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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -1/2, soybeans -2, wheat -2, crude oil +.90, dollar +.20, gold -9.0 and the Dow +70.
* Grains a little lower this morning. SA and US farmer selling providing some offset to yesterday’s short covering.
* Weekly export sales delayed until tomorrow morning due to Monday’s holiday.
* Wednesday funds bought 9,000 corn, 5,000 soybeans and 4,000 wheat.
* US Gulf values of corn are competing with Argentina but French feed wheat offers hang just above the market ready to stand in for corn on global trade.
* USDA will release their monthly Cattle on Feed report Friday afternoon.
* Brazilian soy harvest is progressing well with solid yields being reported. Weather continues to be cooperative for harvest and winter corn planting.

Commodity Weather Group Forecast

In South America, notable Argentine rains lingered in parts of central/far northeast Cordoba, central/southern Santa Fe, Entre Rios, Santiago del Estero, and far northeast Buenos Aires in the past day. Another widespread rain event occurs today into tomorrow, followed by additional chances at the middle and end of next week. The combination of these systems will offer plenty of moisture for corn/soy growth, keeping yield potential high. There will be the risk for patchy areas of excessive

rainfall, particularly in parts of Santa Fe/Entre Rios. However, a return of drier conditions in the 11 to 15 day should limit the risk for any major issues. Brazil picked up only patchy showers again yesterday, mainly in western Mato Grosso, Sao Paulo, eastern Parana, southern Minas Gerais, and Rio Grande do Sul. Similar activity lingers through central areas in much of the next two weeks, with the wettest conditions in parts of MGDS, Sao Paulo, southern Minas Gerais, and northern Parana.

Rains are unlikely to be excessive and will actually help to recharge topsoil moisture after fairly limited showers recently, but port loading and corn/soy fieldwork will slow. Rains also may expand a bit and reach into the Center-West by the 11 to 15 day, but only minor interruptions are expected to soy harvest or safrinha corn seeding. The rains in the Center-South will also aid coffee/sugar prospects, although Robusta coffee areas could again be a bit short-changed.

In the U.S., rains (.10 to .50″, locally 1″) favored the Pacific Northwest yesterday. Showers spread

across the eastern Midwest/Delta/Southeast early next week, followed by drier weather. The next

rain event in the 11 to 15 day still focuses on the Delta but also extends back into the S. Plains,

benefiting drier wheat areas. The break between rains keeps excess wetness concerns for wheat

isolated. Winterkill risks remain minimal in the next 2 weeks, as milder air dominates the country.

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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