Home Market Market Watch Morning Update

Morning Update

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Overnight Highlights

* Overnight markets have corn +1 3/4, soybeans -4 1/2, wheat +2-3, crude oil -.69, dollar even, gold -5.0 and the Dow +3.
* Corn higher overnight on continued short covering and the dropping of Brazil’s corn import tariff with soy lower on profit taking and dryer forecast for Argentina.
* Brazil officially eliminated its 10% import tax on corn from countries outside Mercosur (Argentina, Brazil, Paraguay, Uruguay and Venezuela) for 6 months and will apply to a max of 1 mln mt. This opens the door for US corn to compete into Brazil.
* Argentina forecast looks to be drying out – aiding in return to harvest and meal loading. Damage from heavy rains are still being assessed.
* Soybean open interest at CBOT is likely a new all-time record 615,075 contracts.
* Stats Canada will be out with planting intentions tomorrow, USDA’s Cattle on Feed report will be out Friday.

Commodity Weather Group Forecast

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In the U.S., rains favored southeast NE, central/northeast KS, central/far southwest OK, much of northern TX, central parts of the OK Panhandle and adjacent sections of KS, southeast AR, northern LA, northeast MO, far northwest IL, and far south-east IA in the past day. Scattered showers track eastward in the next two days, favoring the northwest Midwest/OH Valley/ Delta. A few showers scatter across the upper Midwest late in the weekend, but broader coverage then develops through the middle of next week and again in the 11 to 15 day (particularly in the southern Midwest/Delta). Interruptions to seeding will be relatively minor through the weekend but then become more frequent for the southern corn belt. Excess moisture should not be a significant problem though and is most likely in localized sections of the Delta. Light frost around the Great Lakes at the middle of next week should not pose a notable damage risk. Rainfall in recent days has led to only pockets of excess moisture in the Plains hard red winter wheat belt as well, and lingering showers will taper off after today along the southern/ eastern edges of the belt. Additional 6 to 15 day rains will also benefit the crop outside of some localized flooding, improving yield potential during jointing/heading. Spring wheat seeding should progress well in most of the N. Plains/Canadian Prairies.

In South America, Argentina rains (.50 to 1.5″, locally 6″) remained focused on the eastern 1/2 of the corn/soy belt yesterday. Dry conditions in all but the northeast 10% dominate for the rest of the week. Only light showers this weekend and drier weather for much of next week allows harvest to begin getting back to nor-mal in the southern 2/3 of the belt, where soils are not as saturated. Brazil corn areas remain dry through the weekend cutting safrinha yields in nearly 2/3 of the belt. Showers expand into the southwest 1/2 of the belt early next week and ease stress but are unlikely to reach farther north.

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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