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Morning Outlook

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Overnight Highlights

· Asian markets are off 2 to 4% while overnight trade in the US has Dow futures up 60 pts, S & P up 10 pts and NASDAQ up 20 pts.

· In overnight trade; Crude Oil -.72, Dollar +.17, Gold -3.0.

· South Africa’s weather bureau said it expects drought conditions to continue to impact the country as El Niño conditions strengthen.

· Grain and oilseed market mixed overnight as harvest pressure continues with decent yield reports and continued challenge for world business.

· USDA reported corn harvest 18% complete vs 10% last week and 23% average. Soybean harvest was put at 21% complete vs 7% last week and 16% average for the date.

· A noted Palm Oil analyst is forecasting Palm Oil prices to rise 40% by the middle of 2016 due to the El Niño weather event.

· Average estimate for Wednesday’s USDA Quarterly Stocks report. Soybeans 205 vs 92 last year, Corn 1.739 vs 1.232 last year, Wheat 2.149 vs 1.907 last year.

· Stats Canada will release their monthly crop production report on Friday.

· Reports from the board on Monday had funds selling 7,000 Soybeans, 3,000 Soy Meal, 6,000 Corn and 3,000 Wheat.

Commodity Weather Group Forecast

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In the U.S., thundershowers scattered across mainly southern SD, central/eastern NE, southern/eastern IA, WI, far southern IL, western TN, KY, southeast AL, far southwest GA, and eastern NC in the past day. Light frost was noted in scattered sections of ND/northern MN this morning, as temperatures dipped more than expected. However, this is still a week to ten days later than normal. A similar situation is possible along far northern fringes of the Midwest today, with another chance early next week. Showers diminish in the central/far southeast Midwest today, but most of the belt is otherwise dry. Delays will focus on the Southeast in the next few days, including the chance for heavy rains in NC and the Mid-Atlantic late this week that could cause minor quality declines and losses. Showers scatter into the western Plains from Friday into the weekend as well and aid dry wheat fields, although West TX is not as wet on today’s outlook. Rains then favor the central/southeast Plains in the 6 to 15 day, with occasional but short-lived interruptions to harvest into the western Midwest/Delta. Forecast guidance remains particularly erratic at the moment, keeping confidence unusually low through much of the next 2 weeks.

In South America, rains (.50 to 2″) fell in the northern 1/2 of Brazil wheat yesterday. Models have trended wetter for the rest of the week, with much of the area likely to see 1 to 2″ (locally 4″) lead to further damage potential. Drier weather early next week allows some harvest, but widespread rains return late next week. Rains in the 11 to 15 day look more expansive in the north and should ease dryness in at least the southern 1/2 of the coffee belt. Sugar harvest delays increase this week. Showers (.25 to .50″) fell in C. Argentina corn/ wheat yesterday. Timely rains reach southern wheat later this week, but dry spots in the north are not favored for relief until the middle of next week. Any negative yield impacts would be minor.

Morning Market Snapshot

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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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