Home Market Market Watch FW: Sunday Outlook

FW: Sunday Outlook

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Weekend Developments

·         It’s been a tense weekend of negotiations with Greece, with the head of the European Commission giving Greece until tonight’s open of the European financial markets to agree to terms.

·         There are unconfirmed reports that the International Monetary Fund has made a significant concession offer to Greece if it too would agree to slash its military funding. The United States is a major funder of the IMF.

·         The above suggests that we could see a volatile currency market overnight tonight in either direction, depending on the headline flow.

·         Traders expect to see crop ratings improve in tomorrow afternoon’s crop progress report from USDA due to warmer regions seen in the region over the past week.

·         Forecasters expect to see an active weather pattern continue across the Midwest with wetness risks limited.

·         A wet Southern Plains weather pattern is expected to break again mid-week.

·         The Canadian Prairies will see a few showers, but amounts will be light and the longer-term pattern remains warm and dry.

·         Rains are expected to spread across the bulk of Russia over the next 10 days.

·         Friday’s CFTC report showed that the speculative hedge funds had significantly lightened their load of short (sold) positions as of June 9, either indicating a change in sentiment or fresh selling opportunity, depending on signals from this point forward.

Commodity Weather Group Weekend Summary

In the Midwest/South, weekend rains did not exceed expectations and favored southern ND, far southeast KS, central MO, central/northern IL, central IN, northern OH, MI, central AL, southern MS, and central LA. Rains will be most frequent in the southern Midwest and northern/western Delta this week, including some late-week enhancement from remnants of a tropical disturbance out of the Gulf of Mexico.

Rains also track across the upper Midwest Wednesday and Friday, but the wettest weather does tend to miss some of the wettest pockets this month in southeast NE, northwest MO, and northeast KS. Localized flooding remains a risk in the southern/northwest Midwest and northern Delta, but the heaviest amounts should focus southwest of the belt. An active but largely favorable storm track continues through the 11 to 15 and 16 to 30 day in the Midwest, with little threat of heat.

Drier weather gradually returns to the Delta in the 6 to 15 day, while showers slowly build in the Southeast following some yield losses to pollinating corn in GA/SC in the next 10 days from mid-90s to low 100s.

In the Plains/Canada, weekend rain were heavy from central/southern parts of the TX Panhandle into central/southwest OK and far southeast KS but at or below expectations, with showers also favoring parts of southern ND, western Manitoba, patchy sections of Saskatchewan, and central Alberta. While southeast OK/eastern TX will see heavy rain from remnants of a tropical disturbance at mid-week, most of the S. Plains dries out. Harvest concerns focus on NE/KS/CO in the 11 to 30 day.

N. Plains spring wheat remains in good condition. Current showers are offering some relief in Canada wheat/canola but have only averaged 25 to .50”. A similar system in the latter 1/2 of the week then gives way to drier/warmer late June/early July trends that allows stress to rebuild.

Showers Benefit Europe Wheat Over Weekend, But Nearly 25% of Belt Saw Only Minor Relief. Weekend rains (.25 to 1.25”) fell across the wheat area, but northern portions of France, Germany, Poland, and southeast U.K. had areas of less than .25” that will shave off yield for the filling crop in the next 10 days.

FSU Rains Gradually Overspread Belt Next 10 Days, Keeping Moisture Supplies Mainly Adequate. Dryness in the past week gives way to showers in the Ukraine beginning at mid-week and reaching into the bulk of Russia by next weekend to benefit wheat/corn. Low to mid 90s early this week should also abate.

 

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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