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Morning Outlook

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Overnight Highlights

·         The dollar bounced off chart support overnight after holding that support on Thursday.

·         Wheat prices continued to rise overnight on speculative short-covering, setting the market up to have its biggest one-week gain in six months.

·         However, prices pulled back after Russia stated that it will lift its export tariff a month and a half early. Kansas City bounced off trend line resistance off December and April highs overnight, slipping into negative territory early this morning.

·         Russia believes that lifting the export tax early will allow it to ship an extra 37 million bushels of wheat.

·         Speculative short-covering continued to support corn prices overnight, pushing July above resistance at $3.70 to three-week highs.

·         Soybean prices firmed again this morning ahead of an 11 a.m. CDT crush report from the National Oilseed Processors Association, whose members hold 95% of total U.S. crush capacity. The trade expects NOPA April crush will come in at 147.827 million bushels, while our submitted estimate was 152.375 million bushels.

·         Showers should end in the northeastern Midwest , while favoring the northwestern belt this weekend.

·         A frost risk is seen for northern emerged corn early next week.

·         Midwest rains are expected to expand late in the 6- to 10-day and into the 11- to 15-day period.

·         Wetness concerns are expected to persist for the Southern Plains, and possibly east into Arkansas.

Commodity Weather Group Forecast

In the Midwest/Delta, showers scattered across mainly central/northeast ND, southern/eastern MN, western WI, northern/eastern IA, central/northwest IL, central MO, northern IN, northwest OH, and central MI in the past day. Showers exit the northeast Midwest today and favor the northwest this weekend before scattering a few showers farther south and east by Monday.

Except for NE/KS/MO, most of the Midwest then benefits from a drier period until next weekend that aids seeding ahead of more extensive 11 to 15 day rain. A cool shot early next week will bring frost to far northern parts of the Midwest, with a bit more of a concern on Tuesday morning for emerging corn (possibly nearly 1/2 of the acreage) in northern MN and ND to see a freeze risk.

Delta showers will be scattered but widespread in the next week, limiting opportunities for AR to see needed drying to ease concerns for low-lying flooding and soft wheat quality. Rains do gradually diminish in the 6 to 10 day but are expected to return in the 11 to 15 day. An active 16 to 30 day rain pattern appears to continue in the Delta, while showers keep Midwest corn/soy areas well-supplied for moisture.

In the Plains, showers favored southern parts of the TX Panhandle, central TX, central/southwest OK, far north-central KS, and south-central/western NE in the past day. A very active storm track continues to raise quality issues for wheat and threatens localized flooding, particularly in the wettest areas of TX and OK in recent weeks.

The best chance for improvement appears to be in West TX toward the end of the month. U.S. spring wheat areas will benefit from near-term showers before drying back out, while Canada still stays favorably dry for seeding but will remain a concern for stress late this month.

S. Russia Most Prone to Heat and Dryness Starting Next Week; Showers Favor Much of Europe. Showers in Europe will remain favorably active in the next 2 weeks and are likely to spill over into Ukraine, especially late in the 6 to 10 day. South Russia remains the driest/warmest area over the next 2 weeks, drawing down moisture.

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

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