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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -4, soybeans -14-23, wheat -9-12, crude oil +.25, dollar +.22, gold -3.0 and the Dow +6.
* Grains lower across the board as the flurry of recent buying has come to a halt and hedge pressure weighs on the market. Corn and wheat currently off overnight lows.
* France’s AgriMer said soft wheat conditions are 91% G/E vs last week’s 92%. They also noted that 11% of the corn has been planted vs 47% the previous year due to rain showers.
* China’s ag ministry reported their wheat production is expected to be off -100,000 mt from last year due to lower planted acres. This would mark the first decline in 12 years.
* CME group announced they will raise soybean spec margin to $1,925/contract from $1,650 effective close of business today.
* This afternoon’s Cattle on Feed report is expected to have April 1 cattle on feed at 101% of a year ago, placements at 106% and March marketings at 106%.

Commodity Weather Group Forecast

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In the U.S., showers occurred near the Gulf Coast and from the northeast Delta into the central/eastern Midwest in the past day but favored parts of central/southeast IL, near the IA/IL border, central/southwest IN, western KY, northwest TN, south-ern MS, southern LA, central TX, and central AL. Lingering showers will be patchy in the far eastern Midwest today, with showers on Sunday/Monday mainly scattering from the Dakotas into the Great Lakes. Areas farther south will generally see good seeding progress until the middle of next week, with the most active shower pattern in the Midwest and northern Delta developing between Tuesday and Sunday. This will slow fieldwork (particularly in the western Midwest/northern Delta), but several drier days will return ahead of the next event late in the 11 to 15 day. The GFS model still shows a frost risk in MN next Tuesday morning but is likely too aggressive, and only far northern sections of the Midwest should see any freezing temperatures in the next two weeks (including the northern Dakotas this morning). N. Plains spring wheat seeding will slow at times in the next ten days, while Canada remains mostly dry in support of early fieldwork. Fairly extensive 6 to 10 day rains will also aid Plains hard red wheat yields, although the far southwest corner of the belt is slightly drier on today’s outlook.

In South America, Argentine rains (.25 to 1″, locally 2″) were confined to northeast fringes of the corn/soy yesterday. Light weekend showers (.25 to .75″, locally 1.5″) cross the belt. Drier conditions then settle in for much of the next 10 days. Harvest should improve in the southwest 2/3 of the belt, while recovery in the northeast 1/3 will still be very slow. Brazil corn sees showers expand into the southwest 2/3 of the belt early next week to ease stress. Showers remain limited in the northeast 1/3, leading to on-going stress into early May. Rains in the far south stall soy harvest, but the 6 to 10 day turns drier.

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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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