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Morning Outlook

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Overnight Highlights

·         Japan’s economy slipped into recession in the third quarter, contracting 1.6% when analysts were expecting 2.2% growth.

·         Japan’s problems raise fears that the global economy will continue to deteriorate, which tends to be bearish for commodity demand.

·         The dollar rallied and stock futures and crude oil dropped on the news out of Japan.

·         The National Oilseed Processors Association is expected to peg its member October soybean crush total at 150.8 million bushels at 11 a.m. CST today, up 51% from the previous month.

·         A U.S. buyer made a rare purchase of German rapeseed meal according to reports this morning, showing how high prices here are making imports of protein possible.

·         U.S. soymeal and soybean futures traded below their recent ascending price channel overnight. We’ll be watching to see if soymeal basis softens as well.

·         A return of widespread rains in Brazil is expected to aid crops Friday into next week.

Commodity Weather Group Forecast

In the U.S., light snow fell across the S. Plains and southern Midwest (1 to 4”) yesterday, while heavy rains fell in the southeast 1/2 of the Delta (.50 to 1.5”, locally 3.5”). Most of the Delta rains fell to the southeast of the main cotton/soy harvest area, keeping damage minimal and allowing additional progress later this week.

Wheat seeding will be hampered by more rains in the 6 to 10 day. Midwest corn harvest delays remain minor this week, and much of the harvest should be complete by the time rains return in the 6 to 10 day. Colder than normal Midwest temperatures continue to hamper late germination.

In South America, only a few sprinkles were noted in far southern Argentina over the weekend, and the bulk of the rain focused on northern Mato Grosso, northern Goias, Bahia, and northern Minas Gerais in Brazil. Far northern Brazil remains favored until Friday, with all of Brazil picking up showers by the end of the 15-day period.

This will aid moisture for late spring crop development, although parts of Mato Grosso do Sul, Sao Paulo, and southern Minas Gerais may need to be watched for a bit too much rain in the 16 to 30 day if the active storm track continues as some guidance suggests.

Scattered showers occur in northern/western Argentina at mid-week, the far south on Friday, central/southeast areas early next week, and the southwest/east early in the 11 to 15 day. While none of the systems brings particularly heavy rainfall, wet pockets in parts of southern/eastern Buenos Aires, Entre Rios, and southern Santa Fe (up to 1/4 of crop areas) will likely linger. This will cause some additional slowdowns to corn/soy seeding and keep concerns elevated during late wheat development.

China Wheat Dryness Hampering Growth, But Rains Possible Next Weekend. Wheat has struggled with limited moisture in the past month. Rains next weekend are essential for the nearly 1/2 of the crop area which is non-irrigated. Above normal temperatures would allow the crop to take advantage of the rains.

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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