Morning Outlook

Overnight Highlights

• Overnight markets have corn -5, soybeans -6-11, wheat -2-4, crude oil -.60, dollar +.43, gold -4.0 and the Dow -33.
• Grain markets lower overnight on good USDA crop ratings and profit taking.
• USDA reported soybeans at 74% good/excellent vs 72% last week and 67% on average for the date. Corn was rated 75% good/excellent vs 75% last week and 70% on average.
• Informa yesterday lowered their corn acre estimate to 92.5 mln acres vs last month’s guess at 93.3 mln.
• NOPA crush report out tomorrow. Analyst estimate of crush at 149.6 mln bu vs 141.6 mln in April.
• Above average temperatures through much of the corn-belt the next two to three weeks is limiting follow through selling overnight.
• The Fed meets this week. Few expect a rate hike to be announced, but will be parsing the language used to look for indications of hikes to come soon.
• Yesterday funds bought 16,000 corn and sold 10,000 soybeans and 4,000 wheat.

Commodity Weather Group Forecast

In North America, showers favored the TX Panhandle, southern/western OK, northeast CO, west-central NE, southern/ western SD, central IA, central WI, north-central/southwest IL, southern AR, and LA in the past day. Midwest highs ranged from the 70s near the Great Lakes to low 90s southwest. Rains favor the northwest Midwest and then head southeastward, exiting the east Thursday. Additional rain chances in the 6 to 15 day will also produce patchy coverage from bands of thundershowers around the edge of the ridge, but the most limited rain chances will likely be in parts of southern IN, southern IL, southern IA, eastern MO, southern NE, and the northern Delta during the next two weeks. The lack of more general rains will allow moisture supplies to slip most notably in these areas (at least 1/3 of the corn belt). However, today’s outlook also starts to shift the focus for the hottest ridging farther west in the U.S. in the 6 to 15 day, limiting the risks for severe heat in the corn belt. The hottest weather will likely focus on KS, NE, and MO through Monday (mid 90s or better), with a brief expansion possible in the western corn belt on Sunday/Monday. The 16 to 30 day outlook is driest and most prone to building stress in the southeast 1/2 of the Midwest if a stronger pulse of heat returns during early corn pollination. The European model is stronger with Midwest heat early in the 16 to 30 day than our forecast but does also show another moderation later in the period.

In South America, Brazil corn/sugar areas remain dry this week. Rains develop across the southern 1/3 of the corn belt this weekend into early next week, slowing harvest. Drier weather returns in the 11 to 30 day. Argentina corn/soy harvest continues to benefit from mainly dry weather in the next two weeks. Showers are likely to increase in the north half of the belt in the 16 to 30 day, providing needed moisture for the wheat belt but also slowing corn harvest progress.

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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