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Morning Outlook

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Overnight Highlights

·         Greece says that an agreement can be reached by Sunday, but officials close to the talks say there is a “substantial way to go” before an agreement is reached.

·         International creditors are said to need an agreement next week to be able to release aid before Greece’s current loan agreement expires in late June.

·         Meanwhile, data shows that Greek citizens and businesses are increasing the rate at which they are withdrawing their deposits from Greek banks. Private deposits are at their lowest level since September 2004.

·         European stocks fell ahead of the weekend on  Greek concerns, although the euro posted a modest bounce and the dollar small losses in consolidation trade.

·         Intelligence reports indicate a substantial increase in accumulation of Russian troops and tanks along the Ukrainian border over the past 48 hours.

·         The Russian government set its new wheat export tax at 50% minus 5,500 rubles per  metric ton, but not less than 50 rubles per ton. The move is not expected to reduce movement of Russian wheat.

·         The head of Argentina’s crusher’s union expressed optimism that an agreement is near, suggesting that a three-week strike that slowed product movement is near an end.

·         Weekend showers are expected to aid eastern Midwest crops, but the northwestern belt will otherwise be favored over the next 10 days.

·         The Southern Plains are expected to remain under pressure of persistent rains the next two days, before a downturn in showers for the first half of June.

·         Forecast models are similar to drier for northeastern Ukraine and southern Russia, with heat building late next week, but a private industry tour this week said that it still believes the Russian crop could meet or exceed last year’s good crop.

·         Traders will be  squaring positions ahead of the weekend and end-of-the-month today.

Commodity Weather Group Forecast

In the Midwest/Delta, showers favored far southeast IA, central MO, eastern KS, far southeast ND, northwest/far southwest MN, southwest WI, far northeast SD in the past day. Models have scaled back showers into the weekend in mainly NE/IA, but good coverage remains likely for southeast/northwest parts of the Midwest and the Delta (heaviest in the Delta).

Rains then focus on the northwest corner of the Midwest through the 6 to 10 day, expanding across much of the Midwest and event parts of the northern/eastern Delta in the 11 to 15 day. While there could be a few extra gaps in the 11 to 15 day coverage, moisture should remain adequate for corn/soy growth, and warm temperatures (mostly 80s) in the 6 to 15 day will aid growth rates.

Late soy seeding interruptions will focus on IA/WI/Dakotas but should not be serious. The drier break next week in the Delta will help to ease wetness concerns somewhat and improve late seeding, although the 16 to 30 day continues to support a return of extensive near to above normal rain in the Midwest/Delta with mostly seasonable temperatures.

In the Plains, thundershowers (locally 3 to 7” in TX/OK) favored southern parts of the TX Panhandle, central TX, eastern/far southern OK, west-central/eastern KS, and central/southwest NE in the past day. Showers continue in TX/OK and add to flooding concerns in the next 2 days, but guidance continues to support a downturn in rain for the first 1/2 of June as rains shift north and aid late growth in the C. Plains. Wetter trends are still expected to resume in the 16 to 30 day for the south, slowing harvest and possibly threatening additional quality and flooding concerns.

The northward shift in rains over the next 2 weeks will also aid spring wheat growth in both the N. Plains and Canada, with Alberta in most need of the showers.

Similar to Drier S. Russia/NE Ukraine Next 10 days, With Heat Building Late Next Week. Northern portions of South Russia wheat and dry patches in northeast Ukraine (20% FSU winter wheat, including 1/3 of Russia) appear likely to hold onto dryness in the next 10 days, with heat (90s) this weekend and again late next week.

Northeast China Corn/Soy Favored for Showers Next 2 Weeks; 2/3 of N. China Plain Slips Drier. Northeast corn/soy seeding will slow at times through the first 2 weeks of June, but showers will ensure adequate moisture for germination/growth. A lack of showers will draw down moisture for dryland crops in the N. North China Plain.

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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