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Morning Outlook

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Overnight Highlights

·         Crude oil prices fell below $76 per barrel overnight after Saudi Arabia cut prices in an apparent attempt to discourage fracking in the United States.

·         The dollar pulled back a bit, but remains strong, as this year’s drop in crude oil prices acts as more than a trillion dollar stimulus to the U.S. economy.

·         Grain and oilseed prices saw follow-through selling overnight, following a break of soymeal below chart support late Monday, with December corn breaking decisively below the 100-day moving average.

·         USDA’s weekly crop progress report late Monday indicated that harvest progress had advanced more than expected, with corn harvest at 65% and soybeans at 83%, with farm deliveries slowing picking up momentum as storage fills up.

·         Yesterday’s report of record soybean export shipments of 101.8 million bushels in the week ending October 30 indicated to traders that farmers are delivering soybeans and that the pipeline is flowing once again.

·         Showers stretch from Missouri to Indiana this morning, adding yet another delay for harvest in southern and eastern portions of the belt today.

·         Yesterday’s Midwest showers were primarily 0.10” or less.

·         Cold-weather is expected to push Midwest wheat into dormancy by mid-month.

·         Widespread Brazilian rains are expected to shift from the south to the north over the next 10 days, providing good moisture for virtually all of the primary corn and soybean growing areas.

Commodity Weather Group Forecast

In the U.S., showers in the Midwest were mainly .10” or less yesterday, with .25 to 1.5” in the southeast 1/4 of Plains wheat. The eastern Midwest will see very light showers today/Thursday/Saturday. Significant rains favor the Delta tomorrow and slow harvest, but colder/drier conditions next week should prevent detrimental delays. Cold could begin to push Midwest wheat into dormancy by mid-month. Plains wheat turns drier after today, with 1/4 of the belt in the west still short of moisture.

In South America, showers in Brazil favored the Minas Gerais/Sao Paulo border into northeast Mato Grosso do Sul and southwest Goias in the past day, along with far southwest Parana, western Santa Catarina, and central/far northwest Rio Grande do Sul.

Significant rains remain likely to focus on southern/central Brazil this week but spread northward this weekend and next week. This widespread but not long-lived rainfall will ease lingering dry spots in central/northern Brazil, including about 1/4 of Mato Grosso soy in east-central parts of the state. Very few concerns are likely for any Brazil crops, with rains most likely to shift focus back to southern areas again late in the month.

Argentine showers exited Entre Rios and eastern Buenos Aires yesterday, and only a few showers are expected along southern/western fringes of the belt on Friday. Most areas will remain drier until late in the 6 to 10 day, allowing for some recovery in corn seeding following the wet weekend. However, wetness could still hinder late corn seeding and maintain elevated disease threats for wheat in the south with rain events mid to late this month, particularly in already wet sections of Buenos Aires (10% of corn but possibly 1/2 of 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

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