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Morning Outlook

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Overnight Highlights

·         China continues to stimulate its economy, cutting its interest rates for the third time in six months beginning today.

·         Yet, China overtook the United States as the world’s largest importer of crude oil in April, according to data just released.

·         The U.S. dollar pushed modestly higher overnight, with the euro weaker amid the ongoing drama over Greece, while crude oil prices were mixed.

·         Corn futures remained under pressure on expectations that USDA would confirm a near-record planting progress, even as previously dry areas receive rains to give the crop a good start.

·         Soybeans push modestly higher on the China interest rate cut and on supply disruption concerns from South America.

·         Wheat prices were under pressure overnight on abundant global supplies.

·         Today’s focus should primarily be positioning for tomorrow’s 11 a.m. CDT USDA crop report, with trade expectations that soybean and wheat supplies will increase in the year ahead, while corn supplies drop modestly.

Commodity Weather Group Forecast

In the U.S., weekend rain/snow extended from the foothills of the Rockies into the N. Plains/far northwest Midwest, while locally heavy rain extended from the S. Plains into the northwest Delta and central/southwest Midwest. Heaviest amounts (mostly up to 5”) were in parts of northern TX, southern/eastern OK, and AR.

Rains favor the western Delta into the central/northeast Midwest today, but a break otherwise occurs until showers return to the Plains at mid-week and the upper Midwest Thursday/Friday. Additional events occur in the Midwest early in the 6 to 10 day and again in the 11 to 15 day to cause interruptions that will slow seeding at times, but flooding risks appear limited. Notable weekend rains did reach most of the drier spots in the far northwest Midwest.

The additional rain events in the Plains will keep pockets of excess moisture in place that will cause minor flooding concerns, particularly in parts of TX/OK that have been most favored recently. Frost in the past 2 mornings and again tonight along with locally heavy snow from the weekend will pose only very minor damage threats to wheat from the Dakotas into the NE Panhandle.

Spring wheat seeding should remain rapid in the Canadian Prairies for much of the next 2 weeks, although moisture supplies are being drawn down. 16 to 30 day rains appear to favor the central/southeast Plains into the Delta/southern Midwest, with the main risk for continued Plains wetness.

In South America, weekend rain in Brazil (.50 to 2”, locally 3”) benefit the southern 2/3 of corn/coffee and overspread the region to aid crops this week while still missing late soy harvest areas. Sugar harvest delays persist and do not ease until next week. Weekend rains were confined to northeast Argentina and remain minimal through next Tuesday allowing corn/soy harvest to accelerate.

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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