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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +2, soybeans +8, wheat +4, crude oil +.25, dollar -.03, gold +7.0 and the Dow +30.
* Grain markets higher this morning on short covering and market fear of pressing into new lows as spring weather chatter builds.
* Weekly charts are working on reversal patterns as today finishes this week’s bar.
* Brazil’s congress passed a bill that will raise the country’s Biodiesel blend to 10% over the next three years vs the current 7%.
* USDA will be out with supply and demand report Wednesday with the trade expecting incremental builds across corn, soybeans and wheat.
* Yesterday funds bought 6,000 wheat, 2,000 soybeans and sold 1,000 corn.
* Weekly Commitment of Traders report from the CFTC will be out this afternoon.

Commodity Weather Group Forecast

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In South America, showers in Brazil favored northern Mato Grosso, eastern Goias, southeast Minas Gerais, eastern Sao Paulo, southeast Parana, eastern Santa Catarina, and eastern Rio Grande do Sul in the past day. Rains increase in frequency and extent in the northern safrinha crop areas over the next ten days and this should slowly replenish low soil moisture f or most of the region and ensure full stands in the key Center-West region. Shower potential has improved for the late soy crop in Bahia but showers still struggle to reach Espirito Santo robusta coffee areas (nearly 25% of national crop). Showers begin focusing more in the south in the 11-15 day but harvest interruptions should be minor given the favorably dry conditions the next 10 days. Only Rio Grande do Sul has wetness concerns in 16-30 day while port loading conditions farther north remain favorable. Argentina has showers confined to southwest Buenos Aires yesterday. Showers remain limited in northern areas aiding drainage for corn/soy fields. Showers pick back up in the 11 to 15 day in the northern half of the belt and are likely to persist into the 16 to 30 day which could lead to a return of wetness issues that would slow early harvest progress.

In the U.S., rain (.25 to 1.35″) fell in the eastern 1/2 of the Delta and Southeast in the past 24 hours. The next storm will be strong and slow moving, focused on the Delta/Midwest wheat areas from Tuesday through Friday of next week. Rains of 2-6″ are likely to cover the western 2/3 of the Delta and the southeast 1/2 of the Midwest soft red wheat leading to localized flooding with greatest damage potential focused on AR. Plains shower potential focuses on the southeast 1/4 of the belt next week with showers also likely in the northern 1/4 this weekend and again in the 11-15 day. Chance for improving declining soil moisture reserves in the southwest 1/3 of the belt remain very low over the next 2 weeks hampering accelerating crop 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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