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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -3, soybeans -7, wheat -3-5, crude oil -1.00, dollar +.27, gold -20.5 and the Dow -20.

·         Grain markets off overnight over growing planting window through the middle of next week for areas of the Eastern Corn Belt furthest behind on planting pace, higher dollar, and word of increasing farmer sales over the $4 futures mark.

·         Yesterday the EPA called for an increase to the biofuels blend for 2017, raising proposed ethanol production to 14.8 billion gallons. This proposed increase in production fell short of expectations, but is still an increase of 700 million gallons, or slightly over 200 million bushels of corn for ethanol usage in 2017.

·         July board crush surged higher yesterday, matching highs set last July and continuing to support a strong domestic demand landscape for soybeans.

·         European analyst Strategies Grains raised their estimate for 2016 EU Wheat production to 146.7 mmt, up from their previous estimate of 144.8 mmt. EU corn production was lowered to 62.7 mmt from 63.4 mmt forecast last month.

Commodity Weather Group Forecast

In the U.S., showers favored central parts of the TX Panhandle, central TX, western OK, southeast AL, and west-central GA in the past day. Rains exit the far southern Plains and head across the South during the rest of the week. A few showers may reach as far north as southern OH on Friday night, but most of the eastern Midwest remains dry until at least next Wednesday. These showers will also be somewhat light and patchy, with broader coverage and larger totals arriving from next Friday into the weekend. Additional showers occur in the southern Midwest in the 11 to 15 day, but the near-term break will allow improvement in delayed seeding across the eastern Midwest. Rains next week will favor the western Midwest/northern Delta and slow seeding. Delay to late fieldwork will be most prominent in the northern Delta, which remains wet into the 11 to 15 day as well. However, the 11 to 15 day trended somewhat less wet in the western Midwest. Current rains and another chance in the 11 to 15 day will hinder maturing winter wheat in TX, although a drier break does occur in the 6 to 10 day. Limited showers are allowing N. Plains spring wheat seeding to wrap up this week in most areas, while a notable rain event for the rest of this week will ease drought for the time being in western Canada wheat/canola. Seeding interruptions will occur in both the 1 to 5 day and 11 to 15 day for the Prairies, but good progress should occur for much of next week.

In South America, Argentina was dry yesterday. Light rains may benefit drier wheat areas in the south but have little impact on the active corn/soy harvest over the next 10 days. Brazil had a few showers in central corn/sugar areas yesterday. A significant rain event spreads across the southwest 2/3 of the corn belt this weekend and aids filling, but stress persists in the northeast. Sugarcane harvest stalls over the weekend, but drier weather next week will improve harvest.

 

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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