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Sunday Outlook

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Weekend Developments

<![if !supportLists]>·         <![endif]>Ukraine shifts focus away from rebels towards confronting a “full-scale invasion” by Russian forces, warning of Europe’s worst conflict since World War II.

<![if !supportLists]>·         <![endif]>Speculative hedge fund managers were net short 16 million bushels of corn as of August 26, according to Friday’s CFTC report, versus net long 3 million bushels the previous week and net short better than 1.2 billion bushels in October 2013.

<![if !supportLists]>·         <![endif]>Speculative hedge fund managers were short 320 million bushels of soybeans, according to Friday PM’s data, versus net short 269 million the previous week and the record short position of 341 million in 2006.

<![if !supportLists]>·         <![endif]>USDA will update crop ratings Tuesday afternoon, a day late due to the Labor Day holiday. Corn ratings are expected to be steady to bit higher, while soybeans will likely be a bit weaker due to Sudden Death Syndrome in the southern Midwest.

<![if !supportLists]>·         <![endif]>Harvest reports in Kansas and much of the South have confirmed high yield expectations, but we should start to see more reports from the southern Midwest in the days ahead, providing a clearer picture of this year’s crop. We look for those yields to confirm high yield expectations.

<![if !supportLists]>·         <![endif]>Today’s models aren’t quite as wet for the western Midwest this week, but are heavier again late in the 6- to 10-day outlook.

<![if !supportLists]>·         <![endif]>Additional rain chances are expected for Tuesday and Wednesday, and again next weekend, for dry spots in the northern Delta.

<![if !supportLists]>·         <![endif]>There’s a chance for a frost in North Dakota at the end of the 10-day period, but confidence is low, as model support remains lacking.

Commodity Weather Group Weekend Summary

In the U.S., rains thus far over the holiday weekend have favored eastern MN, western/northern WI, much of IA, western MO, eastern KS, central/southwest OH, and much of the eastern Delta, with a few better showers also noted in parts of eastern NE, east-central IL, northwest IN, southwest MI, and western ND. While isolated heavier totals (3” or more) did occur, most of these areas ended up with 1 to 2.5” of rain.

Showers will scatter through the central/eastern Midwest in the next 2 days and favor areas around the Great Lakes on Thursday/Friday before returning to the southern Midwest/northern Delta again next weekend. This will offer a bit of a break for many recently wet sections of the central/northwest Midwest, although the chance for heavier totals and some additional localized flooding concerns will return to the north/west by the middle of next week.

The weekend rains already eliminated dry spots in far western KY and in a few spots near the AR/MO border but will continue to fill in over the next week to aid double-crop soy. While temperatures will mostly run at or above normal for corn/soy to benefit late development this week and again at mid-month, the Euro and Canadian models do hint at frost at the end of the 10-day in central Canada and into northern ND but are not well-supported by ensembles. The GFS limits frost risks to Canada, mainly late in the 11 to 15 day. The CFS guidance then remains showery for the last 1/2 of the month but has trended warmer as well.

Occasional showers will continue to interrupt spring wheat harvest and the Canadian Prairies and bordering sections of the U.S. in the next 10 days, but risks for additional losses are low. The pattern still trends drier at midmonth, as beneficial rains shift into the Plains and aid early-seeded winter wheat prospects.

 

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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