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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +4, soybeans +6, wheat +3, crude +.30, dollar +.35, gold -6.0 and the Dow -240.

* Grains higher overnight after the extended weekend off stronger energy and equity markets, short covering and some concerns over rain in Brazil slowing harvest.

* Argentina administration will lower soybean import barriers in an effort to help its soybean crushers who are currently 30 percent idle. This would open the door to Brazil and Paraguay imports.

* AgRural estimates Brazil farmer has sold 48 percent of the 15/16 soy crop compared to 31 percent a year ago and 44 percent average for the date.

* Safras Mercado estimates the Brazil soy crop at 99.8 mln mt vs their previous estimate of 100.4 mln.

Commodity Weather Group Forecast

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In South America, widespread showers favored much of northern Mato Grosso do Sul, northern Sao Paulo, Minas Gerais, southern Espirito Santo, southern/western Bahia, Goias, Mato Grosso, and Tocantins during the holiday weekend, with the heaviest totals (4″+) in central Minas Gerais and south-central Bahia. Argentina picked up mostly light showers in La Pampa central/western Buenos Aires, southern Cordoba, and western Santiago del Estero. A similar pattern prevails in the next week, with rains then shifting farther south/west. The wet weather is focusing on most of the driest sections of the belt in northeast Brazil, aiding corn/soy/coffee growth. While early Center-West soy harvest will see interruptions due to the rainfall, weekend amounts were mostly 1 to 2.5″, and most areas will average near normal for totals in the rest of this month. This should limit the severity of fieldwork delays. While some guidance does support a wetter 6 to 15 day risk than our current forecast for the region, good model agreement exists for a drier 16 to 30 day to aid fieldwork. Rains also expand across central/northern Argentina corn/soy in the 6 to 10 day and reach southern Brazil by the 11 to 15 day. This will be welcome following continued warm temperatures (90s) this week in Argentina and into early next week in Rio Grande do Sul. Only minor heat stress is expected, as most areas peak in the mid to upper 90s.

In the U.S., rain (.25 to 1.25″, locally 2.5″) was confined to the Southeast over the weekend, with light snow (1 to 4″) in the eastern Midwest/far southern Plains. Minor winterkill damage occurred along the fringes of the C. Plains/western Midwest wheat. Storms favor the Delta in the next 2 weeks, but damage potential is still low as most amounts are not heavy. Light snow is likely in the Midwest/Plains wheat, and winterkill threats are minimal in
the next two weeks as temperatures moderate.

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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