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Sunday Outlook

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Weekend Developments

·         Happy Father’s Day to all of our Father’s today!

·         Strong thunderstorms are again training across portions of northeast Kansas and northern Missouri this afternoon, which is an area that has seen countless planting delays this year.

·         European leaders scheduled an emergency meeting for tomorrow, seeking to find a solution to the impasse that has Greece on the cusp of default.

·         The Greek government told reporters in an email today that Prime Minister Alexis Tsipras phoned European leaders today with a proposal to bring a “definitive” solution to the problem.

·         For his part, Prime Minister Tsipras is currently locked in talks with his cabinet to sell them on the plan that reportedly includes elimination of early retirement, and new taxes on companies and wealthier individuals.

·         Meanwhile, the run on Greek banks continues as the European Central Bank considers withdrawing its support for the banks after June 30 when the country is expected to default on its debt payments to the International Monetary Fund.

·         Currency traders are currently trying to decide if the above is just more empty rhetoric from Greece, or whether a solution is truly at hand, with potential major implications for the broader markets, both tonight and tomorrow.

·         Fundamentally, grain and oilseed traders are increasingly on USDA’s June 30 quarterly stocks and acreage reports.

·         I look for the stocks data to highlight the notion that last year’s soybean crop was likely over-stated by USDA, with this year’s final stocks possibly significantly smaller than currently projected, although still ample to meet processor needs.

·         However, the acreage report will likely frustrate many farmers and analysts focused on planting delays, with the agency expected to show another increase in area devoted to soybeans that can be expected to build stocks if July and August weather is favorable.

·         The next few days should be pivotal, but the charts suggest that fund managers are focused on tightening soybean stocks with higher prices possible near-term.

·         Corn traders are eyeing the soybean market for direction, which could provide near-term support, although traders will likely remain bearish until/unless shown the detrimental effects of saturated soils on this year’s crop at the end of the season.

·         Chicago wheat bounced off support Friday. The wheat complex will likely feel ongoing pressure from this year’s harvest a bit longer, but higher prices are possible if support holds and headlines of adverse weather in the Canadian Prairies, eastern Australia and South Russia increase next month.

·         Heaviest rains over the weekend were in southern Illinois, southern Indiana and central South Dakota, where locally 4” to nearly 7” fell.

·         Additional rains this week will keep both the Illinois and the mid-Mississippi Valleys wet, before a drier pattern develops as the storm track shifts south next week.

·         Minor relief was seen in the dry Canadian Prairies over the weekend, but now a warmer/drier pattern returns.

·         A drier trend over France and Italy is expected to hamper corn growth over the next 10 days.

Commodity Weather Group Weekend Summary

In the Midwest/South, weekend rains favored central/northeast SD, central MN, the MO/IL border, southern IL, southern IN, southern OH, central/northwest KY, northern MS, and far northeast AR but were heaviest (locally 4 to nearly 7”) in southern IL/southern IN/central SD.

An active storm track continues in the Midwest this week, with much of the activity in the far north early but stretching from northwest to southeast in the latter 1/2 of the week. This will include the risk for locally heavy amounts (4”+), including in areas of the IL ad mid-MS Rivers that are experiencing flooding.

However, a southward shift in the storm track next week and into the 11 to 15 day is likely to prevent any serious issues from arising on a more widespread basis in the recently wettest areas of MO/IL/IN/OH. Highs were in the mid-90s to near 100 F in far northwest MO and KS yesterday, and 90s will remain possible through mid-week in the southwest Midwest.

However, milder temperatures then take hold, with rain chances even improving in the 6 to 15 day to ease heat/moisture stress in the Southeast and recharge moisture in the Delta before a downturn in the 16 to 30 day. July prospects remain favorable for the Midwest.

In the Plains/Canada, weekend showers scattered across at least nearly 1/2 of both the N. Plains/Canada spring wheat belts but were heaviest in central SD. Showers remain possible this week in the N. Plains, but both areas otherwise trend warmer/drier for the next few weeks. This will fairly quickly concerns for stress to rebuild, particularly from the Pacific Northwest into Alberta/western Saskatchewan.

Plains winter wheat harvest is progressing favorably with limited showers this week and mostly minor interruptions in the 6 to 15 day. However, the 16 to 30 day could still turn more notably wet again to slow late fieldwork.

France/Italy Trend Drier Next 10 Days; FSU Key Corn/Wheat Areas Remain Showery. Weekend rains favored southern Russia and will remain active in FSU in the next 10 days. Drier weather in France will stress the northern 1/4 of wheat and could begin to hamper corn growth by month’s end.

N. China Plain Rains Ease Dryness in South Half This Week. Significant rains by mid-week avert stress on corn/soy in the southern N. China Plain. Only the northwest 1/4 will still be short of moisture and could see 6 to 10 day rains to avert damage there as well.

 

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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