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Morning Outlook

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Overnight Highlights

·         The dollar pulled back from its multi-year highs overnight as the President travels to China to build relations and address issues between the two countries.

·         Corn and wheat were modestly lower ahead of this morning’s 11 a.m. CST USDA crop report that is expected to emphasize large supplies.

·         Soymeal and soybeans were modestly higher on lingering tight supplies.

·         Malaysian palm oil stocks rose to 20-month highs at the end of October on softer demand and a smaller than expected dip in production due to adverse weather.

·         Snow is falling this morning in an area stretching from South Dakota to Wisconsin.

·         Arctic air is expected to spill over the Plains and Midwest over the next few days, pushing moisture far to the south for the next couple weeks to allow harvest progress, but also putting the winter wheat crop into dormancy.

·         Rains remain very favorable in South America.

·         All the focus in Chicago is on this morning’s USDA crop report. Trade expectations for the key numbers in the report are as follows:

U.S. Yields & Production

2014-15

2014-15

Corn

Soybeans

Corn

Soybeans

Yield in bushels per acre

Production in billions of bushels

USDA November 10

               

                

    Pre-Report Estimates

Average Trade Estimate

175.233

47.608

14.551

3.967

Highest Trade Estimate

178.600

48.700

14.842

4.064

Lowest Trade Estimate

171.400

46.800

14.242

3.903

Previous USDA Estimate

174.200

47.100

14.475

3.927

Water Street Solutions

176.000

48.000

14.626

4.003

 

U.S. Ending Stocks

2014-15

Wheat

Corn

Soybeans

billions of bushels

USDA November Report

Average Trade Estimate

0.660

2.135

0.442

Highest Trade Estimate

0.682

2.282

0.513

Lowest Trade Estimate

0.634

1.850

0.403

Previous USDA Estimate

0.654

2.081

0.450

Water Street Solutions

0.659

2.227

0.403

Commodity Weather Group Forecast

In the U.S., only very light weekend showers occurred in the Great Lakes. Snow has begun to fall in the Dakotas and will expand into MN later today with accumulations of 2 to 6” (locally 10”), but less than 1% of the national corn crop will be impacted as harvest is well-advanced in these areas. Cold will push Midwest wheat into dormancy over the next 2 weeks, with about 1/4 of the crop poorly established for winter. Delta wheat seeding and late soy/cotton harvest will benefit from dryness in the next week. Pacific Northwest wheat will benefit from an upturn in showers in the next 10 days, but cold will limit growth.

In South America, weekend thundershowers were fairly widespread in Brazil, particularly the Mato Grossos, northwest/far southern Goias, Sao Paulo, eastern/west-central Minas Gerais, and central/western Parana. Widespread rains will also occur this week, particularly starting around mid-week.

Rains then shift focus to the north, with more generous coverage likely returning in the 16 to 30 day. Rains should not persist enough in any one spot for serious fieldwork delays, and moisture will be favorable for crop development in nearly all areas. Argentine showers scattered from Cordoba into central Buenos Aires but were very light. Showers exit the east tomorrow, with more limited coverage than initially expected. The best chance for significant rain is early in the 11 to 15 day.

While limited activity in the meantime will help to ease wet spots in southern Argentina somewhat, the rains next week will likely maintain pre-existing wetness concerns in Buenos Aires for wheat disease/loss and potential acreage shifts from corn to soy in late-planted areas (up to 15% of total corn and about 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

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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