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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -1, soybeans -1-3, wheat -4, crude oil even, dollar -.44, gold +17.0 and the Dow +13.
  • Grains slightly lower overnight. The USDA report is behind us and the trade can return its attention to the weather forecast. Short term outlook is favorable as we head into the three day weekend.
  • Yesterday’s USDA report left a bearish cloud over the corn market as planted acres expanded from the March estimate and June 1 stocks came in above trade expectations.
  • Soybeans have a bit more cushion thanks to the stocks report, but the trade immediately looked forward to the demand structure and August weather on the slightly lower acres than were anticipated.
  • Informa will be out this morning with their own crop production estimates.
  • Yesterday funds sold 20,000 corn, bought 19,000 soybeans and 2,500 wheat.

Commodity Weather Group Forecast

 

In North America, showers were limited but a bit more than expected and included scattered sections of southeast MN, central WI, MI, east-central IN, north-central/southeast IA, central MO, and far western IL along with spotty showers in the Southeast/far northern Delta and notable rains in the western Plains/western Canada. Models strongly support a notable thunderstorm complex for late in the holiday weekend, favoring KS, MO, southern IL, and near the OH River. Models are similar to slightly farther south with this track and are closer to our forecast, although there is the chance that rains could slip even a little farther south in the OH Valley. Highs warm into the mid to upper 90s for the far southern/western Midwest next Wednesday to Friday, but the rain ahead of this event will recharge soil moisture and lessen stress to pollinating corn. Highs otherwise range from the low 80s to low 90s in the 6 to 15 day for the corn belt, with the exception of a brief spike into the mid 90s in the far southwest corner at the middle of the 11 to 15 day. Changes were slight in the 6 to 15 day, but the 6 to 10 day was somewhat wetter in the northern Midwest. Of the recently driest areas, this will leave patchy sections of central NE/central SD/central IA/southern MI/northern IN/northern OH (15% of Midwest) at most risk for building moisture deficits. The 16 to 30 day continues to focus the threat for crop stress on the northeast 1/3 of Midwest corn and Delta soy.

 

In South America, Argentina was dry yesterday. Rains (.50 to 2.5”, locally 5”) cover most of the corn belt this weekend, tapering off Tuesday but delaying corn harvest. Drier weather in the rest of next week gives way to more 11 to 15 day rains, keeping corn harvest very slow. Brazil wheat finally sees dryness relief next week. Corn/sugarcane harvest remain favorable in the next two weeks, with just a minor shower interruption at 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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