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Morning Outlook

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Overnight Highlights

·         The dollar rallied sharply overnight on its continued appeal on the global currency market relative to its competing currencies where stimulus is still the primary focus.

·         The dollar’s rally fell just short of testing the multi-year high set on October 3, before pulling back on modest profit taking, but it still remains strong this morning.

·         Strength in the dollar following this week’s Fed meeting has been drawing money out of the broader commodity sector, making gains more difficult to sustain in the grains.

·         Near-term soymeal supplies remain tight amid strong export demand and logistics problems.

·         Soymeal and soybean futures tried to bounce overnight on fears of tightening supplies, but currently hold onto very modest gains as prices pull back once again.

·         Corn and wheat prices are extending Thursday’s losses as the rise in the dollar makes them less competitive on the global market.

·         Light scattered showers are again expected in the northeast quarter of the Midwest today.

·         Rains early next week aren’t as heavy in this morning’s models.

·         Lingering dry spots still encompass roughly one-quarter of Mato Grosso in Brazil.

Commodity Weather Group Forecast

In the U.S., showers in MO/IL were less than .25” yesterday. Light showers in the northeast 1/4 of the Midwest today will be very light as well and only cause brief harvest delays. Rains early next week are not as heavy. Harvest will slow, but damage risks are minor. The main concern will be delayed Delta wheat seeding in the 6 to 15 day. S. Plains wheat will benefit from rains, but the northwest 1/4 is dry enough to limit late growth. Pacific Northwest wheat will see beneficial rain today.

In South America, scattered showers favored far northwest Rio Grande do Sul, western Parana, western Sao Paulo, southern/eastern Mato Grosso do Sul, west-central Minas Gerais, northwest/far southern Goias, and central/northeast Mato Grosso yesterday, although very heavy rain (8”+) was noted in coffee areas near the Espirito Santo coast.

Rains scatter into central/northwest Brazil over the next week but favor the south until the 11 to 15 day. Shower potential then expands farther north in the guidance, although confidence remains limited. Rains will be needed to provide follow-up moisture in coffee/sugar/corn areas of Center-South and northeast Brazil, and this will also offer the best chance for lingering dry spots in east-central Mato Grosso soy (about 1/4 of acreage in the state) that still have poor germination conditions. Southern rains will slow early soy seeding and wheat harvest but are not yet a severe concern.

Argentina is seeing a few unexpected showers in central areas this morning, but the wettest weather will be Sunday/Monday. Additional rains late next week and in the 11 to 15 day may still expand disease concerns for Buenos Aires wheat but focus mostly south of current corn seeding.

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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