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Morning Outlook

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Overnight Highlights

·         China’s stocks tumbled the most in three-months overnight on fears that its government would implement policies to cool the market.

·         The European Union boosted its GDP growth forecast for 2015 to 1.5%, up from 1.3% in its previous forecast. It raised its inflation expectation to 0.1%, up from -0.1% previously.

·         The dollar pushed modestly higher overnight, before slipping into negative territory this morning in quiet trade.

·         Crude oil consolidated higher just below $60 per barrel in overnight trade; trading to $59.95 per barrel, its highest level since December 11.

·         Corn futures slipped to seven-month lows overnight after USDA’s weekly crop progress report confirmed that producers had planted 55% of the crop as of Sunday, up from 19% the previous week and up from the five-year average for the week of 38%.

·         Soybeans held onto very modest gains on South American shipping concerns amid strike threats in Argentina, despite planting progress of 13%, up from the normal 9%.

·         Minneapolis wheat slipped to new contract lows after USDA data showed that 75% of the crop was planted as of Sunday, up from the five-year average pace for the week of 40%.

·         Chicago and Kansas City wheat futures slipped on modest improvements in crop conditions, but losses were limited by today’s start of the Wheat Quality Council’s tour of Kansas and surrounding states. That tour will end on Thursday.

·         Planting progress slows due to expanding rains from the southwestern Midwest into the Great Lakes this week, expanding into northwestern and southern areas early in the 6- to 10-day period.

·         Another break in the rainy pattern should come in the middle to latter part of next week to facilitate more planting progress.

·         Rains could slow late planting progress in the Northern Plains at times over the next two weeks, but progress is well-advanced in that region, which needs the moisture.

·         Meanwhile, timely rains are boosting safrinha corn prospects in Brazil.

Commodity Weather Group Forecast

In the U.S., thundershowers extended from the western Plains into the central/southwest Midwest in the past day, favoring West TX, west-central/northeast KS, northwest MO, southeast IA, northern IL, southwest MI, central/far northern IN, and a few spots in western OH. This included locally more than 7” in cotton areas in southern parts of the TX Panhandle, leading to localized flooding.

Substantial (locally 6” or more) rainfall continues in the Plains during the rest of this week, with the risk for additional minor flooding concerns but abundant moisture for heading wheat. Seeding will slow from the southwest Midwest into the Great Lakes this week, with both the northwest and far southern Midwest and the Delta then filling in early in the 6 to 10 day.

However, this will be followed by another break in the middle to latter part of next week, allowing for some additional seeding before rains return to the southern/western Midwest and Delta. 16 to 30 day showers occur in mainly the Delta and southern/western Midwest, but the wettest weather likely focuses from the Plains to the Gulf Coast. Late seeding will slow in the N. Plains spring wheat areas at times over the next 2 weeks, but interruptions should remain more limited in Canada.

In South America, rain (.25 to 1.25”, locally 2”) spread across the northern 2/3 of Brazil corn, southern 1/3 of coffee, and most of sugarcane yesterday. Rains linger in the northern 1/3 of corn and central 1/2 of coffee this week but then expand across most corn/coffee in the 6 to 10 day, aiding both crops. Sugar harvest improves in the last 1/2 of this week but it is then wet through next week, stalling progress.

Argentina will remain dry for the next week. Models do show shower potential for late in the 6 to 10 day, which could delay slow corn/soy harvest recovery but would not be 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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