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Sunday Outlook



Weekend Developments

·         President Obama and Canadian Prime Minister Harper both put discussion of Greece’s problem on the G-7 Summit agenda this weekend for the purpose of pushing European leaders to resolve the impasse quickly.

·         Political leaders continue to push for a solution to salvage Greece’s membership in the Eurozone, but economists increasingly see the difficulty in making that math work.

·         Rains in the 6- to 15-day period continue to focus on persistently wet areas of the southwestern Midwest, hampering soybean planting in the region.

·         A hotter/drier outlook is seen in the 6- to 15-day period for the Southern Delta and southeastern Corn Belt.

·         Forecasts continue to be drier than the forecast models for late in the 6- to 10-day and into the 11- to 15-day period due to past model tendencies to not live up to rains forecast.

·         Rains are expected to ease shortages in northern Europe in the 6- to 10-day period.

·         Corn finished the week on a negative note, but still gained on the week. The feed grain could see more upside if wheat is able to see additional strength and soybeans see limited weakness, but crop ratings remain above average for this time of year.

·         Wheat rose to two-month highs before breaking on profit taking Friday, but started to break away from the currency market late in the week. It could still see some more upside if traders continue to see headlines about problems in the Southern Plains, South Russia, northern Europe the Canadian Prairies and the North China Plain.

·         Keep in mind that a couple other rally attempts in recent weeks were cut short by strong surges in the dollar.

·         Soybeans have bearish fundamentals, although processors are still pushing bids to get farmers to sell short-term. A look back at the past 25 years found that soybeans found a time to rally in each of the 8 bear years in that period, although sometimes it was late in the season from very low levels. Even so, they continue to show the opportunity for a bit more strength in the near-term.

·         USDA is expected to release its first condition ratings for the soybean crop tomorrow afternoon.

·         Planting delays are expected to remain substantial in Missouri and eastern Kansas. Most other states should be in relatively good shape in the mind of traders.

Commodity Weather Group Weekend Summary

In the Midwest/Delta, weekend rains favored the NE/KS border, eastern NE, central/northern IA, central/far southern MN, northern ND, much of WI, northern IL, and the AR/MO border. Midwest rains continue to head south/east through Monday, with additional rains in the northwest by Thursday/Friday.

Daily scattered showers also build across much of the Delta this week. 6 to 10 day rains then focus on the southern Midwest/far northern Delta, with 11 to 15 day activity favoring the western Midwest. The rains will keep moisture well-supplied for crop growth, although the already very delayed soy areas in the southwest 1/4 of the Midwest will see further slowdowns (particularly in the 6 to 15 day).

Delta rains should not cause serious concerns for soft wheat, and the outlook is actually trending hotter (mid to upper 90s) in drier for corn in the southern Delta/Southeast in the 6 to 15 day. While main crop areas of the Midwest/northern Delta remain well-watered in the 16 to 30 day, corn concerns could develop for the Deep South (particularly GA/SC, where moisture reserves are more limited).

In the Plains/Canada, weekend rain favored eastern MT, northern/western ND, northern MN, southwest Manitoba, far southeast Saskatchewan, northeast CO, and the NE/KS border. Rains will be limited to northern and southern edges of the N. Plains/Canada spring wheat/canola for now, but 11 to 15 day rains return across the N. Plains.

Much of the guidance remains wet in Canada as well, but our forecast remains more limited given recent wet biases in the models. The 16 to 30 day still reverts drier in Canada as well and would pose ongoing dryness concerns.

An active rain pattern for Plains winter wheat (particularly late this week into the 6 to 10 day) will hinder maturation and early harvest but does focus north of the wettest spots in TX/OK from last month.

Showers Likely to Ease N. Europe Wheat Dryness Beginning Next Weekend. Weekend rains fell in southeast France/southern Germany. A surge of showers in France next weekend also likely aids wheat in Germany/Poland. Russian dryness stresses Volga wheat in the next 10 days.

Northeast China Corn/Soy Benefit From Rains This Week; N. China Plains Dryness Persists. Rain in northeast China this weekend continues this week, aiding early corn/soy growth. N. China Plain rains are scarce in the next 2 weeks and could hamper dryland growth (about 15% of national acreage).


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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Arlan Suderman | Senior Market Analyst
WATER STREET ADVISORY® | www.waterstreet.org
(316) 729-4599 | asuderman@waterstreet.org

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