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Morning Outlook




Overnight Highlights

·         Grains lower this morning in overnight trade with concern over weather that is friendly to crop development, export competition from South America and further fund liquidation.

·         Broad commodity pressure continues with crude and gold down.

·         August brings the beginning of crop tour and crop estimate season. This week Informa, Ag Resource and FC Stone will be out with estimates. Doane released their tour results Friday with Corn yield at 163.3 bu and production of 13.240 billion bu and Soybeans at 44.2 bu yield and production of 3.675 billion bu.

·         The EU lowered their estimate for corn production to 65.5 mmt versus the previous estimate of 68.4 mmt. Last year’s crop was 77.8 mmt.

·         COT report Friday shows managed money still significantly long corn and soybeans, almost out of their long wheat and are short soybean oil.

·         Expectations for this afternoon’s crop condition ratings to remain unchanged.

Commodity Weather Group Forecast

In the Midwest/South, weekend showers favored southwest/eastern MI, western OH, northern/eastern IN, southwest IA, northwest MO, central NE, southern GA, and far eastern SC, ending up a bit better in the southeast Midwest and less to the west than expected. Lingering showers will occur today in the far eastern Midwest, but most of this week’s rain will expand in the south/west and peaks at mid-week. The moisture and lack of heat will aid Midwest corn/soy growth, with the best chance for lingering dry patches in WI and southern NE (10% of Midwest). Showers will become somewhat more limited in the 6 to 15 day but still scatter into the Midwest, favoring far western areas (including NE). Temperatures remain benign, and a return of a more active 16 to 30 day pattern is anticipated to help finish out the crops. The hottest/driest conditions will persist in about 1/3 of the Delta (northern LA/central MS/southern AR), trimming soy yields lower. Weekend highs neared 100°F, and similar readings will regularly occur. However, showers scatter into areas farther north Thursday/Friday to prevent an expansion of concerns, and rains should also expand in the Southeast to reduce dry patches in the 6 to 10 day.

In the N. Plains/Canada, scattered light showers were limited to parts of central/northern Alberta, far southern Manitoba, northern MN, and far northeast ND during the weekend. Rains expand in the northern Canadian Prairies this week to aid canola growth and keep further stress limited to 10% or less of the belt. Additional 6 to 15 day showers will aid late growth but will not recover earlier losses. The early N. Plains spring wheat harvest will slow later this week and again in the 6 to 10 day, with a break in the 11 to 15 day. However, wetter 16 to 30 day trends may again threaten harvest progress.

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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