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Morning Outlook

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Overnight Highlights

·         The U.S. expanded its airstrikes against the Islamic State into areas of Syria overnight.

·         Euro-zone manufacturing and services growth slowed unexpectedly to the weakest pace this year in data released overnight, increasing odds that the European Central Bank will add stimulus to the region that pressures the euro and supports the dollar.

·         China’s economy remains in low gear amid struggling retail and residential real-estate markets.

·         The main Midwest rains of the next two weeks should come the middle of next week, but they are not expected to be heavy enough to create damage.

·         Most models are not supportive of freezing conditions over the next two weeks.

·         Heavy rains provide valuable relief to dry areas of Ukraine, providing moisture for establishment of the winter wheat crop. Dry areas of Russia are also expected to benefit from the moisture.

·         Corn ratings rose slightly in the week ending September 21, with harvest advancing to 7% of the U.S. crop. Maturity continues to lag the normal pace, but favorable weather continues to support the crop’s development.

·         Corn prices consolidated lower primarily inside Monday’s trading range overnight.

·         Soybean ratings turned lower in the week ending September, led by losses in Minnesota and Michigan. The losses put our soybean yield model at 47.9 bushels per acre, down 0.5 bushel on the week.

·         November soybeans drop to a new contract low of $9.31 overnight, before rebounding to post 1-cent gains this morning.

Commodity Weather Group Forecast

In the U.S., showers favored the Central Plains winter wheat belt overnight. There were also showers in the Southeast, mainly in GA/SC cotton/soy areas. Rains will favor eastern NE/KS, western IA, and southeast SD today and end tomorrow.

The main rain event in the next 2 weeks comes in the last half of next week. This will slow early harvest. However, given the otherwise dry and warm pattern, significant delays are unlikely. The latest GFS did show a freeze early in the 11 to 15 day, but there is very low likelihood given lack of model support.

Harvest is likely to be disrupted by showers in the South next week. However, models are likely overdoing rains, and damaging wetness is still a very limited threat. Rains in wheat areas in NE, northeast CO, and northern KS overnight will benefit germination of newly seeded fields. Dry spots in OK do have a slightly better chance for some showers in the 6 to 10 day, which would improve germination. The northwest Plains/Canadian Prairies spring wheat harvest will slow early next week but is favorably dry after that.

In South America, Brazil was mostly dry yesterday, and rains focus south this week. Weak frontal passages do progress north in the 6 to 15 day, but significant showers are limited to the southern 1/4 of the coffee belt. This will continue to hinder flowering to the north. Long-range guidance trends wetter in mid-October but may again be overstating shower potential. Heavy rains focus on Parana this week and Rio Grande do Sul in the 6 to 15 day, threatening flooding damage and quality declines to wheat.

Showers will be light in Argentina, but conditions will be stable for wheat/corn in the region.

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

 

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