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Morning Outlook

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Overnight Highlights

·         The euro is dropping and the dollar conversely rallying this morning on increased worries about Greece.

·         The strength in the dollar is causing money to flow out of the broader commodity complex, which makes rallies in the grains more difficult and tends to amplify losses when the grains are in decline.

·         The European Central Bank governing council has called an emergency meeting for this morning to discuss a run on Greek banks; totaling 1.82 billion euros for the small country in the last two days alone.

·         Greek Prime Minister Tsipras is in Russia this morning to meet with President Putin to discuss Greece’s future.

·         China stock markets just saw their worst one-week loss since 2008 as the bubble in their equity markets burst amid mounting economic concerns.

·         Crude oil is weaker on the strength of the U.S. dollar and concerns about global demand amid rising supplies amid expectations of rising production from U.S. shale producers.

·         Indonesian importers are said to have purchased an unknown volume of South American corn to be delivered at less than $4.83 per bushel for fall delivery. That suggests that South American corn will be quite competitive as we move into late summer and fall.

·         South Korea purchased 1.8 million bushels of U.S. wheat for October delivery.

·         European consultant Strategy Grains lowered its estimate of European wheat exports to 27.5 million metric tons Thursday, down 1.1 mmt from its previous estimate, which was down 2.6 mmt from the prior month. The decline is due to expectations of increased competition from Black Sea wheat.

·         Rains the next two days are expected to reach more of the southern Midwest than previously believed, but not be as heavy as previously expected.

·         Temperatures are expected to moderate in the Delta and Southeast in the 11- to 15-day period as showers sink into the region.

·         The Canadian Prairies should benefit from a few showers in the 5-day period, but then revert back to a warmer/drier pattern.

·         Rains are aiding European corn/wheat, but northern France remains under stress.

·         Texas wheat harvest is 49% complete, while Oklahoma is 41% complete, with much drier conditions expected over the next week to 10 days.

·         Soybeans are poised to finish with their biggest week of gains in five months, but today’s close will likely go a long ways toward suggesting that the bounce is over, or that it has more room to run. Prices pulled back from pivotal resistance overnight.

·         Corn prices came under pressure from expectations of rising production amid demand concerns over night.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored central/southwest parts of MO/IL, central/southeast IN, north-central KY, northeast AR, central/far southeast NC, and northern SC in the past day. Highs were in the mid-90s to low 100s for NC/GA/SC corn. The tropical remnants currently centered in southern MO are focusing rains a bit farther north than expected but are also not quite as heavy as anticipated.

Widespread coverage still moves through the far northern Delta and southern Midwest in the next 2 days, with frequent systems in the northern/eastern Midwest well into next week and the western Midwest late next week. While pockets of excess moisture will occur with the heaviest totals, amounts should not be heavy enough in most areas for major issues, particularly given a potential milder 11 to 15 day pattern that will shift the storm track south of much of the Midwest for much of the period.

This will also increase shower potential in the Delta/Southeast to recharge moisture supplies, although heat (upper 90s to low 100s) next week will still take a toll on Southeast corn. The 16 to 30 day outlook remains favorably mild and not quite as wet for the Midwest but allows warmer/drier conditions to return in the South.

In the Plains/Canada, showers exited the eastern edge of the Plains wheat yesterday. While showers return late next week into the 11 to 15 day, only minor harvest interruptions are anticipated until a wetter 16 to 30 day period arrives.

Canada will still see beneficial showers in at least 1/2 of the wheat/canola in the next 5 days, but warmer/drier trends in the rest of the month and into early July for the Canadian Prairies and Pacific Northwest will likely allow concerns to redevelop.

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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