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Sunday Outlook

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Weekend Developments

·         Showers are expected to begin in the Plains and western Midwest early in the week, slowly spreading east across the corn/soybean belt through the week. Rains are expected to be fairly widespread, but not heavy.

·         The 6- to 10-day outlook is mostly dry for the region, allowing harvest progress to resume.

·         A freeze is possible in the northwestern Midwest in the 11- to 15-day period, but crops should be far enough along by then to minimize production losses.

·         Weekend rains disappointed in Australia. Another chance exists in the 6- to 10-day period, but we could see dryness stress emerge during heading for up to half of the wheat crop.

·         Friday’s CFTC data shows that net fund ownership of corn, soybeans, Chicago & KC wheat as of September 23 was $8.9 billion, down $3.1 billion on the week and the lowest since January 2006.

·         Friday’s USDA quarterly hogs and pigs data suggested that the hog industry is battling back from the PED virus and is attempting to expand. That’s good for the hog industry and good for using this massive corn crop.

·         This week’s harvest delays may ease selling pressure some, but traders still know it’s a big crop and rallies will likely continue to be sold.

·         USDA will release its quarterly grain stocks and small grains summary reports at 11 a.m. CDT Tuesday. The markets will likely quickly go back to focusing on this year’s big crops following the reports, but following are the trade expectations already built into prices.

USDA September 30

2014-15

Quarterly Stocks

Wheat

Corn

Soybeans

billions of bushels

USDA September 1 Estimates

    Pre-Report Estimates

Average Trade Estimate

1.880

1.185

0.126

Highest Trade Estimate

1.980

1.350

0.150

Lowest Trade Estimate

1.707

1.020

0.100

USDA September 1 2013

1.870

0.821

0.141

Water Street Solutions

1.949

1.175

0.140

 

U.S. Wheat Production

2014-15

All Wheat

All Winter

HRW

SRW

WW

HRS

Durum

 

billions of bushels

 

 

 

 

 

USDA September 30 Report

    Pre-Report Estimates

Average Trade Estimate

2.037

1.394

0.728

0.465

0.201

0.580

0.062

Highest Trade Estimate

2.075

1.413

0.758

0.472

0.213

0.608

0.070

Lowest Trade Estimate

2.004

1.376

0.707

0.437

0.193

0.558

0.056

Previous USDA Estimate

2.030

1.397

0.729

0.466

0.202

0.572

0.061

Water Street Solutions

2.019

1.376

0.713

0.461

0.202

0.581

0.062

Commodity Weather Group Weekend Summary

In the U.S., weekend showers were limited to just isolated activity in IA and a band of rains in MT and southern Saskatchewan. Showers this week will initially favor the Canadian Prairies and northwest Plains, slowing spring wheat/canola harvest. Showers then extend southward in the Plains and into the western Midwest Tuesday, slowly crossing the Midwest through Friday. Despite the long-lived showers, damaging heavy rains are not likely.

Drier weather then in the 6 to 10 day will improve Midwest harvest before some more rain delays in the 11 to 15 day. A freeze is possible in the 11 to 15 day in the northwest Midwest but would be too late for notable damage.

Dry spots in Plains wheat are likely to linger in CO/OK, but the bulk of the area maintains adequate moisture. Delta/Southeast rains this week only cause minor harvest delays, followed by a favorably dry 6 to 15 day.

In South America, weekend rains were heaviest (2 to possibly 4”) in southern Mato Grosso do Sul and northwest Parana, and frequent showers shift to the southern 1/3 of the Brazil wheat belt in the next 2 weeks. While some quality declines are expected, the weekend rain was not as heavy as expected.

Coffee areas did see amounts of .50 to locally 2” along the border between eastern Sao Paulo and Minas Gerais, with another cluster near the Goias/Minas Gerais border. However, coverage was limited to about 1/4 of the belt, and showers early and again late this week are still expected to fall short of initiating bloom in up to 2/3 of the belt.

The GFS remains slightly wetter than our forecast but shifted a bit drier since Friday, and neither model now expands showers farther north in the 6 to 15 day. Occasional showers for corn/soy in northwest Brazil will aid early prospects.

Argentina will see locally heavy rain next weekend, but the otherwise drier conditions will limit wetness concerns.

Australia Wheat Comes Up Short on Weekend Rains, Next Chance a Week Away. Showers were confined to the southwest fringes of the belt this weekend. Moisture shortages will develop there, in addition to the dryness in South Australia and Victoria. There is the potential for 6 to 10 day showers in these areas (nearly 1/3 of the belt), but up to 1/2 of the area could still see stress during heading.

 

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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www.waterstreet.org 
or 1-866-249-2528

 

 

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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