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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +2, soybeans +12, wheat +1-2, crude oil +.77, dollar -.26, gold +10.0 and the Dow +30.
  • Higher grains overnight from the short term hot/dry forecast and the expectation for friendly USDA report Friday.
  • USDA report Friday has estimates for ending stocks for 15/16 Corn at 1.772 bln vs 1.803 in May. 15/16 soybeans estimated at 385 vs 400 mln in May. 15/16 wheat at 981 mln vs 978 in May.
  • 16/17 estimates for the USDA report are 2.125 bln on corn vs 2.153 in May, soybeans at 385 mln vs 400 in May, Wheat at 1.045 bln vs 1.029 in May.
  • FOB Gulf corn and soy basis continues to hold firm on good export demand.
  • CWG summer weather analogues continue to call for warmer and wetter than average.  
  • Yesterday funds bought 5,000 corn, 4,500 soybeans and 6,000 wheat.

Commodity Weather Group Forecast

 

In North America, showers were mainly limited to central MT, northeast OH, northeast NC, and southeast CO in the past day. Occasional patchy thundershowers remain possible from tonight into Saturday in the northern/far eastern Midwest, but rains will be limited overall as heat builds into the weekend. Highs are likely to peak by Saturday/Sunday in most areas, with mid 90s most likely in the southwest 1/2 of IL, MO, far southern IA, KS, NE, SD, and western MN. Heat lingers in the southwest 1/4 of the Midwest on Monday/Tuesday and then moderates, with mostly 80s to low 90s for the balance of the 15-day period in the Midwest. The European model is similar to slightly hotter than our outlook, while the GFS is not as aggressive today. Rains increase from Monday into Thursday, with the outlook trending wetter (particularly the European model) to aid corn/soy growth. The 16 to 30 day outlook remains warmer than normal in the Midwest, with the risk for some developing stress for drier spots in the southeast 1/2 of the corn belt. However, forecast confidence remains very low in the 16 to 30 day period. 6 to 10 day showers in the C. Plains and Delta will only pose minor interruptions to wheat harvest, although wetter 16 to 30 day conditions may return to the S. Plains. Largely favorable moisture supplies should continue through the rest of the month for N. Plains/Canada spring wheat areas.

 

In South America, Brazil rains (.25 to 1.25”) were limited to fringes of the corn/sugarcane areas yesterday. The next two weeks are mainly dry, aiding harvest. Frost this weekend is too weak and too far south to impact more than isolated corn fields at worst. Argentina was mostly dry yesterday. Mainly dry conditions through next week allow unimpeded corn/soy harvest. A brief light shower is possible next weekend, with more 16 to 30 day rain possibly slowing harvest in the northeast 1/4.

 

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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