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Morning Outlook

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Overnight Highlights

·         Grain market higher this morning from short covering and user pricing after last week’s drop in corn, soy and wheat.

·         Traders say there is talk circulating that China is shopping for US DDGs for Jan/Feb period.

·         USDA will release the Grain Inspections Report for week ending January 1 today at 10:00am CST.

·         Brazil government CONAB crop production report will be released Friday, January 9th.

·         Crude is down 1.58 this morning and the dollar is .627 higher to start the week.

Commodity Weather Group Forecast

In the U.S., rains covered all of the Midwest, Delta, and Southeast wheat belt over the weekend (.25 to 1.5”, locally 3.5”). Drier weather dominates the region all of this week. This will allow much of the standing water in wheat fields to drain. However, some damage is possible in LA, southern MS, and AL, where wettest conditions exist and showers return early next week. A surge of cold into the Plains this weekend was not strong enough for winterkill in areas lacking snow cover, and upcoming cold pushes now focus on the Midwest. The first cold surge comes Wednesday night, with lows in the -5 to -15°F range in the northern 2/3 of the Midwest. Snow tonight will be likely to produce 1 to 5” of snow ahead of the cold, providing limited protection to the northern 1/2 of the region. However, nearly 1/3 of the belt is likely to see damage.

In South America, weekend showers covered more of central/northwest Brazil than expected, favoring southern Mato Grosso, southern Goias, central/southeast Minas Gerais, eastern/far northern Mato Grosso do Sul, northwest Sao Paulo, and central Parana. Showers diminish after today in the northwest and favor the south, but occasional showers still scatter into the northwest in the 6 to 15 day. This should be adequate to limit moisture stress, with the main risk for stress in Bahia, northeast Goias, and northern Minas Gerais (10% of corn/soy and 1/4 of coffee). Argentina was mostly dry over the weekend but trended wetter for this week, particularly Thursday night/Friday. Another fairly widespread event is expected in the 6 to 10 day, and developing dryness should be limited to parts of southern/western Buenos Aires and La Pampa (15% of corn/soy). Low to mid 90s are possible today and again in the 6 to 10 day in mainly the west, but heat stress is unlikely.

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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