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Morning Outlook

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Overnight Highlights

* Weekly export sales estimates: corn 450k – 650k; soybeans 600k to 1.1 mil; wheat 150k-350k; soybean meal 150k-350k; soybean oil 10k-40k.

* Brazil forecast looks like the rains and cooler weather pushed back a few days but extended forecast still calls for wetter and cooler pattern in the North and West Central areas of the country.

* Board soybean crush reach its lowest level since January yesterday, with rumors flying of plants starting to slow pace due to slipping margins and soybean meal premiums.

* Corn basis remains much stronger than seasonally expected with areas in Indiana running as much as +.50, yet positive bids are moving grain as indicated by Decatur dropping bids yesterday by .04.

* NOPA October crush will be released on Monday. Average estimate is 163.4 mb verses last year’s 157.9 mb. Soybean oil stocks are also expected to rise just over 90 million pounds from Septembers numbers.

* Industry sources in China say the National Development and Reform Commission is proposing to cut China corn plantings by a fifth with a target of 175 mmt by 2020. This 20% reduction in acres is designed to reduce the government’s increasingly large stock piles of corn by easing available supply.

Commodity Weather Group Forecast

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In the U.S., rains were minimal yesterday, and most areas should be dry through the weekend. A significant storm will develop in the Plains, Delta, and Midwest early next week, with heaviest rains centered on the Delta and central Midwest by midweek. AR and IL look most threatened with heavy rains (3 to 6″) that could lead to localized flooding damage to soft wheat. Rain potential for the dry areas in eastern KS is still good, but some models have scaled back amounts. In any event, the moisture should still be enough to aid late growth and strengthen the crop for winter dormancy, but soil moisture deficits will remain into the spring. Southeast cotton/soy harvest see only limited rains in the next 2 weeks, allowing improved fieldwork.

In South America, showers favored Rio Grande do Sul in Brazil yesterday but also scattered into northern/eastern Parana, southeast Mato Grosso do Sul, western Mato Grosso, southern/far northeast Sao Paulo, southern Espirito Santo, and southern Minas Gerais. Models show little change in the Brazil outlook, with extensive coverage in the next two weeks (peaking in the 6 to 10 day) further reducing already limited dryness. Current warmer readings in northern crop areas (mid 90s to low 100s) also begin to moderate by the middle of next week. The main impact from frequent rains in the south will be late wheat harvest delays/quality declines and soy seeding delays in RGDS. Port loading delays appear a bit more frequent during the next 15 days, with rain on at least half of the days. Rains were even better than expected yesterday in Argentina to recharge moisture, favoring northern Buenos Aires, southern/northeast Entre Rios, far southern Santa Fe, northern La Pampa, and southern Cordoba. While some guidance remains drier in the next two weeks, a combination of two 6 to 15 day systems should reach most areas once again. Cooler temperatures return next week, slowing corn/wheat growth once again.

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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