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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +2 1/2, soybeans +4 1/2, wheat +5, crude oil +.60, dollar +.30, gold even and the Dow -40.
* Overnight support in grains from the record large fund short position from Fridays COT report and technical buying off last week’s reversal in many weekly charts.
* China’s Dalian exchange has corn & soybeans lower, soy meal higher.
* China’s Ag Minister said their ag sector needs to undertake supply side reform – especially in corn production. He said China will no longer pursue increased grain output over the next five years and will work on an improved grain pricing mechanism.
* Too dry in southern US Plains and too wet in the delta and southern US providing some support to wheat.
* COT showed Managed Money in futures and options are now short corn -203,837 (up -69,503), soybeans short -81,458 (up -59,399), and wheat short -107,477 (up -8,797).
* AgRural estimates the Brazil soybean harvest at 41 percent complete vs 41 percent last year and 39 percent average for this date.

Commodity Weather Group Forecast

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In South America, weekend thundershowers scattered across Mato Grosso, Goias, Tocantins, southern/western Minas Gerais, western Bahia, Espirito Santo, northern Sao Paulo, and far northern Mato Grosso do Sul in Brazil. Rains will continue to recharge topsoil moisture for safrinha corn in the next week across Center-West Brazil, with showers also aiding late coffee/sugar growth in the Center-South. Patchy dry spots may linger in Robusta coffee fields, but scattered weekend storms did limit concerns. Showers will slow fieldwork and port loading in central/southeast Brazil on Wednesday/Thursday, but more limited rains then help to ease interruptions until the 16 to 30 day. Argentina picked up only spotty weekend showers in parts of southern/western Entre Rios, central Buenos Aires, La Pampa, northwest Cordoba, and Santiago del Estero. Showers are limited to the far west this week, with showers briefly increasing in the south next Tuesday/Wednesday. However, broader coverage holds off until the 11 to 15 day, allowing recently wet central corn/soy areas to drain. However, wetter weather may rebuild in the last 1/2 of the month and will need to be watched most closely in southern Santa Fe and Entre Rios.

In the U.S., rain (.25 to 1″) fell in the Pacific Northwest wheat over the weekend. Rains develop in the Delta late tomorrow and continue through the week, leading to extensive 2 to 5″ totals that are likely to extend up into the southwest Midwest as well. This will lead to localized flooding, but damage
potential remains mainly focused on AR. Much of the Midwest wheat will benefit from replenished
soil moisture after a two-month dry spell. Plains wheat will benefit from showers in the
southeast third of the belt early this week. Rains are likely to be too light in the southwest 1/3 of the
belt to ease topsoil moisture shortages. Given very warm conditions, early crop growth will be
hampered, but it remains too early to impact yield.

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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