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Morning Outlook

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Overnight Highlights

·         Greece bought more time with its creditors by convincing them it was serious enough about reforms to continue talks, buying it more time.

·         The euro rallied and the dollar broke more than 700 points lower overnight on the development, supporting money flow back into the broader commodity sector.

·         The route continued in the global bond market overnight, with interest rates rising.

·         Crude oil prices are back above $60 per barrel this morning on the above.

·         Construction workers in Argentina will begin a strike on Monday, with intentions to block roads moving commodities to ports, providing supply disruptions.

·         Japan’s weather bureau issued an El Nino alert overnight on expectations that the emerging weather pattern will create threatening conditions for crops across parts of Asia.

·         Temperatures dropped below freezing once again across much of the central and northern Plains, threatening emerging corn and wheat in the boot and heading stages.

·         USDA reports that 75% of the U.S. corn crop was planted as of Sunday, up 20 points on the week and 18 points above the five-year average for the week. Minnesota led the way with 95% of the crop planted.

·         Soybean planting progress was pegged at 31% as of Sunday, up 18 points on the week and up 11 points on the five-year average for the week.

·         Brazil’s CONAB (equivalent of our USDA) pegs its soybean crop at 95.07 million metric tons and corn at 78.59 mmt, up from USDA’s latest estimates of 94.5 & 75 mmt respectively.

·         USDA will release its monthly crop report at 11 a.m. this morning. Trade expectations for key numbers are as follows:

U.S. Ending Stocks

2015-16

Wheat

Corn

Soybeans

billions of bushels

USDA May Report

               

                

                

Average Trade Estimate

0.750

1.752

0.443

Highest Trade Estimate

0.883

2.267

0.582

Lowest Trade Estimate

0.558

1.551

0.310

Previous USDA Estimate

na

na

na

Water Street Solutions

0.832

1.551

0.405

 

South American Production

Argentina

Brazil

Corn

Soybeans

Corn

Soybeans

MMT of Production

USDA Report

    Pre-Report Estimates

Average Trade Estimate

24.95

58.50

76.87

94.44

Highest Trade Estimate

29.80

61.00

80.30

95.00

Lowest Trade Estimate

23.00

57.00

73.80

93.50

Previous USDA Estimate

24.00

57.00

75.00

94.50

Water Street Solutions

26.00

59.00

75.00

94.50

 

U.S. Wheat Production

2014-15

All Winter

HRW

SRW

WW

All Wheat

billions of bushels

USDA May 12 Report

               

    Pre-Report Estimates

Average Trade Estimate

1.470

0.845

0.420

0.205

2.096

Highest Trade Estimate

1.526

0.925

0.480

0.300

2.178

Lowest Trade Estimate

1.388

0.735

0.380

0.175

2.003

Previous USDA Estimate

1.378

0.738

0.455

0.184

2.026

Water Street Solutions

1.488

0.873

0.410

0.205

2.107

Commodity Weather Group Forecast

In the U.S., showers scattered across mainly central/southern TX, southern/western LA, southern MS, southeast AR, southern/eastern IL, northwest IN, southern OH, central/southwest MI, eastern ND, northwest MN, north-central SD, and the Carolinas yesterday but were more limited than expected in the eastern Midwest/Delta.

Showers will return to the northern/western Midwest by Thursday/Friday and return this weekend to the far northwest, but activity should remain less organized in the balance of the Midwest to limit seeding interruptions to mainly MN/ND/SD/IA/NE/KS. Most of the belt sees a break of several days next week that will allow for fieldwork, with more extensive interruptions across the belt in the 11 to 15 day. The Delta will see intermittent interruptions to fieldwork over the next 10 days, but major delays are not anticipated. The rains in the Midwest/Delta will be supportive of early growth.

An active pattern in the Plains wheat belt over much of the next 2 weeks will continue to improve soil moisture but will also continue to raise wetness concerns for wheat quality and flooding. The main concerns will continue to focus on parts of TX/OK/eastern KS in the next 2 weeks. Light frost occurred in patchy sections of northwest KS, central/western NE, and the Dakotas but caused no damage and were not quite as cold as expected.

The 16 to 30 day continues to support the wettest conditions from the Plains into the southern Midwest/Delta, aiding crop growth but still threatening some wetness issues in the Plains wheat belt.

In South America, rain in Brazil (.25 to 1”, locally 2”) benefit the northern 1/4 of corn yesterday. Rains this week are more limited but aid the northern 1/2 of corn, while improving soy/sugarcane harvest. Argentina remains mostly dry until next Tuesday, allowing corn/soy harvest to accelerate.

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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