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Morning Outlook

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Overnight Highlights

·         The markets will be closed on Monday for Memorial Day; reopening Monday evening for Tuesday’s session in the Globex electronic market.

·         Thursday’s talks between Greek and European leaders broke up early this morning. Greek Prime Minister Alexis Tsipras said a resolution could come “soon,” while German Chancellor Angela Merkel stated that Greece needs to make greater efforts. The only agreement reached was one to keep talking.

·         Germany’s Finance Minister raised the possibility that Greece adopt a parallel currency, providing further evidence that Germany is preparing for the worst.

·         The dollar pulled back overnight following a series of disappointing economic reports that would seem to delay an interest rate hike by the Federal Reserve.

·         Corn and wheat added modestly to Thursday’s gains, while November soybeans bounced off Wednesday’s lows overnight.

·         Argentina’s largest labor union has pledged to go on strike June 1 in support of the crusher’s union if no agreement is reached by then, shutting down all trade at the large Rosario grain hub.

·         Wheat continues to find buying interest on concerns about excessive rains in the Southern Plains, dryness in the Canadian Prairies and heat/dryness in Southern Russia, although the forecast for the latter has moderated somewhat.

·         The European Union is expected to export more than 1.1 billion bushels of wheat in the year ahead, surpassing the United States as the world’s largest exporter of the food grain with another big harvest ahead.

·         Extensive rains are expected in the Midwest next week, while the 6- to 15-day period will likely be wettest in northwestern areas of the belt.

·         The next 10 days should remain wet for the Southern Plains, but a break is currently seen for the 11- to 15-day period.

·         Shower potential has improved slightly for Southern Russia late in the 6- to 10-day period, with temperatures moderating to the 80s F.

Commodity Weather Group Forecast

In the Midwest/Delta, showers were limited to mainly northern LA, far southern AR, and along the LA/MS border in the past day, with otherwise dry weather aiding seeding progress. The next showers reach the western Midwest on Sunday and the Delta on Monday before expanding east and then remaining more active next week.

This will slow late seeding (particularly west), but only very localized flooding is anticipated. The 11 to 15 day quiets down somewhat in the western Delta and central Midwest, with wetter weather and late seeding delays largely in the northwest Midwest. The more limited Delta activity should allow wetness concerns to ease a bit in AR after a last round of more notable rain early next week.

The Dakotas will see temperatures moderate and at least average near normal in most areas in the next 10 days, although the 11 to 15 day will offer the best chance for notable warmer trends to aid emergence rates for corn/soy. The 16 to 30 day guidance generally supports a fairly active pattern but shows the best agreement on wetter conditions in the southwestern Midwest.

In the Plains, showers scattered across southwest KS, southeast CO, northern/western parts of the TX Panhandle, far eastern TX, and the OK Panhandle overnight. Several disturbances will result in additional flooding/quality concerns in TX/OK in the 1 to 5 day. Showers remain relatively active in the 6 to 10 day as well, but the 11 to 15 day offers a needed break in the wetness. The 16 to 30 day does appear more active again in the south but may still be less wet than recent weeks.

Improved rain chances for spring wheat areas in mainly the 6 to 15 day would be particularly welcome in dry sections of western Canada, but 16 to 30 day guidance supports a return of a less active pattern that will need to be watched.

S. Russia Shower Chances Slightly Better Late Next Week But Pattern Break Still Not Likely. S. Russia is still likely to see some showers develop late 6-10 day. The Euro was much wetter as it broke down the ridge and is a forecast risk. However, most ensembles still support a warmer, drier pattern persisting next 2 weeks.

Argentina Corn Harvest Favorable After Weekend Showers, Harvest Delays Likely in Brazil Sugar 6-15 Day. Showers this weekend are only .25 to 1.0” in Argentina with dry weather the rest of the two week outlook aiding corn harvest. Wetter trends in Brazil sugarcane are supported by most models beginning next week, hampering harvest.

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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