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Morning Outlook



Overnight Highlights

·         The U.S. dollar consolidated just below yesterday’s 14-month highs overnight amid talk that the Federal Reserve will alter the guidelines it uses to justify higher interest rates.

·        The Rosario Grain Exchange projects a 16% decline in Argentine corn acres due to high inflation of input costs as the peso plummets in value.

·         French soft wheat exports outside the European Union are expected to drop by a third this year due to the crop’s poor quality, with more being fed.

·         Favorable weather led to a large European corn crop this year as well, pressuring prices.

·         Harvest reports continue to come in 20 to 30 bushels above expectations for corn in many areas of the southern Midwest.

·         Heavy rains fell overnight in southern Iowa, northern Missouri and west-central Illinois.

·         The northwestern Midwest was drier than expected.

·        Scattered frost is expected Friday and Saturday morning in the northwestern Midwest, but the outlook for late September warms.

·        The most vulnerable area is southeastern Minnesota and surrounding areas, but the risk of a hard damaging freeze still appears low, with no other freeze threats apparent through early October.

·        Additional chances for needed rain are seen for southern Russia that would aid seeding.

·        Corn traded a tight range overnight, holding support at yesterday’s contract low, while soybeans dropped to a new contract low, before firming this morning.

Commodity Weather Group Forecast

In the U.S., moderate to heavy rains stretched across the central/southwest Midwest overnight, with the heaviest areas near the IA/MO border and in west-central IL picking up locally as much as 5 to 10” or more. This was heavier than expected in these areas, but MN, SD, northern IA, and WI are ending up drier than expected.

Rains head east today/tonight, favoring central/northeast IL, IN, southern MI, and western OH. While a few light showers scatter from the Central Plains into the upper Midwest on Friday/Saturday and again late Sunday/Monday, the pattern will turn less active for the majority of the Midwest through the balance of the 15-day period. This will help to keep any wetness damage localized. Thundershowers will be most notable from NE into MO next week, but these areas also see a break in the 11 to 15 day as light showers shift into the eastern Midwest.

Cold temperatures late this week still appear likely to only bring light frost to the northwest Midwest (mainly in southeast MN and nearby areas on Saturday morning). The risk of hard freeze damage is low, and there are no other freeze threats apparent through early October. Wetness concerns in the South are focusing on NC, with only intermittent harvest interruptions expected elsewhere.

Other than a few light showers from MT into SD during the next 2 days and limited showers in the 6 to 15 day, dry weather will aid spring wheat/canola harvest. Cool air will still slow drying for the wettest fields over the next week, but warmer readings then prevail into the 11 to 15 day. The combination of recent and expected rains should allow Plains winter wheat areas to see a favorable start to growth this season.

S. Russia Sees Scattered Showers Taper Off, But More Showers Possible Late Next Week. Rains have eased dryness in about 1/3 of the Russian wheat belt, allowing planting to begin. The rest of the region will have to wait at least until late next week for another opportunity to erode dryness further. Drier conditions in Ukraine may begin to hamper early growth later this month.

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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Arlan Suderman | Senior Market Analyst



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