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Morning Update

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Overnight Highlights

* Overnight markets have corn -2, soybeans +3, wheat -4, crude oil -.95, dollar -.20, gold -4.0 and the Dow -55.
* Mixed trade with corn under pressure overnight following the USDA report pressure while soybeans higher on the supportive report. Trade now looks spring weather and the April 12th WASDE report.
* The new crop bean/corn ratio is now over 2.50 which is getting soybeans acres from delayed plantings of corn in the south as well as swing acres in area with better soybean economics.
* USDA February soybean crush report out this afternoon. Avg estimate at 155 mln bu. January was 160.4 mln bu.
* Some concern developing for Brazil’s safrinha corn for April dry stress.
* Yesterday’s fund activity was estimated to be selling 40,000 corn and buying 3,000 soybeans and 5,000 wheat. CFTC data on fund positions as of the end of Tuesday will be out this afternoon.

Commodity Weather Group Forecast

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In the U.S., scattered showers occurred in the northern/eastern Midwest and far southern Plains along with much of the Deep South, favoring parts of central/southern MI, central/southwest OH, southern IN, central KY, central/southwest TN, northern LA, southern MS, AL, northern SC, and central/southwest GA. While a break is still expected for much of the next ten days in Delta corn/wheat/rice areas that have been wettest this week, shower potential did increase at the middle of next week in the northern Delta. Broader coverage remains in the 11 to 15 day, causing another round of planting interruptions for rice and southern corn areas after some intermittent progress next week. Cool temperatures (20s) in the middle to latter part of next week for the eastern Midwest will not threaten wheat damage. Plains wheat areas see a chance for showers next weekend and a bigger system in the 11 to 15 day. Most guidance continues to trend closer to our expectations for at least the southwest 1/3 of the belt to be short-changed by these events though, and warm temperatures (occasional low 90s in the far south) in the 6 to 15 day will add to stress in these areas. The 16 to 30 day outlook continues to support improving rain chances in the Plains late in the period, with the best corn belt rains shifting northward into the central/southwest Midwest.

In South America, Brazil saw rains (.25 to .50″) limited to southeast Minas Gerais/Parana yesterday. Scant rainfall in Brazil safrinha corn areas is likely to persist over the next two weeks and reinstate soil moisture shortages in the Center-West, posing a threat to nearly 1/4 of the crop as the key pollination stage gets underway. First-crop corn/soy harvest will accelerate, with the exception of occasional delays next week in Rio Grande do Sul. Argentina corn/soy sees widespread rain in the next 2 days stall harvest. Heavier rains in the northeast 1/4 of the belt early next week could lead to localized flooding.

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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