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Morning Outlook

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Overnight Highlights

·         Pro-democracy demonstrations are expanding in Hong Kong, but global equity markets have rebounded from yesterday’s losses.

·         ISIS is reportedly less than 5 miles from Bagdad this morning.

·         The dollar surged through chart resistance overnight, reaching its highest level since June 2010 as U.K. home prices fall and Chinese factory output falls.

·         Grain and oilseed prices fall as the dollar rallies, even as traders look ahead to this morning’s 11 a.m. CDT USDA quarterly stocks reports.

·         Soybean prices saw the largest losses, with USDA boosting crop ratings Monday afternoon as harvest reports raise production prospects.

·         Corn condition ratings were unchanged in the week ending September 28, keeping yield prospects high.

·         Midwest rains are expected to slow harvest progress later this week, and again late in the 6- to 10-day period. A 5-day break should separate the rain events.

·         Yet again, the GFS model shows a freeze threat early in the 11- to 15-day period, but gain it has little support from other models.

·         Plains winter wheat dryness focuses on Oklahoma, but relief is possible in the 11- to 15-day period.

·         USDA report expectations are as follows:

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 Forecast

In the U.S., showers favored CO/western NE/KS yesterday as well as the Southeast. Midwest corn/soy harvest will see showers move from west to east, ending Saturday. A 5-day dry stretch after that should allow progress to improve before more showers slow harvest late in the 6 to 10 day and at the middle of the 11 to 15 day. Damaging amounts are not expected.

Delta/Southeast rains are limited enough over the next 2 weeks to allow at least a normal harvest pace. The GFS has a freeze in the Midwest early in the 11 to 15 day. However, confidence is low, and the main impact would be to hamper dry down of corn.

Plains winter wheat dryness concerns focus on OK, but there is a better chance for rains in the 11 to 15 day. Canadian Prairies rains delays this week are brief.

In South America, thundershowers in Brazil focused from western Sao Paulo into northwest Rio Grande do Sul in the past day but scattered eastward in Sao Paulo and into spotty sections of southeast Minas Gerais (up to .50” thus far). Coffee areas will see the best shower potential in the next 3 days and then still turn definitively drier on guidance through at least mid-October in much of the belt.

The southeast 1/3 of the belt stands the best chance to see relief to initiate bloom (GFS remains slightly more generous), while delays will continue elsewhere. Corn/soy areas in the northwest will see beneficial showers for early germination Thursday into the weekend (after mid-90s to 100s at mid-week) but then also shift drier and will need to be watched for developing moisture deficits later in October. Frequent rains will focus minor quality concerns on the southern 1/3 of Brazil wheat in the next 2 weeks.

Argentina will be wet this weekend, and the east is also wetter at the middle of next week. However, only minor wetness concerns are expected for corn/wheat given the lack of rain recently.

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

 

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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