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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/4, soybeans -1, wheat even, crude +.45, dollar -.30, gold +3.0 and the Dow even.
* Quiet news has markets mixed overnight. Energies trading higher. Global equities mixed. Fund buying supported the market yesterday, will they be back today?
* The largest ever foreign purchase by a Chinese firm is underway with ChemChina’s $43 billion bid for Syngenta. The deal will likely face plenty of regulatory hurdles. The move underscores the Chinese priority of food security and domestic agricultural modernization.
* Gulf soy premiums have been under pressure this week as Chinese move to South America.
* Yesterday March Corn closed at its highest level since Dec 18, Soybeans the highest close since Dec 21.
* Yesterday funds bought 9,000 corn, 7,000 soybeans, 1,000 wheat.

Commodity Weather Group Forecast

In South America, mostly dry conditions continued in all but far northern Argentina in the past day, but models remain aggressive with a series of disturbances between Friday and Monday for dry corn/soy areas (particularly to start next week). At least 1/2 of the belt has at least modest rain deficits in the past month, although the most notable dryness remains focused on about 20% of the belt (central Cordoba, central/northeast Buenos Aires, and parts of southern Santa Fe). The driest areas will see minor reductions in yield potential this week, but relatively mild temperatures are limiting losses. A secondary disturbance at the middle of the 6 to 10 day also scatters a few showers in Cordoba/Santa Fe, while 11 to 15 day rain retreats to the west. Brazil picked up patchy showers in western Rio Grande do Sul, southeast/far western Parana, central/southwest Mato Grosso do Sul, southern Mato Grosso, northern Goias, southeast Tocantins, and central Bahia in the past day. Showers aid late corn/soy growth in RGDS in the next ten days, lifting northward by mid-month to aid coffee/sugar as well. Center-West showers will remain sporadic in the next ten days, with soy harvest and port delays focused on Parana. Minor interruptions briefly build in the 11 to 15 day for the Center-West, but rains ease in Parana. Very wet areas in the Northeast last month will need to be watched as 11 to 15 day rains return, but two weeks of dry weather in the meantime is helping to limit concerns.

In the U.S., rain (.25 to 1.75″, locally 5″) covered the Delta/eastern Midwest in the past day, with

snow (4 to 12″) in NE/northwest IA/southern MN/ WI. Drier weather now dominates the Midwest/

Delta/Plains, aiding dry down of wet soft wheat fields. A storm should develop in the 11 to 15 day

and favors the Delta/eastern Midwest. As with the current storm, wetness threats are minor. A Midwest

winterkill threat in the GFS is pushed back to the 11 to 15 day, keeping risks very low.

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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