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Morning Outlook



Overnight Highlights

· Overnight trade has corn even, soybeans -2, wheat mixed, crude +.27, dollar index +.33, gold -5.1 and the Dow Jones -42.

· FC Stone released their 2015 corn crop forecast at 13.543 bln bushels with a yield at 168 bpa and their US soybean forecast at 3.917 bln bushels with an average yield at 47.5 bpa.

· Informa will release their crop estimates later today.

· Monday the USDA pegged the corn harvest at 86% complete vs last week 75% and last year 62%.

· The EU raised its wheat production estimate for this year’s crop by 4.6 mln tonnes to 149.2 mln tonnes. For the corn crop it lowered its outlook to 57.4 mln from 58.4 mln the previous month. This compared to the previous year corn production at 77.9 mln tonnes.

· USDA ag attaché to Ukraine filed a report noting the 15/16 winter wheat crop is expected at 27.6 mln mt, stating the winter crops are at further risk to poor weather conditions.

· Freight carried by major railroads fell 7 percent in the second quarter of 2015 compared with the same period in 2014. Coal shipments were down 15 percent due to environmental regulations and low gas prices while petroleum shipments fell 5 percent as production peaked and new pipelines diverted crude from rails.

· Monday funds reportedly sold 8,500 corn, 4,500 soybeans and 7,000 wheat.

Commodity Weather Group Forecast

In the U.S., rains (.50 to 1.5″, locally 2.5″) covered the Southeast yesterday. Models scaled back rains for the Plains wheat later this week but they should still benefit the drier SW Midwest wheat areas. Additional showers in the 6-10 day should further improve late fall growth in Midwest and E. Plains wheat. Rains for the Delta will be enough from both the system late this week and again late next week to keep seeding of the last 1/3 of the wheat slow and excess wetness is still a concern in LA/ S. MS. Midwest harvest delays later this week will be short lived and much of the corn/soy should be out of the field before next week’s rains arrive. Southeast rains stalled cotton/soy harvest yesterday but drying later this week aids progress.

In South America, thundershowers favored western Mato Grosso, far southern Minas Gerais, Sao Paulo, Mato Grosso do Sul, and Santa Catarina in Brazil yesterday. Rains will be tapering off in northwest Brazil this week and last through much of next week but most models are already showing a return of showers later in the 11-15 day that would avert dryness from redeveloping. Coffee areas also trend drier over the next 10 days and at least 1/4 of coffee area could see some stress until a more significant surge of moisture occurs in the 11-15 day. Central/southern Brazil will see an upturn in delays to wheat harvest/minor quality declines next 10 days along with frequent slowdowns to sugarcane and port transportation, especially this week. Argentina was mainly dry yesterday. Showers will remain confined mainly to the west-ern fringes of the belt this week. Showers are expected to scatter across the belt early next week. Most models limit the significant rains to the south and west but the risk is to the wetter side. In any event the showers do favor much of the wheat belt as it moves into heading. Light frost is possible tonight in far southern wheat areas, but the crop is not heading there, minimizing damage.

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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