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Morning Outlook

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Overnight Highlights

* Corn 1 lower, Soybeans 4-5 lower and Wheat 2-3 higher in overnight trade. Crude +0.40, Dollar Index -0.15, Gold -5.4 and global and domestic Equities softer.

* The wheat market continues to worry about dryness in Russia and Ukraine.

* Trade will focus on preparing for tomorrow’s USDA crop report. Analyst expectations are for a slight drop in both corn and soybean ending stocks.

* EIA reported weekly Ethanol production at 950,000 barrels, up 7,000 from last week with stocks in at 18.8 million barrels – off 30,000 barrels from last week.

* Yesterday funds were reported to have sold 6,000 corn, 5,000 wheat and bought 5,000 soybeans.

* Dry areas of Brazil are seeing some rains with more in the forecast which should help with planting in the dry soils.

Commodity Weather Group Forecast

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In the U.S., showers fell in central/northern MN as well as the western 1/3 of the TX Panhandle, northwest OK, and southwest KS yesterday. Despite cold fronts early and late in the 1 to 5 day, amounts in the Midwest are generally very light. The dry pattern continues in the 6 to 10 day, and rains in the 11 to 15 day are now more limited as the system exiting the Southwest is much weaker. Harvest progress accelerates across the Midwest, but concerns remain for early soft red wheat growth problems in the eastern Midwest and Delta. Plains wheat showers taper off in southern KS today, and the next rains in the 11 to 15 day have been scaled back. This could keep dryness problems in place for northeast CO and western KS. Southeast harvest recovery will be slowed by showers this weekend, but drier conditions in the rest of the two-week period should allow progress to resume. Pacific Northwest showers are still coming in light, raising concerns for wheat establishment.

In South America, only spotty Brazil showers were noted in northern areas, while heavy rains spread across central/ southern Rio Grande do Sul. Southern Brazil is favored for rains in the next two weeks, particularly RGDS. This will threaten wheat quality and cause localized lodging, with occasional corn/soy seeding delays in central Brazil. While a few weekend showers scatter into Mato Grosso soy, models shifted drier. Rain deficits likely persist this month in the north, hindering early soy growth and causing continued notable coffee bloom issues (particularly in key areas of Minas Gerais). Argentina showers were limited to a few far southwestern areas yesterday. Rains next Wednesday favor the southern 1/2 of wheat and up to 1/3 of corn. Crop conditions should be stable, but moisture deficits may begin to develop in about 1/2 of the corn belt by the end of the month. Light frost tonight in southern Buenos Aires only threatens spotty wheat damage at most.

Morning Market Snapshot

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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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