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Sunday Outlook

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Weekend Developments

·         Clashes between Ukrainian forces and pro-Russian militants continued through the weekend, showing the weakness of the current truce.

·         Scattered weekend showers were a bit more than expected around the Great Lakes, but were still generally limited, allowing harvest to progress over much of the southern half of the Midwest.

·         Corn basis is softening as harvest advances, while soybean basis is rapidly tumbling.

·         While there have been areas of exception, the bulk of the corn and soybean harvest reports continue to be remarkable.

·         Best Midwest rain chances come in the 11- to 15-day period, suggesting good harvest weather where crops are mature.

·         Freeze risks remain very low for northern crops over the next couple weeks.

·         Harvest reports give traders little reason to believe that USDA’s tendency for big yield increases in its October report in big crop years won’t be true this year as well for both corn and soybeans.

·         End users remain content to allow prices to come to them as both basis and futures trend lower.

·         Wheat could find support as traders await the results of Egypt’s latest snap tender, but corn and soybean prices should remain under pressure.

Commodity Weather Group Weekend Summary

In the U.S., scattered weekend showers (mostly .50 to 1.25”) were slightly more than expected around the Great Lakes but were still limited overall, favoring western IA, the IA/MN border, central WI, MI, northern IN, far eastern IL, and northwest OH. Rains were also limited in the South.

A few showers are possible in mainly IA, NE, and KS late Monday into early Wednesday, but the main rain event expands in the Plains and into the central/western Midwest next week. While this will cause some interruptions to corn/soy harvest, the otherwise dry and frequently warmer than normal pattern will prevent any notable concerns, with a fairly benign pattern still also extending into the 16 to 30 day on the CFS model.

The large majority of forecast guidance continues to suggest low freeze risks through the first 1/2 of October. While Delta showers stay limited over the next 2 weeks, the European model does show wetter risks in the Southeast from the middle of this week into the first 1/2 of next week that were not followed but will be watched closely.

The weekend rains were locally heavy (2 to 5”+) in West TX cotton areas but focused mainly on the southern ½ of the belt, which was less extensive than anticipated. These areas will encounter some quality decline and perhaps minor losses for the portion of the crop that is open boll (about 40%), but the more limited rains projected in the next 2 weeks should ease concerns.

Showers are expected to be fairly widespread though to the north in the Plains (especially in the 6 to 10 day), aiding newly seeded winter wheat. This uptick in moisture will also cause some short-lived interruptions to spring wheat harvest in the Northern Plains and eastern Canadian Prairies.

Timely Rains Across FSU Wheat This Week to Improve Germination Conditions in Nearly All Areas. Rains of .50 to 1.5” (locally 3”) will boost moisture for favorable establishment in at least 75% of the belt.

 

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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