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Sunday Outlook

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Weekend Developments

·         The Department of Commerce reported Friday morning that the economy created just 126,000 jobs in March, down from 264,000 the previous month and the fewest since December 2013. Furthermore, the previous two months were adjusted downward a combined 69,000 jobs. The average pre-report trade guess was 245,000.

·         The unemployment rate was unchanged at 5.5%, while hourly wages rose 0.3% on the month and 2.1% from the previous year.

·         The equity markets are expected to come  under pressure as a result, with Wall Street bracing for earnings season on Wednesday, when corporations begin to release their quarterly earnings.

·         The dollar traded on Friday, settling nearly 900 points lower on the day due to the disappointing jobs report and just above the March 26 low of 96.170. That critical level will likely be tested tonight.

·         A weaker dollar is expected to increase money flow into the broader commodity sector unless Wall Street becomes more concerned about declining demand due to a global economic slowdown.

·         The U.S. and Iran are telling very different stories regarding the details of the nuclear agreement reached late last week, which leaves the crude oil market vulnerable to some anxiety, with implications for the grain and oilseed markets.

·         Heavy rains of up to 10” fell across portions of the southern Midwest over the weekend, saturating fields and causing some flooding.

·         Rains are expected to expand in the Midwest and Delta this week, bringing rain to most areas while bringing fieldwork to a halt.

·         Rains may focus more again on the Ohio River Valley and Delta early in the 6- to 10-day period.

·         Safrinha corn in Brazil continues to benefit from good moisture, while providing just limited delays for soybean harvest.

·         The wetter forecast should provide additional support for corn and soybean prices to start the week, with added help from a weaker dollar.

·         USDA is scheduled to release its first weekly crop progress and condition ratings for the growing season starting Monday afternoon.

·         Cash cattle traded at mostly $167 to $169 per cwt on a live basis and $265 to $267 per cwt on a dressed basis in the Plains late Friday.

Commodity Weather Group Weekend Summary

In the U.S., rains over the holiday weekend were mainly early and favored the southern Midwest/far northern Delta. The heaviest rains (3 to 6”, locally up to 10”) occurred from south-central IN/north-central KY and caused localized flooding. Light rain/snow also scattered into the foothills of the CO Rockies.

Rains expand this week in the Midwest/Delta, particularly Tuesday into Friday. This could include locally heavy totals but will provide beneficial pre-planting moisture for much of the corn belt. Interruptions will occur to corn seeding in the South, but some progress is possible at mid-week in between systems. Rains may focus more on the OH Valley/Delta early in the 6 to 10 day and threaten some additional minor flooding, but the main threat for wetness shifts south to the Delta in the 11 to 15/16 to 30 day periods.

Guidance has shifted Plains showers farther north at mid-week, limiting the best chance for relief to NE wheat. However, models (particularly the Euro) also now show a follow-up system that could catch much of CO/KS/OK late next weekend, although confidence is still somewhat low.

In South America, rains in past 3 days expanded across 3/4 of safrinha corn areas in Brazil (.25 to 1.5”, locally 3”). Rains in central/southern areas today improve moisture for the remaining dry area. Showers slow sugarcane harvest early this week but benefit coffee filling. Rains contract to northwest Brazil later this week and much of next week, improving sugarcane harvest.

The next expansive rains early in the 11 to 15 day should be well-timed to keep southern safrinha corn in good shape. Soy harvest sees only brief delays today and then turns dry for over a week.

Argentina corn/soy areas had showers (.25 to 1”) in the northwest 1/3 over the past 3 days. Showers are limited this week and then expand across the belt in the 6 to 10 day before diminishing again, allowing harvest progress to maintain at least a normal pace. The 16 to 30 day shows near to above normal rains in Brazil that would slow sugar harvest but aid safrinha corn, while limited Argentine rains aid harvest.

 

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

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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