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Morning Outlook

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Overnight Highlights

·         Greece’s parliament passed the necessary reforms needed to keep it in the Eurozone last night amid violence in the streets protesting their vote. Euro-area finance ministers then agreed to move forward with an emergence loan for the debt-ridden country. The can has been kicked down the road yet once again.

·         Global stocks rallied overnight on ideas the central banks around the world will continue to do “whatever is necessary” to stimulate economies and keep them propped up.

·         China’s Shanghai Composite Stock Index rallied nearly 0.5% overnight, but traders remain quite nervous, fearing that recent steps taken to stabilize China’s stock market have merely put off the inevitable.

·         The dollar is rallying to more than six-week highs this morning amid expectations that the Federal Reserve will raise interest rates later this year and amid concerns about economic problems in Europe and China. Yet, money continues to flow into the broader commodity sector this morning, including grain and oilseed prices.

·         Corn prices rebounded overnight as satellite data shows the poor performance of this year’s crops relative to previous years at this time, despite improving weather forecasts for the Midwest. It’s yet to be seen whether this strength can be sustained in the day session, which frequently trades different from the overnight trade dominated by European perspectives, where a heat dome continues to threaten pollinating corn there.

·         Soybean prices are pushing higher once again this morning as November tries to establish itself above $10 amid satellite data showing that this year’s crops are struggling relative to previous years across southern and eastern portions of the Midwest amid strong demand here.

·         Intense heat over Kansas and Nebraska is expected to moderate this weekend, with milder conditions now expected next week. Rains are expected to focus on northwestern areas of the Midwest, which could use the moisture, while easing moisture pressure on eastern areas.

·         Western Europe is trending wetter to ease corn stress as the heat dome shifts to eastern Europe. Meanwhile, showers are expected to ease crop stress in the Southern Canadian Prairies next week.

Commodity Weather Group Forecast

In the Midwest/South, rains favored E. NE, W. & C. IA, N. KS, NW MO, ND, NE SD, and C. MN yesterday improving moisture for pollinating corn and blooming soy. Showers expand from southwest to northeast in the Midwest today and then favor the NW & C. Midwest along a cold front over the weekend. Additional rains center on the NW Midwest in the 6-15 day and should scatter south and east. Overall the wetter areas are expected to see some reduction in excessive wetness while most of the west sees rains keep dry spots from being more than isolated in the next two weeks as most corn pushes through key pollination.

Heat (mid-90s to lower 100s) the next 2-3 days is limited to KS/NE and milder weather much of next week aids pollination as well. Another surge of heat is possible in the W. Midwest late next week but most models keep it short lived as well. Showers benefit dry spots in S. GA and C. AR yesterday. The Southeast will see showers pick up the latter half of next week and keep most soy/cotton stable. Even the N. Delta could pick up some showers later next week that could slow the onset of stress on cotton/soy areas but with heat and ongoing dryness in 16-30 day some deterioration is still likely.

In the Plains/Canada, rains in N. KS, NE CO, and SE NE yesterday slowed wheat harvest but showers are limited enough in the next 2 weeks to allow the bulk of harvest to complete. Can. Prairies rains were scattered in C. Alberta, C. Saskatchewan and S. Manitoba yesterday. Rains favor N. & E. areas this week, but southern areas could see showers next week further ease stress for canola/spring wheat. Active showers benefit much of the N. Plains spring wheat filling over 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

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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