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Morning Outlook

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Overnight Highlights

·         Creditors prepare yet another “final” deal for Greece, while Greece claims its deal is the only offer on the table and asked creditors to be “realistic” about what it asks the Greek people to sacrifice.

·         Euro-area bonds tumbled overnight after data showed consumer prices in the region rose more than expected, pushing yields upward.

·         The dollar rebounded overnight from Tuesday’s massive losses as the euro pulled back.

·         The dollar added to its gains this morning after an ADP report showing that the private sector added 201K jobs in May, essentially matching expectations of 200K

·         Money is pull back from the broader commodity sector this morning, with grain and oilseed prices showing very modest weakness following Tuesday’s big gains.

·         Grain brokers report a modest increase in cash corn sales in the Midwest on Monday’s rally, and some softening in basis.

·         Midwest is wettest in Nebraska, Iowa and northern Missouri the next two days, with rains shifting south next week.

·         The Southern Plains turn wetter the latter half of next week due to remnants of a Pacific storm.

·         South Russia remains dry, but with limited heat, adding to yield losses in at least 25% of the wheat belt.

Commodity Weather Group Forecast

In the Midwest/Delta, showers favored central/eastern NE, western IA, southern SD overnight, with the heaviest rains (2” to locally nearly 5”) likely in NE/IA/northern MO in the next 2 days. Showers do also scatter into the eastern Midwest from the weekend into Monday, with a bit of a wetter trend since yesterday. 6 to 15 day rains are then expected to favor the southern/eastern Midwest and Delta, including sections of MO/KS that are running slow on soy seeding.

The pattern is otherwise favorable for crop growth, but the Delta will need to be watched again for wheat quality concerns following the current needed break. Current rains and another chance in the 11 to 15 day also ease dryness concerns in the Carolinas. The 16 to 30 day CFS guidance trended warmer/drier in the OH Valley/Southeast, but our outlook remains for near normal temperatures.

In the Plains, showers favored central/northeast MT, northwest ND, northern MN, southern SD, and NE in the past day, with a few light showers also on the Canadian border. Extensive coverage aids N. Plains spring wheat, but rains remain limited to the far south in Canada. Much of the guidance remains wet by the 11 to 15 day in the Canadian Prairies, but showers were scaled back in our outlook given recent model wet biases and some drier Euro ensemble guidance.

While confidence is quite low given the wetter models, this would leave the southwest 1/3 of the Prairies at risk for building dryness, with drier than normal 16 to 30 day conditions as well. The S. Plains remain drier through early next week, but remnants of Hurricane Blanca from the Pacific has shifted the forecast unfavorably wetter again in northern TX/OK in the latter 1/2 of next week.

S. Russia and N. Europe Rains Still Limited, But Minimal Heat Risks; Wetter E. Europe in 6-10 Day. A few 6 to 15 day showers are possible in Ukraine. Dry S. Russian winter wheat (at least 1/4 of the belt) will see yield loss continue but limited heat. Dryness persists in N. France/N. Germany, with 6 to 10 day relief possible for W. Poland

Morning Market Snapshot

 

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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