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Sunday Outlook

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Weekend Developments

·         Both sides are accusing the other for violations to the cease-fire that began in Ukraine Sunday, with Ukraine reporting 5 deaths and 25 wounded on its side since the truce began.

·         The Greek markets dropped overnight due to skepticism voiced by Germany’s finance minister that a deal can be reached to fund Greece.

·         The euro is actually higher and the dollar lower as some traders begin to figure out that a hardline stance on Greece may be good for the Euro-zone in the long run.

·         There’s been no significant movement in the West Coast port slowdown over the weekend.

·         Much of central and northwestern Brazil was wet over the weekend and is expected to remain so this week.

·         The area dries out to allow for soybean harvest and safrinha corn planting in the 6- to 10-day period, but then it appears that rains will return.

·         Wetness in the region is exceeding expectations and poses a risk for getting the safrinha corn planted prior to the March 1 deadline, which could result in reduced plantings, and therefore reduced export competition for U.S. corn later this year.

·         Readings are expected to drop as low as -5 F later this week from northern Missouri through central areas of Illinois, Indiana and Ohio where snowfall is expected to be lacking, leaving wheat at a borderline risk of winterkill.

·         Argentina announced over the weekend that it will be releasing another 1 million metric tons or 37 million bushels for export after reviewing its supplies.

·         Russia may ship up to 75 million bushels of wheat between now and June as exporters honor previous commitments according to an analyst with SovEcon.

·         USDA’s Outlook Forum should make a lot of headlines on Thursday and Friday. Those headlines tend to have a bearish bias, but traders will be watching to see if this year’s list of speakers have any surprises up their sleeves.

·         At this  point the fundamentals are modestly supportive for tonight’s open for corn and soybeans. Wheat fundamentals are mixed to bearish. However, traders will also be watching developments in the outside markets following the three-day holiday weekend.

Commodity Weather Group Weekend Summary

In the U.S., snow showers occurred early in the weekend in the northeast Midwest (1 to 3”), but the main storm developed last night. Showers (.25 to 1”, locally 2”) are favoring eastern parts of KS/OK, much of the Delta, and the southern 1/3 of the Midwest. Snow totals of 3 to 10” are expected in the southern Midwest/northern Delta, with a band of ice in the central Delta (less than 1/2”) that should melt off fast enough to keep wheat damage minimal.

There will be an area from far northern MO through central parts of IL/IN/OH that lacks adequate snow cover when cold surges in later this week. Readings are likely to be 0 to -5 F in those areas, keeping damage threats marginal for wheat. Plains wheat is still not cold enough for winterkill, and the Plains/Delta should benefit from additional shower chances.

In South America, weekend rains in Brazil favored much of Mato Grosso, far southwest Goias, eastern Mato Grosso do Sul, Parana, Santa Catarina, and much of Sao Paulo except for a few northeast areas. Locally 4 to 8” was also reported in some port areas of Santa Catarina/Parana. A wet pattern will continue for central/northwest areas this week, slowing soy harvest/safrinha corn seeding and port movement.

A break does arrive in the 6 to 10 day as needed rains slip south, but showers do appear more likely to interrupt fieldwork again in the 11 to 15 day. Redeveloping dryness concerns remain likely for over 1/3 of coffee in northeast Brazil, as rain chances remain limited.

Argentina showers were locally heavy (up to 8”) but were limited to minor growing areas in the far northwest during the weekend. Scattered showers extend into parts of the central/far northern belt at mid-week, with another event favoring the north in the 6 to 10 day. Rain chances have diminished next week though for the south, leaving the chance for slipping moisture supplies in parts of Buenos Aires (15% of corn/soy).

 

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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