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Morning Outlook

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Overnight Highlights

·         Consumer prices declined in Spain and Sweden and inflation fell to a five-year low in the United Kingdom, reflecting a slowing European economy.

·         Currency traders are returning to the U.S. dollar following the negative Euro-zone data, pushing it to just below Monday’s session high.

·         The stronger dollar pulls money from the broader commodity sector once again.

·         December corn pushed to its highest level since September 16 overnight, but turned lower as buying dried u at the 50-day moving average amid a rising dollar.

·         November soybeans closed a gap created on September 22 and pushed through the top of a descending chart channel that has held the market since late July, before pulling back from its highs as the dollar firmed.

·         Even so, the contract continues to post double-digit gains, with support from strong soymeal demand amid harvest delays.

·         Wheat prices slip on rising European supplies.

·         Rains linger in north-central and eastern portions of the Midwest today, as a more dominant drier pattern begins to develop for the Midwest for much of the rest of the month.

·         Rains are expected to bring relief to northern corn and soybean areas in the 6- to 15-day period.

Commodity Weather Group Forecast

In the U.S., rains benefit Plains wheat in OK/E. KS yesterday. Significant rains stalled harvest in the Delta and the heart of the Midwest, but flooding was isolated. Rains will contract to the north-central/eastern Midwest today and move across the Southeast, stalling harvest in those areas. Showers will be minimal for the remainder of the 2-week period, allowing most of the Midwest/Delta/Southeast harvest to get back on track and keeping loss potential minimal.

Plains showers will also be very limited in the next 2 weeks, with late seeding progress to move along quickly to take advantage of the widespread rains in the past week. Canadian spring wheat/canola harvest will be dry enough to push to completion in the next 2 weeks.

In South America, thundershowers scattered across west-central Mato Grosso, southeast Santa Catarina, and northern Rio Grande do Sul in Brazil in the past day. While minor quality concerns could develop over the next 2 weeks in RGDS wheat areas, models have consistently overstated rain totals for the region, and issues should be limited.

Models remain supportive of rain in northwest Brazil corn/soy next week, and showers are possible at the middle of next week in eastern coffee/sugar areas and late in the 11 to 15 day for southern parts of the belt. However, models are mostly not as wet in parts of western Minas Gerais and northern Sao Paulo and could now focus on no better than 1/2 of sugar and 2/3 of coffee (with additional risks in the drier direction). The 16 to 30 day guidance is also not as wet in the north. Highs still rise into the mid-90s/100s for much of northern Brazil through Monday.

Argentine showers favor the northeast 1/4 of corn/wheat at mid-week, with broader coverage from late in the 6 to 10 into the 11 to 15 day. This will cause early corn seeding to slow and will maintain surplus moisture in mainly Entre Rios, but other wet spots in eastern Buenos Aires may miss much of the more notable rain.

FSU Wheat Areas Favored to Pick Up Showers in Drier Areas This Week. The models are not as expansive with the rains across the Ukraine but still would bring some moisture relief to the region and improve germination/fall growth before dormancy next month, especially in the drier areas of Russia.

E. Australia Rains Continue to Aid Filling Wheat, South 1/4 of Belt Lacks Needed Rain Next 10 Days. Rains again benefit 15% of wheat in the southeast today, but stress continues in south-central areas through next week.

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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