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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn -3, soybeans -19, wheat +1, crude oil -.52, dollar +.19, gold -2.0 and the Dow +26.
  • Lower grains this morning on less threatening weather and the still long Fund soybean position. Look for a flurry of private yield estimates over the next 10 days as the August 12th USDA report nears.
  • Crop condition ratings out this afternoon. Trade looking for a continuation of the high good/excellent conditions with perhaps a drop of 1%.
  • China’s National Grain Trade Center noted that 12 mln mt of corn the 39.3 mln mt offered for auction since May has been sold.
  • AgRural is estimating an increase of 1% of Brazil soybean acreage, less than the 2% estimate by AGR Brasil. This would be the smallest increase in 10 years.
  • Brazil’s cash corn values have firmed for the fourth week in a row, despite second crop corn harvest reaching 70% complete.
  • FOB Gulf premiums continue to trend higher in corn and soybeans as the US maintains its export competitiveness.
  • Friday’s COT report showed Managed Money now a sizable net short corn of -65,538 contracts, up -52,176. Still net long 121,689 soybeans after unloading only -16,003 contracts. Wheat a new record net short of -130,184 after adding another -13,578 contracts.
  • Friday funds bought 10,000 soybeans, 4,000 corn and sold 3,000 wheat.

Commodity Weather Group Forecast

 

In North America, scattered showers favored central SD, southwest NE, central/southern KS, northern LA, southwest MS, northern TN, central/southern KY, south-central IN, northern/central IL, far southern WI, and far western MI in the past day. Highs were in the low 70s to 80s across the Midwest, with 90s to low 100s focusing on the Pacific Northwest and South. Highs warm into the mid/upper 90s for the southwest corner of the Midwest this week and again later in the 11 to 15 day, but most of the rest of the Midwest tops out in the upper 80s to low 90s. The daytime temperatures will pose little concern given moisture supplies, but periods of warmer nights into the 70s during these two stretches and the 16 to 30 day may hinder filling corn at times. Weekend showers offered patchy relief to dry spots in the far eastern Midwest during the weekend, with a few showers expected on Friday as well. However, the majority of rain will scatter into the central/northwest Midwest (mainly tonight into Thursday). Additional rains favor the south/west in the 6 to 15 day and the west in the 16 to 30 day, maintaining favorable moisture for most corn/soy. A tropical system is expected to track into Mexico this weekend and currently poses no threat to U.S. crops. Delta showers have eased moisture stress in the past week, with a slightly better chance in the 6 to 10 day as well. Frequent showers in western Canada this month will keep a moisture surplus in place for wheat/canola.

 

In China, scattered weekend rains hampered drying in saturated N. China Plain/southern Northeast China corn/soy areas. Wetter areas in southern Northeast China dry this week, but wetness concerns linger for 10% of the belt (central N. China Plain). Minor heat stress occurs this week in drier parts of central Northeast China (up to 10% corn/15% soy), but wetter trends next week ease more significant threats. Typhoon Nida impacts far S. China and poses limited crop threats.

 

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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