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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +1, soybeans +2, wheat +1-4, crude oil -.96, dollar +.05, gold -5.0 and the Dow -6.
  • Higher markets overnight on short covering and squaring up ahead of this morning’s USDA report at 11:00 CT. Short term weather forecasts generally favorable.
  • USDA export sales this morning had all crops come in within the trade expectations.
  • EIA report showed ethanol production up 41,000 bbls from the previous week and stocks up 57,000 bbls.
  • The front runner for the Prime Minister role in the UK, former London mayor Boris Johnson, withdrew from consideration for the position as the political turmoil there continues.
  • China was reportedly a buyer of 2 to 3 cargoes of soy from the US and as many from South America. Gulf corn values also firmed sharply yesterday.
  • Wednesday funds were sellers of 20,000 corn, 5,000 soybeans and 5,500 wheat.

Commodity Weather Group Forecast

 

In North America, scattered showers favored northwest SD, southwest ND, central NE, southeast CO, north-central/ southwest KS, western OK, northwest TX, central IA, southeast LA, southern GA, central NC, northeast Alberta, and south-ern Manitoba in the past day. Highs were in the mid 70s to 80s in the Midwest. A few showers occur in the far northern Mid-west today, but the most notable rain forms in the C. Plains on Saturday and spreads moderate to heavy rains through the southern Midwest/far northern Delta mainly Sunday/Monday. Any flooding issues should be localized, and this timely rain event will aid early pollinating corn in nearly the southern 1/2 of the corn belt. Additional rain chances scatter from northwest to southeast across the Midwest next Friday/Saturday and in the 11 to 15 day, with intermittent 6 to 15 day showers also expected in the far southwest Midwest. The expected showers in the next two weeks will leave patchy sections of IA, SD, MI, northern IN, and northern OH most prone to persisting and building dryness (15% of Midwest). While temperatures will still lean warmer than normal in the 6 to 15 day, the outlook has moderated, with mostly mid 80s to low 90s for the Midwest. Hot-ter/drier trends in the Delta will deplete moisture and could allow stress to build for soy in early July. The northeast 1/3 of the Midwest and Delta are warmest/driest in our 16 to 30 day outlook, but some guidance is starting to reduce heat risks.

 

In South America, Argentina was dry yesterday. Rains steadily increase this weekend through next Tuesday, keeping corn harvest stalled. Drier weather during the rest of next week helps to limit wetness damage, but corn harvest/late wheat seeding remain very slow. Brazil sees showers cross the wheat belt next week, easing dryness. Corn and sugarcane harvest remain favorable, with just minor shower delays the middle of next week for the southern third of the belt.

 

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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