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Morning Outlook



Overnight Highlights

* Overnight trade has corn -1, soybeans +2, wheat -1, crude -.50, dollar +.25, gold +3.3 and the Dow -20.

* Strength in soy meal futures offering support to soybeans.

* Reports out of Argentina indicate farmers will plant up to 10 percent more corn on the anticipation of the drop of the corn export taxes. Key growing areas there will plant corn until January.

* Traders in Singapore are saying Asian corn buyers are holding back on purchases on the anticipated pickup in Argentine offers.

* The USDA reported 441.1 mln bu of corn used in October for ethanol production vs. 427.5 mln bu used in Sept.

* Cash sources in Brazil indicate heavy rains have slowed the load out of corn at Paranagua and Santos. Estimated wait times for load out are near 40 days.

* Tuesday funds bought 7,000 corn, 6,000 soybeans and sold 4,000 wheat.

Commodity Weather Group Forecast

In South America, showers were limited yesterday, favoring parts of La Pampa in Argentina and western Minas Gerais, northeast Mato Grosso do Sul, southwest Mato Grosso, and central/northeast Rio Grande do Sul in Brazil. Rains favor Center-South and southern Brazil during the rest of this week but expand northward in the first 1/2 of next week, with another round of showers tracking south to north from late in the 6 to 10 day into the 11 to 15 day. The break in Parana and northern RGDS next week will be welcome but is unlikely to be long-lived enough to notably ease surplus moisture. This will keep soy rust concerns elevated, but widespread rains in central/southern Brazil will otherwise aid corn/soy/coffee/sugarcane growth. While Center-West and Northeast Brazil will still not be favored for the best activity in the 6 to 15 day period, showers should be adequate in much of Goias/Mato Grosso to limit stress to corn/soy. Notably dry conditions are likely to focus on the northern 15% of the belt, including northern Mato Grosso, Bahia, and minor production areas to the north. Argentina will see a few showers early in the 6 to 10 day, but the bulk of rain favors northern corn/soy areas in the 11 to 15 day. This may allow moisture deficits to build in central/southern Buenos Aires and southern Entre Rios (15% of corn/soy but up to 30% of wheat).

In the U.S., rain (.25 to .75″, locally 2″) favored the eastern Delta yesterday, with snowfall of 2 to 5″ in the northwest Midwest. Rain will be confined to the Southeast today and again Monday. The Plains/Midwest/Delta will remain mostly dry until the 11 to 15 day, when a storm early in the period will produce significant rains centered on the Delta. Given the long dry spell prior, wetness damage should be limited. The Pacific Northwest wheat is dormant but will benefit from an active storm pattern in the next 2 weeks, replenishing low soil moisture. Mild conditions aid Delta wheat growth in the next 2 weeks.

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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