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Morning Outlook


Overnight Highlights

* Overnight trade has; corn +3, soybeans +6, wheat +4, crude +.65, dollar +.60, gold -22.0 and the Dow +200.
* Strong outside markets and short covering supporting grain markets overnight.
* Ships waiting to load in Brazil stand at 163 waiting to load corn and soybeans vs 66 at this time last year. Fortunately for shippers, shipping rates are significantly lower compared to a year ago. While the wait time is well above last year, it is close to the five year average.
* Brazil analysis AgRural raised its estimate for the Brazilian soy crop to 99.7 mln mt vs the previous month estimate of 98.7 mln mt.
* NOPA crush will be out this morning at 11:00 CT.
* Egypt rejected four cargoes of US soybeans due to higher than allowed levels of the fungus ambrosia. The vessels are around 30,000 tonnes each.
* Current base price for corn is 3.88 and soybeans at 8.85 with nine more trading sessions left to set final price.
* Russia, Saudi Arabia, Qatar and Venezuela agreed to freeze their production levels of crude oil at the January pace if other OPEC members pledge the same.

Commodity Weather Group Forecast

In South America, showers were locally heavy (4″+) in Argentina over the past 4 days as significant rains covered all but the southwest quarter of the corn/soy area. Two cold fronts bring additional extensive rains to nearly all of Argentina corn/soy this week. Overall the rains will provide the crops with favorable moisture for key development. Excessive wetness will be minor as wettest areas have seen below normal rains in the past month. Shower activity drops off in the wetter southern are-as by the 6-10 day and is more limited across the belt by the 11-15 day keeping wetness threats at bay. In Brazil, showers over the past 4 days have favored Rio Grande do Sul, Santa Catarina, northern/eastern Parana, Sao Paulo, northern Mato Grosso do Sul, eastern Mato Grosso, and western Goias. The moisture benefit late soy growth in Rio Grande do Sul. Rains focus on Center-South Brazil over the next 10 days slowing harvest particularly in Parana and Mato Grosso do Sul but notably improving moisture for sugarcane growth in Sao Paulo. The rains will slow port loading in this region. The main ranis should then start to shift farther north in the 11-15 day bringing more needed rains to coffee areas in Minas Gerais and Espirito Santo. Mato Grosso has limited rains the next 10 days aiding the key safrinha corn area’s planting progress. Drier conditions in Mato Grosso do Sul and Parana in the 11-15 day should ease harvest delays of soybeans and first crop corn.

In the U.S., snow (1 to 5″) scattered across the C. Plains/Midwest on the weekend. Delta/Southeast rains (.5 to 1.5″, locally 4.5″) only led to isolated flooding. Showers will be very limited the next 2 weeks with main rains confined to the Delta/ Southeast in the 6-10 day. This will keep wetness threats confined to the eastern edge of Southeast wheat areas. Temperatures trend back to warmer than normal for much of the next 2 weeks, keeping Plains/Midwest wheat safe from winterkill.

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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