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Morning Outlook

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Overnight Highlights

·         The European Central Bank is expected to reveal the scope of last week’s bond buying program late this morning. The markets are hoping that it reveals an aggressive program for trying to keep the Euro-zone out of recession.

·         Brazilian stocks tumbled and its currency broke 3.2% overnight after President Dilma Rousseff won re-election Sunday. Her re-election is expected to keep policies in place that have pulled the country into recession. A sharply lower real vs the dollar may encourage increased soybean sales once it bottoms, but also raise input costs for crops.

·         Reaction to Europe’s financial system stress test was rather muted in the markets overnight.

·         The dollar firmed in the early morning hours, erasing most overnight losses on the global currency market.

·         New trading hours start today for livestock futures. Trading starts at 9:05 a.m. on Monday’s as usual, but the trading day will continue until 4 p.m. Monday through Thursday; ending at 1:55 on Fridays. Trading will also open at 8:00 a.m. CDT Tuesday through Friday.

·         China is taking steps to strengthen controls to limit grain imports.

·         The weekend was dry across the bulk of the Midwest, allowing harvest progress to gain momentum.

·         A few light scattered showers are expected in the Midwest on Tuesday and in the Delta on Wednesday, but harvest interruptions should be minor.

·         The next interruptions do not come until early next week, allowing for active harvest progress.

·         Rains should be favorable for Brazil corn and soybeans the next two weeks.

Commodity Weather Group Forecast

In the U.S., the weekend was dry in Midwest/South harvest areas. A few showers (mainly in the Midwest tomorrow and the Delta Wednesday) will be too light/scattered to cause more than brief harvest delays. The next significant rains are not until early next week, focused on the southeast Midwest/Delta. Plains wheat could use more rain in the northwest 1/4 of the belt, but 6 to 15 day showers in OK will aid growth. Pacific Northwest rains continue to improve wheat growth in the next 2 weeks.

In South America, weekend rains occurred in much of central/northwest Brazil, providing widespread amounts of most commonly .50 to 1” but not exceeding expectations. Heavier totals were most common in northwest soy areas of central/southeast Mato Grosso.

Rains will remain sufficient to keep corn/soy growth stable over the next 2 weeks, although moisture could start to slip again in early November for far northeast corn areas after some near-term relief. Most coffee/sugar areas are deriving some benefit from the current showers, with similar rains expected to taper off around mid-week but expand into sugar and the southern 1/2 of the coffee again early next week. However, our forecast still leans drier than much of the forecast guidance, particularly in the northern 1/2 of the coffee during the 6 to 15 day.

Follow-up rains will be needed. The return of rains to the south late this week and into the 6 to 15 day will slow wheat harvest but should not be a major damage risk. Widespread rains through mid-week and again in the 11 to 15 day will slow corn seeding in

Argentina, but fieldwork will occur in between rain events. Wet pockets will linger for about 15% of wheat in the southwest and east.

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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