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Morning Outlook

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Overnight Highlights

·         European officials are preparing for a Greek default as creditors and politicians become “fed up” with the lack of cooperation from the debt-ridden country and political support for saving it wanes.

·         A recent survey showed that 70% of Germans oppose further concessions to Greece and 51% want to see Greece leave the euro-zone. Germany has paid the biggest share of the tab for Greece.

·         International Monetary Fund officials pulled out of talks with Greece in frustration.

·         European officials gave Greece until the end of today to come up with a legitimate proposal. That would give officials the chance to review it over the weekend so that it could be voted on at their scheduled June 18 meeting; the last chance to do so ahead of the current plan’s expiration at the end of the month.

·         The euro fell and the dollar rallied once again as a result of the impasse, although the dollar is currently several hundred points off its high.

·         Crude oil prices dropped overnight on the stronger dollar, but also on comments made by a Saudi official that they were ready to raise oil output to new record levels in the months ahead if necessary to meet rising demand.

·         Heavy rains have returned to the central and southern Plains, as well as the western Midwest, hampering planting progress.

·         Rains are expected to favor southern and eastern areas of the Midwest over the next week, followed by northwestern areas in the 6- to 15-day period.

·         FSU heat threat eases next week as light showers cross the wheat belt.

·         Models for the 6- to 15-day period diverge further for the Canadian Prairies, with forecasts leaning drier.

·         The rains bring a halt to wheat harvest once again. Combines were moving from the Gulf Coast to southern Kansas, with Texas at just 23%, Oklahoma at 17% and Kansas at just 1% harvested to this point.

·         Egypt released yet another tender to buy wheat late Thursday, with this morning’s results expected to once again remind traders that U.S. wheat is over-priced on the global market, even after this week’s sharp losses.

·         Corn and soybean prices slipped lower overnight, while wheat posted a technical bounce.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored east-central/southwest IA, northwest IL, southern WI, far southeast MN, central MI, and northern MO, with just spotty activity in the Deep South. Rains favor the southern/eastern Midwest in the next week and also the northwest Midwest in the 6 to 15 day. Pockets of excess moisture occurred near the IA/MO and IA/IL borders yesterday and remain a risk over the next 2 weeks, but the moisture will otherwise be welcome to support corn/soy growth.

Any remaining soy seeding in KS/MO largely stalls again in the next week before another break arrives. Scattered Delta showers will only cause minor soft wheat harvest delays in the next 2 weeks. Hotter (mid 90s to low 100s)/drier weather next week will stress pollinating corn in the Southeast (particularly GA/SC), but the 11 to 15 day has inched wetter/less hot. Mild/showery conditions remain in the 16 to 30 day outlook for the Midwest, with warmer/drier weather in the South.

In the Plains/Canada, thundershowers were locally heavy in far northwest TX, south-central/southwest KS, southeast CO, and the OK Panhandle overnight, with scattered Canadian showers favoring northeast parts of Saskatchewan/Alberta. Showers will scatter across the Prairies into next week and offer the best chances for relief to currently extensive dryness in the northern and southern thirds of the belt, but drier/warmer weather then still returns into July. The showers will be timely for early jointing spring wheat, but concerns may still rebuild in the longer-term.

Very heavy rains will threaten lodging in West TX/OK/southern KS in the next week, but wheat harvest should then improve. N. Plains spring wheat remains stable.

Rains Aid Europe Wheat This Weekend, But Drier Pattern Returns Next Week. Northern Germany (40% of wheat) and north-central France (15% of wheat) remain on the light side of weekend rains. Drier conditions for the rest of the two weeks could lead to further moisture stress for late heading and filling.

Showers Likely to Scatter Across Much of FSU Next Week; Heat Event Looking More Limited. While rain amounts are likely to be on the lighter side (.25 to .50”), showers may reach farther east and benefit Russia and Ukraine. Most models have eased up on heat, with mostly low to mid 90s for 2 to 3 days in Volga.

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

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