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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +1, soybeans +2, wheat +2, crude oil -.05, dollar -.10, gold -2.0 and the Dow +30.
* Grains firmer tone on end user buying and short covering.
* USDA outlook conference begins today. Trade expecting higher corn and soybean acreage estimates for the coming season.
* Weekly export sales will be out this morning.
* Yesterday’s EIA ethanol report showed production up 19,000 bbls/day for the week. Stocks were off 113,000 bbl for the week.
* Argentina reported a record January soybean crush of 3.8 mln mt compared to 2.0 mln the previous year.
* Higher cash movement and slower export demand has Gulf premiums lower.

Commodity Weather Group Forecast

In South America, showers were limited to patchy sections of mainly northern/eastern Mato Grosso, southwest Goias, far southwest Minas Gerais, northern/eastern Sao Paulo, and central/northern Mato Grosso do Sul in the past day for Brazil, but coverage and amounts remained limited compared to expectations. While an active storm track continues for the next ten days in Parana/MGDS/Sao Paulo/southern Minas Gerais, the underperformance of rains thus far this week suggests that the

risk for severe fieldwork/port loading delays or flooding threats is low. While still some model disagreement, a northward expansion of showers is still favored to start next week and continue into the 11 to 15 day, and this moisture is needed to ease rain deficits this month in Center-West Brazil. The dryness has largely been too late to impact soy but has been a building concern for safrinha corn. The rains will aid late coffee/sugar growth (confidence is lowest for Robusta coffee), and sugar

harvest remains at least one to two months away. Argentina picked up scattered showers in central/northern Cordoba, eastern Buenos Aires, and very spotty sections of southern Entre Rios and southern/western Santa Fe. Broader coverage occurs tonight/tomorrow, favoring central Cordoba/central Santa Fe/Entre Rios. This will add to developing wetness concerns this

month, but a break in the pattern next week will keep damage risks very limited and maintain high corn/soy yield potential.

In the U.S., rains (.25 to 1.25″) favored the eastern Midwest/far northern Delta/Southeast yesterday,

with snow (3 to 10″) in southern IL/northwest IN/MI. Storms return to the C. Plains/Midwest/

Delta early in the 6 to 10 day and to the S. Plains/Delta/southeast Midwest in the 11 to 15 day. This

moisture will ensure most wheat has favorable moisture supplies for spring growth. Southeast

CO/southwest KS could still get missed, hampering early wheat growth.

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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