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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1, soybeans +1/2, wheat -3, crude -.55, dollar +.04, gold -5.0 and the Dow Jones +60.

* Wheat remains under pressure as weekly crop conditions for winter wheat improved 1 percent this week to 52 percent good/excellent vs average of 55 percent.

* Commitment of Traders combined futures and options showed Managed Money net short 58,404 corn, net short 52,301 soybeans and net short 48,607 all wheats combined.

* Monday’s US October NOPA soybean crush came in at 158.89 million bushels. Under the expectation of 161 mln bu, but well above the prior month at 126.70 mln bu. Soymeal exports were reported at 644,069 tons vs the prior month 503,320 tons.

* Japan is seeking to buy a total of 114,941 tonnes of food grade wheat from the US and Canada in a regular tender that will close Thursday.

* Yesterday funds reportedly bought 4,000 corn, 3,000 soybeans and were even wheat.

Commodity Weather Group Forecast

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In the U.S., rains (.25 to 1.5″, locally 2.5″) covered most of the Plains hard wheat belt, western and central Midwest, and northwest 1/2 of the Delta yesterday. The storm will continue to spread rains east across the rest of the Midwest/Delta over the next 2 days, with snow in the northwest corner of the Plains wheat belt today. Eastern KS should remain warm enough for the next ten days to take advantage of the moisture before colder trends push the crop into dormancy. Delta soft wheat will still have the potential for some localized excess wetness. However, damage should be minor, with a drier pattern for the following week. Southeast cotton/soy harvest sees brief rain delays on Thursday but then returns to a beneficially dry pattern.

In South America, scattered showers occurred in mainly southern/northwest Rio Grande do Sul, western Parana, central/southwest Sao Paulo, central Minas Gerais, northeast Mato Grosso do Sul, and central/southeast Mato Grosso in the past day. Similar activity is expected for the next couple of days, with increasingly extensive rains for much of the month in Brazil. The broad coverage will keep any lingering dry patches very limited, with the heaviest totals in parts of Parana, Minas Gerais, and Goias in the next ten days. This will cause frequent interruptions to loading in central ports, while remaining wheat harvest in RGDS remains slow but may avoid much of the heaviest activity. Light showers scattered across parts of Cordoba, central/far southern Santa Fe, northern Entre Rios, eastern La Pampa, and northern/far western Buenos Aires in the past day, with another system crossing by Thursday and western areas favored in the 6 to 15 day. The rains do not appear notable
enough for major interruptions to spring seeding and will limit any dry spots to 15% or less of corn/soy/wheat. Cooler weather returns for much of the rest of this month, keeping crop growth behind the normal pace.

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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