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Morning Outlook

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Overnight Highlights

·         European equities and U.S. stock futures surged this morning after Greek Prime Minister Tsipras agreed in principle to most of the latest terms offered by European creditors. There are still significant details to be worked out and creditors say they will not negotiate with Tsipras ahead of Sunday’s referendum. There are also reports that creditors say the deal Tsipras agreed to is no longer on the table after midnight last night. A poll of Greek voters indicated that 54% would vote against austerity, while 33% would vote for it in order to remain a part of the Eurozone. Even so, the Wall Street Journal reports that Greece and its creditors remain far apart on a potential deal.

·         Lost in all of the focus on Greece is the volatility in China’s stock market. China’s Shanghai composite index fell 5.2% on the close after surging 5.5% the previous day. This has the potential to become the dominant story once people take their eye off Greece.

·         The dollar is up nearly 400 points this morning ahead of tomorrow morning’s monthly jobs report; moved up one day to get it in ahead of the Fourth of July holiday.

·         The markets are scheduled to close at 12 Noon CDT Thursday and remain closed until 7 p.m. CDT on Sunday evening for the Fourth of July holiday weekend.

·         Money is flowing out of the broader commodity sector this morning amid the stronger dollar and stronger equity markets, including losses in the grain and oilseed markets that are correcting lower after big gains on Tuesday.

·         Corn and soybeans, which both received positive data from USDA Tuesday, came under pressure early in the overnight session as the market absorbed a surge in cash sales, but then pushed to new highs for the move. However, both came under increased selling pressure in the European trading session, although losses are very modest yet at this point.

·         Much of the rain will fall south of the Midwest until a system on Monday and Tuesday. More extensive rains return again in the 6- to 15-day period. However, we’re looking at amounts of 0.50” to 2.0”, versus the 6 to 8” rains that have been falling. Northern areas should miss out on the heavier amounts.

·         Light showers are offering only very slight relief to dry areas of the Canadian Prairies.

·         Heat and dryness persists in Europe, stressing corn and late maturing wheat.

·         Rains are still expected to be very limited in Australia wheat areas over the next two weeks, depleting moisture in one-third of the belt.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored parts of central/northwest MO, central SD, central ND, southeast IN, northcentral/far southern OH, central MI, central MS, southern LA, and south-central GA. Rains favor the northern Delta and are limited to the southern/western edges of the Midwest during the rest of this week, with the heaviest amounts (up to 6”) from central/southern MO to the OH River and into AR, TN, northern MS, and KY. This will ease surplus moisture concerns a bit in the central/eastern Midwest.

More extensive Midwest coverage returns in both the 6 to 10 and 11 to 15 day periods. While a few embedded heavier amounts will occur in the southern Midwest, amounts of mostly .50 to 2” are expected in both periods, with the most limited showers in the northern 1/3 of the belt. However, openings for late soy seeding and soft wheat harvest will still be brief. The near-term rains will aid moisture in the Delta/Southeast and should be short-lived enough to limit flooding concerns. The 16 to 30 day remains driest in the Delta and still supports a mild/showery southern Midwest pattern, but the OH Valley is not quite as wet on today’s outlook.

In the Plains/Canada, scattered showers occurred in the Dakotas, central TX, and a few spots in Alberta/southeast Saskatchewan. While light showers today/this weekend may offer patchy relief Canada, notable improvement in moisture supplies remains unlikely for spring wheat/canola. Plains wheat harvest will encounter minor delays late this week and occasionally in the 6 to 15 day, but damage is unlikely. Bigger 16 to 30 day rains in the C. Plains could increase concerns.

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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