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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1, soybeans -5, wheat even, crude -1.70, dollar -.30, gold +14.0 and the Dow -300.

* Lower global stock market, new lows in crude oil and cooperative SA weather weigh on soybeans but corn and wheat holding up overnight.

* NOPA crush report due at 11:00am CT today with expected Dec crush of 157.8 mln bu – off 8 mln from a year ago – and for a growth in soy oil stocks.

* US, Argentine and Ukraine corn offers are now on par with each other, offering some stability.

* Paris’ Matif wheat extending losses after yesterday’s new contract lows.

* With the export ban for crude oil lifted, a Chinse refiner now has their first ever US cargo of crude due for March arrival.

* Protesters are planning to block the entrance of the CBOT in protest of the mayor’s MKL annual breakfast.

* Commitment of Traders report out this afternoon expected to continuation of large fund short position. Data will include Tuesday’s report day activity.

* Short covering in grains will require a weather story in South America, wheat damage in Russia or a change in the macro-commodity environment.

Commodity Weather Group Forecast

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In South America, scattered showers were mainly in northern/far southern Mato Grosso, southern Goias, southern/far western Minas Gerais, northern Sao Paulo, and northern/far west-central Mato Grosso do Sul in Brazil during the past day. Rains remain active through most of the next week in Center-West and Northeast Brazil, including locally heavy totals of 6″ or more in northern Goias/Tocantins/western Bahia/Minas Gerais. While a few spots may see too much rain, the showers will aid late corn/soy growth but will also hinder early harvest in the Center-West. A bit of a break appears likely later in the 6 to 10 day period for northern areas, with the models still mixed in the 11 to 15 day. While the majority of the guidance brings additional wet weather to harvest areas in the north at that time, our forecast only inched wetter and still leans toward a more southern focus to rain that would reduce fieldwork delays to the north and aid currently drier southern corn/soy. However, confidence is very low. In Argentina, showers occurred in central/western Buenos Aires in the past day. The near-term outlook is slightly
drier, with only occasional showers in the south/far west. A widespread rain event occurs at the end of the ten-day, aiding corn/soy growth following a warmer (90s) period this weekend and in the first 1/2 of next week. While wet western areas (mainly Cordoba) still need to be watched, the somewhat quieter pattern in the next week should limit concerns for now.

In the U.S., rain (.25 to 1.25″, locally 2.5″) was limited to southern fringes of the Delta/Southeast overnight but spread across the Southeast today. Cold/dry conditions then dominate through the middle of next week, with showers later next week favoring wheat in the southern Midwest/South. Most rains are not heavy enough for renewed wetness issues. Minor winterkill risks for northwest fringes of Midwest wheat early next week give way to a milder pattern in the rest of the month.

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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