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Morning Outlook



Overnight Highlights

* Overnight trade has corn -1, soybeans even, wheat +1-3, crude +.35, dollar +.10, gold +4.8 and the Dow Jones -45.

* November USDA crop report out today at 11:00 am CST. Trade expectation for slight increases in production for corn and soybeans.

* Safras Mercado estimated Brazil soybean planting at 42 percent complete as of Nov 6 vs 27.5 percent last week, 46 percent last year and 57.2 percent on average.

* Safras Mercado estimated the Brazil farmer has sold 41 percent of the soybean crop vs 17 percent last year and 31 percent on average for this date.

* Reports about the trucker strike in Brazil show protests in 11 states, but that federal roads were only totally blocked in four places and partially blocked in 22. Truckers are asking for the impeachment of President Dilma Rousseff. The main trucking unions are not participating in this strike. Pork and poultry shipments are most at risk of disruption.

* Brazil’s Conab raised its forecast for the 15/16 soybean crop to 101.2-102.8 mln tonnes, up from 100.1-101.9 mln tonnes last month. However they lowered their corn forecast to 81.1-82.7 mln tonnes, down from the October estimate of 82.6-83.6 mln.

* USDA winter wheat conditions for the week ending November 8th listed 51 percent at good/excellent. An increase of 1 percent good and 1 percent excellent vs the previous week rating of 49 percent good/excellent. Previous year rating was 60 percent good/excellent.

* China is considering offering subsidies to feed mills to increase domestic corn sale while trying to sell down its state reserves. Beijing is also evaluating freight subsidies for feed mills in southern provinces. Domestic users have been slow to use corn reserves because of high prices and low quality. Current reserves are estimated to be equivalent to more than one year of domestic consumption.

Commodity Weather Group Forecast


In the U.S., rain (.25 to 1.5″, locally 3″) was confined to the Southeast yesterday. The next storm favors the northern Midwest Wednesday/Thursday, but harvest delays are largely limited to WI/MI as most other areas are near completion. Shower potential has increased for the first 1/2 of next week in the southwest Midwest/eastern Plains, benefiting late wheat growth. However, amounts in driest areas of eastern KS are still very light, limiting benefit. Delta wheat sees only very light showers tomorrow and then is dry until early next week, allowing some late seeding. Additional 11 to 15 day rains keep Delta seeding slow though. Drier conditions dominate in the Southeast for the next 2 weeks, gradually improving cotton/soy harvest.

In South America, patchy showers occurred in parts of southern/eastern Mato Grosso, southwest Goias, southeast Minas Gerais, northern Mato Grosso do Sul, and Rio Grande do Sul in Brazil in the past day. Wet weather continues for unharvested wheat in mainly RGDS through much of the next two weeks but particularly this week, slowing fieldwork and reducing quality. While scattered showers do stretch northward into eastern Brazil later this week, the bulk of rain for coffee starts to develop early next week and gradually expands next week into northern soy areas as well. Confidence is relatively high in this rainfall, limiting crop concerns. While showers will occur by this weekend and from late in the 6 to 10 day into the 11 to 15 day for sugarcane and port areas in central Brazil, a total of only 5 to 6 rain days is expected in the next 15 days. Argentine rains favored central/southeast Cordoba, northeast/far southern Santa Fe, northern Entre Rios, and northern Buenos Aires yesterday. While spring seeding progress and crop growth has been slow due to cool conditions, additional rains are expected on Thursday and at the middle of next week across much of the corn/soy/wheat, aiding moisture.

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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