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Morning Outlook



Overnight Highlights

·         The Shanghai Composite Index is down 22% from its peak after falling another 3.3% overnight as the equity bubble bursts in China.

·         Elsewhere, equity markets around the world came under pressure overnight, with stock futures pointing lower for the United States as well on ideas that Greece may fall out of the Eurozone. However, there’s not a lot of volume in the drop in stocks, with the bond market feeling the greater amount of pain in Europe.

·         Greece imposed capital controls over the weekend to keep money from flowing across its borders, while ordering banks to remain closed through next Sunday’s public referendum.

·         Crude oil prices are breaking lower on fears that a global economic slowdown will increase deflationary pressures as demand eases. However, there’s some talk in the markets of the Ag commodities providing a safe-haven buy for investors.

·         December corn pushed to its highest level since April 8 this morning as traders anticipate another drop in crop ratings in this afternoon’s USDA weekly crop progress report.

·         June was the wettest on record for Illinois, where crops continue to sit in saturated soils. Average rainfall for the state in June was 8.91” thus far, topping the old record of 8.27” set in 1902.

·         Soybeans are pushing higher, but losing ground to corn as traders see August as the more critical time period for the crop.

·         Wheat futures pushed to their highest level since early January in Chicago on fears that continued harvest delays will reduce the supply of quality wheat stocks.

·         Weekend showers were near expectations for eastern areas of the Midwest, but a bit less than expected in western areas. Some eastern areas saw locally near 6” of rainfall.

·         The southern Midwest is expected to remain wet the next two weeks, focusing wetness concerns on one-third of the belt.

·         The other two-thirds of the belt focused on northern areas are expected to have favorable growing conditions.

·         A dry and hot pattern is expected to threaten corn production in western Europe over the next two weeks.

·         Some minor relief is expected for Canada, but dryness concerns otherwise remain a problem.

·         Australia Wheat Areas Maintain Dry Pattern Next 2 Weeks; Moisture Stress Possible Latter Half of July due to the developing El Nino.

·         USDA releases its quarterly grain stocks and acreage reports known for their surprises on Tuesday morning. Trade expectations for the reports are as follows:

Quarterly Stocks




billions of bushels

USDA June 1 Estimates

    Pre-Report Estimates

Average Trade Estimate




Highest Trade Estimate




Lowest Trade Estimate




USDA Previous Year




Water Street Solutions





USDA June 1 Acreage




All Wheat

Winter Wheat

Spring Wheat


millions of acres

USDA June 1 Survey Results

    Pre-Report Estimates

Average Trade Estimate







Highest Trade Estimate







Lowest Trade Estimate







USDA March 31







Water Street Solutions







Commodity Weather Group Forecast

In the Midwest/South, weekend thundershowers were near expectations in the eastern Midwest and a bit less than expected to the west, favoring far northeast MO, central/northeast IN, central IL, far northern/far western OH, and far southeast MI with locally up to 6” of rain. Showers were widely scattered farther west in the Midwest and in the South but did favor central/southeast NC.

Scattered showers will linger in the eastern Midwest in the next 2 days, with mid-week rains then expanding across the southern/western Midwest before dipping into the Delta. An active storm track continues in the southern Midwest in the 6 to 15 day as well, maintaining surplus moisture in over 1/3 of the belt and standing water in low-lying areas as well as flooding in river bottoms.

Elsewhere, the outlook overall is similar to slightly drier in the next 2 weeks, and the mild pattern will aid corn/soy growth. However, late soy seeding and soft wheat harvest will remain a struggle. Dry patches will linger in the Southeast and could develop in a few spots in the southern Delta but should be small in scope overall. The 16 to 30 day inched remains mild and inched wetter but remains wettest in the southwest Midwest and driest in the Delta.

In the Plains/Canada, showers were very limited over the weekend. Scattered storms this week should threaten only minor winter wheat harvest interruptions in the S. Plains, but the C. Plains will see gradually increasing interruptions during July.

Notable heat (near 110 F in spots) is stressing Pacific Northwest spring wheat and moderates only slightly in the next week. While mid-week showers may offer slight relief in Canada, notable reductions in moisture deficits are unlikely.

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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