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Morning Outlook

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Overnight Highlights

·         The dollar sank overnight as the euro rose after the European Central Bank releases emergency funds for Greek banks facing deposit withdrawals from their customers, however the release was less than one-fifth of the request and the smallest release to date.

·         Political leaders meet in Europe today to further discuss Greece’s future. Greece had set a Friday deadline for reaching an agreement with the European Union and its creditors necessary to release an aid package needed for it to meet its approaching debt obligations. However, some analysts think it can survive well into next month.

·         The crushers union strike in Argentina has moved into its 16th day, paralyzing the movement of 40 ships at the Rosario port, stopping grain movement and restricting the inflow of U.S. dollars essential for the government to pay its obligations.

·         Some foreign buyers of meal and oil are said to be canceling their orders to buy elsewhere. This morning’s USDA weekly export sales report will be watched closely for evidence of business coming our way.

·         July soybeans are trying to bounce off the bottom of a channel that has held the market over the past several months.

·         Wheat shows signs of trying to revive a short-covering rally that began after last week’s USDA report with fundamental support from dryness in Southern Russia and persistent rains in the Southern Plains.

·         The combination provides support for corn, although traders remain bearish all three commodities longer-term.

·         Much of the Midwest should remain dry the remainder of the week, but rains return to the region Sunday/Monday.

·         A fairly active pattern in the 6- to 15-day period will frustrate efforts to complete planting of this year’s corn crop.

·         The Southern Plains are expected to be excessively wet over the coming week, but the outlook is drier for week two.

·         Shower chances are slightly better for the Canadian Prairie, but dryness concerns are still mounting.

·         Isolated showers are possible in Southern Russia, but the pattern largely remains dry.

Commodity Weather Group Forecast

In the Midwest/Delta, significant rains focused on the N. Delta with very light showers in the C. & E. Midwest (mainly <.25”) yesterday. The Midwest is mainly dry the rest of this week allowing corn/soy seeding to progress in all but the wettest areas in the southwest quarter of the belt.

Rains return to the Midwest Sunday/Monday with only the Ohio River Valley likely to miss most showers. Showers the rest of the week are mainly scattered in nature but keep many areas out of the fields. Another rain band the following weekend produces more extensive rains as does another system in the 11-15 day.

This will prolong the seeding period especially for soybean in the SW Midwest but damaging amounts are not expected with the possible exception of E. KS/W. MO. Delta showers should be mostly isolated now through the weekend with best coverage confined to the western fringes of the belt. This will allow a slow resumption of soy/cotton seeding. Rains next Tuesday/Wednesday stall planting progress again but should be more limited after that through the 11-15 day allowing planting progress to gradually recover.

Soft red winter wheat disease/quality concerns are likely to persist in the Delta based on the wet 16-30 day outlook. In the Plains, it was mainly dry yesterday. Rains expand across the belt this weekend with localized flooding in TX/OK. Rains next week favor the C. Plains as the S. Plains continue to trend less wet for the 11-30 day period. This could avert more significant damage as key harvest period begins.

U.S. spring wheat rain chances have increased in the short term as well as the 16-30 day which will ensure favorable development. Canada spring wheat/canola remain in a drier than normal pattern that threatens moisture stress. Wetter model trends may be overdone but scattered showers could delay dryness problems.

S. Russia Heat Continues to Build Next 2 Weeks but Scattered Shower Possible Late Next Week. S. Russia remains dry for the next week but a storm coming out of Europe pushes close and set off scattered showers late next week but is unlikely to stem the decline in soil moisture as highs in the mid-80s to mid-90s become frequent.

China Corn/Soybean Planting To Progress Favorably Over Next 2 Weeks. A dry pattern this week continues through the weekend aiding seeding in all corn/soy areas. Rains return to the Northeast in the 6-15 day but are not enough to impede further progress. N. China Plain remains dry ensuring rapid planting.

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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