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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/2, soybeans -3, wheat +1, crude +.46, dollar +.63, gold even and the Dow +30.

* US dollar finding some recovery overnight after yesterday’s remarkable sell-off following posting 12 year highs.

* Fed Chair Yellen’s comments during the economic committee testimony yesterday included; “weak growth in the global economy depressing US exports” and that “US spending is on ‘solid course'”.

* USDA Supply and Demand report along with world production estimates will be out next Wednesday. Estimates call for slight increase in US corn and wheat stocks and a small reduction in soybean stocks.

* FCStone lowered their 15/16 Brazil first season corn harvest forecast to 27.8 mln mt down from the previous outlook of 28.1 mln mt and noted second season planting could be delayed because of slow soybean development.

* Stats Canada production report out this morning.

* Thursday funds bought 7,000 corn, 6,000 soybeans, 9,000 wheat.

Commodity Weather Group Forecast

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In South America, showers were widely scattered in Mato Grosso/southern Goias/Sao Paulo/Parana/far northeast Mato Grosso do Sul in the past day, with the most organized Brazil rains in west-central/northern Rio Grande do Sul and central Minas Gerais. More expansive coverage returns to the Center-West early next week and with two opportunities during the following week. While the heaviest rains are likely to favor northern Parana, MGDS, Sao Paulo, and Minas Gerais in the next 10 days, notable corn/soy stress should remain limited to only the northern 10 to 15% of the belt. The lack of a sustained dry period in the southern 1/2 of the soy belt will keep rust risks elevated, particularly for Parana. The active pattern will otherwise generally benefit corn/soy/coffee/sugarcane growth. Highs will continue to peak in the mid 90s to low 100s for two more days and again late next week in the Center-West and Northeast, but shower chances otherwise suppress daytime highs.
Argentina picked up very patchy showers in the north/east in the past day, favoring Santiago del Estero. The best chance for near-term rain favors Cordoba, mainly late Monday/Tuesday. However, frontal passages next weekend and again in the 11 to 15 day then offer relief to all but far southern areas following a brief hotter spike into the 90s late next week.

In the U.S., rain (.10 to .75″) was limited to the Pacific Northwest yesterday. Showers remain focused on the Pacific Northwest for the next week, easing soil moisture shortages. Rains will develop by next weekend in Midwest/Delta wheat areas, but the current dry spell should prevent problems. Another rain event in the 11 to 15 day in the Delta and eastern Midwest is not likely to cause wetness damage and will improve low soil moisture in the eastern Midwest. Plains dryness is not a concern, as recent rains have replenished low soil moisture and mild temperatures still allow late wheat growth.

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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