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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -2 1/2, soybeans -7 1/4, wheat -1/2, crude oil +.12, dollar +.20, gold -7.0 and the Dow even.
* Profit taking overnight weighing on grain trade. Good cash movement in beans and forecasters calling for some easing of rains in Argentina harvest areas. Funds have to keep their buying going to keep the rally up.
* Weekly export sales out this morning.
* AGR Brazil lowered their estimate for 15/16 corn production to 81.2 mln mt vs the previous estimate of 85.07 mln mt.
* EIA reported weekly ethanol production at 938,000 bbls per day, down 38k per day from last week.
* The Bank of England voted to keep their key interest rate unchanged at 0.5%.
* NOPA March soy crush will be out tomorrow. Analysts expect a 7% jump over the Feb pace.
* Yesterday funds bought 30,000 corn, 20,000 soybeans and 9,000 wheat.

Commodity Weather Group Forecast

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In the U.S., rains favored the TX/OK border, Gulf Coast, and central AL in the past day, with lighter showers also noted in northeast AR and parts of the Pacific Northwest. Very wet weather will spread across the Plains this weekend, with showers lingering through early next week. Most Plains hard red winter wheat and spring wheat areas will pick up 1 to 3″ of rain that will greatly ease wheat stress, but locally heavier totals of up to as much as 7″ (particularly in western NE) will cause some localized flooding issues. Another event crosses the belt in the 11 to 15 day, only missing the far southwest corner of the Plains. Rains will also scatter through the southern/eastern Delta and Southeast in the next two days, with broader coverage in the middle to latter part of next week for the Delta and again in the 11 to 15 day. This will cause fieldwork interruptions in the Delta, but flooding risks are limited and progress should be made in between each event. Midwest showers are limited to mainly MO/NE/KS/southwest IA in the next ten days (mainly early next week), with broader interruptions in the western Midwest from gradually expanding 11 to 15 day rain. However, very good seeding progress occurs in most areas during the next 10 days and in parts of the OH Valley through the rest of the month. Warm temperatures will also aid germination.

In South America, Argentine rains (.25 to 1″) lingered in Buenos Aires yesterday, with heavier amounts confined to northeast fringes of the belt. Weekend showers keep harvest very slow, but heavy rains are limited to the northeast 10% of the belt. A drier pattern next week should allow harvest to start to slowly recover. Brazil rains (.25 to 1.25″, locally 2.5″) were confined to far southern safrinha corn areas yesterday and are minimal over the next ten days, as stress expands to nearly 1/2 of the belt. Showers return to the south in the 11 to 15 day but are limited mainly to the southern 1/3 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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