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Morning Outlook

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Overnight Highlights

·         The dollar rallied overnight to just below its recent four-year high in anticipation of a good number from this morning’s U.S. September jobs report.

·         Wall Street expects this morning’s report to show that the economy created 215K jobs in September, with the unemployment rate unchanged at 6.1%.

·         Protests escalated overnight in Hong Kong as the world watches to see how the Chinese government will respond, with significant implications for the East Asian economy.

·         Corn traded a narrow 1-cent trading range overnight as traders wait for direction from next week’s USDA crop report.

·         Soybeans traded both sides of unchanged overnight while waiting for greater clarity on the size of this year’s crop.

·         Wheat traded modestly higher in follow-through buying as global prices rebound from multi-year lows.

·         The Linn Group raised its corn yield estimate to 176.9 bushels per acre, with soybeans up to 48.6 bushels.

·         Significant Midwest rains favoring southern and eastern areas are expected to slow harvest over the next two weeks, particularly in the 6- to 15-day period.

·         Rain chances are diminishing for Australia over the next two weeks, with production estimates beginning to drop.

·         Rain showers end in Mato Grosso this weekend, with northern Brazil mostly dry the remainder of October.

Commodity Weather Group Forecast

In the U.S., significant rains fell in the central 1/2 of the Midwest yesterday, with heaviest amounts in MO/IL/western IN. Midwest corn/soy will see showers in the east 1/2 of the belt today further slow harvest. Drier conditions should benefit the northwest 1/2 of the belt for nearly a week, but light rains keep harvest slow in the southeast 1/2 on Monday/Tuesday. More substantial rains late in the 6 to 10 day and again in the 11 to 15 day also slow progress, especially in the south and east with greatest concerns for excess rain in MO/IL. The weekend freeze should be confined to ND/WI corn, hampering dry down.

Delta/Southeast showers will be limited over the next 10 days, allowing a normal harvest pace. S. Plains wheat shower potential improved in the 6 to 10 day, benefiting dry areas in OK. Canadian spring wheat/canola harvest should be favorable.

In South America, showers favored northwest Mato Grosso do Sul, northern Mato Grosso, and northwest Goias in the past day, with only very spotty/light activity in minor coffee areas of northwest Minas Gerais and western Bahia. After lingering thundershowers into the first 1/2 of the weekend for northwest corn/soy areas in Brazil, models are in good agreement on notably drier weather through the rest of October for most coffee/corn/soy/sugar areas in northern Brazil.

Flowering delays will persist for up to 3/4 of coffee, and moisture stress will build for early growth of corn/soy/sugar. The best rain chance is late in the 11 to 15 day but is limited. Heat will also return by the 11 to 15 day, with widespread 90s/100s. Rains will return in the 6 to 15 day and could still threaten quality concerns for the southern 1/3 of Brazil wheat.

Locally heavy rain this weekend and a weaker system on Wednesday should only cause brief wetness concerns in southern/eastern Argentina corn/wheat. Another cold push next Friday morning brings only spotty light frost again to the far south and no damage.

Australia Wheat Showers in Victoria More Limited, Stress in South Australia to Shave Off Yield Potential. W. Victoria/S. Australia likely remain too dry in the next 2 weeks for heading wheat, stressing nearly 30% of the belt.

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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