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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1/2, soybeans +2, wheat -3, crude +.15, dollar +.20, gold +3.5 and the Dow Jones +5.

* Short covering in the overnight providing some support to the markets.

* Disappointing export sales yesterday was too much for the already jittery soybean market to handle. Current pace of sales (not shipments) is 22% behind last year on this date.

* Trade watching Brazil next week. Some forecasts calling for a drier and warmer period to set in to central and northern Brazil.

* CBOT soft wheat traded at the largest premium to KC wheat yesterday since 2007. The low supply of deliverable grade soft wheat had the CBOT contract trade beyond a 40 cent premium.

* CEO of Pacific Ethanol sees 2015 US ethanol exports at 900 mln gallons, up slightly from 2014.

* Reportedly funds yesterday sold 10,000 corn and 11,000 soybean contracts.

Commodity Weather Group Forecast

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In the U.S., rains (.25 to 1″, locally 2.5″) favored the southeast Plains, northern Delta, and central/eastern Midwest yesterday. The rains also improved moisture for drier southwest Midwest soft wheat areas. Rains still missed eastern KS, and limited showers over the next 2 weeks will lead to a return of stress in the eastern 1/3 of KS wheat. Midwest rains benefit eastern soft wheat areas in the next two weeks, but southwest areas should have sufficient moisture for stable growth. Midwest corn harvest delays from showers yesterday and again next week are too light to pose any problems. Rains in the Delta remain frequent enough to slow late wheat seeding. However, there is plenty of time to plant, keeping threats for acreage loss low.

In South America, showers were more limited yesterday, favoring far southwest Buenos Aires in Argentina and far southwest Sao Paulo, far north-central Parana, east-central Mato Grosso do Sul, western Mato Grosso, and spotty sections of southwest Goias in Brazil. Rains will begin to expand again in Brazil to start next week, with extensive coverage limiting dryness concerns by mid-month. The GFS model continues to show drier risks in the Center-West, but this may be due to the model’s hot bias. Quality may slip for unharvested wheat in southwest Brazil due to the active rain pattern, and fieldwork will remain slow. While rains will not occur every day in sugarcane and port areas of central Brazil, about 1/2 of the next 15 days will include interruptions. 6 to 15 day rains will help to keep moisture supplies at least marginally adequate for most Brazil coffee areas. Argentina showers favor Cordoba/northern Santa Fe on Monday and at the middle of next week, with broader coverage still possible in the 11 to 15 day for corn/wheat areas. While occasional cool pushes will still keep crop development on the slower side overall for the region, the expected rains should be sufficient to keep crop concerns limited.

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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