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Morning Outlook

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Overnight Highlights

* Overnight trade has corn even, soybeans -3/4, wheat -1, crude +.40, dollar +.60, gold even and the Dow +100.

* Mixed trade overnight following yesterday’s break. Trade will be watching for further China cancellations and developments in Argentina dry areas.

* USDA export sales report will be out this morning and Commitment of Traders and Cattle Inventory will be out this afternoon.

* EU Commission lowered its forecast for 15/16 EU wheat ending stocks to 15.8 mln mt vs the previous estimate of 17.6 mln mt and last year ending at 20.6 mln.

* Argentine export policies showing up on the high seas with wheat cargoes loading to South Korea – the first in 9 year and wheat to Vietnam – the first in 8 years.

* Russia’s deputy Prime Minister says there is no need to change the export tax on wheat.

* Thursday funds sold 11,000 soybeans, 7,000 corn and 3,000 wheat.

* FOB Gulf soybeans a bit weaker while interior cash soy meal values continue to firm.

Commodity Weather Group Forecast

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In South America, showers favored parts of central/far southwest Cordoba, northern Santa Fe, northern La Pampa, and northwest Buenos Aires in Argentina in the past day. Any relief for the driest 20% of the corn/soy in east-central Cordoba and bordering sections of Santa Fe as well as central/northeast Buenos Aires remained limited. The best chance for rain through next week arrives next Thursday/Friday and could offer slight relief to Buenos Aires, but some minor reduction in yield potential remains likely in the next ten days for the balance of the driest areas. Our forecast continues to trend wetter in the 11 to 15 day for the region to offer some improvement. While there is still model disagreement and drier risks during the period, mid-February relief remains in our forecast given similar tropical forcing (MJO) patterns to mid and late December. In Brazil, showers scattered across southern/eastern Mato Grosso, Goias, southern Tocantins, central/western Bahia, southern/ western Minas Gerais, northern Sao Paulo, and far northern Mato Grosso do Sul in the past day but remain less intense and less extensive than model forecasts. With an even drier break after the weekend for Center-West harvest areas and recent wet spots in the Northeast, the wettest weather will favor southern/eastern crop areas during much of February. This will aid late soy growth in Rio Grande do Sul but will hinder fieldwork and cause more frequent port delays in Parana/Sao Paulo.

In the U.S., rain (.25 to 1″) fell in the Southeast and Pacific Northwest wheat areas yesterday. The snowstorm early next week (6 to 12″, locally 18″) benefits Plains wheat but stresses livestock, especially in CO/KS/IA. Rains in Midwest/Delta soft wheat areas are not heavy enough for damage in most areas. Colder 11 to 15 day trends raise winterkill concerns for Midwest wheat where snow is lacking. 11 to 15 day rains in the Delta/Southeast wheat remain unlikely to threaten damage.

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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