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Morning Outlook

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Overnight Highlights

·         The dollar weakened in the overnight most likely a slight pullback after Friday’s bullish jobs numbers catapulted the market sharply higher.

·         The grain complex is trading higher this morning as rains over the weekend continue to slow harvest, and 6-10 day forecasts are mixed for harvest to continue at a steady pace. Short covering in advance of Friday’s USDA report could also explain this overnight positivity.

·         Trade is expecting this afternoon’s harvest progress report to show corn 19-25% harvested and soybeans 20-25% complete, both behind average but ahead of last year’s pace.

·         Brazil analyst Safras Mercado estimates Brazilian soybean planting at 3% complete vs. the average for the week of 4%. Corn is estimated at 28% planted vs. 30% at this date last year.

Commodity Weather Group Forecast

In the U.S., rains were limited to the northeast 1/4 of the Midwest and scattered through the Southeast early in the weekend. Corn/soy will only see showers in the eastern 1/4 of the Midwest and northern 1/2 of the Delta today/tomorrow. More notable rains return later this week, with a second surge possible early next week. This will slow harvest considerably in the southeast 1/2 of the Midwest and northern 2/3 of the Delta. The northwest 1/2 of the Midwest avoids most rains.

 

11 to 15 day rains taper off for most of the Delta/Midwest, easing delays. Greatest concern for flooding centers on Kentucky/Tennessee/northern Arkansas. Southeast showers are limited over the next 10 days for harvest. Plains wheat should see fairly extensive showers this week, benefiting dry areas in OK. Canadian spring wheat/canola areas are on the dry side in the next 10 days, aiding harvest.

 

In South America, weekend thundershowers favored far western Mato Grosso, western Rio Grande do Sul, eastern La Pampa, southern/eastern Buenos Aires, southern Entre Rios, eastern Cordoba, and southern/western Santa Fe. Brazil rains remain south-focused through the rest of the month, although occasional showers become more possible from the 11 to 15 day onward in Mato Grosso. Quality concerns remain in place for the southern 1/3 of Brazil wheat. Stress will build for corn/ soy germination/early growth in the northeast 1/3 of the belt, while the dryness will continue to hinder coffee flowering and stress trees in much of the belt. The best chance for showers in coffee areas is at the end of the 11 to 15 day but remains limited.

 

Highs rise into the 100s for northwest corn/soy and well into the 90s for coffee by the 11 to 15 day. Occasional showers will keep wetness concerns in place for up to 15% of Argentine corn and 20% of wheat in the wake of weekend rains, mainly in southern/ eastern Buenos Aires and Entre Rios. Fields should be able to dry elsewhere.

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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