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Morning Outlook

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Overnight Highlights

* Overnight markets have corn even, soybeans +3-5, wheat +2-5, crude oil -1.55, dollar -.09, gold +5.0 and the Dow -60.
* Generally higher grains this morning after overnight weakness. Support of continued Argentine wet harvest weather, dry Brazilian safrinha corn weather and step one of routing Brazilian President Rouseff from the lower house of Congress.
* Trade expects this afternoon’s USDA corn plantings report to come in 14-18% complete vs 4% last week and 9% last year. This will likely be the fastest pace since 2012.
* Weather outlook has shifted wetter for the Corn Belt tomorrow and will bring a halt to the corn planting progress in many areas.
* CFTC info showed Managed Money net short corn -136,705 (off 25,160), net long soybeans 100,216 (up 26,475) and net short wheat -106,163 (up -38,425). Surprising amount of new shorts in wheat providing wheat support overnight.
* Plains wheat received rain relief over the weekend. Some areas of TX, OK, KS, NE seeing accumulations past 6″. Widespread accumulation of 1-2″.
* FOB Gulf corn values firmed Friday.

Commodity Weather Group Forecast

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In the U.S., moderate to heavy rains occurred throughout the Plains, favoring parts of east-central CO, southern/western KS, central/southwest NE, central/southwest OK, and central/eastern TX. While localized flooding was noted (5 to 8″+, particularly near the TX/OK border), the moisture was welcome to scale back dryness, with 10% or less of the hard red wheat belt to hold onto stress (mainly West TX). While a few showers will linger through mid-week, the heaviest rains are complete in the Plains. Widespread 6 to 15 day coverage will occur from a series of systems starting early next week, providing further benefit to wheat yields in areas that miss any localized flooding. Showers will scatter into the western Midwest into Wednesday, shifting eastward into the OH Valley and Delta late Wednesday/Thursday. The showers will cause minor seeding interruptions, but fieldwork recovers through the weekend before occasional interruptions return next week (favoring the southern/
western Midwest and Delta). Serious wetness concerns are not anticipated, although the outlook is wetter versus Friday. Temperatures will be near to above normal to aid germination but will be warmest this week. Showers have also reached N. Plains/southern Canada spring wheat areas, with fieldwork delays mainly limited to U.S. areas during the 6 to 10 day.

In South America, Argentina weekend rains (.25 to .75″, locally 2″) kept corn/soy harvest minimal. Showers early this week keep harvest stalled. Heavy rains (3 to 5″) are confined to the northeast 15% of the belt, where wetness damage is most likely. Drying later in the week is short-lived, with a risk of more extensive showers in the 6 to 10 day further delaying harvest. Brazil corn areas were mostly dry over the weekend. Dryness/heat cut into safrinha yields all week. Showers are likely to expand into the southwest 1/2 of the belt late in the 6 to 10 day, but stress in the north likely continues to lower yields.

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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