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Morning Outlook

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Overnight Highlights

·         OPEC members made the decision this morning to keep production at 30 million barrels per day, unchanged from their current pace, in order to defend market share.

·         Greek Prime Minister Alexis Tsipras elevated tensions in Europe overnight by rejecting austerity demands of creditors and “deferring” today’s payment to the International Monetary Fund.

·         Greece has apparently “decided” to bundle all of its upcoming IMF payments and transfer them all to the end of the month.

·         The move increases the risk of a bankruptcy and an exit of Greece from the euro-zone.

·         Here at home the focus is on this morning’s monthly jobs report, which Wall Street expects to show that the economy created 220,000 jobs in May with the unemployment rate unchanged at 5.4%.

·         The dollar is posting modest gains ahead of the jobs report, while the euro is posting modest losses on the Greek news.

·         The Buenos Aires Grain Exchange raised its Argentine soybean production estimate to 60.8 million metric tons, up from 60 mmt previously and up from USDA’s current estimate of 58.50 mmt.

·         Grain and oilseed markets largely consolidated near Thursday’s close overnight, with grain traders waiting for the jobs report before assessing their positions going into the weekend.

·         An active pattern of heavy rains in the Central Plains and far southwestern Midwest is expected to continue.

·         The active pattern is expected to keep conditions generally favorable for crop development over most remaining areas of the Midwest.

·         Europe wheat is favorably wetter in the 6- to 10-day period, although rains are still limited for the Former Soviet Union.

Commodity Weather Group Forecast

In the Midwest/Delta, thunderstorms again favored southeast NE/eastern KS/northwest MO in the past day. The southwest Midwest will see a brief break in rain over the weekend as rains track through the northwest belt, but rains return by Sunday night/Monday in the southern Midwest/northern Delta.

Rains continue in these areas into the 6 to 15 day, with only brief breaks of generally a couple of days in between southwest Midwest showers. This will continue to hinder late soy seeding progress there, but the rest of the Midwest will remain in good shape given the active pattern. The Delta will need to be watched but does not appear persistently wet enough for notable quality threats to soft wheat. Mild/showery conditions in the 16 to 30 day will continue to aid crop prospects, except for the wettest spots in the southwest 1/4 of the Midwest.

In the Plains/Canada, locally heavy rains stretched from the foothills of northeast CO along the NE/KS border, with scattered activity in far northwest TX, central MT, central/far southeast Alberta, and southwest Saskatchewan. Showers will spread back into TX/OK by early in the 6 to 10 day to slow early harvest, but the 11 to 15 day generally shifts back drier in the far S. Plains.

The wettest weather and main concerns for winter wheat focus on NE/KS over the next 2 weeks and into the 16 to 30 day. N. Plains spring wheat should see at least adequate moisture maintained. While patchy relief occurred yesterday, Canada trended drier in the 6 to 10 day. Many models remain quite wet in the 11 to 15 day, but our forecast favors the far south/west based on the drier trends in the 10-day forecast. The 16 to 30 day outlook remains drier.

Rain Potential Improved for Dry Europe Wheat Areas; FSU Dry Spots Rebuild Next 2 Weeks. Wetter trends in France, Germany, and Poland in the 6 to 15 day are reducing the risk for stress. While heat is limited, eastern Ukraine/southern Russia likely see broader dryness concerns redevelop (currently 15% of FSU winter wheat).

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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