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Sunday Outlook



Weekend Developments

·         Rain showers are confined primarily to Wisconsin and the Upper Great lakes region today.

·         Midwest showers are expected to be very limited the next 10 days, accelerating harvest progress.

·         Basis began to soften late in the week for corn, with weakness expected to accelerate for both corn and soybeans over the next week to 10 days, particularly in central and eastern areas of the Midwest as supplies increase.

·         This week’s showers and thunderstorms are expected to provide good relief for much of drier areas of Brazil, although 15% of the soybeans and 25% of the corn should see lingering dryness.

·         Ebola continued to make the headlines in the U.S. over the weekend. Nobody has contracted Ebola here other than two nurses who cared for the original case. In other words, no family members or other contacts have contracted it to this point, even though it has been more than three weeks since the original case wondered around Dallas.

·         Yet, fear of Ebola continues to grip the nation, with Wall Street worried more about the fear hurting economic activity than the disease itself.

·         The Federal Reserve is scheduled to end its quantitative easing program when it meets October 28 & 29, but money began flowing back into the broader commodity sector, boosting grain and oilseed prices this past week, when Fed members hinted about fresh stimulus.

·         This leaves the market susceptible to the latest comments from members of the Fed ahead of their late-month meeting.

·         Futures prices will be susceptible to shifting winds from the Fed, while cash basis should reflect accelerating harvest progress.

·         Some “experts” are convinced that the Fed will start a new stimulus program, while others are convinced that it will not. My bias leans to a lot more rhetoric that actual action at this point, leaving commodity prices vulnerable to additional weakness, but this will be a key issue to track.

·         Bottom line: Predicting market-influencing statements by members of the Federal Reserve is difficult, but one thing we do know is that this year’s corn and soybean crops are much bigger than even the strong demand at hand. Grain fundamentals remain bearish.

Commodity Weather Group Weekend Summary

In the U.S., only the NE 1/4 of the Midwest saw light showers (.10”) early in the weekend, with a similar chance tomorrow. Showers (.25 to .75”) will develop in the western 1/4 of the Midwest on Wednesday/Thursday. The bulk of the Midwest/South will remain on the dry side for at least 10 days, allowing harvest to accelerate. Midwest rains in the 11 to 15 day are not expected to be heavy enough to be a damage threat.

Plains wheat sees rains at mid-week and again in the 11 to 15 day aid early growth. Showers in Pacific NW wheat this week will bring more needed moisture to improve germination and early growth, as soil moisture is still short.

In South America, weekend thundershowers scattered from northern/eastern Mato Grosso do Sul into western Mato Grosso but favored northern parts of Santa Fe/Entre Rios into Rio Grande do Sul/southeast Parana. Lighter activity (mostly <.50”) scattered into southern Argentina and from the Minas Gerais/Sao Paulo border into southeast Minas Gerais.

The main frontal passage this week for Brazil coffee/sugar areas occurs late Monday into Wednesday but still may short-change at least 1/2 of coffee and much of sugar, with our forecast still siding toward the drier Euro guidance. Wetter risks also exist in the 6 to 15 day from the GFS for northeast Brazil, but our forecast holds most of the rain farther south. Dryness should linger for 15% of soy and 1/4 of corn in the next 2 weeks, but good coverage of the Mato Grossos remains likely. 16 to 30 day guidance is wettest from northeast Argentina into the southern 2/3 of Brazil, still missing many of the drier spots in northeast Brazil.

Argentina will be quite wet next weekend but otherwise sees limited rain. This should keep wetness concerns focused on patchy areas that are already saturated in Entre Rios/eastern Buenos Aires (less than 1/4 of corn/wheat).


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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