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Morning Outlook

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Overnight Highlights

·         Greece and its creditors failed to reach an agreement before today’s emergency meeting to approve such ahead of the end of the current agreement next Tuesday.

·         Reports from the talks thus far indicate that creditors have rejected most proposals heavy on taxes because Greece has a terrible track record for actually collecting taxes.

·         The equity and currency markets are actually very quiet this morning; perhaps numb over the weeks and weeks that this saga has drawn out.

·         Creditors began their meeting at 6. a.m. Chicago time this morning, with reports that a new proposal was provided them at the beginning that was once again heavy on taxes.

·         Another proposal to be discussed at the meetings is one from Great Britain to renegotiate the terms of its own membership in the European Union as prime minister Cameron seeks more favorable conditions.

·         USDA says it will not make a decision on resurveying areas of the southwestern Midwest ahead of the release of its June 30th acreage report.

·         A Reuters’ survey of trade participants reveals expectations that Friday’s USDA quarterly hogs and pigs report will show that all hogs and pigs are up 8% from year ago levels to 66.5 million head.

·         China’s wheat imports may double to more than 110 million bushels this year after rains at maturity hurt the quality of its crop.

·         Furthermore, the lower quality wheat may displace high-priced corn in the feed sector, reducing the prospects of imports of U.S. feed grain.

·         July options expire on Friday, with attractive strike prices above the market for the corn market.

·         Grain and oilseed prices came under pressure early in the overnight session, but are pushing higher toward recent highs in this morning’s trade.

·         Heavy rains again developed in central and southeastern Iowa overnight, dropped down into northern Missouri and spread east across Illinois into Indiana, dropping up to 7” of rainfall in parts of Iowa and Missouri.

·         Those rains head eastward across the Midwest today, with another round of significant rainfall expected tonight and tomorrow that exits eastern areas early on Saturday.

·         Notable rains return late next week after a slight downturn in rainfall.

·         The outlook turned wetter for areas of the northern and eastern Canadian Prairies for next week, but limited relief is expected.

·         French corn areas remain hot and dry over the next two weeks.

Commodity Weather Group Forecast

In the Midwest/South, rains favored the central Midwest (locally up to 7” in central/southeast IA and far northeast MO) but were spotty across the southern Delta and into the Southeast. Rains head eastward in the Midwest today, with another round of significant rain tonight/tomorrow that exits the east early on Saturday. Heaviest amounts will focus near the MO/IA border and eastward into parts of IL/IN/OH to add to surplus moisture concerns.

A relative downturn in showers then occurs in the Midwest until late in the 6 to 10 day, although scattered showers (mainly Great Lakes and far southern Midwest) will still occur. A bigger surge of rain then returns to the central/southern Midwest from late next week into the 11 to 15 day though, again favoring many of the wettest spots in the central/southeast Midwest. The 16 to 30 day trended drier in the eastern Midwest and favors IA/NE/KS for the wettest weather.

Temperatures remain mild, with very favorable corn/soy conditions likely in the areas (between 1/2 and 2/3 of the Midwest) that are not dealing with surplus moisture, helping to offset concerns elsewhere to some extent. Soft wheat concerns continue in the next 2 weeks but ease in the 16 to 30 day. Delta/Southeast showers will recharge moisture for corn/cotton/soy areas in the next week to ease concerns a bit.

In the Plains/Canada, showers were limited yesterday. Canadian spring wheat is slightly wetter north/east next week and far south in the 11 to 15 day, but overall relief is still limited. Otherwise dry/warm conditions (90s at times west) will threat to lower yields in over 1/2 of the belt. The main concern for wheat harvest will focus on the C. Plains from late in the 6 to 10 day into the 16 to 30 day.

France Corn Areas Trending Warmer in July, With Very Limited Shower Potential Raising Stress Concern. Dryness dominates western Europe in the next 10 days, and highs in the 90s develop in France later next week. A cold front approaches late next week, but prolonged heat/dryness could threaten corn yields if the front stalls.

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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