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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -4, soybeans -4, wheat -6, crude -1.15, dollar -.30, gold +7.0 and the Dow -90.

* Pressure in grains overnight on lower energy, favorable South American weather and the COT report showing fund have covered a large portion of their shorts.

* Russian wheat prices rose last week on the strength of the ruble. Black Sea prices for 12.5% pro were at $182 a tonne FOB – up $2 from a week earlier.

* Commitment of Traders shows Managed Money Corn: short 87,197, off 71,013. Soybeans: short 30,456, up -4,683. Wheat: short 50,699, off 19,759.

* Friday funds bought 11,000 corn, 9,000 soybeans and 3,000 wheat.

* USDA semi-annual Cattle Inventory report estimated total Cattle & Calves at 103 percent vs trade estimate of 102 percent. This has the cattle population at its highest level since 2011.

Commodity Weather Group Forecast

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In South America, weekend rains scattered across mainly far northern Argentina but did include a few patchy sections of west-central/northern Cordoba, central Santa Fe, northern Entre Rios, and western/far southeast Buenos Aires. While a lack of heat will mitigate impacts to yield potential in the driest 20% of the corn/soy belt this week (east-central Cordoba, central/ northeast Buenos Aires, and patchy sections of Santa Fe), broader coverage is needed soon to recharge topsoil moisture.
Showers late Thursday into Saturday are not expected to reach into most of the dry spots, but guidance has come into better alignment for significant 6 to 10 day rain that could narrow concerns to only a few spots in the southeast 10% of the belt. Many models are even wetter than our outlook. Brazil picked up showers in the south/west over the weekend, favoring central/ northern Rio Grande do Sul, southwest Parana, western Mato Grosso do Sul, and central/southwest Mato Grosso. Rains
focus south/east in the next ten days, providing further improvement for late summer corn/soy growth in RGDS but hindering early harvest and threatening port delays in Parana/Sao Paulo (particularly in the 6 to 10 day). Rains are more likely to spread back northward in the 11 to 15 day, aiding coffee/sugar. Recently very wet fields in the Northeast will also see rain, but the break in the next ten days helps to limit concerns. Center-West soy harvest encounters mostly minor interruptions.

In the U.S., showers were confined to rain (.10 to .50″) in the northern Delta last night and snow
(1 to 3″) in northeast CO/southwest NE on Saturday. 6 to 15″ snow totals in the next two days will benefit Plains wheat but stress livestock in CO/ NE/northwest KS/northwest IA. Midwest/Delta wheat areas see only rain and minimal damage. Rains then hold off until the 11 to 15 day and focus on Delta wheat, with wetness concerns still isolated. No winterkill threats exist.

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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