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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +1, soybeans +3, wheat +1-3, crude oil -.04, dollar -.004, gold +3.2 and the Dow +46.
  • Improving crush margins and talk of more demand heading to the U.S. are supportive factors in overnight trade, but weather will continue to be a negative factor that weighs on the markets.
  • The Argentina Agriculture Ministry issued an estimate for Argentine 2016-17 wheat plantings at 5.3 million hectares vs. 4.3 million hectares last season. This would be the largest wheat plantings since 2006, and is a direct result of the current administrations tax relief to wheat exports.
  • Buenos Aries Grain Exchange reports this week that the Argentine corn harvest continues to progress, though with only 1% harvested this past week due to wet conditions. Argentina’s crop is currently 28.3% harvested, running behind normal harvest pace substantially.
  • Yesterday funds sold 15k contracts of corn, 6k contracts of wheat, and 1k contracts of beans.

Commodity Weather Group Forecast

In the U.S., a few showers were noted in the far southwest Midwest/northern Delta/far northwest Plains in the past day, but rains favored eastern TX, southern LA, southern MS, southwest TN, southern AL, central/southeast GA, northern SC, and central/northwest Alberta. Showers have shifted a bit farther north for the next two days and now have a better chance at scattering into more of central/southern IN and OH. Drier weather otherwise dominates the Midwest pattern until Monday, when rains expand in the west and remain fairly active through much of next week. This will slow late corn/soy seeding, but the dry break currently is aiding fieldwork. These rains also scatter into the eastern Midwest by Wednesday/Thursday to slow delayed seeding again in OH/IN/MI after a break in the first 1/2 of the week. 11 to 15 day rains then tend to favor parts of the Plains/southern Midwest/far northern Delta, causing occasional slowdowns to late seeding but maintaining plentiful moisture in most corn areas heading into June. A similar 16 to 30 day storm track remains likely. The southwest Plains winter wheat see more limited rains in the next ten days, as showers tend to favor the central/southeast Plains. Wetter 11 to 15 day conditions could hinder early harvest in TX/OK. Drought relief expands in western Canada spring wheat/canola areas during the weekend, with minor 6 to 15 day seeding interruptions expected farther south/east from occasional scattered showers.

In South America, Argentina had light showers (.10 to .50”) benefit the drier southern 1/3 of wheat, which is the one spot that could see additional late 6 to 10 day showers aid stands. Otherwise, dry weather aids corn/soy harvest. Brazil was mainly dry yesterday. Weekend rains spread across the southwest 3/4 of the corn belt, aiding filling. Sugarcane harvest stalls over the weekend, but drier weather next week improves harvest and allows early corn harvest to get underway.

 

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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