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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1/4, soybeans +3, wheat +2, crude +.10, dollar -.14, gold -3.9 and the Dow -5.

* Firmer trade this morning as the trade debates Brazilian weather stress and Argentine selling has not yet overwhelmed the market.

* USDA Quarterly Hogs and Pigs report will be released at 2pm CT this Wednesday.

* Talk that China bought 1 to 2 cargoes of US soybeans yesterday along with a cargo from Argentina.

* Malaysian palm oil futures had their third day of gains on Tuesday. Buoyed by low production data.

* Monday funds sold 5,000 corn, 1,000 soybeans and 3,000 wheat.

Commodity Weather Group Forecast

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In South America, widely scattered showers occurred in mainly north-central/southeast Mato Grosso, central/northwest Mato Grosso do Sul, and far western Goias in Brazil in the past day, with more general coverage and heavier totals in Santa Catarina and Rio Grande do Sul. Scattered showers linger in central/northwest Mato Grosso in the next two days, but rains otherwise still focus on southern Brazil in the next ten days. This will leave about 20% of Brazil corn/soy subject to yield losses, including parts of central/northeast Mato Grosso, Tocantins, eastern Goias, northern Minas Gerais, and Bahia. More widespread relief is still forecast for northern crop areas in the 11 to 15 day, along with a brief but needed break from heavier rain totals in the south. However, surplus moisture will still keep soy rust risks elevated for Parana/RGDS (1/3 of belt) and will require timely fungicide applications. Flooding should remain localized. Argentina picked up significant rain in southern Cordoba, far northeast La Pampa, and much of Buenos Aires in the past day, with frequent showers over the next two weeks. The greatest risk for excess moisture will be in southern Cordoba, northern Entre Rios, and northern Santa Fe (15 to 20% of corn/soy), but most areas will benefit from the moisture. Wheat harvest will slow, but damage risks are limited at this point.

In the U.S., rains (.25 to 1.5″, locally 3″) covered the northeast 2/3 of the Midwest, southeast 1/3 of the Delta, and much of the Southeast wheat in the past day. Showers linger in the Southeast today, with more showers for the Midwest/Delta on Wednesday. A complex weekend storm produces substantial rains across the eastern Plains/Delta/Midwest wheat areas by early next week, with flooding risks focused on MO/IL/AR. Heavy snow (6 to 12″+) is likely in the western Plains, benefiting wheat but stressing livestock. Colder trends finally push Plains/ Midwest safely into dormancy in the 11 to 15 day.

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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