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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -1/4, soybeans -1 1/2, wheat -6-8, crude oil +1.00, dollar +.38, gold -7.0 and the Dow +32.
* Mixed trade overnight and generally lower markets this morning with weakness in wheat from anticipated Plains rain in the extended forecast and soybeans off on anticipation of additional acres and weaker soy oil market.
* May soybeans hanging at the 200 day moving average and will be sensitive to price movements in the meal and soy oil markets.
* USDA’s first crop conditions report of the year had wheat rated at 59% G/E vs 44% last year and 50% for the date. This was above the average trade estimate. KS, TX and OK ratings were each one to two points off their previous week state by state reported conditions.
* USDA will release their first corn planting progress report next week. The average for that report is 5%. State by state reports show Texas, Louisiana, Alabama, Mississippi, Arkansas and Georgia all behind their 5 year average planting pace.
* US ethanol exports for February came in down 20% from January and down 20% from February of 2015. Year to date export pace is off 8% from one year ago.
* Yesterday funds were reported to have bought 5,000 corn, 1,000 wheat and sold 7,000 soybeans.

Commodity Weather Group Forecast

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In the U.S., showers favored southwest/east-central IA, northern IL, and around the Great Lakes in the past day, with lighter activity in the central/northern Plains and Canadian Prairies. Showers will develop through tonight in the eastern Midwest, with lingering light activity around the Great Lakes through the rest of the week. Cold temperatures (mostly 20s) are also occurring currently and return Friday into the weekend, but wheat damage threats are very low. A more active pattern returns to
the southwest Midwest/Delta by Monday/Tuesday. While models remain very inconsistent on the U.S. storm track for the balance of the 15-day period, the more frequent rain pattern in our forecast will reintroduce planting interruptions to the southern Midwest/Delta at mid-month, but there is the chance for warming and less rain in the 16 to 30 day to limit concerns. In addition, the wettest Delta corn/rice/wheat fields are seeing a needed dry break of at least ten days before the rains return.
Plains wheat will see a system late in the weekend favor northeast CO and northern/eastern KS, with additional chances in the 6 to 15 day. The best shot for the southwest Plains will be next Tuesday/Wednesday. While southwest KS/southeast CO are not favored in our forecast, showers would significantly reduce wheat stress elsewhere in the Plains for now.

In South America, Brazil rains (.25 to .75″) were isolated in northern Mato Grosso yesterday. Showers linger in the northern 1/3 of safrinha corn over the next week and expand in the southern third next week. Moisture stress will begin to impact early safrinha corn pollination in 1/4 of the belt by mid-month. Argentina rains (.25 to 1.25″, locally 3″) favored the north half of the belt yesterday. Rains (.50 to 2″, locally 4″) contract to the northeast 1/4 of the belt for the rest of this week. Limited showers next week allow harvest to resume, but more extensive rains in the 11 to 15 day are likely to halt harvest again.

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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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