Home Market Market Watch Memorial Day Outlook

Memorial Day Outlook

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Weekend Developments

·         Greece appears to be playing a risky game of chicken with the European Union and other creditors.

·         Greece demanded this weekend that its creditors reduce their austerity requirements to release an aid package needed to pay its bills.

·         A Greek official stated that Greece could not and would not make their payment to the International Monetary Fund next month without that aid package.

·         Federal Reserve Chair Janet Yellen stated Friday that she expects to raise interest rates this year with gradual economic tightening from that point forward.

·         The grain and oilseed markets are closed until 7 p.m. CDT tonight for the Memorial Day holiday, but the international markets are open, with the euro lower and the dollar trading at its highest level since April 28 at this hour. Crude oil is modestly higher.

·         USDA’s daily crop progress reports will be delayed until 3 p.m. CDT Tuesday due to the holiday.

·         Showers continue to scatter into mainly the Delta and southern/eastern Midwest in the next 2 days.

·         Another chance for rain exists for much of the Midwest and Delta from Friday into the weekend.

·         Near to above-normal temperatures should aid early crop growth, although a few areas may struggle to complete planting.

·         Heavy rains again fell in eastern Kansas, Oklahoma and central/northwest Texas over the weekend.

·         Another round of widespread rain for the Southern Plains is expected Thursday to Saturday.

·         Rains finally focus further north for the remainder of the 15-day period, but the 16- to 30-day outlook looks wetter again.

·         Confidence is not high, but chances are improving for showers in dry areas of the Canadian Prairies and South Russia.

·         Friday’s CFTC report indicated that the funds aggressively built short (sold) soybean positions, with the charts searching for an area of footing near the $9 level for new-crop.

·         Wheat charts suggest that traders may not yet be done covering short positions, which are still large according to Friday’s CFTC data.

·         Corn charts are increasingly bearish with soybeans dragging them down, but key support has not yet given way. Corn needs strength in wheat and/or soybeans to avoid breaking that support.

Commodity Weather Group Weekend Summary

In the Midwest/Delta, rains favored parts of the central/southwest Midwest and southern/eastern Delta late in the weekend, including WI/northern IL/eastern IA/northeast SD/eastern KS/western MO/western TN/western KY/MS/LA.

Showers continue to scatter into mainly the Delta and southern/eastern Midwest in the next 2 days, with another chance for rain for much of the region from Friday into the weekend. The most notable interruptions to fieldwork are expected in parts of IA/IL/WI/IN/OH/MO/KS by the end of the weekend, but rain delays otherwise tend to favor the western Midwest from late in the 6 to 10 into the 11 to 15 day.

While a few spots could see localized flooding in the western Midwest, the pattern will aid early corn/soy growth and does not appear wet enough for severe problems. Near to above normal temperatures will benefit early growth as well in the region. Lesser 6 to 15 day rains will also aid recently wetter spots in the Delta, but an active storm track in much of the Midwest and particularly the Delta in the 16 to 30 day could reintroduce possible soft wheat quality concerns.

In the Plains, weekend rains were heaviest in eastern KS, OK, and central/northwest TX. This caused additional flooding issues and will add to wheat concerns. While showers early this week will be mostly limited to the southeast edge of the belt, another round of widespread rain is possible from Thursday into Saturday for the S. Plains. Rains may then finally focus farther north for the rest of the 15-day period, but the 16 to 30 day does suggest a risk for the wetter conditions to return.

6 to 15 day showers will keep N. Plains spring wheat stable. While confidence is not high, chances are also improving for a brief upturn in needed showers for the Canadian Prairies.

Rain Potential Increased in 6-10 Day for Southern Parts of N. China Plain Corn/Soy. Increased rain potential could reduce developing dryness concerns in dryland areas to the northern 2/3 of the N. China Plain, but confidence is low given drier GFS guidance. Showers will keep the Northeast stable.

Italy/Hungary Showers Continue; More Support for E. Ukraine/S. Russia 6-10 Day Rains. Showers in Hungary/Italy ease dryness, while corn seeding conditions are favorable this week in France. Rains aid eastern Ukraine this week, with increased 6 to 10 day support for relief in South Russia 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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