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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -2, soybeans -19, wheat -2, crude oil +.09, dollar +.08, gold -6.0 and the Dow +19.
  • Benign weather forecasts continue to weigh on the markets and drive fund liquidation of longs in soybeans.
  • Argentina’s Ag Ministry bumped their 15/16 soy crop estimate by 800k mt to 58.8 mln mt, while the Buenos Aires Grain Exchange kept their estimate at 56 mln.
  • Euro wheat futures posted new highs for the month on continued production concerns in France and Germany.
  • Port officials in Argentina say the trucker strike will start impacting their corn exports soon if the dispute isn’t remedied soon. The Rosario port saw seven trucks Thursday vs 3,300 the previous Thursday.
  • Cattle on Feed and Cold Storage reports out this afternoon. On Feed as of July 1 is expected at 102%.
  • Look for grains and oilseeds to near forging their summer low. Reduced fund selling pressure and a pickup in demand should support soybeans soon. Continued problems in Euro wheat and seasonals will help wheat. The oversold condition and demand will stem the selling in corn. For now, anticipated supply is dominating the focus before attention can be paid to demand.
  • Commitment of Traders report this afternoon likely to show a record short wheat position, small short in corn and a significant reduction in soybean length.

Commodity Weather Group Forecast

 

In North America, thundershowers favored southeast IA, WI, central/northern IL, far northeast MO, northwest IN, southwest MI, southeast AL, and southwest GA in the past day. Highs were mostly in the low to mid 90s in the Midwest yesterday, with 100s limited to southern NE/KS/central SD. Similar readings are likely today, lingering in the southern belt through the weekend and then easing everywhere for the rest of the 15-day period (80s to low 90s). The lack of more notable heat and favorable moisture is helping to limit any negative impacts to corn/soy yields this week. However, the short-term rains have continued to track farther west then expected, bringing better rain chances into the central Midwest and less into dry areas around the Great Lakes. With a similar bias for rains to miss the northeast 1/4 of the belt in the next two weeks, this will allow stress to lower yields in that region, while an active storm track in most other areas otherwise maintains favorable yield potential.

Dry spots will also be possible for soy/cotton in parts of southern AR/LA/SW MS/GA/SC in the next few weeks, but a broader issue should be avoided in the South as rains otherwise expand (particularly in the 6 to 15 day). The 16 to 30 day outlook also continues to focus the primary heat/dryness concerns on the northeast 1/4 of the Midwest. Wetter than normal conditions

will remain a threat to Canada wheat/canola in the next 30 days, with the main impact to elevate disease risks.

 

In South America, Brazil shower potential in the next two weeks is confined to Rio Grande do Sul,

aiding wheat establishment. Mostly dry conditions farther north benefit safrinha corn/sugar harvest.

Argentine showers early next week focus in the central areas, slowing fieldwork but boosting

moisture for wheat establishment. Cold concerns in the next 2 weeks are minimal, with any light

frost in the south during the 6 to 15 day causing only minor burn back to vegetative growth.

 

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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