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Morning Outlook

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Overnight Highlights

·         The dollar dropped sharply overnight after a member of the Fed made comments over the weekend that a sluggish economy overseas might lead the Fed to delay interest rate hikes.

·         Yet, the dollar remains above Friday’s low and money flow back into the commodity sector is very modest yet to this point, with crude oil trading just above last week’s lows.

·         A Dallas health worker contracted Ebola while caring for a patient, raising concerns that fears of the disease may slow economic growth if panic sets in.

·         Corn and soybeans are posting modest gains this morning after trading both sides of unchanged overnight.

·         Wet weather will delay harvest through Tuesday in all but the northwestern Midwest, but then the pattern is much drier over the next two weeks.

·         This morning’s forecast continues to favor good rains across dry areas of Brazil’s northern corn/soybean belt late next week and early the next, but model agreement deteriorated over the weekend.

·         Rain relief improves for drier areas of the FSU wheat belt later this week.

·         Dryness continues for the southern quarter of Australia’s wheat belt the next 10 days.

·         China will suspend its weekly soybean reserve sales this week and new-crop supplies become available.

·         Today is the Columbus Day holiday. Grain and oilseed trading will proceed as normal, but USDA reports data releases are delayed and traders will be cautious, with volume expected to be thinner than normal.

Commodity Weather Group Forecast

In the U.S., rains benefit the southern 3/4 of Plains wheat over the weekend, slowed harvest in the southern 1/4 of the Midwest, and stalled harvest in much of the Delta. Rains favor the southeast 2/3 of the Midwest and most of Delta today/tomorrow, with isolated flooding risks in the northern Delta. Cotton quality will decline in the northern 1/2 of the Delta.

Mainly dry weather for the rest of the 2-week period will allow most of the Midwest/Delta harvest to get back on track and keep loss potential minimal. Plains showers will be minimal in the next 2 weeks, allowing late seeding to progress favorably following recent beneficial rain. Southeast rain delays this week are short-lived, with harvest picking up in the rest of the 10-day period.

In South America, weekend showers scattered across mainly far northern/western Mato Grosso, Rio Grande do Sul, and eastern Santa Catarina in Brazil. Moisture deficits are building for coffee/sugar and 1/2 of corn/soy in northern Brazil, and the best chances for relief are from the latter 1/2 of next week into early the following week. While our forecast does remain in favor of fairly extensive coverage, recent guidance (mainly the GFS) has been showing a drier risk (especially for coffee/sugar).

The upturn in rain remains reliant on temporary enhancement from the Tropical Pacific and is still very low confidence for northeast Brazil but will be needed to improve conditions for early corn/soy/sugar germination and coffee flowering. Mid-90s to 100s build across northern Brazil ahead of this rain in the next week.

Argentine showers were limited to a few spots in the west overnight, with mainly Entre Rios/Santa Fe favored by showers Wednesday to Friday. Model agreement then worsens in the 6 to 15 day, but our forecast favors central/southwest areas most heavily. This could slow early corn seeding further, particularly in Santa Fe/Entre Rios. However, wet wheat areas in Buenos Aires could see some improvement.

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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