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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1/2, soybeans -1/2, wheat -3, crude +1.00, dollar +.10, gold +10 and the Dow Jones -12.

* Analysts ahead of today’s 11:00 am NOPA crush report are expecting the report to show 161 mln bu crushed during October. Much greater than the previous year report.

* Reports out of Ukraine and Russia continue to confirm production concerns from the wheat producing area. An estimated 11 percent less wheat will be planted while 30 percent of the current crop is considered poor condition.

* Industry sources site Cargill may eliminate as many as 4,000 jobs (2.5 percent of workforce) in a global restructuring initiative.

* The October Global Purchasing Managers Index bumped up to 51.4 from 50.7 the previous month. It is not uncommon for strength in the PMI to lead strength in crude and copper by a couple months.

* Friday’s Commitment of Traders report is delayed until this afternoon.

* On Friday, funds reportedly sold 8,000 corn, 3,000 soybean and 2,000 wheat contracts.

* Soy crush plants are reportedly slowing pace due to weakening crush margins.

Commodity Weather Group Forecast

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In the U.S., the weekend was dry until yesterday, when .25 to 1″ rains fell in the southeast Plains/southwest Midwest. A major storm will develop in the Plains/Delta/Midwest from later today through Wednesday. The rains will benefit dry areas in eastern KS but are likely to lead to localized flooding in parts of the Delta soft wheat. The pattern then trends colder/drier in the 6 to 15 day period. Showers are possible in the Delta, but rains are more limited even there and should lower overall wetness threats going forward. The cold may limit the opportunity for C. Plains wheat to take advantage of moisture as dormancy sets in, but no outright cold damage is expected. Southeast cotton/soy harvest sees only brief rain delays later this week.

In South America, showers were scattered but expanded in Brazil as the weekend progressed, with the most organized activity in parts of eastern Mato Grosso, central/northeast Mato Grosso do Sul, southern/western Sao Paulo, southwest Goias, central/southeast Minas Gerais, northern Parana, and northwest Rio Grande do Sul. Rains will remain very active through much of the rest of this month, limiting any dry spots to less than 10% of corn/soy (mainly Bahia). The rains will still slow late wheat harvest in RGDS, but the heaviest totals likely hold off until late in the 6 to 10 day. Otherwise, the heaviest activity tends to favor Parana/Sao Paulo/Minas Gerais in the next two weeks. The wet weather will frequently slow port loading in central areas but will otherwise aid soil
moisture. Temperatures are also moderating after a hot start to the weekend (mid 90s to low 100s) in northern crop areas. Argentina picked up a few showers along the northern/southwest edges of the crop areas during the weekend, with two disturbances to pass between Tuesday and Thursday and another event at the middle of next week. This will aid moisture, but a return of cooler weather will keep corn/wheat growth delayed.

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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