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Morning Outlook



Overnight Highlights

·         China imported a record 313 million bushels of soybeans in December, up 41.5% from the previous month and up 16.8% from the previous record set in December 2013.

·         China also set monthly records for imports of crude oil and iron ore as it took advantage of cheap prices to build supplies, despite waning demand.

·         China suspended imports of U.S. poultry amid bird flu fears.

·         U.S. crude oil fell to a new 5-1/2 year low of $44.20 per barrel as supplies build relative to demand. Last year’s U.S. production reached more than a three-decade high, even as OPEC members continue to pump at full throttle amid slowing global demand.

·         The dollar traded higher near recent long-term highs overnight amid talk of more stimulus in Europe, which weakened the euro.

·         Both the soybean and Chicago wheat markets bounce off support near the 100-day moving average on the March charts overnight, while corn adds to modest gains from Monday.

·         Forecast models increase rainfall for central/northwest Brazil for an event expected to reach the region next Wednesday to Friday.

·         Rains favor central Argentina corn/soybeans overnight again, but the 10-day outlook has dried out somewhat, limiting excessive moisture concerns.

·         Midwest wheat avoids additional winterkill damage overnight, with conditions moderating over the next 10 days.

Commodity Weather Group Forecast

In the U.S. rains fell in the Carolinas and eastern GA (.50 to 2.25”) yesterday, with lighter activity (.25 to .75”) in the eastern 1/2 of the Delta. Midwest wheat will see one more cold night tonight, with lows of -5 to -10°F in the northeast 1/3, but snow cover of 4” or more should minimize damage. Milder conditions for the rest of the 10-day period will end winterkill concerns.

Delta wheat remains mostly dry for over a week, allowing southern areas to drain prior to a return of rains from late in the 6 to 10 into the 11 to 15 day. Plains wheat has a chance for some needed showers in the 6 to 10 day, but confidence is low due to poor model agreement. Colder trends in the 11 to 30 day bear watching for winterkill risks in the C. Plains/Midwest. Pacific Northwest wheat will see some beneficial showers in next week, which are needed as soil moisture reserves remain low.

In South America, showers occurred in mainly northern Mato Grosso, central Mato Grosso do Sul, far southeast Sao Paulo, and northwest Rio Grande do Sul yesterday in Brazil. A similar pattern continues for the rest of the week and into early next week, but rains are then still expected to advance into all but far northeast Brazil by mid to late next week.

Both models show increasing shower potential, although the GFS is not as wet as the preferred Euro model. Showers then most likely shift back south for much of the 11 to 15 day, leaving 15% of corn/soy/sugar and the northern 1/3 of coffee most short-changed. However, coffee/sugar will need follow-up rains in February, and our outlook remains drier than the CFS model.

Rains favored northern/eastern Cordoba, southern Santa Fe, far northern Buenos Aires, and southwest Entre Rios overnight. After today, rains should be less active until the 11 to 15 day to ease wetness concerns, except for scattered weekend showers.

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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