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Morning Outlook

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Overnight Highlights

  • Overnight markets have corn +2, soybeans -2, wheat +2, crude oil +.40, dollar -.30, gold +5.0 and the Dow -32.
  • Mixed trade overnight. Continued pressure from ongoing good crop conditions and high yield expectations from private analysts while support coming from the oversold condition and export demand.
  • Traders in Brazil expect August exports of corn and soybeans to fall sharply compared to a year ago due to their lack of price competitiveness on the world market.
  • China reportedly sold 21k mt of reserve corn today of the 1.9 mln mt being offered. Much of the corn and soybeans being auctioned have been from reserves more than three years old and of low quality.
  • FC Stone released a client survey that estimated 2016 corn crop production at 15.1 bln bu with a yield estimate of 175 bpa.
  • USDA reported June Soy crush at 4.624 mln mt vs 4.826 in May and 4.549 last year. This came in near the trade estimate.
  • Monday funds sold 13,000 soybeans, 10,000 corn and 500 wheat.

Commodity Weather Group Forecast

 

In North America, scattered showers favored parts of eastern ND, far northern MN, eastern NE, western IA, northern/central MO, southern IL, central/far western KY, northeast AR, southeast IN, southern GA, central SC, and southern NC in the past day. Low 90s to low 100s were limited to the S. Plains/South. While warmer temperatures develop this week in the Midwest, highs peak on Thursday in the mid/upper 90s for the southwest belt and upper 80s/low 90s elsewhere. A similar event is possible in the 11 to 15 day. The lack of more severe heat will limit any stress, although filling corn may still encounter some minor stress due to a handful of warm nights (70s) during these two stretches. Rains are more limited in the central corn bel t this week (IL/eastern IA), but fairly extensive 6 to 15 day rain should keep notably dry spots very limited (mainly patchy sections of OH/eastern IN). The 16 to 30 day remains fairly wet in the western Midwest and inched wetter in the northern Delta/ southern OH Valley, and heat mainly focuses on the Deep South. Recent showers and additional activity in the 6 to 10 day should limit concerns for late soy development in the Delta, and the Southeast is seeing some relief this week as well. Frequent showers will keep pockets of surplus moisture in place for up to 1/3 of the Canadian Prairies wheat/canola this month, and an active storm track also will slow N. Plains wheat harvest (particularly mid to late in the month).

 

In China, scattered rains (.25 to 1”, locally 2”) slowed drying in N. China Plain corn/soy areas yesterday. Model trended wetter in drier northern parts of Northeast China later this week, aiding the key soy area. Heat this week (90s) fades by the weekend and into next week. Additional rains likely ease dryness in central Northeast China next week. N. China Plain rains remain on the lighter side in the next two weeks, limiting further wetness threats and aiding dry down.

 

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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