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Morning Outlook

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Overnight Highlights

·         Greece reopened its banks for basic services this morning as expected, but capital controls remain in place. Another crucial vote takes place in Greece’s parliament this week, but the markets are generally looking past the Greek event at this point.

·         A flash crash of sorts hit the gold market late Sunday evening, with prices plunging $50 in less than a minute with a large sale order in a thinly traded market. The sell-off dropped prices to a five-year low below $1,100 per ounce after China revised data, indicating that its build in supplies was smaller than estimated by analysts.

·         It was otherwise a relatively quiet night in the outside markets. The dollar crept higher to a new three-month high, triggering fund managers to again be short (sold) the major commodity indices, of which grain and oilseeds are a part.

·         Corn slipped to nearly three-week lows overnight on more favorable weather patterns. December corn is eyeing its next chart objective near $4.20 per bushel, although the contract is coming well-off its low in trade this morning.

·         Soybeans saw double-digit losses overnight as well, with weather patterns seen more favorable for the oilseed, which faces its most critical month for development in August. The declines in corn and soybean prices fit the seasonal pattern for wet years, when the market tends to not recognize the damage done to the crops until the combines roll.

·         Chicago September wheat dropped below the 200-day moving average overnight as it battles to become relevant on the global market amid a large supply of cheaper wheat in Europe and the Black Sea.

·         Showers are expected to scatter into the southwestern Midwest today and favor Missouri once again, with activity then heading through the far southern Midwest into Tuesday. This is then expected to lead into a quieter pattern for the Ohio River Valley for much of the next 10 days, with rains focusing on the northwestern Midwest in the 6- to 15-day period.

·         Heat is expected to focus on Kansas and the Delta, although we could see mid-90s readings expand from this weekend into early next week in Missouri and southern Illinois and Indiana, but heat should otherwise not be a significant factor. The 16- to 30-day outlook is cool and showery for the Midwest.

Commodity Weather Group Forecast

In the Midwest/South, weekend rains were most limited in the central Midwest and Delta but favored parts of western OH, northern/eastern IN, central MN, the NE/SD border, northern KS, northern MO, and west-central IL. Heat (mid-90s to low 100s) was limited to mainly the Delta and Plains. Showers will scatter into the southwest Midwest today and favor MO, with activity then heading through the far southern Midwest into Tuesday before shifting focus to the northern/eastern Delta and parts of the Southeast.

This will lead into a quieter pattern for the OH Valley for much of the next 10 days, easing Midwest wetness concerns and aiding soft wheat harvest. Favored areas will then focus on the northwest Midwest in the 6 to 15 day, aiding corn/soy growth. KS and the Delta will be most frequently hot (mid-90s to low 100s) in the next 10 days, but the expected rainfall will help to limit stress to some extent.

Mid 90s expand from this weekend into early next week in MO/southern IL/NE as well, but Midwest temperatures are otherwise milder. The 16 to 30 day pattern is cool/showery for the Midwest, while the Deep South is at most risk for any heat/dryness in cotton/soy areas.

In the Plains/Canada, weekend rains favored parts of western/northeast Alberta, western Saskatchewan, west-central Manitoba, northern/western KS, east-central CO, and the OK Panhandle. The combination of recent relief and showers in the next 10 days will limit additional stress to less than 1/3 of Canadian wheat/canola, although notable losses have occurred to date. Rains will cause minor interruptions to late Plains winter wheat harvest but little damage risk.

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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