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Morning Outlook

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Overnight Highlights

<![if !supportLists]>·         <![endif]>The dollar rallied to a fresh 14-month high overnight, with money flowing out of the broader commodity and equity markets and to the relative security of the U.S. dollar and government securities.

<![if !supportLists]>·         <![endif]>Very spotty frost is possible in the Dakotas on Friday morning, with a better chance Saturday morning in eastern Minnesota, northeastern Iowa and in Wisconsin, with the coldest areas near 30°F.

<![if !supportLists]>·         <![endif]>The colder GFS model is slightly less aggressive than it was on Friday with this weekend’s freeze threat.

<![if !supportLists]>·         <![endif]>Midweek rains are expected to be heaviest in eastern Nebraska, Iowa, southeastern Minnesota and Wisconsin.

<![if !supportLists]>·         <![endif]>The outlook dries out beyond the midweek rain event, allowing for active harvest progress in the Midwest where crops are mature.

<![if !supportLists]>·         <![endif]>December corn broke lower overnight after forecast models confirmed a limited frost risk and the contract failed to find buying interest above Friday’s session high.

<![if !supportLists]>·         <![endif]>Similar factors pressured November soybeans after the contract failed to take out the top of a descending wedge chart pattern.

<![if !supportLists]>·         <![endif]>Dry areas of Russia winter wheat belt are seeing some moisture relief.

Commodity Weather Group Forecast

In the U.S., scattered storms early in the weekend favored parts of far northern OH, northern IN, far eastern/southwest MI, central IL, central MO, and the Southern Plains (including West TX cotton), with showers otherwise from the Gulf Coast into the Southeast. Remnants of a dissipating Pacific tropical storm may help to enhance Midwest rain on Tuesday/Wednesday, favoring eastern NE, IA, southeast MN, and WI with the heaviest rainfall (2 to 4”, locally heavier).  

However, drier trends for the balance of the month aid maturing corn/soy. Occasional showers in the Delta over the next 2 weeks will cause only minor harvest interruptions and benefit late double-crop soy, while the Southeast will be wet over the next 2 days but then should encounter more limited showers.

Cold air drops out of Canada late this week, with only very spotty frost possible in corn/soy areas of the Dakotas on Friday morning but still a better chance on Saturday morning in eastern MN, northeast IA, and WI (coldest spots near 30°F). While some GFS guidance still supports slightly colder readings, guidance is generally similar or slightly less aggressive than Friday’s outlook. The lack of a hard freeze (28°F or colder) would prevent notable damage, with no other threats through the balance of the month.

Rain/snow showers in western Canada and a few rain showers in the Northern Plains will slow harvest through mid-week, but drier weather then returns during the balance of the month. Very cool temperatures will still slow drying this week, but warmer readings then return. The greatest freeze threats focus west of late-maturing canola in the eastern Canadian Prairies this week. Showers will continue to aid newly seeded Plains winter wheat.

S. Russia Likely to See Scattered Showers This Week, But Then Back to Drier Pattern. The rains this week could extend into nearly half of the dry areas in S. Russia. This could improve planting conditions in the region, but follow-up rains will be essential since soil moisture supplies will remain very limited.

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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