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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/2, soybeans +3, wheat +1/2, crude -.60, dollar index even, gold even and the Dow Jones -70.

* Large volume in overnight grain trade.

* Starting November 2, 2015 and lasting until May 2, 2016 the CME Group grain limits will be; Corn from 30 down to 25 cents, Soybeans from 70 to 60 cents, Wheat from 40 to 35 cents.

* Japan’s Ag Ministry on Tuesday announced they are seeking 134,352 MT of US and Canadian food grade wheat.

* Report from the floor Tuesday had funds buying 8,500 corn, 7,000 soybean, 3,500 wheat.

* Look for China to underpin the soybean market on continued purchases.

* November options expire Friday with the largest volume strikes in Soybeans in the 8.60 puts, 9.00 puts and 10.00 calls.

* Subway sandwich chain announced Tuesday it will start serving antibiotic-free chicken and turkey at US restaurants next year, and within the next nine years will stop selling any meat from animals given antibiotics.

Commodity Weather Group Forecast

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In the U.S., showers (.25 to 1″, locally 2″) favored western parts of the TX Panhandle, southwest NE, northwest MO, east central IA, and northwest IL yesterday. Rains spread across Plains hard red wheat through early Friday, enhancing crop vigor. Rains in the TX Panhandle stall early cotton harvest and lead to localized damage/quality declines. Midwest wheat has better shower chances in the latest models, which should ensure full stands going into winter. Midwest corn/soy harvest delays likely remain brief. The main Delta rains fall in the first 1/2 of next week, improving wheat germination and only delaying the last 10% of cotton/soy harvest. Southeast cotton/soy harvest should avoid rain delays for much of the next 10 days.

In South America, showers favored northeast Mato Grosso do Sul, western Sao Paulo, far southern Parana, Santa Catarina, and far southern/northeast Rio Grande do Sul in Brazil during the past day. Rains remain on track to expand northward in Brazil, reaching most soy/coffee/sugarcane areas and peaking during the 6 to 10 day. Remnant showers begin to become more limited in coffee and northern parts of the soy belt in the 11 to 15 day, as tropical support for showers wanes. While too late for any dryland coffee areas that already have aborted the first bloom, the rains will ease additional concerns for now and also will be very timely as soy seeding expands in Center-West Brazil. Rains will cause intermittent interruptions to increase for sugarcane fieldwork in Sao Paulo. While wheat harvest will frequently slow to the south, rains do not appear heavy enough to threaten more than minor quality concerns. Argentina saw showers limited to very spotty southwest areas overnight. While some guidance is drier, our forecast remains supportive of adequate 6 to 15 day rain to support corn/wheat. Another round of light frost in southern Buenos Aires on Saturday morning will pose little damage risk for wheat.

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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