1. Ag markets seen strong, ahead of USDA

In overnight trading, the Dec. corn futures are 2 1/4¢ higher at $3.67 1/4. March corn futures 1 3/4¢ higher at $3.76 3/4.
 
Nov. soybean futures are 7 3/4¢ higher at $9.85 1/4. January soybean futures are 7 1/2¢ higher at $9.89.

Dec. wheat futures are 2 1/4¢ higher at $5.50 1/2. 

Dec. soymeal futures are $2.50 per short ton higher at $320.00. Dec. soy oil futures are 0.25 cent higher at 33.45¢ per pound.

In the outside markets, the U.S. dollar is lower, and the Dow Jones Industrials are expected to fall.

In addition to the USDA Supply/Demand and WASDE Reports, the USDA will release its delayed Weekly Export Sales Report, on Friday.

Bob Linneman, Kluis Advisors, says that traders are patiently waiting today's USDA data.

“Trade estimates suggest a much larger decrease of yield than what history says is likely. We could be setting up for a bearish reaction if the USDA releases smaller-than-expected decreases to yield. If that is how the report goes, will the trade believe the report? Will the funds step in and use a pullback to extend their already unseasonal long position, ” Linneman stated in a daily note to customers.

Note: This article is now available in audio format. You can subscribe from your favorite podcast provider or listen with an Alexa or Google Home enabled device.

2. USDA's Sept. Supply/Demand Estimates

On Friday, the USDA will release its September Supply/Demand and World Production Reports.

For the U.S., the USDA is expected to lower the corn and soybean yields, due to inclement weather in July and August. 

The trade sees the USDA pegging the U.S. corn average yield at 178 bushels per acre vs. the USDA's August estimate of 181.8 bu./acre. 

The U.S. total corn production is seen falling from 15.27 billion bushels in August to 14.8 billion.

For soybeans, the U.S. average yield is expected to be estimated at 51.8 vs. the August estimate of 53.3 bushels per acre.

For 2020/2021 production, the trade sees the USDA pegging the soybean output at 4.2 billion bushels vs. the August estimate of 4.42 billion.

The USDA resurvey of Iowa’s harvested area is likely to reveal 250-300,000 in lost corn acres from last month’s Derecho that crossed central Iowa, leaving many fields flat and un-harvestable.
 
The USDA will release its reports at 11:00am CT.

3. Flash Flooding In the Corn Belt

On Friday, the National Weather Service (NWS) forecasters expected an upper-level low over the Northern/Central Rockies to aid in drawing a
plume of moisture northward from the Western Gulf of Mexico over the Upper/Middle Mississippi Valley on Friday into Saturday. 

Isolated/scattered flash flooding is possible across parts of the Midwest through tonight, according to the NWS. 

"Two main rounds of precipitation are expected across the region. (1)Through the day, moderate to heavy rain from Missouri into Iowa. (2)Thunderstorms overnight in northeast Missouri, eastern Iowa, western Illinois.

"The upper-level dynamics associated with the upper-level low will aid in producing rain with embedded thunderstorms over the Upper/Middle Mississippi Valley and parts of the Upper Great Lakes on Friday into Saturday," the NWS forecasters stated in a Friday morning weather outlook.  

Excessive rainfall over parts of the Middle Mississippi Valley is expected.  "The rain associated with the system will be heavy enough to produce localized to scattered areas of flash flooding over the region on Friday into Saturday morning.  The rain will move into the Upper Great Lakes later on Saturday into Sunday," the NWS forecasters stated.  

Temperatures associated withthe upper-level low will be 10 to 20 degrees below average over the Plains and parts of the Upper/Middle Mississippi Valley that will moderate slowly, according to the NWS.