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Morning Outlook

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Overnight Highlights

·         The dollar pushed higher again overnight and is near its recent 14-month high, adding pressure to the broader commodity sector, after data showed that industrial output in China is slowing.

·         December corn consolidated lower in a tight trading range overnight on big crop expectations, holding at last week’s contract low.

·         Soybeans dropped to double-digit losses early in the overnight session on big crop expectations amid perceptions that the crop mostly escaped frost damage. However, they have erased most of the overnight losses.

·         Wheat continued lower on increased competition from the Black Sea region.

·         Saudi Arabia bought 22.4 million bushels of hard wheat from optional origins for December to January delivery.

·         Cargill filed a lawsuit against Syngenta over its selling of corn containing MIR 162 when it had not been approved by China.

·         No fresh freeze threats are currently seen the rest of September for the Midwest.

·         Remnants of a Pacific tropical storm are expected to provide moisture for the Midwest in the 6- to 10-day period, but the region should otherwise be quiet, allowing for harvest progress.

Commodity Weather Group Forecast

In the U.S., cold air did bring light frost as expected to parts of northern IA, central/western NE, near the NE/KS border, central/eastern MN, and eastern ND, but the coldest spots were only in the low 30s (near to or slightly warmer than projected in our Friday forecast in most areas). Given the lack of a hard freeze, damage to immature corn/soy will be minimal. There are no other freeze threats into early October, and this would allow the large majority of the belt to escape damage threats this season.

Very light showers will continue to scatter across the upper Midwest today, with a chance at mid-week in the far southwest Midwest. However, broader coverage holds off until this weekend, when the combination of a frontal passage and remnant tropical moisture from Hurricane Odile will spread rains across the Midwest. The best chances for heavier rains (3 to 6”) should focus from KS and southeast NE eastward through northern parts of IL/IN/OH and near the MO/IA border.

However, showers then again become more limited for the balance of the month, and rain chances are also short-lived in the Delta over the next 2 weeks and should become less frequent in the Southeast. The 16 to 30 day focuses the best rain chances on the OH and TN Valleys and Gulf Coast.

Rains scattered from southern parts of the TX Panhandle to the TX/OK border over the weekend and will reach much of the Plains winter wheat with beneficial moisture this weekend. Rains will also reach more of the West TX cotton (.50 to 2”) but should be short-lived and only result in minor quality concerns for now. Limited rains and warming temperatures will aid spring wheat/canola harvest in the Canadian Prairies and Northern Plains.

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
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

 

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