• HEADLINES: Soaring US$ weighs heavily on raw materials; Crude down $5/barrel; Midwest rain absent next two weeks.

• Chicago futures are sharply lower this morning amid pronounced weakness in financial and energy markets. Crude oil has extended overnight losses considerably and is down $5.00/barrel at $78.50, a new 8-month low, with the Dow down 440 points. Concern over a slowing economy is cited, and weakness in the macroeconomic landscape is beginning to spill into physical ag markets as evidenced the pace of US grain and soybean export demand. FAS’s daily reporting system was void of new sales this morning, and key is whether China opts to extend autumn/winter supply coverage on this break early next week. Note that China’s Golden Week holiday occurs Oct 1-7 and relative quiet is anticipated from China during this period.

• RBOB gasoline’s fall t0 $2.35 will act as a weight on cash ethanol prices. The cash ethanol market has been rather resilient until now, but as Midwest ethanol prices are unlikely to break $2.50/gallon, it remains that production margins tighten above $7.10, Dec Chicago. Broadly, the collapse in crude since mid-summer has on balance been a negative for biofuel production growth worldwide.

• The US$ index’s surge to a newer 20-year high has pulled currencies in importing countries like Nigeria and Turkey to record lows. Once again, the market must contend with currencies’ impact on both demand (reduced purchasing power) and supply (profitability in S America). It is a risk-off day in Chicago.

• A rapid filling of the US cash pipeline lies ahead, with producers actively gathering crops as far north as IA/IL.

• Recent and current basis strength is noted, elevators in IA are paying $0.50-0.65 over for spot delivery, but this has provided the incentive to sell corn/soy supplies right off the combine. A relatively seamless transition from the farm to end user is imminent. Additionally, we note that the EU and GFS weather models are in better agreement with respect to the season’s first tropical storm late next week. Damage is unfortunately probable across FL and the South-eastern Coast, but the risk to energy and ags has been diminished based on updated model guidance. Near complete dryness is scheduled for the Plains and Midwest into Oct 5.

• Paris milling wheat futures are down €2.50/mt ($0.07/bu) and relative stability is noted there amid a falling €uro and as drone stocks have been reported near Odesa Ukraine. Black Sea supply/military risks remain intact, but the best proxy for measuring adjustments to grain flows will be weekly US/European export commitment data. Both have been lacklustre through this week.

• The midday GFS weather forecast pulls next week’s tropical storm into GA and the mid-Atlantic but otherwise the outlook into Oct 3 is unchanged from the morning release. A lengthy period of dryness lies ahead and still there is no indication of even moderate Midwest rainfall into Oct 5. Cool temperatures fade beyond the middle of next week as low pressure currently aloft the Great Lakes is pushed northward. High temperatures in the 70s and 80s resume in the 7-15 day period.

• The market can’t yet prove/disprove US corn and soy supply loss, but we maintain that the burden of lasting rallies is being more heavily weighted toward future NASS yield reductions. Supply driven rallies will be used to price a majority of corn and soy production between now and mid-autumn. Economic outlooks are troubling. Initial support lies at $14.20, Nov Chicago soy, and $6.65, Dec corn.

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