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Morning Outlook

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Overnight Highlights

·         The Greek government released a statement overnight stating that it is willing to compromise to reach a deal with its creditors that is acceptable to both sides, leading to a stronger euro and weaker dollar.

·         Crude oil prices dropped on a sharp decline in Chinese oil imports for the month of May amid commitments from OPEC to maintain output at current levels.

·         Yet, a survey shows that nearly half of U.S. private equity investors are planning to pour cash into the crude oil and gas markets over the next three years, believing they are near the bottom. That’s a good sign for the ag commodities.

·         Add head scab to the list of problems with the Kansas wheat crop, with pathologists noting moderate problems in the eastern portion of the state.

·         Russian Consultant SovEcon raised its 2015 grain forecast to 99 million metric tons, up from 94 mmt previously.

·         Grain and oilseed prices pushed higher overnight, extending gains this morning.

·         Traders will look to this afternoon’s USDA crop progress and Wednesday morning’s USDA monthly crop report for fundamental direction.

·         Saturated areas of the southwestern Midwest should see a quieter pattern much of this week, before turning wet once again.

·         Heat and dryness risks are seen for the 6- to 15-day period in the southeastern U.S. Corn Belt.

·         Heat and dryness are also seen in corn/soybean areas of the North China Plain the next two weeks hampering crop growth.

Commodity Weather Group Forecast

In the Midwest/Delta, weekend thunderstorms favored the NE/KS border, northeast NE, southeast SD, northern ND, central/far southern MN, west-central WI, central/northwest IA, northeast MO, northeast KS, much of IL, northern/western IN, and the AR/MO border. Shower chances have become more limited in the Delta, with hotter (mid 90s to low 100s)/drier 6 to 15 day trends also possible in the Southeast. This may begin to stress corn in the latter 1/2 of the month, particularly in GA/SC.

Extensive Midwest showers will keep corn/soy conditions stable, but the return of rain after mid-week and particularly in the 6 to 10 day for the southwest will keep late soy seeding slow in KS/MO. The 16 to 30 day outlook remains favorably mild/showery in the Midwest, while drier/warmer conditions may persist from the Gulf Coast into the Southeast.

In the Plains/Canada, scattered weekend showers occurred through the Plains/southeast Canada but favored the NE/KS border and adjacent sections of CO as well as the NE Panhandle, eastern MT, northern/western ND, northern MN, southwest Manitoba, and far southeast Saskatchewan. Rains will slow TX/OK wheat harvest late this week and into the 6 to 10 day but then ease, while the wettest concerns favor KS/CO/southeast NE in the next 2 weeks and into the 16 to 30 day. N. Plains spring wheat will remain stable, with extensive 11 to 15 day rain expected.

Scattered showers will occur in the northern Canadian Prairies this week. The best chance will be late in the 6 to 10 day for relief, but our forecast favors mainly far southern/western areas before drier 16 to 30 day trends return to keep concerns elevated.

Rains Ease Dryness in NW Europe Wheat Areas Over Next Week; FSU Rain Chances Improve 6-15 Day. Showers will aid France, southern Germany, and U.K., but northern Germany/Poland could still see only spotty relief. FSU dryness this week and heat early next week should break later next week, and scattered rains limit moisture stress.

China Dryness Concerns Remain Focused on N. China Plain Corn/Soy Region. Rains in Northeast China this week aid corn/soy. A lack of rains over the next two weeks and highs in the 90s to low 100s will begin to stress early corn/soy development in dryland sections of the N. China Plain (15% of national crop).

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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