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Morning Outlook

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Overnight Highlights

·         Polls show that Sunday’s Greek referendum is too close to call, keeping equity and bond traders on edge into the weekend.

·         China’s Shanghai Composite Index fell below 4,000 for the first time since April amid fears that the government will not be able to stem the tide of selling. The index fell another 3.5% overnight, has lost 24% of its value since June 12, wiping out at least $2.4 trillion of value.

·         U.S. and European markets are quietly consolidating ahead of this morning’s 7:30 a.m. CDT U.S. monthly jobs report. Wall Street expects it to show that the economy created 230,000 jobs in June, with the unemployment rate falling to 5.4% from 5.5% the previous month.

·         Egypt released another snap tender to buy wheat late on Wednesday, which is expected to remind traders of how over-priced U.S. wheat is relative to European and Black Sea wheat on the global market.

·         A heat-dome continues to stress European crops, threatening corn and late-maturing wheat yields.

·         U.S. showers are expected to exit the far southern Midwest over the holiday weekend, focusing on the Delta and Southeast.

·         The 6- to 15-day outlook shifts the storm track back north into the Midwest, but confidence remains low on the northward shift due to inconsistency in recent models.

·         The outlook for the Midwest remains mild for July, with the 16- to 30-day outlook focusing the wettest conditions in the southwestern quarter of the Midwest and driest conditions in the Delta. The Central Plains are also expected to face wetness concerns in July.

·         Dryness stress is expected to persist over two-thirds of the Canadian Prairies wheat and canola belt.

·         Light showers are expected in far southern and far eastern Australia in the 6- to 15-day period, but up to one-third of the wheat is still at risk of developing dryness this month related to El Nino.

·         Corn and soybean prices are posting modest losses this morning. Positioning for the three-day holiday weekend creates a measure of uncertainty for today’s markets, but Wednesday’s action was encouraging for me, suggesting firm undertones beneath the market at this point. Soymeal demand remains seasonally strong to this point.

·         The grain and oilseed markets will close at Noon CDT today for the Fourth of July holiday weekend and reopen at 7 p.m. CDT on Sunday evening.

Commodity Weather Group Forecast

In the Midwest/South, thundershowers favored south-central ND, central SD, central/southern MO, far southern IL, southwest IN, central/western KY, far northern AR, central/far northwest TN, central AL, and southeast LA. Showers are exiting the far southern Midwest and focus on the Delta/Southeast through the holiday weekend, with a wetter outlook for the western Midwest late Sunday/Monday.

The 6 to 15 day has shifted the storm track back a bit farther north in the Midwest, but confidence remains low on this northward shift given the erratic nature of the guidance in recent days. While the near-term break in the central/eastern Midwest is helping to ease surplus moisture concerns a bit, the return of wetter weather in the 6 to 15 day will hinder soft wheat harvest and late soy seeding.

Standing water will remain an issue in low-lying fields/river bottoms across mainly MO/IL/IN/OH, but a lack of heat will favor corn/soy growth in areas that do not have excessive moisture. The rains will pose only localized flooding concerns in the northern Delta, with more limited 6 to 15 day activity occurring. The 16 to 30 day remains mild, with wettest conditions in the southwest 1/4 of the Midwest and drier weather in the Delta.

In the Plains/Canada, spotty showers occurred in western Canada and northern/far western parts of the Plains, but coverage was very limited. The best chances of relief will be in northern sections of the western Canadian wheat/canola this weekend and then in the far west in the 6 to 15 day, but stress is likely to persist in about 2/3 of the belt. Minor interruptions to Plains wheat harvest occur through the weekend, but the biggest wetness concerns are in the C. Plains later in July.

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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