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Morning Outlook



Overnight Highlights

* Overnight trade has corn mixed, soybeans +1, wheat +2, crude +.20, dollar index even, gold +12 and the Dow Jones +140.

* Scattered showers throughout the Midwest this morning. Primary accumulation past 36 hours in North Texas, Oklahoma, West Kansas, Nebraska and South Dakota.

* Asian flour millers have stepped up US wheat purchases as dry weather in parts of the U.S. and Russia raise concerns over grain supplies.

* Ethiopia is seeking a million tonnes of wheat in one of the biggest import tenders in recent years as it deals with poor local harvests linked to El Nino.

* China’s central bank cut interest rates for the sixth time since November in another attempt to jumpstart the economy.

* Argentine Presidential election is Sunday and analysts and grain traders expect the next president to lower grain export taxes.

* Weekly soybean export sales now stand at 55% of the total USDA estimate vs the five year average for this date of 62%. Corn sales now equal 25% of the total USDA estimate vs the five year average for this date of 44%.

* Rumor was floating yesterday that China was going to charge the U.S. with dumping of DDGs into China. No confirmation of this yet.

* More talk of China shopping several US soybeans for Nov/Dec delivery. Good crush margins and expanding hog herd supporting their buying.

* Cattle on Feed report out today.

Commodity Weather Group Forecast


In the U.S., showers (.25 to 1.5″, locally 4″) favored much of the Plains hard red wheat yesterday but gapped over the eastern half of KS and parts of northern OK. Light weekend rain (.25 to .75″) spreads across the Midwest, benefiting soft wheat but keeping corn/soy harvest delays minor. Heavier rains push into the Delta late in the weekend and the southern Midwest at the middle of next week. This will aid soft wheat growth but slow late Midwest/Delta harvest. Additional showers late next week may benefit wheat in OK and potentially southern KS. TX cotton dries favorably over the next week, but rains late next week could keep harvest slow. Dry weather aids Southeast cotton/soy harvest, with only minor delays late in the 6 to 10 day.

In South America, thundershowers occurred in a few spots in eastern Mato Grosso, Goias, and southern/northeast edges of Mato Grosso do Sul in the past day, but favored areas included parts of central/southern Minas Gerais, eastern Sao Paulo, Parana, Santa Catarina, and far northern Rio Grande do Sul. Rain chances in Center-South and Center-West Brazil over the next week and again late in the 6 to 10 day into the 11 to 15 day will ease recent dryness concerns for coffee/soy, although sugarcane fieldwork interruptions will also increase. This is similar to wetter compared to yesterday’s outlook, particularly in the 11 to 15 day. Wheat harvest and port delays will occur intermittently but do not appear persistent. areas in the next two nights will not threaten any damage. Argentina still sees rains in the 6 to 10 day, but the best chances have shifted farther north/west. This will still aid topsoil moisture in much of the corn belt, but dry spots could begin to develop for wheat areas in the southeast 1/2 of the wheat belt (Buenos Aires). Any light frost tonight and in the 11 to 15 day in far southern wheat areas will be of little concern, as wheat is not yet heading across these 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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