Home Market Market Watch Morning Outlook

Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +4, soybeans +16, wheat +1, crude oil -.40, dollar +1.01, gold +10.0 and the Dow -139.
  • Grains higher overnight on short-covering, thoughts that last week’s selling was overdone and hints of warm weather creeping back in after the next 10 days.
  • Crop condition ratings will be out this afternoon with the market expecting a drop of 1% in both corn and soybeans.
  • Market this week will be watching the evolving weather forecasts and preparing for Thursday’s USDA acreage report.
  • Stocks lower, the US dollar higher and the British pound lower overnight as the post-Brexit vote continues to rattle the market. Exit can’t proceed until the UK officially notifies the EU, which some cite could be weeks or months. Financial markets hate uncertainty and are reflecting their distain in price action.
  • Friday’s COT report showed Managed Money is still holding significant long positions in Corn and Soybeans. Dropping -27k in their net corn position taking them to net long of 224,827 and unloading only -6k contracts of soybeans leaving them net long 200,789 contracts.
  • Friday funds sold 14,000 soybeans, 8,500 corn and 3,000 wheat.
  • Friday’s Cattle on Feed came in close to estimates with On Feed at 101%, Placements 110%, Marketings 105%.

Commodity Weather Group Forecast

 

 

In North America, weekend showers favored northeast MT, northwest ND, southeast MN, southwest/eastern IA, WI, western/northeast IN, central OH, southwest MO, southwest TN, western GA, northeast SC, southern NC, central/western OK, central/southwest KS, and eastern/southwest parts of the Canadian Prairies. Mid 90s were noted in the far southern Midwest and near the MS River during the weekend, with hotter readings in parts of the Deep South. However, most areas in the Midwest peaked in the upper 80s to low 90s. Highs cool this week, and the main warming trends return early in the 16 to 30 day. Chances for severe and/or sustained heat are still somewhat limited, but dry spots around the Great Lakes could see mid 90s in mid-July. Midwest showers mainly occur Thursday/Friday this week, favoring NE/KS/western MO. Additional rain aids the southwest Midwest in the 6 to 10 day. More extensive showers then return in the 11 to 15 day, particularly in the central/

northwest Midwest. Given the rain pattern in the short-term, the 11 to 15 day activity will be needed to ease dry spots in parts of central/southeast IA, west-central IL, and eastern SD. However, dryness concerns are still expected to build in the northeast 1/3 of the Midwest in the 16 to 30 day, posing the main potential threat to pollinating corn. Improving rain chances in the Delta will aid moisture supplies in the next two weeks, while rains will hinder late Plains wheat harvest in the next ten days.

 

In South America, Argentina weekend rains (.50 to 2”, locally 5.5”) favored the northern 2/3 of the

wheat/corn. Light showers linger across the country this week, benefiting wheat establishment but

stalling corn harvest. Heavy rains may set back corn harvest further in the northeast 1/4 early next

week. In Brazil, weekend rains (.50 to 2”) were limited to the southwest corner of the wheat belt.

Rains aid wheat in the next ten days, but corn/sugar harvest remains favorably dry

 

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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