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Morning Outlook

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Overnight Highlights

·         The European Central Bank continues to support policies that weaken the euro, which in turn supports a stronger dollar.

·         The dollar rallied to fresh 4-year highs overnight, before turning back at trend line resistance off the 2009 and 2010 highs.

·         Global equity markets turned lower overnight on the strength of the dollar and concerns about the escalation of pro-democracy demonstrations in Hong Kong.

·         It was an active harvest across the Midwest over the weekend, pressuring prices early in the overnight session to new lows for corn and soybeans, although prices have recovered off those lows.

·         Traders are bracing for possible surprises in tomorrow morning’s USDA quarterly grain stocks and small grains summary reports, although harvest of the big crops is expected to quickly be the focus again following the reports.

·         USDA will be releasing its updated weekly crop progress data at 3 p.m. CDT today.

·         Wheat quickly recovered overnight from Friday’s revelation by USDA that unapproved volunteer GMO wheat had been discovered at a research facility in Montana.

·         This week’s rains are expected to primarily be a factor delaying harvest in the last half of the week, but overall delays are expected to be relatively minor.

·         The southern third of Australia’s wheat is still short of moisture and in need or relief over the next two weeks.

Commodity Weather Group Forecast

In the U.S., weekend showers favored the N. Plains/southern Canadian Prairies. Midwest corn/soy harvest will continue to make good progress over the next 2 days in all but the western 1/4 of the belt. Showers then move west to east across the belt, ending Saturday. This will slow harvest, but a mainly dry 6 to 10 day will allow a return to a normal pace before more showers late in the 11 to 15 day. The latest GFS has a freeze in the northwest Midwest early in the 11 to 15 day, but confidence is low and damage potential is minor.

Cotton/soy harvest disruptions in the South this week are brief, and a drier 6 to 15 day pattern aids progress. Plains winter wheat rains still miss the driest areas of OK/CO but hamper germination in less than 15% of the belt. Canadian spring wheat/canola harvest is delayed early this week but then recovers into October.

In South America, scattered weekend thundershowers occurred in eastern Mato Grosso, southwest Goias, Sao Paulo, and adjacent sections of Minas Gerais, but favored areas were in southern Mato Grosso do Sul, Parana, Santa Catarina, and northern Rio Grande do Sul. The rains were not as heavy as feared in Brazil wheat, but locally 4” was noted in northwest RGDS and SE MGDS.

Most areas see a break late this week into the 6 to 10 day, but additional rains toward mid-month may still threaten quality declines in RGDS. Rains this week will aid early prospects for northwest corn/soy, while about 1/3 of the coffee belt still has the best chance for .50 to 1.25” totals tonight through Thursday. However, model agreement is much better on drier 6 to 15 and 16 to 30 day conditions for the belt that will cause further blooming delays.

Argentine rains this weekend will be locally heavy/widespread, but otherwise limited showers keep wetness concerns minor.

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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