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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1, soybeans -6, wheat +1, crude -.50, dollar +.30, gold +5.3 and the Dow +64.

* The market will be watching Sunday’s Argentine Presidential election. The business friendly opposition candidate has a slight lead in recent polls. Trade will watch if there is action on export taxes and currency policy in the following weeks that would bring new farmer selling.

* The Baltic Exchange dry bulk freight shipping index has dropped to 504, an all-time low for the index. The index which is an indication of global shipping costs and freight demand has been under pressure from the over-supply of vessels and weak commodity demand.

* As of yesterday’s USDA sales report, corn is at 38 percent of the total USDA estimate vs five year average of 52 percent. Soybeans total 66 percent of the total estimate vs the five year average of 72 percent.

* NOAA reported that a key indicator for the strength of El Nino has reached a record high. This being one of the strongest El Ninos ever, the market is watching for the risk of rapid shift to La Nina.

* USDA monthly Cattle on Feed report out this afternoon. Avg estimates: On Feed 102.2%, Placements 96%, Marketings 96%.

* Commitment of Traders report will be out today with changes in reportable positions as of Nov 17. The report will show what changes have occurred to speculative positions since the USDA report.

* December option expiration is today.

* Gulf soybean values have weakening, barge bids being off 9 cents from the previous week.

* Yesterday funds reportedly bought 2,000 soybean, 5,000 wheat and were even corn.

Commodity Weather Group Forecast

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In the U.S., rains (.25 to 1.25″, locally 2.5″) lingered in the Southeast yesterday. A band of weekend snow crosses the northern Midwest, with 2 to 8″ accumulations in northern NE/southern SD/IA/northern IL/southern WI/MI stalling very late corn harvest. The next significant storm hits the Plains/Midwest/Delta in the latter 1/2 of next week, with substantial rains benefiting Plains/Midwest wheat but leading to a return of excess wetness in the Delta. Damage should be limited, as the Delta benefits from a week of dry weather prior to the storm. The cold pushes this weekend and at the end of next week look weaker, keeping winterkill threats minimal but helping to push C. Plains/Midwest wheat safely into dormancy by the end of the month.

In South America, showers picked up in central Brazil yesterday, favoring parts of southeast Minas Gerais, Sao Paulo, northeast Goias, central/southern Mato Grosso do Sul, northern Santa Catarina, far northwest Rio Grande do Sul, and much of Parana. Rains will now shift northward into Center-West and parts of Northeast Brazil into the weekend, but occasionally heavy rain returns to central Brazil next week. This will still threaten some pockets of excess moisture in S. MGDS and Parana along with loading delays in coastal ports, while the extensive rains aid topsoil moisture farther north over the next 15 days to limit concerns for corn/soy/softs. Interruptions will still occur to soy seeding at times in RGDS (mainly late next week and late in the 11 to 15 day), but breaks should allow for some progress in between showers. Lingering Argentine showers exited eastern Buenos Aires and Entre Rios yesterday, with showers returning to much of the belt by the middle of next week. Another system arrives in the 11 to 15 day, and the rains will help to keep moisture adequate for nearly all corn/soy/wheat while still well-spaced enough to avert major seeding delays. Cool weather will still keep crop growth behind normal.

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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