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Morning Outlook

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Overnight Highlights

·         It was “risk-on” in the global markets overnight as traders look ahead to the Federal Reserve’s monetary policy meeting today and tomorrow.

·         Most economists expect the Fed to stay the course and end its current bond buying program as scheduled tomorrow, while keeping the wording of its policy statement relatively unchanged.

·         The dollar was modestly higher overnight, but money flowed into both the broader commodity and equity markets.

·         Corn and soybean futures rallied to fresh two-month highs overnight on strong demand for soymeal amid slow deliveries from this year’s big harvest.

·         Chart-related buying accelerated after December soymeal pushed through the 200-day moving average late in Monday’s trading session.

·         Some cash sources pulled rail offers due to tight soymeal supplies and an inability to get delivery.

·         Light showers will favor the eastern quarter of the Midwest today, slowing harvest progress in that region, with more light showers in the northeastern Midwest on Friday.

·         Significant rains are expected to slow harvest progress early next week, focused on the southeastern Midwest and Delta.

·         Frequent rains are expected to benefit corn and soybeans in key production areas in Brazil’s northwestern belt.

Commodity Weather Group Forecast

In the U.S., light showers (.10 to .70”) favored MO/IL yesterday. Similar showers favor the eastern 1/4 of the Midwest and Delta today and the northeast 1/4 of the Midwest Friday but will be too light to cause more than brief harvest delays. Significant rains are expected to slow later harvest early next week, focused on the southeast Midwest/Delta. S. Plains wheat growth benefits from rains next week. Seasonable Pacific Northwest rains improve wheat establishment in the next 2 weeks.

In South America, thundershowers favored central/western Mato Grosso in Brazil yesterday, although parts of east-central Minas Gerais and Espirito Santo also saw .50 to 1.5” rains. The best chance for rain (mostly .50 to 1” but locally heavier) for northeast Brazil is in the next 2 days.

Rains are then expected to focus south/west for the rest of the 15-day period, although the GFS remains much wetter in the north. Recent showers have brought temporary relief to coffee/sugar/corn in northeast Brazil, but follow-up showers will be needed in November. The CFS supports 16 to 30 day rain, but the Euro weeklies inched a bit drier (particularly in Minas Gerais/Bahia) and are preferred.

Frequent rain chances in key northwest soy areas will limit concerns, although wheat harvest will slow in the south.

Rains favored southern Buenos Aires yesterday, but widespread Argentine coverage occurs in the next 2 days. Southern areas are also wetter early next week, in addition to widespread 11 to 15 day rain. This will slow corn seeding and keep up to 1/4 of wheat wet, but much of the region has been drier recently. A cold shot this weekend may bring frost to southern Buenos Aires, but damage threats are borderline for early jointing 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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