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Morning Outlook



Overnight Highlights

·         The dollar rallied once again overnight, while global commodity and equity markets came under pressure, on rising concerns about a sluggish global economy pulling the U.S. economy under as well.

·         Rains fell primarily across the southern half of the Midwest over the past 24 hours, stalling harvest progress. Heaviest rains were focused primarily over Missouri.

·         Rains are expected to remain a problem for the harvest across the southeastern two-thirds of the Midwest and Delta over the next five days, with wettest conditions across the northern Delta.

·         Eastern Australian rains benefit wheat, while southern Australia remains too dry.

·         Rains increase across most of Brazil’s soybean belt in the 11- to 15-day period, but confidence remains low this far out.

·         Russian wheat exports reach 463 million bushels in the first eight months of the year, compared to just 231 million bushels in the same period last year.

·         Thailand feed millers buy 180K metric tons of Brazilian soymeal and 40K tons of Argentine soymeal on the global market.

·         Malaysian palm oil stocks rose to an 18-month high at the end of September, revealing that a move to cut export taxes did little to reduce stock levels.

·         The results of the latest Egyptian snap tender to buy wheat are expected this morning.

·         Traders are doing their final positioning for this morning’s 11 a.m. CDT USDA crop report. Expectations already built into the market are as follows:

U.S. Yields & Production







Yield in bushels per acre

Production in billions of bushels

USDA October 10

    Pre-Report Estimates

Average Trade Estimate





Highest Trade Estimate





Lowest Trade Estimate





Previous USDA Estimate





Water Street Solutions






U.S. Ending Stocks





billions of bushels

USDA October Report

Average Trade Estimate




Highest Trade Estimate




Lowest Trade Estimate




Previous USDA Estimate




Water Street Solutions




Commodity Weather Group Forecast

In the U.S., rains benefit CO/KS/northern OK wheat in the past day but stalled harvest in MO/KY/S. IL. Weekend rains continue to hold up harvest in the Delta and southern 1/4 of the Midwest and expand in the southeast 2/3 of the Midwest and Delta early next week. Greatest flooding risks focus on S. MO/N. AR/W. KY/TN, but damage will be very limited. Cotton quality will decline in the northern 1/2 of the Delta.

The northwest 1/3 of the Midwest will see favorable harvest, with only light showers late in the 1 to 5 day. Rains late in the 6 to 10 and early in the 11 to 15 day will slow harvest recovery in the eastern Midwest. Plains weekend rain will aid early wheat growth. Southeast harvest is more likely to slow in the 11 to 15 day.

In South America, showers mostly scattered from far northern Buenos Aires, Entre Rios, and northern Santa Fe into southern Rio Grande do Sul in the past day. Showers become frequent again in the southern 1/3 of Brazil wheat in the next 10 days to elevate quality concerns again.

Rain chances have been increased for much of the northern Brazil corn/soy/sugar and about 1/2 of coffee in the 11 to 15 day. Confidence does remain low given uncertain support from the Tropical Pacific, but both the GFS and Euro models trended wetter (GFS still wettest). This would help to improve early corn/soy/sugar germination and improve flowering conditions for southern coffee areas after nearly a week of notable heat (mid 90s/100s) starting at the middle of next week. The 16 to 30 day shifted wetter on the CFS model in most of the region, while the Euro is preferred (at least until late in the period) and shows more limited showers in northern Brazil.

The main rain chance in Argentina at the middle of next week will favor the east and keep surplus moisture in place for parts of Entre Rios/eastern Buenos Aires. While only a small amount of corn area, this could raise disease risks for about 1/4 of the wheat belt.

FSU Showers Likely to Scatter Across Area in 6-10 Day, With Limited Improvement in Early Growth. The rain event is not well-organized but could ease dryness in the northern 1/4 of the wheat belt to aid fall growth.

E. Australia Rains Aid Filling Wheat This Weekend, But South 1/4 of Belt Still Misses. Showers will improve prospects for filling wheat in New South Wales this weekend. Victoria/S. Australia shower potential remains very limited, and stress on heading wheat will shave off yield potential in about 1/4 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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