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Morning Outlook

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Overnight Highlights

·         The dollar continued to actively trade a broad trading range overnight amid increased global uncertainty. The greenback is currently posting modest gains amid rising concerns.

·         Money flowed into the relative safety of government securities again overnight, pushing interest rates lower while futures for the Dow Jones Industrial Average suggest triple digit losses again this morning.

·         Dallas County in Texas may vote today to declare a state of disaster due to the Ebola problems there, although there are no new cases today.

·         Argentine farmers are expected to increase soybean plantings by 1 to 2% this year.

·         Malaysian palm oil futures fell to fresh three-week lows overnight as crude oil posted fresh four-year lows and soyoil stocks rise. Crude oil probed below $80 per barrel on demand concerns

·         China will maintain its minimum state purchase price for wheat at $10.49 per bushel for the coming crop year, unchanged from 2014 levels.

·         The Midwest and Delta are still expected to see a mostly dry pattern over the next two weeks favoring active harvest progress.

·         Forecasters remain confident that dry northern areas of Brazil’s corn/soybean belt will receive rain by the middle of next week.

·         Showers are advancing across Ukraine wheat areas, with Russian areas expected to see rains later today and again next week.

·         Western Australia rains are expected to boost wheat prospects there, but bypass dry southern areas where yields are eroding.

Commodity Weather Group Forecast

In the U.S., light showers lingered in the eastern 1/4 of the Midwest yesterday, while significant rains were confined to the Carolinas. Showers will be very limited for the next 2 weeks, allowing Midwest/South harvest to improve. Western Plains wheat could see more beneficial showers late next week. Pacific Northwest wheat saw showers yesterday, but moisture is still limited for early growth.

In South America, thundershowers occurred in parts of southern/western Mato Grosso and the southeast 1/2 of Rio Grande do Sul in Brazil in the past day. While rains increase for RGDS wheat areas through the weekend and again in the 11 to 15 day, limited rains otherwise limit any quality issues.

Rains still scatter north in Brazil by the middle of next week. The GFS shifted much drier overnight, but our outlook will keep showers in key soy areas of Mato Grosso given other model support. Scattered showers will occur in northern/eastern Minas Gerais for the 6 to 10 day, but coffee/sugar areas did slip a bit drier again. Coverage could now be fairly minimal in sugar areas and only a little better than 1/3 of coffee.

With relatively dry 11 to 15 and 16 to 30 day conditions, this will continue to hinder early sugarcane growth and coffee flowering. Heat eases next week, but highs continue to peak in the upper 90s/100s for northern Brazil in the meantime.

Argentine rain scattered through central/southwest areas in the past day and returns to much of the region in the 6 to 10 day. This will cause minor early corn seeding delays, with scattered wet pockets lingering in wheat areas of mainly Buenos Aires and Entre Rios.

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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