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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -1/4, soybeans +1 1/2, wheat +2-5, crude oil -.70, dollar even, gold even and the Dow -50.
* Markets mixed overnight ahead of Thursday’s USDA reports and on continued wheat weather topics.
* Wheat condition ratings are holding up with TX 48% G/E vs 47% last week, KS 56% G/E vs 57% last week and OK 63% G/E vs 63% last week.
* States reporting corn planting: TX 38% vs 37% avg, MS 5% vs 29% avg, LA 36% vs 61% avg, AR 8% vs 20% average.
* Safras Mercado estimated Brazil soy harvest 63% complete vs 66% average.
* Dr. Cordonnier noted the combination of record high Brazilian corn prices and falling hog prices have the hog industry in southern Brazil on the verge of collapse.
* Monday funds bought 3,000 corn, 7,000 wheat and sold 1,000 soy.

Commodity Weather Group Forecast

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In the U.S., rain/snow showers were limited to east-central MI, far eastern WA, and ID in the past day. A storm will exit the Rockies tomorrow and favor parts of the northern/southeast Plains, northern Midwest, OH Valley, Delta, and Southeast into Friday and will slow southern corn seeding this week. However, drier weather will then prevail in all but the eastern Midwest and Great Lakes next week, aiding fieldwork in the Midwest/South. Showers do return in the 11 to 15 day, with the best
chances in the southern Midwest/northern Delta. However, wetness concerns remain limited, and warming temperatures will aid drying after the rainfall. With showers in the next ten days limited to the NE Panhandle and spots near the southern OK/TX border, light showers seen last weekend in parts of the S. Plains will quickly be drawn down. This is particularly true given the warming temperatures, with highs expected to spike into the low to mid 90s at the middle of next week and again in the 11 to 15 day for far southern parts of the hard red wheat belt. The GFS model does show a wetter risk in the 11 to 15 day, but our forecast focuses on central/southeast parts of the Plains based on the ensemble guidance and given the expected warm pattern. However, the 16 to 30 day outlook is beginning to shift a bit wetter late in the period for the S. Plains.

In South America, rain (.25 to 1.5″) in Brazil was confined to southern Minas Gerais/northern Sao Paulo/southern Goias/northwest Mato Grosso yesterday. Only widely scattered rains occur in Brazil this week, aiding first-crop corn/soy harvest. Rains aid Mato Grosso safrinha corn next week but slow Rio Grande do Sul soy harvest. Argentina corn/soy harvest makes good gains, with ongoing dryness this week. Rains cross the belt this weekend, stalling harvest. Wetness concerns have increased for the northeast 1/3 of the belt, as rains persist into next week and raise flooding concerns.

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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