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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +1/4, soybeans +4, wheat +1/4, crude oil +.64, dollar +.18, gold -12.0 and the Dow +44.
* Grain markets higher overnight, recovering from yesterday’s selling pressure on continued fund short position, stronger energy markets and buyers on the improve currency exchange rates.
* China’s Dalian exchange has soybeans mixed and corn/soymeal higher.
* Malaysian Palm Oil trading at highs level in two years on dryness concerns. Providing continued support to soy oil and soybeans.
* Yesterday’s weekly corn and soybean export sales report had corn come in above trade expectations and soybeans at the upper end. For corn, sales now equal 72% of the USDA estimate, five year average for this date is 80%.
* Yesterday funds bought 4,000 soybeans, were even corn and sold 5,000 wheat.
* Cattle on Feed report out his afternoon.

Commodity Weather Group Forecast

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In the U.S., rain/snow showers scattered from east-central CO into central KS in the past day, including snow totals of 1 to 3″. Rains also favored the southern Delta/Gulf Coast. Light showers track eastward to near the OH River in the next day, with lingering showers from the far southeast Plains through the southern Delta/Southeast in the next two days. Showers scatter across the C. Plains (mainly KS/CO) by next Thursday. Showers then scatter across northern/eastern parts of the Plains
wheat in the 11 to 15 day. Confidence in the Plains outlook is still limited due to model inconsistency, as the Euro headed drier in today’s outlook but the GFS has occasionally been now showing wetter solutions. Cold risks for wheat areas remain low through the rest of the month, as temperatures will not be cold enough in areas lacking snow cover to threaten damage. Locally heavy rains return to the Delta and southern/eastern Midwest late next week, with additional showers in the 11 to 15 day. After drying this week, the return of rain will slow fieldwork again and threaten localized flooding, primarily in the already wettest sections of the Delta. However, the 16 to 30 day outlook limits the wettest weather to areas closer to the Gulf Coast.

In the South America, rains (.25 to .75″, locally 1.5″) were isolated in Sao Paulo and Minas Gerais in Brazil yesterday. Showers remain isolated in Brazil until Sunday, when showers expand north across much of the safrinha corn over the course of the week. Additional rains late in the 6 to 10 day are likely to fill in any areas missing rains next week. Soy harvest delays will only be notable in Rio Grande do Sul. Showers ease stress in drier Robusta coffee areas later next week and aid late sugar growth. Argentina rains (.50 to 1.5″, locally 2.5″) are currently expanding and stalling early corn/soy harvest. Mostly dry conditions return Sunday and persist all of next week to allow harvest to get back on track.

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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