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Morning Outlook



Overnight Highlights

· Overnight trade has corn -2, soybeans +2, wheat -3, crude +.10, dollar index +.20, gold +2.4 and the Dow Jones +34.

· Petrobras in Brazil estimates 13% of their daily production has been affected by the oil worker strike.

· The US Ag attaché in Brazil issued an estimate for 15/16 Brazil soybean production at 98.6 mmt vs the most recent USDA estimate of 100 mmt.

· Brazil’s trade ministry stated October corn exports at 5.547 mmt, vs September at 3.455 mmt and Oct ’14 at 3.178 mmt.

· Informa estimated corn production at 13.7 bil bu vs their last estimate in October was 13.5 bil bu.

· Average analyst guess for the USDA WASDE report has corn production at 13.564 billion bushels (USDA on Oct was 13.555) and a yield of 168.2, up 0.2 bu from the USDA’s October estimate.

· WASDE analyst guess average for soybeans are total production of 3.914 billion bushels, up from the October USDA estimate of 3.888 billion bushels. Average analyst yield estimate of 47.5 vs USDA’s October number of 47.2 bu.

· China’s state media reported the government is considering allowing land to go fallow as a means to ease resource and water usage in some growing areas.

· Tuesday funds reportedly bought 12,000 corn, 5,000 wheat and were even on soybeans.

· Drought in South Africa continues to intensify.

Commodity Weather Group Forecast


In the U.S., rains (.50 to 1.5″, locally 3.5″) were confined to eastern fringes of the Southeast yesterday. Plains shower potential is minimal for wheat areas in the next 2 weeks. Renewed dryness issues for late fall growth are likely, mainly in central KS. Showers in the Midwest are still sufficient to benefit late fall growth, and late corn/soy harvest should finish up with few delays. Rains in the Delta will remain frequent enough in the next two weeks to keep seeding of the last 1/3 of the wheat quite slow. Main wetness concerns are still confined to LA/southern MS, but damage threats are minimal given the lack of seeding so far. Southeast rains this weekend will again slow cotton/soy harvest, but drying next week improves progress.

In South America, scattered showers favored southwest/eastern Mato Grosso, northwest Mato Grosso do Sul, southwest Goias, west-central Minas Gerais, Sao Paulo, south-central/far northern Parana, and southern Rio Grande do Sul in Brazil during the past day. The wettest weather focuses on southern MGDS, Parana, and southern Sao Paulo in the next two weeks, but showers likely expand back across much of the Center-West and Center-South as well from late in the 6 to 10 day into the 11 to 15 day period. This should limit stress to the northeast 10 to 15% of Brazil soy and no more than 1/4 of coffee. Rains in Sao Paulo/Parana will slow sugarcane fieldwork and cause port loading delays. Wheat harvest will also be slow, but the heaviest amounts focus north of the primary remaining harvest area. Argentine showers favored northwest Cordoba and San Luis in the past day. Showers reach a bit more of Cordoba/Santa Fe through tonight, with 6 to 15 day showers favoring the western 1/2 of corn/wheat. While the southeast 1/2 of the belt will slip drier, recent rains have been adequate. Near freezing temperatures in far southern wheat areas this morning were not cold enough to cause 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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