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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1, soybeans -5, wheat-3, crude -.80, dollar +.05, gold +13.0 and the Dow -295.

* Grains even to lower with soybeans under pressure from outside markets and corn supported from the large short fund position.

* Crude oil in to new lows overnight on continued supply glut concerns with the entrance of Iranian supplies on the world market.

* Soy meal demand in China continues to be strong after a 10.3 percent increase in 2015 on the slowdown in DDG imports and lower Rapeseed supplies.

* Informa Economics planting acreage estimate for 2016 of 88.869 mln acres of corn and 85.23 mln of soybeans. A slight decrease in corn and slight increase in soy acres from their previous estimate.

* Short covering yesterday had funds buyers of 10,000 corn, 4,000 soybean and 1,000 wheat.

Commodity Weather Group Forecast

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In South America, scattered showers in Brazil occurred in mainly central/northeast Mato Grosso, central/northwest Goias, Tocantins, Bahia, central/northern Minas Gerais, and Espirito Santo in the past day. A similar pattern prevails for the balance of the week, causing slowdowns to early soy harvest in the Center-West but focusing heavier amounts farther east. Moisture deficits in Northeast corn/soy/coffee are notably easing, and only very isolated areas of excess moisture are anticipated.
Models may be overstating 6 to 10 day rain chances in the north, but scattered showers do linger. However, rains also begin to build in the south, with the main focus for 11 to 15 day rain also now expected in the south. The 16 to 30 day shows a similar pattern, which would ease fieldwork delays in the north (shifting the best chance for delays to Parana) and will be needed to aid currently warmer/drier spots in Rio Grande do Sul. Highs will remain in the 90s for RGDS into early next week, with similar readings in central/northern Argentina for the rest of this week. Argentine showers were a bit more than expected in central/northwest Buenos Aires, La Pampa, and far southwest Cordoba in the past day, with similar placement in the short term but expanding rain chances next Monday/Tuesday/Friday and again in the 11 to 15 day aiding most corn/soy. This should limit dry spots to northeast Buenos Aires and adjacent sections of Santa Fe/Entre Rios (10 to 15% of belt).

In the U.S., rain/snow (.25 to 1.5″) favored the Pacific Northwest and southwest Midwest/northern Delta yesterday. A storm tomorrow/Friday favors the Delta/Southeast. There is a break then until the 11 to 15 day, when a more extensive rain/snow event crosses much of the Plains/Midwest/Delta. Wetness damage potential is low over the next 10 days, as amounts are generally not heavy. 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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