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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/4, soybeans even, wheat -1, crude even, dollar +.30, gold -10.8 and the Dow +165.

* Mixed trade overnight as the trade waits for the USDA reports at 11:00 am CT.

* World stock exchanges mixed with Japan lower and the US, China and Europe higher.

* In its monthly report, Brazil’s Conab estimated 15/16 soybean production at 102.1 mln mt vs last month’s 102.5 estimate. 15/16 corn production estimated at 82.3 mln mt vs last month at 82.0. 2015 wheat production at 5.5 mln mt vs 5.6 last month.

* Brazil farm organization IMEA in Mato Grosso said 30 percent of the soy crop there was in bad to terrible condition vs 43 percent in December.

* Cordonnier left his Brazil soy production estimate unchanged at 97 mln mt and corn production unchanged at 81.2 mln mt. He noted early harvest soy in Mato Grosso will be the most impacted from the dry weather.

* China’s Commerce Ministry announced it has officially launched an investigation of US DDG imports on complaints from Chinese ethanol producers.

* Monday funds sold 7,000 corn, 3,000 soybeans and 6,000 wheat.

Commodity Weather Group Forecast

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In South America, scattered showers were limited to mainly northern Parana, central Sao Paulo, western Minas Gerais, northwest/far southeast Goias, southern/western Mato Grosso do Sul, and a few spots in northern Mato Grosso in Brazil during the past day. While Center-West and Northeast Brazil coverage was more limited yesterday, the most frequent rainfall will still focus on these areas in the next two weeks. The recent and projected rain will aid late corn/soy growth as well as moisture
for coffee/sugar but will also increasingly hinder early harvest progress in the Center-West. Both the CFS and Euro models now hold onto a relatively wet pattern through the end of the month in the north, with drier trends in the first 1/2 of February. Limited showers in southern corn/soy areas of Brazil continue to ease wetness concerns there, with rains returning in the 16 to 30 day. Argentina picked up scattered showers in central/western Buenos Aires and La Pampa in the past day, with
lingering showers today and again about every two days in the next ten days occurring in the southern/western corn/soy areas. This will allow wet pockets to persist in the western 15 to 20% of the belt, particularly Cordoba. Widespread rain in the 11 to 15 day then aid growth in much of the belt. Highs were mostly in the mid 80s to low 90s yesterday and will be similar to only slightly warmer today, with low to mid 90s possible from Monday to Thursday but very little stress.

In the U.S., snow (1 to 2″) fell in the eastern Midwest overnight. Snow ends today, with light rain in
the eastern Midwest/Delta on Friday. The next significant rain/snow event develops late in the 6
to 10 day into early in the 11 to 15 day, with better prospects for extensive precipitation in the Plains/
Midwest/Delta. Wetness problems for wheat could recur in the southwest Midwest. Winterkill risks for
wheat are low, as snow precedes the coldest readings in the Plains/Midwest late next week.

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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