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Morning Outlook



Overnight Highlights

* Grains closed in overnight trade with crude -.70, dollar +.30, gold -14.0 and the Dow -15.

* Outside markets look to provide some pressure to the ag sector with the dollar higher and crude and metals lower.

* Thin holiday trade volume today as the markets will close at Noon CT.

* Weekly export sales for 15/16 sales; corn 80.15 mln bu (well above expectation), soybeans 43.1 mln bu (middle of expectations), wheat 11.16 mln bu (low end of expectation). Of note is more than 20 mln bu of corn sold for 16/17 marketing year.

* The market is anticipating EPA’s RFS mandates to be released today or Monday.

* China stocks sharply lower as the government started an investigation of Chana’s largest brokerage firms. A nice distraction from the Chinese government’s own role in contributing to the recent equity bubble and crash.

* Beijing plans to cut local corn prices for a second year as it pushes to reduce the large Chinese corn stockpile.

* Wednesday funds bought 7,000 corn, 9,000 soybeans and sold 2,000 wheat.

* Cattle cash markets have been inactive as packers were said to have purchased large quantities last week and may not feel pressured to buy many cattle this week

* Shares of JBS, the world’s largest beef producer, fell more than 3 percent on the Sao Paulo exchange after Brazil’s federal accounts court said it had identified irregularities on loans from state-run BNDES.

Commodity Weather Group Forecast

In the U.S., rain (.50 to 2″, locally 4″) expanded in the southern/eastern Plains and southwest/north-central Midwest in the past day. Snow was 2 to 4″ (locally 8″) in northern parts of the TX Panhandle/central KS/eastern NE/northwest IA/southeast MN. Rains expand in the eastern Midwest/Delta today and remain active in the western Midwest and southern/eastern Plains through early next week. The main wetness damage concern will be in AR/southern MO/eastern OK. Weekend snow/ice damage is likely in TX cotton areas, as up to 1/2″ of ice accumulation is possible with nearly 1/3 of crop still unharvested. The moisture will benefit Plains wheat. The ice is a concern but should be light and melt off before damage occurs in most areas.

In South America, showers favored parts of central/southeast Mato Grosso, southwest/eastern Goias, central/northwest Bahia, southern/eastern Mato Grosso do Sul, far western Sao Paulo, far northern Parana, and northeast/far western Rio Grande do Sul in the past two days. Rains diminish through the weekend in the Center-West but linger in the Northeast and expand in the central/south. Showers advance back northward to start next week, with additional showers spreading south to north from late in the 6 to 10 day into the 11 to 15 day. Intermittent late soy seeding delays will occur in RGDS after a fairly open pattern this week, but persistent rains are unlikely. Showers should still be frequent enough for most Center-West soy to limit stress and will also further benefit Goias/Bahia (limiting severely dry spots to 10% of corn/soy) and often favor coffee areas. Argentine showers were less than expected but scattered into eastern La Pampa, northern/far western Buenos Aires, southern Cordoba, and far southwest Santa Fe in the past two days, with heavier totals mainly to the north. Moisture may slip in Entre Rios/Buenos Aires/southern Santa Fe in the next two weeks, but dry spots are limited for now.

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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