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Sunday Outlook

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Weekend Developments

·         There’s a sense of urgency this weekend in the negotiations over Greek debt, at least on the part of creditors and European leaders, who believe that an agreement must be reached by the first week of June to avert a crisis at the end of June.

·         Look for currency markets to be wildly influenced by comments coming out of the talks in the days ahead, with implications for the commodity markets.

·         Rains favored drier eastern portions of the Midwest over the weekend. Another round of scattered showers is possible next weekend, but most of the rains will again favor northwestern areas of the belt.

·         Saturated portions of the Southern Plains should finally dry out until the 11- to 15-day period, when a wetter pattern returns.

·         Warmest readings now shift to Europe, away from the Black Sea region, but much of South Russia is expected to remain on the dry side.

·         One of the keys to corn prices this week will be the crop ratings to be released Monday afternoon. They are already above average for this time of year. Will they trend seasonally lower, or strengthen with improving weather?

·         Reports out of Argentina suggest that an agreement has been reached with the crushers union, but a larger union may go on strike tomorrow if it hasn’t reached an agreement. Look for soybean prices to be impacted by the latest news.

·         Wheat harvest is waiting to start in the saturated Southern Plains as soon as fields are dry enough. Quality reports will need to be watched closely for market implications.

Commodity Weather Group Weekend Summary

In the Midwest/Delta, weekend rains favored east-central SD, southern MN, WI, MI, central/southern MO, central/southwest IL, central/northern IN, northern OH, AR, northern LA, and MS. While a few showers may scatter into the eastern corn belt again by next weekend, the bulk of the rains exit these areas today, with the northwest Midwest favored for rains into early next week.

Rains then expand into the OH and TN Valleys as well in the latter 1/2 of the 6 to 10 day, with the best rain chances sinking into the Delta in the 11 to 15 day. The weekend rains brought notable relief (mainly 1 to 2”) to many drier spots in the eastern Midwest. While the northwest showers will slow late soy seeding at times, concerns appear limited overall for the Midwest through mid-month.

The break in the rain over much of the next 10 days will also ease concerns for the time being in recently wet sections of the Delta. The CFS 16 to 30 day guidance continues to show wet weather in the Delta that will need to be watched, while the Midwest has shifted drier but only modestly warmer on the latest model guidance.

In the Plains, lingering weekend showers favored southern/western parts of the TX Panhandle, northern TX, eastern OK, southeast KS, western NE, and the ND/SD border. With limited rains for the S. Plains in the next 10 days, flooding concerns will ease for winter wheat areas. Showers will aid late wheat growth in the C. Plains in the next 2 weeks, and spring wheat areas to the north should also see adequate moisture. Rains do begin to creep back into OK and far northern/eastern TX in the 11 to 15 day. The CFS 16 to 30 day guidance is not as wet as Friday but still shows a risk for wetter weather in the southeast 1/4 of the Plains winter wheat belt.

 

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

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