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Morning Outlook

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Overnight Highlights

  • The dollar and crude oil are both modestly  higher in quiet trade this morning.
  • The U.S. government predicts that shale-oil production will fall 45,000 barrels per day in May to 4.98 million barrels per day due to lower prices that are slowing new well development.
  • China’s monthly soybean imports are expected to rise to between 240 and 275 million bushels in May, June and July, an increase of at least 45% from March, according to a trade source. The increase comes as China tries to take advantage of cheap global prices to build supplies.
  • Meanwhile, poor margins have led to liquidation in China’s sow herd for 18 straight months.
  • Winter wheat conditions slipped again in ratings released Monday afternoon, largely due to drought conditions in the Central Plains, which are finding relief this week, with locally heavy rains expected.
  • Rains are expected to become less active in the Delta next week

Commodity Weather Group Forecast

In the U.S., showers scattered across the southern Midwest/Delta/far southern Plains/Southeast yesterday but favored northern AR/far northern MS/southeast MO/far southern IL/KY/western TN/eastern OK/northeast TX/southern parts of the TX Panhandle. Showers mostly favor the Gulf Coast into the eastern TN and OH Valleys and Southeast in the next 2 days, but thundershowers start to scatter into the Plains by Thursday and will be locally heavy (particularly western KS/eastern CO) this weekend to benefit wheat growth in most of the Plains. Additional showers occur around the end of the 10-day period in the central/southeast Plains.

Farther east, breaks in rain will be limited this week for the Delta, but a 6 to 10 day break is anticipated before wetter weather resumes in the 11 to 15 day. Localized flooding risks will be greatest from the Lower MS Valley into AL, but quality concerns may build for soft wheat in the Delta and a few spots in the OH Valley. While some guidance is a bit more extensive with Midwest showers, interruptions to early fieldwork are expected to be minor and mainly focus near the OH River. Mostly dry conditions allow moisture to slip in the northwest Midwest/N. Plains/Canadian Prairies.

In South America, showers (.25 to 1.5”, locally 2.5”) favored the northern 1/2 of Brazil corn yesterday. Rains scatter south this week across the rest of the corn and are limited in scope initially but intensify next week, ensuring adequate moisture. Showers push into southern Brazil soy harvest areas late this week and could continue into the 6 to 10 day, slowing progress. Stress in coffee areas only slowly eases next week, as showers reach the area.

Argentina rains (.25 to .75”, locally 2”) fell in the southwest 1/2 of the belt yesterday. Rains expand across all areas this week, stalling corn/soy harvest. Additional showers now look possible next week on the Euro model and slow recovery but are not heavy enough for damage.

Morning Market Snapshot

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

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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