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Morning Outlook



Overnight Highlights

·         The euro dropped and the dollar rallied once again as Euro-area factories cut prices in September by the most in a year, raising deflation fears and expectations of more stimulus.

·         The U.S. Department of Labor will release its September jobs report Friday morning, providing better indication of when the U.S. Fed might begin to raise interest rates.

·         Egypt released a snap tender to buy wheat Tuesday afternoon, but the United States is not expected to garner any of the business, as the strong dollar leaves U.S. prices uncompetitive for November delivery.

·         December corn dropped to a new contract low of $3.185 overnight on expectations that this year’s crop is getting bigger.

·         November soybeans traded just above their contract low of $9.055 overnight as yields continue to impress.

·         Wheat prices continue to consolidate just above contract lows, but holding those lows is becoming increasingly difficult as the dollar rallies and corn prices slide.

·         Showers are expected to favor the southeastern three-fourths of the Midwest corn/soybean belt the next three days.

·         Drier conditions then return, with rains returning late in the 6- to 10-day and into the 11- to 15-day periods are expected to add to harvest delays.

·         A weekend freeze next week is more probable in this morning’s model runs for North Dakota corn, mainly hampering dry-down of the crop.

·         Rain potential for the 11- to 15-day period for dry areas of Oklahoma has decreased.

Commodity Weather Group Forecast

In the U.S., rains were substantial in southeast NE/western IA yesterday, as well as the western Dakotas. Midwest corn/soy harvest will see showers favor the southeast 3/4 of the belt in the next 3 days. Drier conditions through early next week then allow some progress, but more rains late in the 6 to 10 and into the 11 to 15 day likely keep harvest slowest in the southeast 1/2 of the belt. A weekend freeze is more probable in ND corn, mainly hampering dry down.

Delta rains tomorrow night and in the 11 to 15 day would still allow a normal harvest pace, and drier conditions will accelerate Southeast harvest. Plains winter wheat dryness concerns focus on OK, as rain potential in the 11 to 15 day has become more limited.

Canadian Prairies rains will continue in the east 1/2 of the belt today, but spring wheat/canola harvest then improves through mid-month.

In South America, thundershowers again favored areas from the southeast 1/2 of Parana into western Rio Grande do Sul in Brazil yesterday, although 20% of coffee areas picked up .25 to .75” (locally 1.5”) from showers in southern Espirito Santo and far southeast Minas Gerais.

Similar showers occur today, shifting into northern Minas Gerais tomorrow. However, the event appears likely to fall short of expectations if anything, leaving over 2/3 of the belt with ongoing flowering delays. Mostly dry and increasingly hot conditions otherwise prevail through at least the next 3 weeks. Highs in the upper 90s to low 100s continue in the next 2 days for northwest Brazil corn/soy.

Showers will aid early germination prospects late this week, but drier/hotter trends also build next week to draw down moisture and quality concerns return to the southern 1/3 of Brazil wheat. The CFS model shows late October rains in northern Brazil but may be overly optimistic.

Light frost in southern Buenos Aires tonight will not threaten damage, but the GFS shows another in the 11 to 15 day that needs to be watched.

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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