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Morning Outlook

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Overnight Highlights

·         China’s main stock index fell another 3.4% overnight on continuing worries about its economy. Those fears are spreading throughout much of Asia and the rest of the world. Asian stocks overall were down for the fifth day in a row, with investors pointing toward concerns voiced in the minutes of the latest Fed meeting that were released Wednesday. Traders are now pricing in roughly a 36% probability of rate hike in September due to the Fed’s concerns about global economic problems, down from 50% earlier this month.

·         The Pro Farmer Crop Tour moves into its final day today, with tour participants expected to see the best crops of the week as they move through Iowa into southern Minnesota. Pro Farmer will release its official estimates then on Friday. Day 3 results showed quite a bit more variability than expected by tour participants in the western belt, as conditions slowly improve in the eastern belt route. Overall though, the tour continues to produce results that we believe support our lower yield estimates.

·         The dollar is trading 200 points lower this morning, but crude oil also produced new 6-1/2 year lows on economic concerns. Those concerns have fund managers selling the broader commodity indices in early trade this morning.

·         Soybeans slipped to new contract lows overnight, with the November contract slipping to $8.88 per bushel, but the oilseed is pushing higher to erase those lows as U.S. desks open. Corn and wheat meanwhile are posting modest gains, with corn traders encouraged by the findings thus far on the Pro Farmer crop tour, suggesting that USDA will need to lower its estimates in future reports.

·         Showers are expected to linger into early next week in the Deep South, but activity will primarily scatter into the western Midwest this weekend and then intermittently favor northwestern areas from late next week into the 11- to 15-day period. Eastern areas remain most notably dry over the coming two weeks. Showers are expected to favor southern Canada and near the U.S. border to finish the week, slowing wheat harvest. Cold air on Saturday in far western Canada and into the northern Plains in the 11- to 15-day period poses only a very marginal frost risk at this point.

·         USDA will be releasing export sales data for the week ending August 13 at 7:30 a.m. CDT this morning, providing further direction for the markets.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored central/southwest OH, southern/northeast IN, eastern MI, far southern IL, far southeast MO, KY, TN, northern/central AR, northern/far southwest MS, southern LA, AL, southeast GA, southern SC, and southern NC in the past day.

Showers will linger into early next week in the Deep South, but activity will primarily scatter into the western Midwest this weekend and then intermittently favors the northwest Midwest from late next week into the 11 to 15 day. The rains this week have limited moisture stress of note to about 10% of the corn/soy areas, mainly in west-central OH, east-central IN, northeast MO, ND, spotty sections of central IL, and patches in the southern Delta. ND will see a rain chance late on Saturday but does otherwise remain drier if that event falters.

The drier trends in the southern Midwest and northern Delta in late August and early September will draw down moisture and will need to be watched for potential concerns during very late double-crop soy development. A lack of prolonged breaks in the rain pattern for the northwest Midwest in the next 2 weeks will allow wet pockets to persist in southern MN, northwest IA, and SD, with NE, IA, southern MN, WI, and MI most likely to see wetter conditions slow early harvest in the 16 to 30 day.

In the N. Plains/Canada, showers were limited to northwest Saskatchewan and northeast Alberta in the past day. Showers favor southern Canada and near the U.S. border to finish this week, slowing wheat harvest but threatening only very localized lodging at most. Intermittent showers otherwise threaten only very minor delays in the rest of the 15-day period. Cold air on Saturday in far western Canada and in the northern Prairies in the 11 to 15 day pose only very marginal frost risks.

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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