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Morning Outlook

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Overnight Highlights

·         Stocks rallied Tuesday on talk of a deal in Europe, but they are under pressure today after creditors rejected Greece’s proposal as time runs short for reaching an agreement.

·         The dollar is more than 300 points lower ahead of U.S. GDP data to be released this morning, with crude oil pressing against overhead resistance as money flows into the broader commodities on the weaker dollar. Wall Street expects the final reading on 2nd quarter GDP to come in at -0.2%, which would be an improvement from the previous reading of -0.7%.

·         However, grain and oilseed prices are correcting lower this morning following recent price gains, although little chart damage has been done.

·         China takes steps to remove a rule that caps a bank’s capacity to make loans to 75% of deposits, which could increase funds available to stimulate the economy.

·         There’s market chatter this morning that much of China’s wheat crop may be of lower quality, which would suggest that more of it may slip into the feed grain market as a substitute for high-priced corn there, while increasing the need for imported quality milling wheat.

·         Chinese imports of U.S. DDGS dropped by a quarter to 485,668 metric tons in May from year ago levels, with trade sources saying that buyers were cancelling shipments and delaying shipment of other orders to cut their losses, pressuring prices here in the Midwest.

·         An Allendale survey of farmers in 26 states suggests that this year’s corn acreage may be 91.742 million acres, up from USDA’s current estimate of 89.199 million. The survey pegged soybean acreage at 85.105 million, up from USDA’s current estimate of 84.635 million. USDA will release the results of its survey on June 30. The Allendale survey was conducted June 8 to 19.

·         This morning’s Midwest outlook is slightly wetter than it was yesterday, with the next chance for heavier/widespread rains returning at the end of next week into the 11- to 15-day period.

·         Opportunities for late soybean seeding in Missouri are expected to be short-lived, with Midwest wheat harvest progress slow.

·         The 16- to 30-day outlook is a bit drier for the Midwest, pushing wettest conditions again into the far southwestern Midwest.

·         Temperatures are expected to remain mild for the bulk of the Midwest over the next 30 days, preventing any risks of heat stress.

·         Wheat harvest progress is expected to be slow in the Central Plains in early July, with a much wetter pattern returning, although interruptions are limited in the near-term.

·         Moisture will likely be “adequate” for the Northern Plains, but warm dry conditions are expected to build stress for two-thirds of the Canadian wheat/canola crops into July.

Commodity Weather Group Forecast

In the Midwest/South, limited showers favored southeast NE, central/southeast IA, far northeast KS, northwest IL, central TN, southern AL, and southern GA in the past day. Rains will increase from tonight through Friday in the Midwest, with the heaviest amounts in parts of IA/IL/IN/OH/KY. This will add to recent wetness concerns in the southern Midwest, with the most notable flooding still near the middle MS and IL rivers at the moment.

A few showers are possible Sunday/Monday in the central/southeast Midwest and at mid-week around the Great Lakes and into the far southern Midwest. While slightly wetter than yesterday’s outlook, the next chance for heavier/widespread rains still returns at the end of next week and into the 11 to 15 day.

Opportunities for late soy seeding in MO will remain short-lived, and Midwest soft wheat harvest remains slow. The 16 to 30 day slipped slightly drier, with the wettest conditions in the far southwest Midwest.

Temperatures remain mild in the next 30 days, preventing any risks of heat stress. Showers in the past 2 days have aided late corn development in southern GA, and expanding showers this weekend into next week should recharge moisture in both the Delta and Southeast.

In the Plains/Canada, showers scattered across mainly central MT/southwest ND/southeast NE/far northeast KS in the past day. Wheat harvest will slow in the C. Plains in early July with a much wetter pattern, but interruptions are limited in the near-term. N. Plains spring wheat likely picks up adequate moisture, but warm conditions and limited rain in Canada will allow stress to rebuild for 2/3 of the spring wheat/canola into July. Heat will also stress Pacific NW wheat in the next 10 days.

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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