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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +2, soybeans +5, wheat + 1 1/2, crude oil +1.10, dollar +.80, gold -26.0 and the Dow +180.
* Higher grains on covering of the large short spec position, supportive corn exports and pockets of too much rain in Argentina.
* Friday’s Commitment of Traders report showed Managed Money short corn -137,937 (up -35,152), soybeans short -43,391 (off 24,746), wheat short -84,367 (up -3,322).
* The USDA Outlook Conference will take place this week.
* Friday’s Cattle on Feed report was out Friday afternoon. On Feed 100% vs 99.9% est, Placements 99% vs 99% est, Marketed 98% vs 98.4% est.

Commodity Weather Group Forecast

In South America, thundershowers lingered in northern Cordoba/central Santa Fe/Entre Rios/Santiago del Estero early in the weekend, but Argentina otherwise turned drier. Showers will occur across the northern 1/2 of the corn/soy belt between Wednesday and Friday, adding to recent very wet conditions in northern Cordoba, northern Entre Rios, and central Santa Fe. However, a break across the entire belt next week should keep flooding concerns localized and limit any damage, particularly since surpluses during the past 30 days remain modest due to a drier January in many of these areas. Yield potential remains high for corn/soy, with the next notable chance for showers then returning in the latter 1/2 of the 11 to 15 day period for the northern/western belt. Brazil picked up showers in mainly southwest Rio Grande do Sul, northern/far southern Parana,

northern/southwest Mato Grosso do Sul, Sao Paulo, far southeast Minas Gerais, southwest Goias, and western Mato Grosso during the weekend. Rains will be most notable in MGDS/Sao Paulo/Parana in the next ten days and could even threaten spotty areas of excess moisture, slowing fieldwork and port loading but aiding late coffee/sugar growth (Robusta areas could still be short-changed). While confidence remains low due to model disagreement, our outlook does still support a northward expansion of 6 to 15 day rain into Center-West safrinha corn areas, which is needed given recent drier weather in the region.

In the U.S., weekend rains (.25 to .75″, locally 1.5″) fell in the southern 1/3 of IL/IN/OH and the

southwest 1/4 of the Delta. Rains favor the Delta today, but the main storm favors the S. Plains/

Delta/eastern Midwest/Southeast at mid-week. The rains will benefit early wheat growth, with only

isolated wet spots. Additional rains in the 11 to 15 day should again reach the S. Plains and improve

topsoil moisture for early spring growth. No winterkill threats exist in the next two weeks for wheat.

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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