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Sunday Outlook

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Weekend Developments

·         Soymeal supplies continue to get squeezed for now, providing fundamental support for the oilseed complex, which is giving a lift to corn as well.

·         The dollar surged to a fresh four-year high on Friday, with strong fundamentals going forward, which tends to make rallies more difficult to sustain in the commodity markets.

·         Showers hampered harvest again in the eastern quarter of the Midwest Friday, with very light showers in southern Illinois this afternoon.

·         The eastern two-thirds of the Midwest should see 0.25 to 1.0” on Tuesday, but that should be followed by a week of drier weather ahead of the next system.

·         The Southern Plains should see good rains this week, although the northwestern quarter of the hard red winter wheat belt will likely remain unfavorably dry.

·         Model support is good for another northward push for rains in Brazil this week, benefiting corn and soybeans and finally providing relief for lingering dry areas.

·         Longer-term, soybeans should be the leader, based on growing conditions in South America.

·         USDA will update it production estimates and supply and demand balance sheets next Monday, November 10. We should see more of a focus on positioning for the data dump as we move through the week.

·         New daily price limits go into effect for the grains tonight.

·        

Commodity Weather Group Weekend Summary

In the U.S., showers were limited to the eastern 1/4 of the Midwest (.10 to .50”) on Friday, and the Carolinas (.25 to 1.25”) yesterday. Showers favor the eastern 2/3 of the Midwest on Tuesday (.25 to 1”) and the Delta on Wednesday (.50 to1.5”). With the next showers a week later, corn/soy/cotton harvest progress and wheat seeding should recover. Plains wheat benefits from rains this week, but the northwest 1/4 remains unfavorably dry for late fall growth. Showers aided Pacific Northwest wheat on Friday, ahead of a drier trend in the next 2 weeks.

In South America, weekend showers were widely scattered in Brazil but began to shift back to the south/west. Heavier totals favored parts of western Mato Grosso, southwest Goias, far southern Mato Grosso do Sul, Santa Catarina, and far western Rio Grande do Sul. A similar pattern prevails this week, but models still show good support for a northward push next week. This would be timely follow-up moisture for corn/coffee/sugar in central/northeast Brazil and should finally provide needed moisture to ease germination concerns and planting delays in lingering dry soy areas (particularly east-central Mato Grosso).

Argentine rains were most extensive in far northern Buenos Aires, southern Entre Rios, and much of Santa Fe/Cordoba over the weekend, but most areas picked up 1” or less. Showers exit through Buenos Aires in the next day, with drier weather then expected for about a week. However, rain events in the 6 to 15 day may then return to the south.

The return of drier weather to central areas should allow corn seeding to recover this week, and some progress is even possible into Buenos Aires. However, the return of rains next week may still hinder the last 1/4 of seeding Buenos Aires and also pose a continued risk of disease for wheat. No frost was noted over the weekend in far southern wheat areas.

 

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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