Morning Outlook

Overnight Highlights

• Overnight markets have corn +2, soybeans +8-11, wheat +1-3, crude oil +.30, dollar -.07, gold -5.0 and the Dow +65.
• Grains higher overnight on stabilization in the Chinese grain futures and continued strength of the soy crush margin.
• China announced it would start auctions of corn on May 27^th. No word yet on when soybean reserve auctions may start.
• Eastern soybean processors started to become more aggressive on cash soybean bids.
• The call for the official end to El Nino has brought continued support to fund manager ownership of grains and oilseeds.
• Yesterday funds sold 5,000 soybeans, 1,000 corn and bought 3,000 wheat.

Commodity Weather Group Forecast

In North America, rains favored C. SD, W. & SE NE, C. & E. KS, E. OK, S. MO, and N. AR yesterday. Rains will continue to focus in the middle of the country for the next week. Frequent rains across the W. Midwest will keep late corn/soy seeding slow. The E. Midwest remains open today allowing slower seeding areas in IN/MI/OH to make up ground and then spotty showers occur through the weekend, not shutting down all fieldwork but slowing the overall pace before drying early next week. The western Midwest finally gets a needed break beginning the middle of next week which promises a longer window to catch up soy seeding and this will extend into the eastern Midwest as well. Delta rains focus on AR only slowing late soy seeding while most of the belt sees favorably limited showers allowing soy and cotton seeding to push to completion. South-east cotton/soy planting improves with a week of dry weather and rains later next week have been scaled back in intensity which should avert wheat damage. SW Plains winter wheat harvest progresses next 5 days before harvest delays build due to rains next week. Frequent showers over the next 10 days benefit heading wheat in the C. Plains and early growth of spring wheat in the N. Plains and Can. Prairies. Drier trends in the Plains and western Midwest in the 11-15 day should benefit winter wheat harvest and late soy seeding while an upturn in rains for the Southeast will stall wheat harvest and soy seeding.

In South America, Argentina dryness continues to aid corn/soy harvest through the week. Rains are still expected to scatter across the area next week brining some needed moisture for wheat germination. Brazil corn/sugarcane were dry yesterday. Rains this weekend and the middle of next week aid corn filling in south 1/2 but stress late development in north. The dryness in the north will aid early corn harvest. Sugarcane harvest delays next week focus on south 1/3 but slow most areas.

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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