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Sunday Outlook

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Weekend Developments

·         News wires announced the EPA reached a settlement with the oil industry, effectively setting a deadline for the agency to release biofuel targets for 2014 & 2015. The EPA says it will release guidelines for 2015 no later than June 1.

·         CFTC data after Friday’s close found large spec funds were net sellers of 10,000 corn contracts in the week end Tuesday the 7th, leaving them net short 40,000 contracts going into mid-week.

·         In Friday’s trade, floor sources reported funds as net buyers of 5,000 wheat contracts, sellers of 3,000 corn and even on the day in soybeans.

·         India’s industrial output expanded at its fastest pace in three months in February on the back of the growth in manufacturing and power.

·         Corn basis in the interior and Gulf generally firmed this week due to lack of farmer sales and supported from eastern flooding and improved ethanol margin in the west.

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

·         Packers pulled bids in Kansas down to $162-$163. A few traded in $163 for May delivery. In Nebraska, major packers are bidding $260 dressed, with regional packers bidding $263 in Iowa.

Commodity Weather Group Weekend Summary

In the U.S., very light showers scattered around the Great Lakes on Friday, but most of the weekend rain has

focused on the Gulf Coast/AL/western GA and scattered parts of northwest TX, central/southwest OK, southern/eastern KS, and west-central MO. This has offered patchy relief to S. Plains winter wheat, but most of the widespread rains focused on eastern KS. Scattered showers occur into tomorrow in the central/northeast Midwest and again at mid-week, while broader coverage expands tonight into Tuesday in mainly TX/OK before spreading into the Delta. A second system then fills in across more of the Plains by Thursday to Saturday, with mainly parts of NE/northern KS possibly missing out. However, even these areas could see showers by the 11 to 15 day, and the combination of events should aid jointing/early heading wheat in much of the belt. These systems will also bring fairly frequent rains (and the risk for minor flooding in low-lying areas) into the southern Midwest/Delta to slow corn seeding and raise quality concerns for soft wheat, with a similar pattern persisting into the 16 to 30 day as well. Interruptions to early fieldwork in the northern 2/3 of the Midwest should stay more limited though.

 

In South America, rains in the past 2 days fell in the northwest 1/3 of Brazil safrinha corn (.25 to 1.5”, locally

2.5”). Rains expand into central areas this week, aiding corn. A strong cold front late this week pushes significant rains into the south, finally slowing soy harvest after good progress well for much of this week. Rains should reach coffee later in the 6 to 15 day, but dryness hampers filling in 1/3 of the belt until then. Sugarcane harvest sees only minor rain delays in the next 2 weeks. The 16 to 30 day shows near to above normal rain, aiding corn. Argentina corn/soy had showers (.25 to 1”) in the southern 1/3 of the belt over the past 2 days. Showers scatter across the area this week, but the main rains push through Friday and halt harvest. Drier 11 to 15 day conditions should avert damaging wetness, with near to below normal rains in the 16 to 30 day allowing harvest to improve.

 

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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