Home Market Market Watch Morning Outlook

Morning Outlook

SHARE

https://www.hoosieragtoday.com//wp-content/uploads//2015/07/image00916.jpg

Overnight Highlights

·         China found a way to stop the rout in its stock market, at least for now. It banned major stock holders from selling stakes in listed companies for a six month period. That made it safer for bargain hunters to step in and buy on the exchange overnight, but observers say it simply put off the inevitable and didn’t solve the long-term problems. Regardless, the Shanghai Composite Index had its best session since 2009, gaining 5.76%.

·         European traders anticipating a Greek exit noticed that the sun still came up this morning. They’re increasingly optimistic that the European Union will do fine without Greece, leading to a rally in its stock market overnight. The euro was modestly lower overnight after big gains Wednesday, while the dollar posted small gains after yesterday’s big losses. U.S. stock futures suggest big gains to open up trade today.

·         Crude oil prices are rebounding this morning on the strength in the Chinese and European markets, with a couple of reports out saying that the associated problems that had been pressuring those markets will not likely impact demand.

·         A combination of the above are bringing back buyers to the commodity sector with money flowing again into the broader commodity indices, of which the grains are a part. Traders are again talking about this week’s heavy rains in saturated areas of the southern Midwest and potential crop deterioration to show up in Monday’s weekly crop progress report.

·         Soybeans lead the grain complex higher this morning following yesterday’s big 8.8 million-bushel sale of new-crop soybeans to “unknown destinations,” which will be presumed to be China. The price break stimulated demand and that’s good for soybeans.

·         Conab, Brazil’s version of our USDA, calls for a record safrinha corn crop this year, bringing total corn production to 81.81 million metric tons, up from 80.21 mmt previously and up from USDA’s June estimate of 81.00 mmt. It also raised its 2014-15 soybean production estimate to 96.22 mmt, up from USDA’s latest estimate of 94.50 mmt. USDA will be updating its estimates tomorrow at 11 a.m. CDT.

·         Thunderstorms are expected to again scatter across eastern areas of the Midwest today and southern areas tomorrow. Activity is then expected to lift farther north and east from Saturday through Monday. The storm track stretches from Nebraska to Ohio in the 6- to 15-day period, although there are drier risks to the forecast, particularly for eastern areas.

·         Temperatures are expected to warm over the next couple of weeks. However, peak temperatures should be in the mid-80s to low-90s for the Midwest, with higher temperatures limited to Kansas and surrounding areas.

·         Rains are expected to increase in Canada early next week, with similar chances in the 11- to 15-day period. Some forecast models are wetter, but Commodity Weather Group believes that the southwestern half of the wheat and canola belts will remain unfavorably dry and vulnerable to notable yield losses. Drier areas may see occasional 90s as heat builds in the area.

·         Light showers benefited dry corn areas of Hungary overnight, but France and Spain remain dry over the next 10 days.

·         Rains are expected to ease dryness in southeastern Australia over the next week, while dryness hampers spring growth in the western third of the wheat belt.

·         Indian Monsoon rains will likely remain limited over the next 10 days, threatening stress for groundnut areas later this month.

·         Grain and oilseed prices are rebounding this morning, with corn prices still near their recent six-month highs. Traders are positioning for tomorrow morning’s USDA crop report. Trade expectations going into the report are as follows:

Old-Crop Stocks

2014-15

Corn

Soybeans

billions of bushels

USDA July 10 Report

    Pre-Report Estimates

Average Trade Estimate

1.811

0.287

Highest Trade Estimate

1.880

0.330

Lowest Trade Estimate

1.726

0.251

Previous USDA Estimate

1.876

0.330

Water Street Solutions

1.786

0.294

 

U.S. New-Crop Ending Stocks

2015-16

Wheat

Corn

Soybeans

billions of bushels

USDA July Crop Report

Average Trade Estimate

0.861

1.540

0.370

Highest Trade Estimate

0.947

1.910

0.450

Lowest Trade Estimate

0.695

1.263

0.193

Previous USDA Estimate

0.814

1.771

0.475

Water Street Solutions

0.947

1.472

0.311

 

U.S. Yields & Production

2015-16

2015-16

Corn

Soybeans

Corn

Soybeans

Yield in bushels per acre

Production in billions of bushels

USDA July 10

    Pre-Report Estimates

Average Trade Estimate

165.391

44.964

13.440

3.776

Highest Trade Estimate

169.000

46.100

13.945

3.885

Lowest Trade Estimate

163.000

43.500

13.140

3.580

Previous USDA Estimate

166.800

46.000

13.630

3.850

Water Street Solutions

164.000

44.200

13.301

3.713

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored far northern OH, far southeast MI, northern IN, central/far southern IL, central/far southeast MO, and western KY in the past day. Thundershowers again scatter across the eastern Midwest today and the south tomorrow, with activity then lifting farther north/east from Saturday through Monday.

The 6 to 15 day storm track favors parts of NE/IA/IL/IN/OH most frequently, although there are drier risks on the forecast guidance (particularly east). While not necessarily as wet of a pattern as recent conditions, the active pattern will focus the most notable wetness concerns on low-lying fields and river bottoms in IL/IN/OH, and MO will stand the best chance for wetness to ease next week.

Temperatures will warm but should still peak in only the mid-80s to low 90s for the Midwest over the next 2 weeks, with mid-90s or better limited to KS and perhaps a few spots in southern MO/NE. Rains should expand into the Southeast in the 11 to 15 day to aid growth, while drier conditions in the Delta reduce moisture supplies gradually in the wake of recent heavy rains. The 16 to 30 day remains driest in the Delta and wettest in the northwest Midwest, with mostly seasonable temperatures.

In the Plains/Canada, thundershowers favored central/northwest TX and north-central/southwest OK in the past day. Rains early next week increase in Canada, with a similar chance in the 11 to 15 day. While some guidance remains much wetter, our forecast keeps at least the southwest 1/2 of wheat/canola unfavorably dry and prone to notable yield loss. Occasional heat will also push drier spots into the 90s. Current Plains wheat harvest interruptions ease over the next 2 weeks.

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.

https://www.hoosieragtoday.com//wp-content/uploads//2015/07/image01016.jpg

https://www.hoosieragtoday.com//wp-content/uploads//2015/07/image01116.jpg

https://www.hoosieragtoday.com//wp-content/uploads//2015/07/image01216.png

www.waterstreet.org 
or 1-866-249-2528

 

 

https://www.waterstreet.org/s/ws-80x70.png

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.

The information contained in this e-mail message is intended only for the personal and confidential use of the recipient(s) named above. This message may be an attorney-client communication and/or work product and as such is privileged and confidential. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message. Water Street Solutions is an equal opportunity provider. Water Street Solutions is an equal opportunity employer.