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Morning Outlook

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Overnight Highlights

·         The euro rallied sharply and the dollar fell to one-week lows on signs of progress in the Greek talks. Greek bonds rose, with yields falling 71 basis points to 24.2%.

·         Additional support for the euro came from data showing the first rise in euro-zone consumer prices in six months, suggesting to policy makers that the region’s stimulus program is working.

·         Commodity prices rise as the dollar drops more than 800 points overnight.

·         Brazil’s ABIOVE, representing the crush industry, raised its soybean production estimate to 93.06 million metric tons, up from 92.69 mmt previously.

·         USDA’s weekly crop progress report showed that the corn crop remains in above-average condition for this time of year, suggesting a national average yield near 169 bushels per acre.

·         Soybean planting advanced to 71% as of Sunday, which is still slightly ahead of the five-year average for the week of 70%.

·         Winter wheat condition scores inched lower in the latest week reported, led by a significant drop in Texas scores where record rains have spurred sprouting in the head.

·         There was a lot of chatter overnight of declining crop conditions stretching from Europe to Russia, reflecting a shift in market focus as the dollar falls and commodity prices rise.

·         Rains return to the Plains in the 6- to 15-day period, focusing on Kansas, Colorado and northern Oklahoma, just as wheat in that region reaches maturity.

·         Rains currently favor the northwestern Midwest, but then expand into the southern Midwest and northern Delta in the 6- to 10-day period.

Commodity Weather Group Forecast

In the Midwest/Delta, showers scattered into mainly central/northeast ND, central KY, central TN, and far southern OH in the past day. Rains favor the northwest Midwest starting tonight, with a few showers scattering into central/southeast areas to finish the week.

Rains expand in the southern Midwest/northern Delta in the 6 to 10 day, particularly late in the period. Showers remain active into the 11 to 15 day but average mostly near normal in the Midwest/Delta, with 16 to 30 day rains then diminishing in the southeast Midwest but remaining at or above normal in the rest of the region.

The return of a more active pattern to the Delta will threaten additional quality concerns/harvest interruptions in the Midwest after a needed break this week. Concerns appear to be negligible for Midwest corn/soy areas through the next 30 days, with no sign of heat threats.

In the Plains, showers favored central/southern MT, central/northeast ND, southwest NE, far western TX, and far northeast CO in the past day. Rains remain much more limited in TX in the next 2 weeks, easing flooding and wheat harvest delays. Rains favor NE and northeast CO this week and aid late wheat growth, but 6 to 15 day rains do pick back up in CO/KS/northern OK and could be locally heavy. Models do lean drier in the belt in the 11 to 15 day but may be underestimating another Pacific storm.

Spring wheat areas in the N. Plains benefit from rains this week, but only far southern Canada is reached. Showers do expand in the models from late in the 6 to 10 into the 11 to 15 day across Canada, but confidence remains low given recent model biases. Given that 16 to 30 day guidance has slipped drier again, the midmonth rains will be important in western Canada to ease dryness, particularly in central Alberta into far western Saskatchewan.

Limited Rains for Dry Patches in FSU Wheat; Guidance Hints at Wetter 11-15 Day for Driest Areas in Europe. Dry spots in FSU (15% of winter wheat) see little rain but limited heat in the next 2 weeks, with moisture from recent rains also drawn down in other areas. 11 to 15 day guidance trended wetter for Europe, but confidence is still low.

6-15 Day Shower Potential Increased Slightly for Dryland Corn/Soy Across N. China Plain, But Confidence Low. Overnight model guidance trended wetter late next week across the N. China Plain corn/soy and would limit concerns. However, confidence is low, and potential 90s to low 100s prior to this event will draw 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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