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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -2, soybeans -3 ½, wheat -3, crude -1.20, dollar +.30, gold +24.0 and the Dow -240.
* Rains in Argentina, lower financial markets and the holidays of Carnival and Lunar New Year have grains under pressure this morning.
* Argentina holiday has their financial and grain markets closed Monday and Tuesday.
* USDA will release its monthly supply/demand report. Analysts are expecting a small increase in corn, wheat and soybean ending stocks.
* Ukraine’s ag ministry suggested that the acres of failed winter crops will likely be re-seeded with corn.
* Egypt’s ag minister and GASC held a joint press conference to reassure grain suppliers there was no division over ergot and that they would accept shipments containing up to .05%.

Commodity Weather Group Forecast

In South America, weekend showers were at or above expectations in Argentina, favoring La Pampa, central Cordoba, central/southeast Santa Fe, Entre Rios, and central/western Buenos Aires. This system lingers in central/northern areas today, with additional rains likely by Friday/Saturday, late in the 6 to 10 day, and again in the 11 to 15 day. The moisture is quite timely to meet building corn/soy needs, and wetness concerns will be limited. Highs did rise into the low to mid 90s in central/northern Argentina and far southwest Brazil ahead of this system but will now begin to moderate. Brazil picked up the best rains in mainly western Mato Grosso, northern Mato Grosso do Sul, far southern Goias, southwest Minas Gerais, and northern Sao Paulo. While a few showers reach the south on Tuesday/Wednesday, the bulk of rains will continue to scatter into central areas this week and then lift to the Northeast in the 6 to 10 day. This will aid most coffee/sugar areas once again, although the return of wet weather to the northeast 10% of the corn/soy may lead to spotty issues after a wet January. However, the recent two-week break in rain has helped to limit concerns, and our outlook sides with guidance that starts to shift rains back to the south/west in the 11 to 15 day once again. While minor intermittent interruptions will occur to soy harvest/ safrinha corn seeding, no major concerns are likely, and sufficient rain should reach far southern soy to support late growth.

In the U.S., rain (.25 to 1.5″) lingered in the east 1/2 of the Southeast this weekend. Light snow (1

to 2″) scattered across the Midwest yesterday and continues today, lingering in the east tomorrow.

More light snow is possible late in the week. A strong cold push in the 6 to 10 day raises winterkill

risks for the Midwest, but the snow could provide needed protection. Delta wheat benefits from

over a week of dry weather prior to a wetter pattern next week, keeping wetness concerns 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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