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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -1, soybeans -2, wheat -1-4, crude oil even, dollar -.20, gold +12.0 and the Dow +45.
  • Grain markets mixed overnight and lower now this morning. Pressure from more cooperative Argentine weather and better Midwest planting weather to come this week. Market will be watching if the funds return today as buyers as they have been.
  • Market will be watching if the US dollar can continue to break lower this week to encourage additional speculative buying and money flow into commodities.
  • Planting progress this afternoon is expected to be around 50% for corn vs 55% last year and 38% on average.
  • USDA supply and demand report will be May 10th. The market will watch for adjustments to South American production and this will be the first look at 16/17 estimates for US S&D.
  • Bloomberg’s Commodity Index saw April as its biggest gaining month since December 2010 due to simultaneous gains in petroleum, metals and grains.
  • CFTC data has shown large spec money purchased 112,000 contracts of corn for the week ending April 26th – or 560 mln bushels.
  • The annual Kansas wheat tour sponsored by Wheat Quality Council starts this week. Market anticipates high marks from the tour for the KS wheat crop.
  • July corn needs to prove it can trade and close above the resistance at 3.95.

Commodity Weather Group Forecast

 

In the U.S., weekend showers stretched from the central/southeast Plains into the central/southern Midwest and Delta but were heaviest in central/northeast AR, southern/far northern LA, eastern TX, southeast OK, and central KS. Showers linger in the South into Tuesday, and a few showers will scatter into the eastern Midwest by Wednesday. However, the balance of the week is favorably dry for the Midwest/South and will allow for substantial planting progress, particularly given the slightly lesser weekend rain totals compared to expectations (mostly averaging around 1” in the Midwest). Showers return to the western Midwest to start next week, and occasional showers through the rest of the 15-day period in the Midwest/Delta will interrupt fieldwork (most frequently in NE/KS/IA/MO). The near-term rain will aid Southeast corn/cotton/wheat moisture be-fore drier weather returns. N. Plains/Canadian Prairies spring wheat seeding also moves along with limited rain (mostly MT) and favorably warm weather in the next two weeks. Moisture remains favorable for Plains hard red winter wheat yields, with additional 6 to 15 day showers favoring the central/southeast Plains. Light weekend frost in the foothills of the Rockies and western KS resulted in very little damage. Pacific Northwest mid-week showers may trim back dry spots in WA/OR wheat.

 

In South America, Argentina was dry and cool over the weekend. Frost was limited to the far southwest and was outside of double-crop soy areas. Mostly dry and warmer weather this week gives way to scattered showers in the southwest 1/3 of the belt this weekend into early next week, but the rest of the area should stay dry for harvest in the heart of the belt over the next 10 days. Brazil rain (.25 to 1” locally 2”) was confined to coffee areas. Rains return to the southern 1/2 of the corn belt next weekend into early next week, but the northeast 1/3 will continue to see moisture stress in the next ten days.

 

 

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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