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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +2, soybeans +7, wheat +1-2, crude oil +.40, dollar -.22, gold +11.0 and the Dow +50.
* Higher overnight markets on more rain in Argentina, persistent hot/dry Brazilian corn weather and corn planting progress in the US came in on the low end of expectations.
* USDA reported corn planting progress at 13% complete vs 4% last week, 7% last year and 8% on average. The trade was expecting 14-18% complete.
* Soybean progress reporting states of TX, LA, MS, and AR – only Arkansas is ahead of their 5 year average.
* Winter wheat came in at 57% G/E, up 1% and spring wheat planting was 27% vs 15% on average.
* Analysts in Brazil say if dry weather persists, second crop (safrinha) corn production could fall 3 to 5 mln mt. Reuters noted yesterday that if the Brazil Ag Ministry is successful in getting the 10% import tariff dropped, US corn could be imported.
* Statistics Canada will release farmer planting intentions Thursday. Canola acreage is expected at 20.4 mln acres compared to 20.1 the previous year, soybeans are expected at 5.5 mln vs 5.4 in 2015.
* Some of the wettest areas of Argentina received additional rainfall overnight however their forecast does look to be improving.
* Monday funds bought 12,000 corn, 10,000 wheat and 2,000 soybeans.
* US planting progress is expected to slow on showers this week.

Commodity Weather Group Forecast

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In the U.S., rains favored SD, southern ND, southwest MN, northwest IA, northwest IL, central/western MO, eastern NE, western LA, eastern/far northwest TX, central/far southwest OK, and western KS in the past day. Patchy showers linger in the central Midwest today, scattering into the southwest again tonight/tomorrow and shifting through the Delta/eastern Mid-west by Thursday. The heaviest totals occur in the Lower MS Valley, and only minor interruptions are expected to Midwest seeding as the rains will be relatively disorganized. Shower scatter into the northern/eastern Midwest again by Sunday/ Monday, but broader Midwest/Delta coverage occurs at the middle of next week and again early the following week. While the more active pattern will hinder corn seeding, risks of excessive rain are limited, and fieldwork still occurs in between rain events. Cooler 6 to 10 day trends in the upper Midwest should not be a problem, even if the colder GFS solution verifies (light frost around the Great Lakes). Lingering Plains showers will be scattered but continue to aid soil moisture in the next few days. Another extensive event by the 11 to 15 day will possibly bring pockets of excess moisture but aids winter wheat yields. Rains continue to favor the Plains in the 16 to 30 day, while rains may begin to retract westward in the Midwest.

In South America, Argentina rains (.50 to 1.5″, locally 3″) favored the eastern 1/2 of the corn/soy belt yesterday. Showers taper off in all but the northeast 10% of the belt today. Showers return this weekend and linger in the north half of the belt early next week, keeping harvest very slow. Brazil corn areas remained dry, with highs in low to mid 90s yesterday. Dryness/ heat cut safrinha yields through the weekend. Showers expand into the southwest 1/2 of the belt early next week and ease stress but are unlikely to reach farther north, resulting in building stress in the north 1/2 that 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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