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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn even, soybeans +7, wheat even, crude oil -.12, dollar -.12, gold +5.0 and the Dow -25.

·         Grains mixed today fueled by continuing problems in Argentina mixed with decent crop ratings domestically.

·         China’s National Grain Trade Center announced it will offer for auction 3.4 mmt of reserve corn on Friday, up from previous expectations of 1 mmt of corn.

·         The USDA reported both ethanol and DDG corn use backed off in April, with corn use down 38.5 million bushels month on month and down 15.4 million bushels year on year. However, DDG production was up marginally from last year at 1.702 mmt.

·         Brazil’s export association Anec lowered their estimate for 2016 corn exports to 23 mmt vs. the previous estimate of 30 mmt.

·         The USDA reported April soybean crush at 4.75 mt vs 4.99 mt in March, off month on month but over industry expectations of 4.7 mt.

·         Wednesday funds bought 14,000 contracts of corn, 12,000 contracts of beans, 3,750 contracts of wheat, 2,500 contracts of meal, and 4,500 contracts of oil.

Commodity Weather Group Forecast

In North America, showers favored parts of northeast CO, southwest OK, north-central/west-central TX, southeast AR, southern/far northwest TN, far western MS, far northern AL, southeast MO, central IL, west-central KY, eastern GA, and eastern NC in the past day. Showers will occur in the northwest Midwest tonight into Saturday, with similar to wetter trends into the weekend for the Delta/far southern Midwest (mainly Saturday/Sunday). While the showers will cause minor interruptions to late corn/soy seeding, warming/drier conditions for the Midwest/Delta prevail next week until patchy showers return to the northwest Midwest next Thursday and scatter farther south/east Friday/Saturday. Highs rise into the low to mid 90s for MO/ KS and the South late next week but ease a bit again by the 11 to 15 day. 11 to 15 day rains then favor the southern/far northwest Midwest. The northeast 1/4 of the Midwest will be most prone to rain deficits by mid-month, but crop conditions will be largely favorable across the corn/soy belt given occasional showers and a lack of severe heat. Modest warmth and an active storm track remain expected in the 16 to 30 day for the Midwest, with parts of the GA/AL/MS/southern TN at most risk for any heat/dryness concerns. Plains wheat harvest interruptions become more limited during the next two weeks. Spring wheat concerns are limited, with 6 to 10 day rain in Canada and another chance in both the U.S./Canada in the 11 to 15 day.

 

In South America, Brazil rains (.25 to 1.5”) fell in the central 1/3 of the corn/sugar belt yesterday. Showers over the next week stall early harvest in the southern 1/2 of corn and most of the sugar but contract later next week to ease wetness threats. The main corn harvest in the northern 1/2 of corn remains favorably dry. Argentina rains (.10 to .50”) benefit the northern and southern 1/4 of wheat yesterday. Light rain aids wheat this weekend, turning drier next week to aid corn/soy harvest.

 

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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