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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +1/2, soybeans +1/2, wheat even, crude oil -.50, dollar +.14, gold even and the Dow -30.
* Slightly higher grain markets on bargain buying overnight.
* China estimated their soybean imports for 15/16 will be 83 mln mt vs 78.3 mln last year. The USDA estimate is 80.5 mln mt.
* USDA reported corn used to make ethanol in January came in at 441.3 mln bu vs 451.3 mln in December. Held back by low margins and growing inventories.
* USDA reported January soybean crush at 4.81 mln mt compared to 5.01 mln in Dec. This was slightly above trade expectations.
* Yesterday funds sold 5,000 soybeans, 4,000 corn and 5,000 wheat.

Commodity Weather Group Forecast

In South America, widely scattered showers in Brazil occurred in central/western Mato Grosso, southeast Goias, southwest Minas Gerais, central Mato Grosso do Sul, northeast Sao Paulo, southern/eastern Parana, eastern Santa Catarina, and southern/eastern Rio Grande do Sul in the past day. Rains will expand across drier northern crop areas in the next ten days, aiding safrinha corn in the Center-West and late soy/coffee/sugar growth in the Northeast and easing building dryness. Robusta coffee areas could still be short-changed, leaving up to 20% of the coffee with lingering stress. Showers begin to ease in the north at mid-month as tropical support (MJO) wanes, and rains shift back to the south in the 16 to 30 day after a quieter first 1/2 of the month in those areas. Argentina saw lingering showers in mainly southern Entre Rios, northern Santa Fe, and Corrientes early yesterday. The wettest sections of the belt in far east-central Cordoba, southern Santa Fe, Entre Rios, and far north-central Buenos Aires (1/4 of corn/soy) will be drier through at least the next ten days to allow fields to drain and to limit damage. Scattered showers return in the 11 to 15 day, and the return of a wetter 16 to 30 day pattern could hinder early harvest efforts and will need to be watched for any renewed threats of wetness damage.

In the U.S., rain (.25 to 1″) fell in the southeast 1/4 of the Midwest and north 1/2 of the Delta wheat areas in the past day. A few light showers fall in the Midwest/Delta tomorrow. The main storm arrives at the middle of next week. Those rains recharge soil moisture across the western Delta/western and central Midwest. Localized flooding is possible in the Delta, but the majority of the wheat benefits as growth accelerates given the mild pattern. Plains showers re-main confined to north and east fringes of the hard red wheat over the next 2 weeks, stressing growth in the southwest 1/4 of the belt.

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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