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Morning Outlook

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Overnight Highlights

<![if !supportLists]>·         <![endif]>Ukraine and Russia reach agreement on steps needed for a truce.

<![if !supportLists]>·         <![endif]>Europe moves closer to quantitative easing to stimulate the Euro-zone economy.

<![if !supportLists]>·         <![endif]>The dollar rises to a new 13-month high, before pulling back in profit taking.

<![if !supportLists]>·         <![endif]>Wheat trades just above contract lows as Ukraine tensions ease.

<![if !supportLists]>·         <![endif]>December corn breaks below chart support at $3.62 on rising crop ratings, but holds for now above its contract low of $3.58.

<![if !supportLists]>·         <![endif]>November soybeans again find support just above their contract low of $10.1975, but remain under pressure on rising crop ratings.

<![if !supportLists]>·         <![endif]>Corn ratings are the highest since 1994 for the week, with our yield model up another 1.3 bushels on the week to 172.7 bushels per acre.

<![if !supportLists]>·         <![endif]>FC Stone’s survey of elevator grain merchandisers puts the corn crop at 14.595 billion bushels on a yield of 174.1 bushels per acre.

<![if !supportLists]>·         <![endif]>Soybean ratings are the highest on record for the week, with our yield model up 0.7 bushels to 48.0 bushels per acre.

<![if !supportLists]>·         <![endif]>FC Stone’s survey put the soybean crop at 4.0 billion bushels on a yield of 47.6 bushels per acre.

<![if !supportLists]>·         <![endif]>There is a frost threat for Minnesota and western Wisconsin around September 15, with a few snowflakes possible in North Dakota, but the event lacks good model support.

<![if !supportLists]>·         <![endif]>Egypt releases another snap tender to buy wheat, with Russian and Romanian wheat expected to capture the business.

Commodity Weather Group Forecast

In the U.S., scattered showers favored parts of TN, MS, LA, and northeast OK in the past day, with a few showers also noted near the OH River, KS/MO border, and southwest MN. Showers will favor MN and WI tonight/tomorrow, with scattered activity stretching from southwest to northeast in the Midwest by Thursday night/Friday along a front before dipping down into the northern Delta. However, the broadest coverage favors the central/southern Midwest at the middle of next week.

While pockets of excessive rain remain possible, totals do not appear quite as heavy overall today, and showers retreat to the southwest for the balance of the 15-day period. This should prevent any serious wetness concerns. Frequent showers are expected this week from the Gulf Coast into the Southeast, causing minor impacts to harvest. Rains and accompanying harvest slowdowns then tend to focus mostly on the southern Midwest/northern Delta in mid to late September, while the northwest Midwest should be driest.

GFS guidance this morning does show frost in MN/western WI (even perhaps a few snow showers in the Dakotas) around September 15. However, only about 20% of GFS ensembles are as cold, and the Euro remains less intense. This keeps odds low, but the event will need to be watched. Guidance was then not quite as cool in the 16 to 30 day today.

Showers scatter near the Canadian border in the next 2 days, but activity is otherwise more limited for much of the month to allow spring wheat harvest to improve. Frequent rains remain likely for Southern Plains winter wheat this month to aid newly seeded acreage, and rain chances are a bit better toward mid-month for dry West TX 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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