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Morning Outlook

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Overnight Highlights

·         Over 300 people have had possible or confirmed contact with an Ebola patient in the United States. Other than the two nurses who contracted it, the first 48 of them are expected to be cleared today.

·         Global equity markets opened higher overnight, but then turned lower on concerns about a sluggish global economy.

·         A stronger dollar has also turned weaker overnight, but grain and oilseed prices continue to languish under the weight of big crops, with traders back to focusing on supply and demand fundamentals for now.

·         Friday’s CFTC data showed that speculative hedge funds had corrected over-sold conditions, increasing their long positions, while reducing short positions, leaving the market vulnerable to a another flush of selling.

·         Midwest rains should remain very limited next 10 days, allowing active harvest progress.

·         Storage problems are expected to increase pressure on the market beginning with the last third of October.

·         Rains are expected for dry areas of northern Brazil this week, although 15% of the soybean and 25% of the corn may be left dry.

Commodity Weather Group Forecast

In the U.S., very light weekend showers fell in the eastern 1/4 of the Midwest. Light showers in the west later this week and again early next week will only result in minor interruptions, allowing the corn/soy harvest pace to improve. Showers still arrive later in the 11 to 15 day period, keeping harvest delays minor. While Plains rains will be limited in the next 2 weeks to aid wheat seeding, more rains would be of benefit. Pacific Northwest rain potential is better this week, aiding early wheat growth.

In South America, weekend thundershowers in Brazil favored Rio Grande do Sul, eastern Santa Catarina, northwest/southeast Parana, southeast Sao Paulo, northern Mato Grosso do Sul, parts of southern Mato Grosso, and a few spots from the Minas Gerais/Sao Paulo border into southeast Minas Gerais. Combined with showers in the next 36 hours, scattered relief of at least .50” will reach less than 1/2 of dry coffee/sugar areas and may still short-change up to 15% of soy and 1/4 of corn.

Good coverage to the west will aid key soy areas in Mato Grosso. Relief is also projected to be limited in the 6 to 15 day for northeast Brazil, although the GFS model remains extremely wet and poses a forecast risk. The early 16 to 30 day trended wetter in the north on today’s guidance but may be too aggressive. Southern wheat areas will see 6 to 15 day rains return but will be favorably dry this week to limit quality concerns.

Argentina picked up weekend rains in mainly the far north and will see a widespread 6 to 10 day rain event. While wet pockets will linger in Entre Rios and Buenos Aires, the lack of more frequent showers should keep concerns for wheat disease and corn seeding delays limited to less than 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

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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