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Morning Outlook

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Overnight Highlights

·         Leaders are believed to be close enough to a framework outline nuclear agreement with Iran to grant them another three months to work out the details, which may release another million barrels of oil per day onto the world market.

·         No aid is yet available for Greece as its obligations pile up, with the nation being slow to come up with either the financial details or reforms requested by creditors.

·         China cut down payment requirements to buy a house for the second time in six months in an effort to stimulate the housing industry as its economy struggles.

·         Russian grain traders are delaying signing contracts for new-crop wheat sales; not knowing what the export tax will be at that time.

·         Meanwhile, Brazilian producers are taking advantage of currency exchange differences to get sales of next year’s soybean crop on the books.

·         The dollar rallied to its highest level since March 20 as our economy moves forward while Greece, Europe and much of the rest of the world struggle.

·         Money is flowing out of the broader commodity sector amid the stronger dollar, with grain and oilseed prices following ahead of this morning’s 11 a.m. CDT USDA planting intentions and quarterly stocks reports.

·         Southern Brazil soybean harvest conditions improve, with limited rains the next two weeks.

·         FSU wheat to benefit from extensive rains the next 10 days.

·         Readings in the 80s & 90s with high winds are expected to stress wheat in the central and Southern Plains today.

·         Central Plains crop ratings continued to slide in state data release Monday afternoon.

Commodity Weather Group Forecast

In the U.S., widely scattered showers occurred into the Great Lakes and Southeast yesterday, with showers scattering across the C. Plains and into the western Midwest by Tuesday/Wednesday and then focusing from the southern Midwest into the northern/eastern Delta on Thursday/Friday. Isolated showers are also possible in the next couple of days in the Delta, but interruptions to early corn seeding should remain minor until the middle of next week in much of the southern Delta.

Broader coverage then develops in the Delta, with additional disturbances favoring the Delta/Southeast in the 11 to 15 day. This will slow fieldwork. Soft wheat areas along and south of the OH River will need to be watched, but flooding concerns should remain localized for now. While wetter forecast risks exist, patchy showers in the central/southeast Plains over the next 2 weeks should only offer limited relief for hard red winter wheat, with highs rising into the 80s to low 90s in the next couple of days and again early next week. Pacific Northwest wheat remains likely to see occasional beneficial light showers.

In South America, rain (.25 to 1.5”) fell in Brazil, favoring coffee/sugarcane and the northeast 1/4 of safrinha corn. Showers favor the northern 1/2 of safrinha corn and much of the coffee this week. Showers expand back into southern corn (benefiting growth) and sugarcane areas (slowing early harvest) early next week, but only brief showers are expected in key soy harvest areas of Rio Grande do Sul. Showers taper off in the 11 to 15 day and aid soy/sugar harvest, while normal rains in the 16 to 30 day pose no threat.

Argentina had showers (.25 to .75”) limited to the far southwest yesterday. Showers remain minimal until the weekend, when rains slow corn/soy harvest in north. More extensive rains occur at the middle of next week. Rains also likely slow progress in the 11 to 15 day and beyond, but nearly all models keep damaging rains out of the picture.

Morning Market Snapshot

 

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

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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