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Morning Outlook


Overnight Highlights

* Overnight trade is currently corn +1, soybeans +5, Chicago wheat +3, KC wheat +2, MPLS wheat +2, crude -1.00, gold +.30, and the US dollar +.20.
* Argentine President moved yesterday to speed up grain exports and help bring in more money announcing that it would remove limits on how much corn and wheat the country can sell for export.

********* SovEcon analysts expressed concern that European parts of Russian grain growing areas have thinning snow pack that could leave large parts of the crop open to damaging freeze over the next several days.

********* Yesterday’s supportive trade allowed corn and wheat to stave off accelerating through their lows, but follow through is necessary to prevent the next leg lower in the short term.

********* Trade continues to eye rains in Central Brazil as positive, but there is also value-buying going on resulting in a tug-of-war of prices that is not entirely driven by the current fundamental outlook of the crop.

Commodity Weather Group Forecast

In South America, thundershowers were scattered in the past day for Brazil but did bring as much as 1 to 3″ to parts of central Mato Grosso, central/western Goias, eastern Mato Grosso do Sul, western Sao Paulo, and central/southwest Rio Grande do Sul. Rains continue to gradually expand in northern crop areas, particularly late this week into the 6 to 10 day. However, a relatively active pattern continues into the 11 to 15 day as well, and significant relief is well-supported for drier spots in the northern 1/4 of the corn/soy belt and all coffee/sugar areas. While showers are still possible in the next two days and again at the middle of next week in recently wettest sections of southern Brazil (approximately 10% of corn/soy), the heaviest totals do temporarily shift farther north. However, the 11 to 15 day trended wetter, and this will keep some flooding concerns in place (particularly for western RGDS). Light showers scattered into central Argentina in the past day, but the bulk of the rain favored southwest Buenos Aires/La Pampa/northern Entre Rios. Rains will favor the far western belt in the next few days and then expand across much of the belt by late Sunday/Monday, slowing wheat harvest. A few showers are also possible late in the 6 to 10 day, with a broader event again in the 11 to 15 day. Patchy areas of surplus moisture are possible in western/ northeast areas from the rain in the next week, but the rains will otherwise be welcome for corn/soy and will ease recent 90s.

In the U.S., rains (.25 to 1″) scattered across the Southeast in the past day. Drier weather allows standing water to drain over the next 2 weeks. Only light showers are expected in the Midwest late next week, but more rains in the Delta then could exacerbate damage in AR. Colder conditions over the next 10 days in the Plains/Midwest wheat are not strong enough to threaten winterkill, but some models hint at a stronger cold push late in the 11 to 15 day that will be monitored.

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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