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Morning Outlook

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Overnight Highlights

·         Chinese stocks plunged overnight, with their equivalent to our NASDAQ posting its largest decline on record on ideas that a stock bubble is bursting.

·         One person was decapitated and two others hurt in a terrorist attack on a gas plant in France overnight.

·         The Washington-based International Monetary Fund says it plans to consider Greece in “arrears” rather than in default if it misses its big payment due on Tuesday, buying more time for the debt-ridden country that has repeatedly frustrated creditors with its arrogance in recent months.

·         That probably buys Greece another several weeks until July 20 when a potential missed payment to the European Central Bank would be expected to have larger consequences with the European Union.

·         The currency and energy markets remain quiet this morning, with almost a numb response to the news that continues to hit traders out of Europe.

·         Heavy rains fell once again overnight from Nebraska and Kansas east to Indiana with locally up to 6” recorded.

·         The southern Midwest will be wettest today, next Wednesday and again late next week into the 11- to 15-day period.

·         The outlook is a bit wetter for Canada early next week, but very limited relief is expected for wheat and canola.

·         Heat and dryness threats continue to grow for corn and late-filling wheat in France.

·         Plains Grains, Inc. reports that 74% of Texas wheat has been harvested, with progress at 71% in Oklahoma and 22% for Kansas. Test weights are averaging 58.0 pounds per bushel, with protein at 12.1%. The advanced progress in the Southern Plains makes it easier for the wheat market to rally.

·         Harvest delays in the Midwest continue to support buying in Chicago, which is now trading at a rare premium to Chicago.

·         Grain and oilseed prices surged higher in European trading overnight due to increasing concerns about adverse weather, led by excessive rains in the U.S. Midwest.

·         July options expire today, providing another attractive reason for futures to push higher. The July $10.20 strike price is particularly attractive for soybean traders if they can maintain momentum against a surge in farmer selling.

·         Basis levels are tumbling at many locations across the Midwest as farmer selling of both old- and new-crop increases dramatically.

·         Traders face considerable increased risk in the days ahead, with Greek uncertainty, first notice day for delivery against July contracts on Tuesday, end of the fiscal quarter on Tuesday, USDA’s quarterly grain stocks report on Tuesday and USDA’s planted acreage report on Tuesday.

·         USDA’s quarterly hogs and pigs report is scheduled for release at 2 p.m. CDT this afternoon. Trade expectations are as follows:

June 26 Quarterly Hogs & Pigs

USDA

Trade Est.

Range

percent of previous year

All hogs June 1

108.0

107.4 – 109.0

Kept for Breeding

102.0

101.3 – 102.6

Kept for Market

108.9

107.9 – 110.8

Pig Crop

March to May

107.7

106.1 – 109.0

Weight Groups

Under 50 lbs.

108.0

106.0 – 111.5

50 to 119 lbs.

108.6

106.1 – 110.2

120 to 179 lbs.

109.6

108.2 – 111.6

Over 180 lbs.

110.0

107.8 – 111.8

Farrowings

March to May

102.1

102.0 – 102.5

Farrowing Intentions

June to August

99.3

97.0 – 101.2

September to November

100.4

97.4 – 102.2

Pigs per Litter

March to May

106.0

105.0 – 108.0

Commodity Weather Group Forecast

In the Midwest/South, thundershowers scattered from NE/northern KS into the southern Midwest in the past day, with activity also in northeast NC/southeast GA and near the Gulf Coast. However, heaviest rains (locally nearly 6”) largely favored parts of central MO/southern IN.

Rains favor parts of MO/IL/IN/OH today and also scatter into the Delta/Southeast. Rains are then more limited through early next week, although showers do scatter into the central/eastern Midwest/northern Delta Sunday/Monday. Rain chances return to the southern Midwest/northern Delta at the middle of next week and late next week, with broader Midwest coverage developing into the 11 to 15 day.

The active storm track will keep surplus moisture in place for over 1/3 of the belt, including parts of southern IA/MO/IL/IN/OH and will hinder late soy seeding and soft wheat harvest. However, the lack of heat/abundant moisture remains very favorable for corn/soy areas not dealing with excess moisture. While gaps in coverage are possible in the Southeast, the expected scattered showers should limit dryness concerns to some extent. The 16 to 30 day remains mild and trended wetter around the Great Lakes but remains drier for the OH Valley/Delta.

In the Plains/Canada, showers scattered across the central/northern Plains but favored CO/NE and northern/western KS. Intermittent but short-lived harvest interruptions occur in the next 10 days for the south, but most notable concerns remain late next week into the 16 to 30 day for the C. Plains. Heat (especially in the next week) will stress spring wheat in the Pacific Northwest/Canada. While rain chances improved slightly early next week in Canada, relief appears limited.

Heat and Dryness Prevalent in W. Europe Next 10 Days, May Expand Across Rest of Continent by 11-15 Day. Showers in the next 5 days favor eastern Europe. Northern France dryness will shave back yields on filling wheat and pose a greater risk to corn yields in July. 11 to 15 day heat/dryness could stress filling wheat in northeast Europe.

FSU Rains Remain Active Next 5 Days, Aiding Wheat/Corn; Drier/Cooler Trends 6-15 Day Keep Corn Stable Most corn/wheat areas continue to pick up beneficial moisture through the weekend, with the exception of the Volga (15% of Russian crop) where wheat yields have declined. Drier weather will aid early wheat harvest in southern Russia.

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

Past performance is not indicative of future results. The information contained in this report is intended for informational purposes only and is the opinion of the writer and may change at any time. This information was compiled from sources believed to be reliable but accuracy cannot be and is not guaranteed. There is no warranty, expressed or implied, in regards to this information for any particular purpose. There is SIGNIFICANT RISK involved in trading futures and or options on futures and may not be suitable for all investors. Investors should consider these RISKS and evaluate their suitability based on their financial conditions. No one should ever consider trading futures or options on futures with anything other than RISK CAPITAL. This information is provided freely and is NOT in the capacity of a trading advisor. NO LIABILITY on the part of the author exists for any trading loss you may incur in the use of this information. Information provided is not to be construed as an offer to sell or solicitation to buy any commodity or security named herein.

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