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Morning Outlook

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Overnight Highlights

·         The dollar traded to a fresh two-week high overnight as the euro slipped lower on ideas that the European Central Bank may step up its bond buying program to stimulate the region’s economy.

·         European Central Bank policy makers meet in Frankfurt today to discuss whether to tighten rules for Greek banks wishing to access funds as depositors withdraw cash.

·         Europe’s political leaders will meet in Latvia Thursday to discuss Greece’s future.

·         Crude oil bounced modestly after falling to nearly three-week lows on Tuesday.

·         Continued weakness was seen overnight in the grain markets as the dollar rose back above the 100-day moving average.

·         Soybeans extended losses after breaking through chart support on Tuesday, while corn and wheat prices have generally held above Tuesday’s lows thus far.

·         A warming trend is expected in the northern Midwest in the days ahead to assist corn and soybean emergence.

·         Midwest rains are expected to return to slow seeding again starting early next week.

·         The Southern Plains remain quite wet over the next 10 days with some flooding concerns.

·         Dryness is expected to mount the next two weeks in Southern Russia as heat builds.

Commodity Weather Group Forecast

In the Midwest/Delta, rains overnight were mainly light in E. NE/W. IA with heavier amounts in E. KS/W. MO. Rains keep MO wet today but die out elsewhere. Dryness in Midwest the rest of this week aids late corn seeding and allow soybean seeding to make needed progress.

Next week will be much more active with rains expanding across the region Sunday/Monday and keeping fieldwork very limited through the week. The 11-15 day rains are heaviest in the southern Midwest and should delay late soybean planting especially in MO.

Unseasonably cold conditions in the north are hampering corn/soy germination but should ease as a warming trends lasts through next week. The N. Delta will see showers hamper a return to the fields today but only isolated showers then through early next week should support a gradual return to soy/cotton seeding. Rains return the middle of next week but planting progress should still be running near normal given the break this week.

Soft red winter wheat still has disease/quality concerns, mainly in the north but limited showers this week and again in 11-15 day should curtail widespread problems. The 16 to 30 day pattern for the Delta/SW Midwest threatened early wheat harvest delays.

In the Plains, rains were widespread with localized flooding in S. OK/N. TX yesterday. Rains taper off today but return early weekend with more localized flooding likely in TX and OK. The S. Plains wet pattern may not taper off until the 11-15 day period and trended a little less wet in the 16-30 day which could limit early harvest delays.

U.S. spring wheat likely to see rains frequent enough to maintain good early growth with best rain potential in the 11-15 day. Canada spring wheat/canola likely to see some spotty dryness problems by early June, mainly in west half of belt.

S. Russia Dryness and Building Heat Likely Next 2 Weeks but Ukraine Sees Rain Chances Later Next Week. Dryness in S. Russia leads to increasing heat next week with highs in the upper 80s to lower 90s becoming more widespread and begin to stress wheat. Ukraine is likely to see rains expand from Europe next week aiding wheat/corn.

Australian Wheat Areas Benefiting from Upturn in Rains Over Next 2 Weeks. Rains last weekend brought timely rains to western wheat areas. An active pattern in the south and east crop areas ensure that the majority of the newly seeded crop will be well established and make favorable early growth.

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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