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Morning Outlook

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Overnight Highlights

·         G-7 leaders rebuffed Greek claims that a deal with Greece was close, with German and French delegates saying that Greece needs to get serious about striking a deal.

·         The European Central Bank warned that failure to get a deal soon could drive yields on bonds issued by other euro-area countries higher.

·         Chinese stocks plummeted overnight as brokerages tightened lending restrictions and China’s central bank pulled money from the financial system.

·         The dollar dropped modestly overnight, but has again risen back into positive territory as U.S. desks open leading money to flow out of the broader commodity complex.

·         Soybeans continue to consolidate on supply uncertainties created by Argentine strikes.

·         Corn prices bounced off Wednesday’s lows overnight to post very modest gains.

·         Wheat prices found modest support from an Egyptian snap tender late Wednesday for early July delivery.

·         Local industry representatives expect Chinese end users to continue seeking imported corn from the Black Sea and/or corn substitutes such as U.S. grain sorghum rather than utilize reserve corn stocks that are priced 40% above the global market due to China’s subsidy program, leaving those reserve stocks large.

·         USDA’s weekly export sales report is delayed until Friday this week due to the Memorial Day holiday on Monday.  

·         Argentina nearly tripled its export tax on biodiesel shipments, sending that country’s industry into turmoil.

·         More rains are expected for the southern Plains and western Delta into the weekend, before drying somewhat over the next two weeks.

·         Weekend Midwest rains shifted south, but 6- to 15-day showers still favor northwestern areas of the belt.

·         The American GFS model is similar to wetter for south Russia, but the Volga region is still favored for heat and dryness.

Commodity Weather Group Forecast

In the Midwest/Delta, showers scattered across northern IN and northern OH yesterday as well as the southern/eastern Delta, but the heaviest amounts were in central LA and near the border between southeast AR and MS.

A few showers occur along the western edge of the Midwest today, then spreading across much of the Midwest/Delta through the weekend. Best rain chances with this event have been shifted farther south, with drier risks in the northwest Midwest. Rains then favor the northwest Midwest from the middle of the 6 to 10 into the 11 to 15 day, although the 11 to 15 day shower potential has also been inched higher elsewhere in the Midwest.

This will ensure adequate moisture for corn/soy growth, although very late seeding interruptions will occur in the northwest Midwest. Drying in the Delta in the first 1/2 of June should ease recent wetness concerns, although the 16 to 30 day does suggest extensive showers in the Midwest/Delta that could again be heavier in the Delta and reintroduce concerns for soft wheat quality.

In the Plains, scattered thundershowers occurred from West TX into central OK, KS, and western NE, with showers also noted in the northwest Plains spring wheat areas. Heaviest totals (5”+) were in spotty sections of northwest TX/western KS. Daily showers through the rest of the week will favor the S. Plains, adding to flooding concerns in TX/OK. While locally heavier totals will be possible in NE/KS at times, a downturn in rain for the south should ease concerns in the following 2 weeks, although the 16 to 30 day outlook heads back to the wetter side.

Extensive shower chances in N. Plains/Canadian Prairies spring wheat during the next 2 weeks will  aid growth and delay the onset of stress in western Canada for now.

GFS Wetter in S. Russia This Weekend/Early Next Week, But Heat/Dryness Still Favored 1/4 of Russian Wheat. GFS guidance shows better coverage of S. Russia and only misses far eastern areas. However, the drier Euro guidance is still favored for the Volga, with low to mid 90s possible through early next week and again late next week.

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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