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Morning Outlook

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Overnight Highlights

·         China’s central bank is expected to funnel 100 billion yuan to five of its biggest banks in an effort to stimulate its economy.

·         European inflation remained low at 0.4%, keeping the door open for more stimulus there.

·         The dollar firmed overnight, with the U.S. Federal Reserve expected to release a statement at 1 p.m. CDT today supporting a further reduction of stimulus and a move toward higher interest rates. Fed Chair Yellen will hold a press conference at 1:30 p.m.

·         Scotland will vote on independence Thursday. It’s believed that a vote for independence would be bearish for the euro and bullish for the dollar, which is negative for U.S. commodities.

·         Soybean basis remains red hot at some Midwest processors where new-crop supplies are still lacking.

·         Yesterday’s Egyptian wheat tender showed that U.S. wheat still was too high priced, but it’s becoming much more competitive after recent losses.

·         Corn remains under pressure as big yield reports make their way to Chicago.

·         The outlook is drier for Midwest weekend rains, allowing for harvest to make better progress.

·         The American GFS model, which originally forecast mid-20s for the northwestern Midwest last weekend, is again calling for a cold event in the 11- to 15-day period, but freeze risks are still considered low, lacking other model support.

·         The outlook turned wetter next week for the Southern Plains and Delta.

Commodity Weather Group Forecast

In the U.S., widely scattered showers were limited to TX and from the Gulf Coast into the Southeast in the past day. A few showers will be possible in the next 2 days in the far southwest Midwest, but the main frontal passage occurs from Friday into the weekend in the Midwest.

The remnants of a Pacific hurricane now appear more likely to track south of the Midwest, with the best rain chances focusing near the Great Lakes and in the southwest Plains. The lesser amounts and coverage will keep concerns limited for maturing corn/soy, with showers also expected to be relatively light along a frontal passage in the 11 to 15 day.

Freeze threats remain low through the first week of October. The GFS model did show a threat late in the 11 to 15 day for the northern/eastern Midwest but was not supported by the ensembles or Euro model. The 16 to 30 day suggests no major harvest issues and trended even a bit drier today. The southward shift in the wettest weather to start next week does lead to a wetter Delta pattern, with additional showers also possible in the 6 to 10 day. Harvest will slow, but damage threats are low. Wetter spots in the Carolinas and GA should see a downturn in rainfall, although the pattern will not be completely dry.

Very few interruptions are seen for spring wheat/canola harvest over the next 2 weeks. Rains late this week and a wetter trend next week will aid early growth of Southern Plains winter wheat. However, the rains will also bring the risk for some quality declines to about 1/2 of the cotton crop in West TX that is opening bolls.

FSU Wheat Rains Continue to Expand in 6-10 Day, Aiding Seeding and Germination Prospects. Shower potential continues to increase in most models for early next week. This timely moisture event would help to ease extensive dryness and enhance seeding. This would allow the crop to become established before dormancy.

Morning Market Snapshot

 

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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