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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +.01, soybeans +.05, wheat +.04, crude oil -.55, dollar -.16, gold -5.3 and the Dow +43.

·         Grains traded mixed most of the night under the opposing forces of bearish rains across the U.S. in the overnight verses forecasts continuing to heat up for the heart of the corn belt in the 6-15 day period.

·         At its weekly auction yesterday, China sold 1.5 mmt of reserve corn out of a total of 2.0 mmt offered this week.

·         Argentina’s under Secretary of Agriculture estimates that Argentina has lost 3.7 – 4.0 mmt of soybeans due to late season rains which will reduce their exports this season by as much as 1 mmt. However, corn exports should grow from 19.1 mmt to 24.1 mmt.

·         China’s National Grain and Oils Information Center is forecasting China’s 16/17 soybean imports at 85 mmt vs last year’s imports of 82mmt. This figure is slightly lower than the USDA’s current estimate of 87mmt.

·         Tuesday funds bought 16k corn, and sold 7k wheat, 2k beans, and 4k meal.

Commodity Weather Group Forecast

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In North America, showers favored eastern ND, northeast SD, central/southern MN, northern/eastern IA, southern/western WI, northern/eastern IL, southwest MI, central/southern IN, central KY, southern AR, northeast LA, west-central MS, northeast SC, and southeast NC in the past day and were better than expected in the central Midwest. Midwest highs ranged from the 70s east to low 90s southwest. Lingering thundershowers continue through Thursday in the eastern Midwest. Rains shifted farther south/west in the Midwest during the 6 to 15 day period. This would increase the chance for timely showers to reach southwest corn areas as early pollination begins, although parts of southern NE, KS, and the northern Delta may still be short-changed (15% of the belt). While showers become more limited during the next two weeks in the northern Midwest due to the southward shift, these areas are seeing the current rains limit concerns for now. Highs will rise well into the 90s in the southwest during the next two days and again Sunday/Monday (particularly MO/NE/KS/southern IL), but highs otherwise tend to mostly run in the 80s to low 90s. The 16 to 30 day remains warmer than normal but still most persistently hot in the western U.S., with the central/northeast Midwest driest. This would suggest that the highest risk for building rain deficits would focus around the Great Lakes, while the Delta/southern Midwest trended wetter for pollinating corn.

 

In South America, Brazil corn/sugar areas see light showers in the far south this weekend and then expand in the southern 1/2 of corn and southern 1/3 of sugar next week, slowing harvest. Showers likely linger in southern areas into the 11 to 15 day. Argentine corn/soy harvest is favored, with mainly dry weather for next two weeks. Showers are favored in the north half of the belt in the 16 to 30 day and is needed for the dry northeast 1/4 of wheat, but confidence is limited.

 

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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