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Morning Outlook

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Overnight Highlights

·         Scotland voters reject independence 55 to 45% in yesterday’s vote.

·         Yet, the dollar remains strong near 4-year highs today on expectations that we will see interest rates begin to rise relatively rapidly at some point next year.

·         The broader commodity complex remains under pressure due to the strong dollar.

·         Corn traded a very narrow trading range lower just above contract lows overnight as high yield reports continue to make their way into Chicago.

·         Soybeans drop to new contract lows overnight as basis tumbles due to advancing harvest progress amid high yield reports.

·         Wheat falls to new contract lows for each of the three exchanges overnight amid increased global competition and increased rainfall in the previously dry Plains winter wheat belt.

·        This morning’s 11- to 15-day outlook is wetter, but rains were scaled back for the Midwest to allow for greater harvest progress in the next 10 days.

Commodity Weather Group Forecast

In the U.S., scattered thundershowers favored areas from central parts of the TX panhandle into southeast TX in the past day as well as northern/eastern MS, near the NC/SC border, and a few spots in eastern parts of KS/OK. A few showers will be possible into the weekend in the upper Midwest (mainly near the Great Lakes), but most areas will remain dry.

Showers will expand from the Plains into the far western Midwest by late on Tuesday, but coverage will again be limited. The next chance for a more extensive rain event holds off until the 11 to 15 day in much of the Midwest and northern Delta, favoring NE/IA. Showers then appear most frequent in the upper Midwest through mid-October. However, the drier trends in the next 10 days limit concerns and aid maturing corn/soy.

The GFS occasionally attempts a surge of tropical moisture (either in the 6 to 10 day for the Carolinas or in the Delta in the 11 to 15 day), but odds remain low of any such development.

Freeze threats remain very low into early October, and the 16 to 30 day trended warmer and keeps odds limited through mid-October.

Shower potential is increasing gradually for spring wheat in the Northern Plains/Canada in the 6 to 10 day but should result in only minor harvest interruptions. Rains in the next 2 weeks aid early growth of newly seeded Plains winter wheat. Rain totals of .50 to 2” (locally 4.5”) reached less than 1/2 of West TX cotton yesterday but continue to fill in over the weekend with similar amounts. While not quite as extensive with the heaviest amounts, quality declines remain likely for open boll cotton.

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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