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Morning Outlook

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Overnight Highlights

·         The dollar slipped to its lowest level since April 7 on disappointing U.S. economic data and in follow-through selling after European Central Bank President Mario Draghi made dovish comments about continued stimulus for the euro-zone and committed to continued support for Greek banks.

·         Ukraine plans to ship between 135 and 200 million bushels of grain to China this year, in line with a loan-for-grains five-year deal signed in 2012.

·         Crude oil pulled back from its surge to new 2015 highs after OPEC confirmed a surge in production in March, but prices are still trading near session highs this morning.

·         Grain and oilseed prices were quietly mixed overnight.

·         Russia’s Ag Ministry proposes to cancel the wheat export tax beyond July 1, with a decision expected sometime over the next two months.

·         China considers doubling its subsidies for corn processors to stimulate usage of its massive high-priced reserves. Extensive Rains are expected in the Midwest/Delta over the Weekend, but rains then focus on the South in the 6- to 15-day period.

·         Rains have reached nearly 50% of the Plains wheat belt thus far, with areas of the southwestern belt missing out.

·         Extensive rains are expected to continue to support Brazil safrinha corn production, while drier weather further south supports harvest activities.

Commodity Weather Group Forecast

In the U.S., thundershowers scattered across the central/southwest Plains and southern Delta yesterday, favoring areas near the CO/KS border, southwest NE, central KS, western OK, northeast parts of the TX Panhandle, eastern TX, southern LA, southwest MS, and northern/western AL.

Rains will continue into the weekend for the Plains, leaving only a few dry spots in the far southwest corner. Two additional systems in the 6 to 10 day and another in the 11 to 15 day will also aid jointing/early heading wheat, with only parts of West TX, far western OK, southeast CO, and far southwest KS possibly holding onto stress (10 to 15% of belt).

Widespread weekend rains will aid Midwest pre-planting moisture, with the focus then shifting back to the southern Midwest and particularly the South in the 6 to 15 day due to a cooler pattern. While frost will occur at times in the upper Midwest, freeze damage risks to wheat remain low. The pattern will keep wetness concerns focused on the Delta and near the OH River for soft wheat quality and fieldwork delays, although the 16 to 30 day is trending wetter from the C. Plains into the central Midwest. Limited rains in spring wheat areas will continue to aid seeding progress over the next 2 weeks.

In South America, showers (.25 to 1.25”, locally 2.5”) favored the northern 1/2 of Brazil corn yesterday. Substantial rains in the next 10 days across the will enhance moisture reserves for upcoming pollination, since rains tend to drop off quickly in the north over the next few weeks. Brazil soy harvest is making limited progress, but weekend rains stall work until later next week when drier weather returns. Rains aid coffee areas next week and slow sugarcane harvest, but drying in the 11 to 15 day eases damage threats.

Argentina rains (.50 to 1.5”, locally 3.5”) fell across the southern 3/4 of corn/soy yesterday. Drier weather settles in over next 2 weeks which should allow corn/soy harvest to slowly resume and minimize 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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