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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -2, soybeans +1, wheat -3, crude -.90, dollar index -.16, gold -3.3 and the Dow Jones +10.

* Soybeans find some support on Brazil plantings at 31 percent compared to the five year average of 42 percent.

* Reports out of the Ukraine show the driest fall in 50 years could lead to a 20 percent drop in production of the ’16 crop. Farmers have only seeded 86 percent of the anticipated acreage.

* Corn continues sideways trade as it searches for export demand.

* USDA corn harvest progress is expected to be 85-87 percent complete vs the five year average of 73 percent.

* November USDA crop report estimates from private analyst firms will begin being released this week.

* Friday, funds were reported to have bought 7,000 corn, 4,000 soybeans and 6,000 wheat.

* Friday’s Commitment of Traders showed managed money with futures and options not only reduced their number of short positions in Chicago Wheat, but added new longs. They sit with a net short position of 33,264 contracts.

* Some hot/dry issues developing in South America, but too early for market concern.

Commodity Weather Group Forecast

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In the U.S., weekend rains (.25 to .75″) benefit many of the drier areas of the C. Plains/southwest Midwest, while 1 to 3″ (locally 6″) exacerbated wetness across the southern 1/2 of the Delta. Showers later this week are still limited but should provide the drier wheat areas of the Plains/Midwest with some additional moisture, improving late fall growth. Rains for the Delta have generally been scaled back for the next 2 weeks, easing flooding concerns and allowing fieldwork to make some better progress. Midwest harvest delays remain limited. Rains over the weekend were mainly light, and the rains later this week are brief. Southeast rains stall cotton/soy harvest today and again at the end of this week.

In South America, thundershowers occurred in southern/eastern Mato Grosso, Goias, far western/far southeast Minas Gerais, Sao Paulo, northern/eastern Parana, northern/central Mato Grosso do Sul, and southern Rio Grande do Sul in Brazil during the weekend. Recent rains have eased dryness concerns in central/northwest Brazil, but drier trends in northeast areas over the next two weeks will allow moisture to be drawn down again for at least 1/3 of coffee and 15% of soy. Rains will not favor Mato Grosso soy, but occasional showers should be adequate to meet current needs. Favored areas in central/southern Brazil will encounter delays to wheat harvest/minor quality declines, in addition to more frequent slowdowns to sugarcane and port transportation (particularly in the next week). Argentina picked up a few showers in eastern Cordoba and central/southwest parts of Santa Fe/Entre Rios during the weekend. The Euro guidance shows a wetter 6 to 10 day, but our
forecast limits showers to the western 1/3 of corn/wheat in the next two weeks. However, rain last week aided most of the area. Light frost is possible on Tuesday night in far southern wheat areas, but the crop is still not heading in the region.

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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