In this report we present the design of a stencil compiler for the Connection Machine system CM--5. The stencil compiler will optimize the data motion between processing nodes, minimize the data motion within a node, and minimize the data motion between registers and local memory in a node. The compiler will natively support two--dimensional stencils, but stencils in three dimensions will be automatically decomposed. Lower dimensional stencils are treated as degenerate stencils. The compiler will be integrated as part of the CM Fortran programming system. Much of the compiler code will be adapted from the CM--2/200 stencil compiler, which is part of CMSSL (the Connection Machine Scientific Software Library) Release 3.1 for the CM--2/200, and the compiler will be available as part of the Connection Machine Scientific Software Library (CMSSL) for the CM-5. In this report, we discuss the implementation status of the stencil compiler. In particular, we discuss optimization strategies and status of code conversion from CM-2/200 to CM-5 architecture, and report on the measured performance of prototype target code which the compiler will generate.