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Morning Outlook

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Overnight Highlights

* Overnight trade has corn even, soybeans +3, wheat -3/4, crude +.18, dollar +.11, gold +2.0 and the Dow +11.
* Mixed trade overnight on quiet news. Market waiting for a spark.
* China will be celebrating their Lunar New Year next week.
* USDA monthly report next Tuesday. Trade expectations for ending stocks in the US of corn, soybeans and wheat to be incrementally higher since January. Trade expects a small drawdown in global stocks.
* FOB soybean values at the Gulf have weakened this week.
* Commitment of Traders report out this afternoon to update fund positions.
* Yesterday funds sold 7,000 corn, 6,000 wheat and 1,000 soybeans.

Commodity Weather Group Forecast

In South America, showers increased in western Argentina overnight, favoring parts of La Pampa, central/southern Cordoba, and western Buenos Aires. With the possible exception of the southeast 5 to 10% of the corn/soy, substantial relief (mostly 1 to 2″) through Monday provides timely improvement in soil moisture, with guidance also a bit wetter for the latter ½ of the 6 to 10 day. Current stress has been mainly focused on 20% of corn/soy, including central Cordoba, central/northeast Buenos Aires, and parts of southern Santa Fe. Highs were near 90°F yesterday, but a lack of severe heat has helped to limit reductions in yield potential ahead of the rain event. Brazil showers scattered across mainly central/northeast Mato Grosso do Sul, northern Parana, southwest Sao Paulo, and western Mato Grosso in the past day. Similar placement occurs with showers into early next week, spreading into Northeast Brazil in the 6 to 15 day and easing to the south to support late corn/soy as well as coffee/sugar growth. Minor interruptions to both soy harvest and port loading will occur as showers occur, but the lack of a persistently wet pattern in any one region will limit concerns. Areas in the northeast 10% of the summer corn/soy will need to be monitored for excess moisture after a wet January, but the two-week dry break ahead of the return of wetter weather will limit threats. 16 to 30 day guidance is in better agreement for rains to favor Argentina and far southern Brazil.

In the U.S., rain (.50 to 1.65″) lingered in the Southeast yesterday. A mainly dry pattern dominates

the Midwest/Delta/Southeast through next week aiding the dry down of wet wheat fields. Light snow does fall in the eastern Midwest Monday. Rains early in the 11 to 15 day favor the Delta/southern Midwest wheat, but wetness concerns are limited given prior drying. Despite colder model trends, winterkill threats for the Midwest/Plains remain 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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