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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1/2, soybeans +4, wheat +4, crude even, dollar index -.30, gold +1 and the Dow Jones +20.

* Reuters survey found OPEC oil output has fallen in October from the previous month as declines in top producers Saudi Arabia and Iraq outweighed higher supply from African members.

* Datagro’s latest release estimates northeastern Brazil regional ethanol imports at 650 mln liters up +235 mln liters over previous estimates due to the smaller sugar cane crop and crush volume.

* China’s National Grains and Oils Information Center forecast China’s fourth quarter soybean imports at 22 mmt. Up 18% from the same period a year ago. They stated tight stocks of veg oils will keep crushing volume high but slow recovery in the hog herd could temper meal demand.

* Dalian exchange has soybeans and soymeal lower, corn higher.

* Disappointing beef exports provide a tug-of-war with the supportive box beef reports.

* Thursday funds bought 6,000 corn, 6,000 wheat and sold 4,000 soybeans.

* Rains in needed areas of Brazil to continue in the next few days but look to dry out after that. Helpful for soybean plantings but delay to wheat harvest.

Commodity Weather Group Forecast

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In the U.S., showers are just starting to push into the TX/OK hard red wheat and should ease dryness in N. OK/SE KS this weekend but NE KS/SE NE rains will still be too light for any notable improvement. A system the latter half of next week still presents the best chance for easing dryness in the NE corner of the hard red wheat. Showers this weekend and especially later next week should ease dryness for SW Midwest soft red wheat. Delta rains this weekend and late next week tend to favor AR which needs to be watched for developing excess wetness and seeding delays. Midwest harvest delays are minor over the next week and decrease in rains for western Midwest in 6-10 day should allow harvest to make favorable gains.

In South America, showers in Brazil favored C. Mato Grosso, E. Goias, N. Minas Gerais and S. Bahia yesterday. Rains increase across the north and central soy areas this weekend and remain more active through the first half of next week. Showers become more limited then through the 11-15 day period. Most areas should pick up needed moisture for germination and planting progress should accelerate with the drying trend. Rains potential has increased in S. Brazil over the next 10 days that will add some delays to the wheat harvest. The northeast half of the coffee belt still struggles to get sufficient rain for bloom threatening production potential further. Late sugarcane harvest and transportation remain hampered by wetness next 10 days but do improve in 11-15 day. Argentina rains (.5 to 2.0″) favored the N half of the wheat belt and much of the corn area yesterday. Rains will be confined to the west fringes of the belt over the next week. Showers scatter across the belt in week two favoring the west half of the belt. Any dry spots would be limited mainly to the southeast fringes of the belt over the next 2 weeks with most heading wheat and corn germination in good shape due to this week’s rains.

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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