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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -9, soybeans -12-15, wheat -5, crude oil -2.30, dollar +2.48, gold -66.0 and the Dow -513.
  • Lower grains on the “Brexit” vote and non-threatening near-term forecast. Market will begin now looking to next Thursday’s USDA report.
  • LEAVE! Was the vote by the people of the UK on their first referendum in 43 years that let the people decide on their role in the European Union. The result was a shock to the EU and the world and sent traders seeking quality; sending gold and the US dollar higher and sending the Pound Sterling lower along with equity markets.
  • The fear in Europe is manifold as Scotland is already talking of holding another referendum to leave the UK so they can stay in the EU as well as fear of other European countries seeing secession from the EU as a viable path forward.
  • Prime Minister David Cameron who called for the referendum and was a “Remain” advocate has resigned his post stating he would step down in three months leaving the conservative party to find a new Prime Minister.
  • Export sales for corn now equal 100% of the USDA estimate vs the five year average of 97%. Old crop soybeans sales are at a total of 104% of USDA estimate vs the five year average of 101%.
  • Trade estimates for next Thursday’s USDA plantings report are for a loss of 800k acres of corn compared to the March estimate and a gain of 1.6 mln acres of soybeans.
  • USDA Cattle on Feed, Cold Storage and Quarterly Hog & Pig report is out this afternoon.
  • Yesterday funds sold 13,000 corn, 12,000 soybeans and 4,000 wheat.

Commodity Weather Group Forecast

 

In North America, thundershowers favored southern KS, northern/western OK, parts of West TX, southeast CO, southwest MO, central TN, central KY, far southeast IN, far southern OH, northeast NC, and north-central Alberta in the past day. 90s were limited to far southwest corn belt yesterday, but heat returns this weekend. Most areas peak in the upper 80s to low 90s, with stronger heat focused on the southwest 1/4 of the belt. While still warmer than normal overall, odds for severe heat

are otherwise then limited through early and mid-July based on our current forecast, as the hottest  weather focuses west of the corn belt. A frontal passage this weekend will bring scattered showers across the Midwest, but the best chances for rain focus on parts of NE, southwest IA, KS, western MO, and WI. Rains also favor the far southwest corn belt in the 6 to 10 day, while the 11 to 15 day shifted slightly wetter in the MS Valley and southern Midwest. Given an expectation for expanding 16

to 30 day rain in the western corn belt, this will put the northeast 1/3 of the corn belt at most risk for building rain deficits in early July. Expanding rains from late next week into early in the 11 to 15 day will aid moisture in most of the Delta to improve soy/cotton and late corn growth. Late Plains wheat harvest interruptions will occur but should not be serious. Diminishing moisture and expanding heat for N. Plains/southern Canada spring wheat in the 6 to 15 day will be a limited concern for now.

 

In South America, Brazil corn/sugar areas remain dry for the next two weeks, allowing harvest

to accelerate. Rains in southern wheat areas are mainly beneficial later next week. Argentina remains dry through today. Rains expand across wheat areas Saturday through Monday, alleviating

dryness. Rains later next week will slow late wheat seeding/corn harvest in the northeast 1/4 of

the belt, with localized flooding possible. Drier 11 to 15 day conditions should ease excess wetness.

 

 

 

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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