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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -1, soybeans -3, wheat -2, crude oil +.40, dollar +.05, gold +10.0 and the Dow -50.
* Grains lower on profit taking and doubt that tomorrow’s USDA report will hold any bullish news.
* Chinese Dalian exchange corn futures under pressure, soy and meal lower as well.
* China’s largest ethanol producer is urging the government to support ethanol blended gasoline to help cut the record state corn stocks.
* Texas corn planting is 5 percent complete vs 5 percent last year and 12 percent on average.
* Tomorrow’s USDA supply/demand report has the trade expecting corn at 1.854 bln bu vs 1.837 bln last month and 1.731 bln last year. Soybeans are expected at 452 mln bu vs 450 mln last month and 191 mln last year.

Commodity Weather Group Forecast

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In South America, scattered showers occurred in central/southeast Mato Grosso, southern/eastern Tocantins, western Bahia, Goias, central/northwest Minas Gerais, north-central Mato Grosso do Sul, and far eastern Sao Paulo in Brazil during the past day. While rains are not particularly heavy or widespread on any single day, daily showers through the weekend in Center-West Brazil will aid safrinha corn growth, with rains then diminishing next week and shifting back to southern soy areas by the 11 to 15 day. While interruptions to fieldwork and port loading will linger this week in central Brazil, delays should then briefly ease next week to limit concerns. Rains will aid late coffee/sugar growth in the Center-South in the short-term, with the exception of some Robusta areas (15 to 20% of the coffee belt). Rains favored northern/western Cordoba, west-central Santa Fe, and far northeast La Pampa overnight in Argentina. Scattered rains return by the middle of next week to mainly southern/western corn/soy areas, but broader coverage still likely holds off until the 11 to 30 day. This will allow the wettest spots in southern Santa Fe/Entre Rios to drain further, but wetness concerns and harvest delays may return later this month.

In the U.S., rain (.25 to 1.5″, locally 4″) was confined to the southeast corner of Plains wheat overnight. Moderate to heavy rains spread across the Delta tonight and Midwest tomorrow/Thursday, with additional showers from a second surge over the weekend. Extensive 2 to 6″ totals are likely to lead to localized flooding in AR/LA soft wheat, with additional 11 to 15 day rains likely to prolong wetness problems. The southwest Midwest will see standing water, but damage should be minor after drier conditions in the past two months. Southeast Plains wheat benefits from showers today. The southwest 1/3 of the Plains hard wheat belt will miss most rains, and moisture shortages will lead to increasing stress on vegetative 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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