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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -1 ½, soybeans -4-5, wheat -1-5, crude oil +.90, dollar -.08, gold +4.0 and the Dow -33.
  • Generally lower trade overnight in grains. Energy markets are higher and dollar lower overnight. Fed governors are meeting for policy meeting which wraps up today – notes will be out this afternoon – expect the door to be open for a June hike.
  • Brazil’s large food processor says they have been importing corn from neighboring countries due to the domestic supply shortage but doubt the need to import from beyond South America.
  • Argentina’s corn grower group said the increased ethanol blending requirement there will not be met by sugar based ethanol, but rather corn based sources. Corn ethanol producers are expected to increase output 60 percent.
  • Severe weather has been found this week so far from Texas to Omaha and east across the southern corn-belt. Rain accumulation map below.
  • Nearby resistance for July contracts seen at 3.95 for corn, 10.40 for soybeans, 5.00 for wheat and 4.90 for KC wheat.

Commodity Weather Group Forecast

 

In the U.S., thundershowers favored northwest/eastern KS, central/eastern NE, eastern/far southwest OK, central/northeast TX, southwest IA, central/northwest MO, southern IL, southern IN, far southwest OH, and far northern KY in the past day. Storms will continue to track across the Midwest/Delta in the next two days, with another event this weekend. Favored areas should include central NE, southern SD, southern/western IA, central/southern IL, southern IN, southern OH, and much of the Delta, with locally heavy totals (4”+). However, the pattern does turn quieter now after the weekend to allow fieldwork to recover before a return of rain (favoring the western Midwest) early in the following week. This should prevent planting interruptions from becoming serious. Rains will regularly aid Plains hard red winter wheat yield potential, with the next big system on Thursday/Friday. Cool air in the short-term will still only bring frost to the foothills of the Rockies and near the Canadian

border, with no notable damage. Showers will recharge moisture for many Southeast corn/wheat areas in the 6 to 10 day, while moisture deficits are likely to build for winter wheat areas in WA/northern OR. Spring wheat seeding interruptions will be limited in the next ten days, with the main slowdowns in the next day or two for the N. Plains.

 

In South America, Argentine rains (.10 to .35”) fell in the southern fringes of the corn belt yesterday. Mostly dry weather dominates for the next nine days, aiding slow recovery for corn/soy harvest. Showers late next week favor the northeast half of the belt and slow fieldwork, but wetness damage remains limited to the northeast 15% of the belt. Frost threats remain minimal. Brazil rains (.25 to 1”, locally 2”) favored the southeast 1/2 of the corn yesterday, easing stress in southern Goias. There is still about 30% of the corn belt that lacks adequate moisture and will see stress build when heat returns next week.

 

 

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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