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 - Tractor Proflie: John Deere Model R - by Staff. The John Deere Model R, the last of the lettered tractors, was the first diesel-powered tractor produced by John Deere with a gasoline starting engine. It was also the first tractor they produced that had an optional steel cab. The photo above shows the tractor w
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