirmed that 6 people there have contracted H7N9 bird flu strain.

·         Reports from the floor report fund sold 5,000 corn, 2,000 soybeans, 4,000 wheat, 3,000 meal and bought 2,000 oil.

·         Regular close today for the grain and livestock – re-opening Friday morning in their respective pit hours.

Commodity Weather Group Forecast

In the U.S., lows fell to -5 to -20 F in the northwest 1/3 of the Plains winter wheat belt last night. Winterkill damage was incurred, as much of the region only had 1 to 3” of snow cover that offered only partial protection. Light snow fell in southern KS yesterday, but dry weather prevailed elsewhere. Rains return Friday through Sunday in the Delta/Southeast/eastern Midwest and raise wetness concerns, especially in the southern Delta. However, a dry spell much of next week will allow wet fields to drain and limit damage. Showers do return to the Delta/Southeast in the 11 to 15 day, with another potential for excess rain. Arctic air returns to the C. Plains late in the weekend, with more winterkill possible in NE/northern KS. The Euro model also shows a risk for northern IL at the middle of next week if snow cover is as limited as forecast.

In South America, thundershowers in Argentina again favored southern Cordoba overnight, weakening to the east. Rains end early today in most areas, with the next chances around next Tuesday and again in the 11 to 15 day. Notably dry spots are quite limited at the moment, and only the southern 1/4 of the corn/soy may get short-changed in the next 2 weeks. Brazil showers favored northwest Rio Grande do Sul, western Santa Catarina, southwest Parana, eastern Mato Grosso do Sul, and near the Goias/Mato Grosso border yesterday. Rains will be heaviest in the south (particularly RGDS) over the next 2 weeks, but a break this weekend and early next week should limit wetness concerns for now. The northeast 15% of corn/soy will be most at risk for developing dryness, but 6 to 15 day showers should be adequate farther west to limit moisture deficits and aid some of the recently driest spots near the MGDS/Paraguay border.

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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