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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1 1/2, soybeans +4, wheat +3, crude +.43, dollar +.55, gold -8.2 and the Dow -125.

* Stronger equity markets and position squaring ahead of the USDA report supporting grains overnight.

* China’s National Grain and Oils Info Center raised their estimate for China 15/16 soybean imports to 80 mln mt vs their previous estimate of 78 mln mt. The increase was credited to the shortfall of rapeseed and cottonseed meal.

* Slumping commodities markets had Cargill report a quarterly drop in earnings by 13 percent while CHS Inc net income dropped 30 percent for the quarter.

* CFTC Commitment of Traders weekly report on fund positions will be out this afternoon showing fund positions as of January 5th.

* USDA quarterly grain stocks and WASDE report is next Tuesday 11:00am CT.

* Thursday funds bought 4,000 wheat and were even corn and soybeans.

Commodity Weather Group Forecast

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In South America, showers again scattered across northern Brazil in the past day, favoring southern/western Tocantins, southern Goias, central/northeast Mato Grosso do Sul, far western Minas Gerais, eastern Bahia, and west-central Mato Grosso. Continued daily showers across northern corn/soy areas will aid late crop growth through much of the next two weeks. Rains will also begin to hinder early harvest progress in the Center-West, but guidance supports a drier pattern in late January/early February to aid fieldwork. The best chance for showers in wet sections of southern Brazil and adjacent areas holds off until the 11 to 15 day, with much of the guidance showing a drier pattern even then. This should help to ease wetness concerns for corn/soy/rice and is offering a needed break, although guidance does still show a wetter pattern returning by the 16 to 30 day. Coffee sugar areas remain fairly quiet at the moment, but expanding rains in the next 10 days reach all areas (including the driest Robusta coffee areas in the east). Argentina picked up rain in mainly central Cordoba and the foothills of the Andes again in the past day, with very light/spotty activity in central Buenos Aires. Rains remain limited to the south/west in the next ten days, helping to limit surplus moisture concerns to only a few spots in the west (mainly Cordoba). This will also limit interruptions to late wheat harvest, while extensive 11 to 15 day rains then aid corn/soy in most of the belt.

In the U.S., showers (.25 to .85″) in the past day favored KS/MO and the Delta. Showers taper off in the Southeast today, with another surge of mainly rain across the Midwest/Delta tomorrow. Drier weather then returns for the next 2 weeks in the Midwest, aiding dry down of excessively wet wheat fields. Delta wheat sees showers return late
in the 6 to 10 day, but rains are too light to cause problems. Winterkill risks for wheat remain very low, even in northwest fringes of the Midwest.

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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