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Sunday Outlook

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Weekend Developments

·         French elections over the weekend resulted in a big shift in power in favor of an anti-tax, anti-euro and anti-immigrant party. This threatens to add further volatility to the euro, and therefore the dollar.

·         President Obama’s talks with Iran have a Tuesday deadline. A deal between the two could release another 1+ million barrels per day of crude oil onto the global market.

·         Fighting continues to escalate across the Middle East, largely defined by pro-Sunni versus pro-Shiite Muslim nations.  

·         Greece’s Prime Minister Tsipras, who has been meeting with other euro-zone nations, now focuses on meeting with members of his own cabinet to seek support for changes necessary to acquire aid being held by creditors needed to pay obligations.

·         Mid-week showers will slow planting in the Delta, with even bigger rains next week.

·         Little relief is expected for dry areas of the Plains winter wheat belt the next 15 days.

·         Limited rains the next 10 days should allow active harvest progress of corn and soybeans in Argentina.

·         An active rain pattern the next 10 days should boost wheat growth in the Former Soviet Union.

·         Grain traders hope to be able to avoid influence from the outside markets to focus on final position squaring ahead of Tuesday’s USDA planting intentions and quarterly stocks reports, known for their surprises. Trade expectations are as follows:

Quarterly Stocks

Wheat

Corn

Soybeans

billions of bushels

USDA March 1 Estimates

    Pre-Report Estimates

Average Trade Estimate

1.140

7.609

1.346

Highest Trade Estimate

1.200

7.800

1.404

Lowest Trade Estimate

1.083

7.459

1.273

USDA Previous Year

1.057

7.008

0.994

Water Street Solutions

1.163

7.459

1.304

 

 

USDA March 31 Acreage

2015-16

Corn

Soybeans

All Wheat

Winter Wheat

Spring Wheat

Durum

millions of acres

USDA March 1 Survey Results

    Pre-Report Estimates

Average Trade Estimate

88.731

85.919

55.796

40.727

13.334

1.759

Highest Trade Estimate

89.700

88.000

56.800

42.000

14.503

2.202

Lowest Trade Estimate

87.000

83.100

54.950

40.425

12.500

1.400

USDA Previous Year

90.597

83.701

56.822

42.399

13.025

1.398

Water Street Solutions

88.900

86.800

55.753

40.673

13.350

1.730

Commodity Weather Group Weekend Summary

In the U.S., showers exited the Carolinas early in the weekend, with activity otherwise quite light (mostly well under .25”) in the northern Delta and northwest Midwest that heads east in the next day. Better rains arrive from Wednesday into Friday. Favored areas should include the central/northeast Midwest and much of the Delta, with even broader rains from the Delta into the OH Valley early and again late next week.

The rains will aid Midwest pre-planting moisture in all but a few far western areas. Flooding risks should remain localized, but locally heavy totals occur for soft wheat areas near and south of the OH River next week. This will also slow early corn seeding in the Delta after more limited interruptions currently and much of this week.

While not completely dry, guidance still is not supportive of notable relief for Plains winter wheat. Cold air currently is not strong enough to threaten damage in soft wheat, and 80s to low 90s in the S. Plains at mid-week and early next week will draw down moisture further. Chances for beneficial light follow-up showers in Pacific Northwest wheat have improved.

In South America, weekend showers favored 1/2 of safrinha corn areas in central/northwest Brazil (.50 to 2”, locally 4”). Rains in central/southern areas today then contract north and benefit coffee. Showers expand into central Brazil next week, keeping safrinha corn in good shape. Soybean harvest sees only brief delays, as the main harvest areas in the south see the most limited rains over the next 2 weeks. Near to above normal rains in the 16 to 30 day would ensure favorable early safrinha corn pollination but are not enough to impair sugarcane harvest.

Argentina corn/soy areas have been dry this weekend and remain drier than normal for the next 10 days, as rains in the 6 to 10 day still look light and scattered. This should allow harvest progress to get back to a more normal pace. More extensive rains in the 11 to 15 day could lead to another harvest setback, but the latest 16 to 30 day has reverted back to just normal rains and lessens the potential for prolonged harvest delays.

 

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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