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Morning Outlook

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Overnight Highlights

·         Greek Prime Minister Tsipras pleads with creditors to have the political courage to provide assistance as they prepare to meet for the next round of meetings on Monday. Officials say that some progress has been made, but the two sides are still far apart on requirements for releasing a 240-billion euro ($269 billion) aid package.

·         Greece must prove it is serious about reforms to get the aid or pay 745 million euros ($839 million) to the International Monetary Fund next week to avoid tighter liquidity rules on Greek banks.

·         Both the dollar and crude oil are modestly higher in quiet trading thus far this morning.

·         China soybean imports in April totaled 195 million bushels, down 18.3% from the previous year due to a truckers strike in Brazil that slowed movement of soybeans to ports earlier in the year. As a result, soymeal supplies are tight in China.

·         Corn futures face their largest three-week decline since January on pressure from ideal crop weather and expectations of record production in China.

·         The western Midwest quiets down after Monday, with showers exiting eastern areas by Tuesday.

·         A few 6- to 10-day showers were added in northwestern areas, but bigger rains are seen in the 11- to 15-day period as the pattern leans wetter.

·         The Wheat Quality Council tour group pegged the wheat-state of Kansas at 288.5 million bushels, up from last year’s crop of 246.4 million bushels but below the five-year average tour projection of 313.6 million.

·         However, the real question highlighted by the tour will be the final impact of strip rust, which is prevalent in the Plains with favorable conditions for development and little interest among producers for treatment.

·         The trade expects next Tuesday’s USDA crop report to show that corn stocks will shrink slightly but remain large in the next marketing year, while soybean and wheat stocks rise.

U.S. Ending Stocks

2015-16

Wheat

Corn

Soybeans

billions of bushels

USDA May Report

Average Trade Estimate

0.750

1.752

0.443

Highest Trade Estimate

0.883

2.267

0.582

Lowest Trade Estimate

0.558

1.551

0.310

2014-15 Crop Year

0.684

1.827

0.370

Water Street Solutions

0.832

1.551

0.405

Commodity Weather Group Forecast

In the U.S., thundershowers favored east-central CO, west-central/eastern KS, southern OK, central parts of the TX Panhandle, north-central TX, southwest MN, western/far east-central MO, west-central IL, the MN/WI border, and eastern SC yesterday, including locally 3 to 6” totals in northeast KS and near the TX/OK border.

Rains favor the central/southwest Midwest today and the southwest/far northwest Midwest late in the weekend before scattering eastward. This will improve moisture in drier sections of MN/ND/SD. Seeding delays will be most short-lived in the OH Valley/Delta in the near-term. Drier breaks in the western Midwest will allow fieldwork at times in the 6 to 10 day, although a few showers were added on Thursday in the northwest. More general rains return to the northern Delta/Midwest in the 11 to 15 day, slowing fieldwork again but aiding moisture.

The Plains will remain in a very active pattern, with soil moisture continuing to improve for heading winter wheat areas. Pockets of excess moisture remain likely in mainly NE/eastern KS/TX/OK and will cause some minor concerns. A cold shot next Monday in mainly the NE Panhandle and Tuesday in parts of ND/western SD will bring frost but little risk of damage. Rains in the next 2 weeks should mainly focus on spring wheat areas that are already nearing completion with planting.

In South America, rain in Brazil (.25 to .50”, locally 1”) was limited to northeast fringes of coffee yesterday. Rains return to southern corn/soy areas late this weekend and spread across corn/coffee areas early next week to aid growth. The rains slow sugar harvest early next week, but drier trends then aid progress.

Argentina remains dry through much of next week, and corn/soy harvest gets back on track. Rain late next week is lighter in models, limiting harvest interruptions.

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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