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Morning Outlook

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Overnight Highlights

<![if !supportLists]>·         <![endif]>The U.S. dollar surged to a fresh 13-month high overnight on expectations that today’s manufacturing data would be strong amid generally sluggish global data. Additional strength comes from rising global tensions and expectations that the euro will lose value as Europe turns to quantitative easing.

<![if !supportLists]>·         <![endif]>December corn bounced off chart support at $3.62 overnight, but gains are limited by early harvest results confirming big crop expectations.

<![if !supportLists]>·         <![endif]>November soybeans are posting a modest bounce after finding support at last week’s contract low, but gains are limited by big yields in early harvest results.

<![if !supportLists]>·         <![endif]>Wheat prices remain quietly lower, under pressure from a stronger dollar.

<![if !supportLists]>·         <![endif]>Heavy rains are expected in the Midwest in the 6- to 10-day period, but wetness concerns are less overall than seen in Friday’s outlook.

<![if !supportLists]>·         <![endif]>Frost chances for the corn/soybean belt for the 6- to 15-day period are seen as minimal; scattered north of the Canadian border.

<![if !supportLists]>·         <![endif]>Minimal rains in the FSU wheat belt the next two weeks, mainly in Russia, are seen hampering wheat planting progress.

Commodity Weather Group Forecast

In the U.S., rains over the holiday weekend most heavily favored southern/eastern MN, northern/western WI, southwest MI, central/southwest OH, southern/western IN, southern IL, much of MO/IA, central/eastern KS, KY, central TN, northern MS, and LA. This included some localized flooding (mainly in central/southeast KS, central/southwest MO, southern IL, southern IN, and southwest OH from locally 4 to 6.5” rain totals), and heavy rains are expected at the middle of next week in the Midwest.

However, a relatively quieter pattern on either side of that event should limit the severity of wetness concerns. The best chances for rain this week will be near the OH River and into the South into tomorrow and again Saturday and in the far northern Midwest Wednesday into early Friday, although a few showers will also scatter into the central belt late Wednesday and again Thursday night.

The 16 to 30 day trended drier northwest and wetter south in the corn/soy belt, suggesting the main risk for harvest interruptions in the southern 1/3 of the belt. A cool shot this weekend should not be strong enough to bring frost into the corn/soy areas. Cooling in the 16 to 30 day will bring the Dakotas closer to frost levels by late-month, as normal first frost dates arrive. However, the pattern still may not be quite cold enough for frost.

Scattered showers from western ND into southern Canada caused minor interruptions to spring wheat harvest over the weekend, with additional interruptions at mid-week and briefly in the 6 to 10 day. However, the pattern otherwise shifts favorably drier in September, with wetter conditions to the south aiding moisture for newly seeded Plains winter wheat.

Showers Benefit Argentina Wheat This Week; Brazil Coffee Showers Still Too Light to Initiate Bloom. Rains across all of Argentina will ease dryness in the northwest 1/3 of wheat and ensure adequate moisture for early corn seeding. Brazil coffee will see .25 to .50” amounts later this week; not enough to promote bloom, with prospects delayed until late this month or early October. Brazil wheat may see localized damage due to heavy rains next week.

Drier Pattern in Place Next 2 Weeks for FSU, Hampering Wheat Germination. The lack of moisture is most pronounced in S. Russia but extends into portions of SE Ukraine and the Volga Valley as well. Delayed seeding will shorten time for establishment and at worst could cut back on seeded acreage.

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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