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Morning Outlook

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Overnight Highlights

·         Global commodity and equity markets rallied overnight on ideas that we will see European and U.S. central banks increase stimulus programs.

·         The dollar was weaker against competing currencies on those stimulus expectations.

·         Midwest showers should be minimal the next 10 days, allowing for acceleration of harvest progress. Showers in the 11- to 15-day period appear to be light in most models, providing limited delays.

·         Rains are now expected to provide relief for dry areas of northern Brazil Monday to Wednesday, although 15% of the soybeans and 25% of the corn may be left short. Of the moisture needed. However, the models hold a wetter risk to the forecast.

·         Midwest corn basis is beginning to see increased pressure as harvest progress increases.

·         Soybean basis remains firmer due to strong soymeal and soybean demand.

·         Kansas City wheat rose to its highest level since September 11 on positive chart signals with support from expectations of rising demand due to shrinking production estimates in Australia and quality problems with the crop in southern Brazil due to persistent rains.

·         Short-covering in Chicago wheat provides support amid concerns that soft red winter wheat acreage will decline due to planting delays.

Commodity Weather Group Forecast

In the U.S., light showers were confined to the NW and SE fringes of the Midwest yesterday. Showers will remain minimal next 10 days aiding Midwest/South harvest pace. Showers may return to Midwest late 11-15 day but look light in most models, keeping harvest delays minor. Western Plains wheat looks likely to see more beneficial showers later next week aid fall growth. Pacific Northwest wheat continues to be on the drier than normal side next two weeks which could hamper growth.

In South America, thundershowers favored Uruguay, southern/eastern Rio Grande do Sul, and southeast Santa Catarina in the past day. The most extensive showers in northern Brazil are expected from late Monday through Wednesday, but rains do linger in the northwest into the 11 to 15 day.

Northeast Brazil is wetter on the overnight GFS 6 to 10 day solution, and both the GFS and some Euro ensembles show wetter 11 to 15 day risks. However, our forecast continues to side with a more limited rain event next week and a drier 11 to 15 day that leaves about 1/4 of corn, 15% of soy, and well over 1/2 of coffee/sugar in many parts of western Minas Gerais, Bahia, northern Sao Paulo, southeast Goias, and northern Mato Grosso do Sul under stress. While confidence is low, the latest Euro and CFS models do show wetter 16 to 30 day trends for northern Brazil. Weekend heat (100s in much of the north) continues before moderating next week.

Argentine showers will be limited until late next week and again in the 11 to 15 day. This will slow early corn seeding in many areas after some near-term progress, and excessively wet pockets in mainly Entre Rios and Buenos Aires will linger for up to 1/4 of wheat.

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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