It can be condensation if the conditions are just right.
But more commonly, if stored outside, there is rain water getting in somewhere, like around the shifter or a failed rubber boot, broken vent cover, an opening somewhere that is letting water get in.
Unlike an engine that "breathes" air while it's running, once moisture is trapped in a gear case or hydraulic tank, even when it boils up from operating heat, it mostly condenses on the cooler areas of the upper case and drips back into the oil. Changing it is about the only way to clean it up. Even that is difficult once the water is emulsified into the oil.
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Today's Featured Article - Women and Tractors - More Views From the Farmer's Wife - by Teri Burkholder. The top ten reasons why the judges wouldn't let you participate in the stock antique tractor pull: Hey, this is stock! It came with that V8 in it! That "R" on my tires stands for "really old" not radial! Blue gas? We thought it was a pretty color! What wire hooked to my throttle?
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