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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +1/2, soybeans +4, wheat -1-3, crude oil -.70, dollar +.23, gold -3.0 and the Dow -97.
  • Mixed grain trade overnight ahead of the 11:00 am CT USDA report and the mixed emotions of hot weekend weather balanced by a wetter extended forecast.
  • Yesterday’s corn exports finally moved the pace ahead of last year. Putting corn sales at 102% of the USDA projection vs the five year average of 95%.
  • Brazil’s government issued its monthly crop report and estimated 15/16 soybean production at 95.6 mln mt vs last month at 96.9 mln. 15/16 corn production was estimated at 76.2 mln mt vs last month at 79.9 mln.
  • Analysts are estimating today’ report to have corn 15/16 ending stocks at 1.77 bln bu and 16/17 ending stocks forecast at 2.13 bln. Soybean expectations for the 15/16 US ending stocks are at 385 mln bu and falling to 289 mln for 16/17.
  • Yesterday funds sold 10,000 corn, 7,000 wheat and 1,500 soybeans.

Commodity Weather Group Forecast

In North America, showers favored far S. Manitoba, E. MT, ND, far N. SD, SE MN, NE IA, S. WI, N. IL, NW IN and isolated spots in SW Plains in the past day. Intense but scattered showers will continue to develop along the edge of the ridge expanding over the Midwest through Monday. This ridge leads to highs in the 90s for much of the belt. The ridge slowly weakens next week providing the opportunity for a storm to push across the Midwest with the main rains mid-week. The best activity runs from NW to SE across the belt and rain amounts of .50 to 2.5” in about 3/4 of the belt remains likely. Areas at great-est risk to be missed are in the NE and SW corners of the belt (MI, N. OH, MO). The rains should ease moisture shortages that have started to develop across central and eastern areas and with highs mainly in the 80s, improve corn/soy growth. The 11 to 15 day is likely to be drier (there is still a risk rains could return to the E. 1/2 of the belt) but 90s are still mainly con-fined to the W. & S. fringes of the belt. The 16 to 30 day outlook remains warmer than normal, with limited rains for at least t the southeastern 1/2 of the corn belt raising concerns for spotty moisture stress as corn pollination begins. Delta/Southeast rains next week aid early corn pollination but slow wheat harvest. Plains wheat harvest remains favorable in the south. Spring wheat/canola conditions in the N. Plains/Can. Prairies remain mostly favorable due to the active shower pattern.

 

In South America, Brazil corn/sugar areas were dry yesterday, with the coldest reports in the mid- 30s in the southern corn belt. Dry conditions further harvest progress next 10 days, with 11 to 15 day rains confined to southern 1/4 of corn. Frost chances in far south through Sunday with minimal damage. Argentina corn/soy harvest favored by lack of rains next 2 weeks with just brief light showers possible in south 1/3 of belt late next week. Rain delays more likely 16-30 day NE 1/3.

 

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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