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Morning Outlook

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Overnight Highlights

·         Greek markets rallied on word of a possible deal with lenders that includes eliminating early retirement options, hiking the sales tax, increasing taxes for middle- and high-income earners and the introduction of a new levy for companies with an annual income above 500,000 euros.

·         Greek Prime Minister Tsipras is currently working to build support within his own fragile coalition for passage through parliament, which is expected to be a major challenge. He has 48 hours to pull it together.

·         Eurozone finance ministers will meet again on Thursday for their part in the approval process, with German Chancellor Angela Merkel indicating that “we’re not yet where we need to be.”

·         Port workers at Argentina’s Rosario grain hub call off a strike after agreeing to a 31.5% pay hike, according to a union official.

·         Argentine grain sorghum acreage is expected to rise 23% in the season ahead after a deal opening the door for sales to Chinese end users.

·         The U.S. dollar rallied more than 800 points this morning while the euro fell on European nervousness, while crude oil is down on surplus supply concerns.

·         Violent storms moved across the northern Midwest Monday morning, while another round of strong storms hit portions of the same region last night.

·         Traders have been pointing toward “greenhouse” conditions across much of the Midwest, but yet corn and soybean ratings are sliding lower, with eastern Midwest ratings taking a huge hit in Monday afternoon’s USDA crop progress report.

·         The overall drop in crop ratings took another 1.1 bushels off the corn yield model and 0.4 bushels off the soybean yield.

·         USDA data suggests that 8.5 million acres of soybeans remain unplanted as of June 21, with 4.06 million of those acres in Missouri, Kansas and Nebraska, with another 0.5 million in Illinois.

·         Winter wheat harvest progress reached 19% as of June 21, with progress behind normal in every state other than Texas. Winter wheat condition scores also dropped over the past week.

·         Spring wheat ratings pushed higher over the past week, with very good conditions in the key production states of Minnesota and North Dakota.

·         Grain and oilseed prices pushed higher overnight on the declining crop ratings, but soybeans slipped into negative territory this morning and gains in corn and wheat are disappearing  as the dollar surges and money flows out of the broader commodity sector.

·         Widespread rains are expected across the Midwest Wednesday through Friday, and have turned wetter for the 11- to the 15-day period as well.

·         A mostly dry pattern is expected to increase crop stress across much of the Canadian Prairies and the U.S. Pacific northwest over the next 10 days.

·         Expanding rains in the North China Plain are expected to avert corn and soybean crop stress.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored northeast/far southeast IA, northeast MO, northern IL, western WI, far southeast MN, southern MI, and southeast GA in the past day. Strong winds along the I-90 corridor from central SD to the MN/IA border early yesterday likely caused some damage but was localized.

Hottest conditions were again in the Southeast, with mid-90s to low 100s. Similar heat persists this week in the Southeast, with mid to upper 90s in the next few days for the Delta. The southwest Midwest peaks in the low 90s and otherwise remains milder.

Rains will expand from Wednesday through Friday across the Midwest and favor central/southeast areas, adding to surplus moisture in MO/IL/IN/OH. A welcome break then occurs through the rest of the 10-day period, but the 11 to 15 day has trended wetter in the southern Midwest. This will keep some wet spots in place, while the wettest weather shifts into the western belt for the 16 to 30 day with a mild pattern.

Most areas should see favorable or improving corn/soy conditions. Rains will aid the Delta/Southeast late this week and into the 6 to 10 day, offering a needed upturn in rain ahead of a return of drier 16 to 30 day conditions.

In the Plains/Canada, showers were limited yesterday, and warming/mostly dry conditions in much of Canada and into the Pacific Northwest/northwest Plains will raise stress over the next 2 weeks, with the greatest concerns from western Canada into WA spring wheat. Recent showers should keep most of the N. Plains in more stable condition.

Winter wheat harvest will progress well in the next 10 days for most of the Plains but slows in the 11 to 30 day.

Showers Benefit N. France Wheat Yesterday, But Corn Areas Drier and Warmer Next 2 Weeks. Showers in northeast France/Germany yesterday aided filling wheat and remain active in Eastern Europe this week. France/Italy corn areas remain drier than normal, with building heat next week to raise stress concerns in July.

Rains Benefit Southern 1/2 North China Plain Corn/Soy Today, More Extensive Showers Early Next Week. Substantial rains will cross the southern 1/2 of the N. China Plain, averting stress for corn/soy after a dry month. Models remain supportive of widespread rains early next week that could minimize moisture stress for the northern 1/2 as well.

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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