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Morning Outlook

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Overnight Highlights

·         Today is the day many have feared when Greece would miss its $1.8 billion payment to the International Monetary Fund, but Prime Minister Tsipras spoke defiantly to the nation last night, vowing that Greece would not yield to its creditors.

·         The euro is modestly lower and the dollar higher this morning, but the currency markets are otherwise relatively quiet with much of the bad news already priced in. Stock futures are rebounding this morning.

·         Many Greek observers believe that there is a decent chance that voters will accept more austerity in Sunday’s election in order to remain in the Eurozone.

·         China’s Ag Minister stated that the nation will implement policy to reduce corn acres in 2016, while encouraging more soybeans and other alternate crops.

·         U.S. corn ratings tumbled again across the southern and eastern Midwest in Monday afternoon’s USDA crop progress report. Ratings remain high in the northwestern Midwest, but my seasonally adjusted yield model dropped another 2.2 bushels in the week ending June 28.

·         U.S. soybean ratings fell in a similar manner to corn, with my seasonally adjusted yield model falling another 0.4 bushels.

·         Soft red winter wheat ratings also fell over the past week as heavy rains hammered the mature crop waiting to be harvested.

·         Forecast models have scaled back Midwest rains somewhat for the next 10 days, but wettest areas will likely continue to be in Missouri and near the Ohio River.

·         A system moving across dry areas of the Canadian Prairies is expected to provided limited relief with generally light amounts.

·         A drier hotter weather patterns continues to hold across Europe, with stress on corn expanding.

·         Australia wheat still mainly dry next 2 weeks in most models; nearly 1/3 of belt could see growth hampered

·         However, today’s focus is on USDA’s quarterly grain stocks and planted acreage reports known for their surprises. The data has the potential to sustain current momentum or to reverse it. Trade expectations going into the report are as follows:

Quarterly Stocks

Wheat

Corn

Soybeans

billions of bushels

USDA June 1 Estimates

               

                

                

    Pre-Report Estimates

Average Trade Estimate

0.718

4.555

0.670

Highest Trade Estimate

0.740

4.700

0.707

Lowest Trade Estimate

0.688

4.419

0.604

USDA Previous Year

0.590

3.852

0.405

Water Street Solutions

0.721

4.583

0.672

 

USDA June 1 Acreage

2015-16

Corn

Soybeans

All Wheat

Winter Wheat

Spring Wheat

Durum

millions of acres

USDA June 1 Survey Results

               

                

                

    Pre-Report Estimates

Average Trade Estimate

89.292

85.171

55.867

40.822

13.214

1.809

Highest Trade Estimate

91.742

86.760

57.200

42.000

13.500

2.232

Lowest Trade Estimate

88.450

83.760

55.100

40.500

12.800

1.600

USDA March 31

89.199

84.635

55.367

40.751

12.969

1.647

Water Street Solutions

88.900

85.900

55.753

40.673

13.350

1.730

Commodity Weather Group Forecast

In the Midwest/South, widely scattered showers favored the MN/WI border, central SD, northeast IA, northeast IL, far northwest IN, southwest OH, northern MS, far southeast AR, and near the LA/MS border in the past day. Similarly spotty activity is expected today in mainly the eastern Midwest. Guidance has then shifted rains farther south with events both Wednesday/Thursday and early next week in the Midwest.

While locally heavy rain remains possible from MO to points near and south of the OH River, wet areas farther north in the central/eastern Midwest will have an opportunity to miss much of the activity. The 11 to 15 day storm track lifts only slightly farther north, and the main wetness concerns should focus on the southern 1/4 of the Midwest and KY over the next 2 weeks.

The rains will be mostly welcome in the rest of the Delta and should also reach into parts of the Southeast by the 6 to 10 day to limit dry patches. Mild temperatures in the Midwest will continue to favor corn/soy growth in areas that are not excessively wet. The 16 to 30 day remains mild but has trended wetter in the southern 1/3 of the Midwest, while the driest spots are mostly in the Deep South.

In the Plains/Canada, scattered showers favored central SD, parts of West TX, and central/northeast Alberta in the past day. While light showers this week will offer minor relief to Canada, notable relief is unlikely, and amounts have been quite light in most areas so far. Intermittent heat (low to mid-90s) will add to stress in the west.

Plains winter wheat harvest will encounter minor interruptions late this week, with a few 6 to 15 day delays in the C. Plains and a wetter 16 to 30 day.

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

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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