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Morning Outlook

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Overnight Highlights

· Overnight trade has corn 3 lower, soyeans 3 lower, wheat 5 lower, crude .50 lower, dollar index .30 higher, gold off 10.1 and the Dow Jones down 55 pts.

· Forecast of rains for dry plains wheat, continued corn harvest weather, strong yield reports from the west and softer Dalian and Euronext trade have the week starting under pressure.

· Trade expects this afternoon’s corn harvest progress to be 57-60% complete vs 53% average and soybean harvest progress to be 77-82% complete vs 66% average.

· AgRural analyst late Friday estimated Brazil soy planting at 13% complete vs last year at 10%.

· An analyst from Australia’s ABARE suggested the country’s wheat crop will be arount 24 mil MT, down from previous estimate of 25-28 mil MT due to dryness from El Niño.

· Reports from the floor Friday had funds as buyers 5,000 corn and sellers of 7,000 soybeans and 6,000 wheat.

· 3Q China GDP shows +6.9%. Slightly better than the expectation of 6.8%, but the first sup-7% since the 08/09 financial crisis.

Commodity Weather Group Forecast

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In the U.S., the weekend was mainly dry. Rains increase across the Plains hard red wheat belt later this week, boosting soil moisture substantially and ensuring favorable growth prior to dormancy. Midwest corn/soy harvest will only see minor delays from rains crossing the belt later this week, with delays next week limited to the Ohio River Valley. Delays in the Delta in the 6 to 15 day will only impact the tail end of cotton/soy harvest. Rains across soft red wheat in the Midwest/Delta over the next two weeks recharge soil moisture and aid early growth. Southeast harvest should continue to recover in the next 10 days, as dry weather should hold. Light shower potential in the Pacific Northwest should benefit dryland wheat in the 6 to 15 day.

In South America, weekend showers were limited in Brazil but scattered across patchy sections of the western Mato Grossos, southern Sao Paulo, northern/eastern Parana, and Santa Catarina. While rains will remain frequent and cause some slowdowns to wheat harvest in the south during the next two weeks, damage risks are limited. A few showers may scatter into southeast Minas Gerais coffee areas between Thursday and Saturday, but the best rain chances (and moderating heat) in northern Brazil remain next week. Extensive coverage develops due to improving support from the tropical Pacific (MJO event), with model consensus improving and confidence building. This will help to spur more soy seeding and ease dryness for coffee, although dryland areas in Minas Gerais that have lost an earlier bloom will still see some reduced crop potential. Argentina is picking up very spotty showers in central/northwest corn/wheat areas this morning, but rains favor the south tonight. Additional showers early in the 6 to 10 day and again in the 11 to 15 day should keep moisture concerns limited. Frost in southern Buenos Aires posed little threat to wheat during the weekend, due to slower than normal growth.

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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