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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +2, soybeans -1, wheat +3, crude oil +.15, dollar +.14, gold +12.0 and the Dow -30.
* Grains mixed to higher on short covering and end user buying.
* Chinese Govt officials announced it would unveil its state corn policy after the People’s Congress meeting next week. One official noted “we have to make our prices at home resist imports.”
* Commitment of Traders report Friday showed Managed Money corn short -134,334 (off 3,603), Soybean short -22,059 (off 21,332) and wheat short -98,680 (up -13,313).
* Brazil’s state of Mato Grosso reported soybean harvest 52.5 percent complete vs 53.4 percent LY and 49.6 percent on average.

Commodity Weather Group Forecast

In South America, weekend showers did finally expand in Brazil, favoring parts of central/western Mato Grosso, central Goias, southeast Minas Gerais, central/western Sao Paulo, Mato Grosso do Sul, northern/far southwest Parana, and northern/southeast Rio Grande do Sul. The focus for the bulk of the rainfall in the next two weeks lifts northward peaking next week. This should limit the severity of fieldwork/port loading delays in recently wetter central areas, while also providing much needed

moisture to aid late soy/sugarcane/coffee growth and increasing moisture needs for safrinha corn in recently drier sections of the Center-South, Center-West, and Northeast. Rains are projected to shift back farther south in the 16 to 30 day, as support from tropical forcing (MJO) wanes. Argentina was wetter than expected early in the weekend, as rains favored parts of east-central Cordoba, Santa Fe, Entre Rios, far northern Buenos Aires, and Santiago del Estero. The wettest areas of concern focus from east-central Cordoba into southern Santa Fe and Entre Rios (up to 1/4 of corn/soy) at the moment, with the late-week rains likely adding to localized flooding in the region. While there are some forecast solutions that lean wetter, most guidance continues to suggest that rains will focus farther west in the next two weeks (best chances Friday/Saturday and in the 11 to 15 day) to ease these concerns and limit any damage.

In the U.S., light showers (.10 to 30″) fell across the eastern Midwest yesterday. An active storm

track in the Delta/Midwest wheat areas in the next two weeks is largely beneficial, given somewhat

low soil moisture levels and accelerating wheat growth with the milder pattern. Plains showers are

limited this week for wheat and favor eastern areas next week, leaving the southwest quarter of the

crop area struggling due to limited moisture. However, the risk for loss in yield potential is still 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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