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Morning Outlook

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Overnight Highlights

·         Soybean meal continues to be the energizer for the market. After a reversal day on Tuesday, December meal found renewed strength overnight as the shipping challenges and rumors of short covering in the crush trade fuel the unprecedented market.

·         The December meal contract is trading under a monthly resistance area of 384. Look first for the Dec contract to weaken in relation to the deferred months before this strength lets up…the calendar spreads have not yet weakened.

·         Meal strength has supported corn and soybeans, helping the soybean contract to absorb farmer selling and bringing fund buying into corn.

·         Announcements in the Malaysian Palm Oil market that supplies are stabilizing and that they expect prices to rise in Q1 of 2015 supported the soy oil and canola markets.

·         The Federal Open Market Committee (FOMC) will release its policy statement today at 1 pm CST with the market anticipating a halt to new bond purchases, ending its third “QE”.

·         Wheat is holding up in the overnight after short covering in the complex and continued weather concerns in Australia and Russia and slow planting progress in the SRW belt.

·         The dollar was basically unchanged overnight in anticipation of the Fed statement this afternoon.

·         Strength across the energy complex in the overnight.

Commodity Weather Group Forecast

In the U.S., showers (.25 to 1”, locally 2”) delayed harvest in the eastern 1/4 of the Midwest and northern 2/3 of the Delta yesterday. Light showers in the northeast 1/4 of the Midwest Friday cause more brief delays. Significant rains next Tuesday/ Wednesday may focus on the S. Plains/Delta, with more limited Midwest delays. S. Plains wheat will benefit but will have to be watched for localized flooding. Pacific Northwest rains have improved wheat growth, but forecast rains have diminished.

 

In South America, significant rains (locally up to 4”) occurred in north-central/eastern Buenos Aires in the past day, while Brazil showers favored central/northeast Goias and spots near the Minas Gerais/Bahia border. Rains will taper off in far northeast Brazil, with the best chances near the coast. Brazil rains otherwise shift focus south/west for the next 15 days, although showers scatter into western sugarcane/coffee areas this weekend and central/southern areas at the middle of next week and late in the 11 to 15 day. Recent rains aided coffee/sugar/corn in dry sections of northeast Brazil, but the greatest risk to miss follow-up rain will be in the northeast 1/3 of coffee and 15 to 20% of corn. Most soy areas will see sufficient additional rain chances into November, although wet weather in the south will slow wheat harvest and spring seeding. Argentine rains will exit the east today, but additional showers favor the south on Monday/Tuesday and again in the 11 to 15 day.

Much of the early corn seeding in the north will encounter only minor slowdowns, but expanding disease threats are possible in the southeast 1/3 of the wheat belt. Frost in the far south this weekend remains unlikely to cause yield loss.

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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Dean Heffta | WIN – Director
WATER STREET SOLUTIONS® | www.waterstreet.org
(309) 680-1200 | dheffta@waterstreet.org

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