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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +2, soybeans +3, wheat +2, crude -.07, dollar -.65, gold +6.0 and the Dow -40.
* Higher markets on weaker dollar yesterday and overnight and Brazil’s downward revision of production estimates.
* Brazil’s government issued its monthly crop report this morning that estimated soybean production at 100.9 mln mt vs last month’s estimate of 102.1 mln mt.
* Weekly export sales out later this morning.
* Yesterday’s EIA weekly ethanol production came in at 959,000 bbl per day, off 2,000 from the previous week. Stocks came in at 22.3 mln bbl, up 926,000 bbl from last week.
* World food prices fell in January, dragged down by price drops in food commodities – particularly losses in sugar and dairy, according to the United Nations FAO.

Commodity Weather Group Forecast

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In South America, showers were limited to a few spots in northern Cordoba, La Pampa, far southwest Buenos Aires, and minor far northwest growing areas in Argentina in the past day. The expansion of significant rains across nearly all Argentina corn/soy areas remains universally supported by guidance between late Friday and early Tuesday, offering timely relief to recent rain deficits in over 1/2 of the belt. Minor stress has been occurring this week in about 20% of the belt (central Cordoba, central/northeast Buenos Aires, and parts of southern Santa Fe) that has been driest in recent weeks, but a lack of heat and the return of improved moisture will limit yield loss. Showers in Brazil scattered into mainly northern Rio Grande do Sul, northeast/far southwest Parana, central Sao Paulo, far southern Mato Grosso do Sul, western Mato Grosso, and far southwest Goias in the past day, with patchy daily activity into central/northwest areas through the weekend and lifting into the Northeast by later next week. The shifting rains will keep moisture adequate for late corn/soy/coffee/sugar growth in southern/eastern areas. Interruptions to early soy harvest should be minor and occur mainly in the short-term for Parana and late next week into the early 11 to 15 day in the Center-West. Port delays will occur but do not appear persistent. Rains appear most likely to focus on Argentina/southern Brazil in much of the 16 to 30 day but could begin to lift north again in early March.

In the U.S., rain (.50 to 1.5″, locally 3″) covered the Southeast in the past day, with snow (1 to 4″) in northeast IA/WI. Rains linger in the Southeast today. A drier pattern then dominates the Midwest/Delta/Southeast through next week, allowing wet soft wheat fields to drain. Rains return in the 11 to 15 day to the Delta/Midwest wheat, but wetness concerns will be limited by prior drying. Warmer model trends make winterkill threats for the Midwest/Plains minimal in the next 2 weeks.

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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