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Sunday Outlook

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Weekend Developments

·         Grain and oilseed charts began to turn positive Friday as the dollar broke hard. Now we need follow-through buying to confirm the move, which means traders are watching Greece, the euro and other factors impacting the dollar.

·         Greece made its debt obligations on Friday, but it has more to meet this week. Defaulting on its debt would open the door for an exit from the euro-zone, but it needs to see 14% GDP growth to meet the economic standards set forth by its creditors.

·         NATO reports that Russia is still pouring into Ukraine, while NORAD reports that Russia has flown a plethora of flights into its airspace to assess its response to the probes.

·         Talk of next week’s March 31 USDA quarterly stocks and planting intentions reports should increase this week, adding to the volatility.

·         Friday’s CFTC report showed that net fund ownership of corn, soybeans and Chicago & Kansas City wheat on March 17 was a nine-year low of $9.1 billion, although late-week action is believed to have spurred ownership once again. Both hedge and index funds have been moving short (sold) the grain complex.

·         Wheat has the best charts. Old-crop soybean charts are weaker than new-crop.

·         Rains look limited for providing relief in dry areas of the Plains winter wheat belt the next 15 days, with the 16- to 30-day outlook trending drier as well.

·         Storms remain few enough to allow for soybean harvest in Brazil, but frequent enough to maintain yield potential for safrinha corn.

·         A drier trend the next two weeks is expected to be good for corn and soybean development in Argentina.

Commodity Weather Group Weekend Summary

In the U.S., weekend showers favored central/eastern TX, southern AR, northern LA, and southern MS. Midweek rains will scatter from the C. Plains into the Midwest and northern Delta, with a few showers also scattering across the northern/eastern Midwest and Delta early next week. However, interruptions to early corn seeding should become fairly limited until the 11 to 15 day in the South, and pre-planting moisture in much of the Midwest will improve.

Wet wheat areas in the northern Delta will still need to be watched for some redeveloping concerns in April, but amounts are relatively light in the next 10 days. While patchy showers will be possible at times in the central/southeast Plains, opportunities for substantial relief in the hard red winter wheat belt are limited, and the 16 to 30 day guidance has also trended drier.

Highs well into the 80s through mid-week and again early in the 11 to 15 day will also draw down moisture. Light showers early this week are even a bit more widespread for Pacific Northwest wheat areas before drier trends return, keeping crop conditions stable for now.

In South America, showers in Argentina were confined to the north 1/4 of the corn/soy belt early in the weekend (.50 to 1.5”). This kept central Santa Fe excessively wet. However, significant showers over the next two weeks are expected to be limited to the northern fringes of the Argentina corn/soy, aiding early harvest progress. Only about 15% of the soy in Buenos Aires will see the dryness shave off yield potential for the late filling crop.

Brazil showers scattered across the northeast half of the corn/soy with rain totals of .50 to 1.5” (locally 2.5”) in 30% of safrinha corn and 40% of soy but nearly general coverage of coffee/sugarcane. Rains remain mainly confined to the northeast third of the corn/soy area this week, and showers then expand across the south early next week and into central areas later in the week. The drier pattern in the south this week will aid soy harvest progress. The return of rains later next week will aid safrinha corn and late coffee/sugar growth.

 

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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