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Morning Outlook

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Overnight Highlights

· Overnight trade has corn -1 ½, soybeans -1, wheat +1-4, crude -.60, dollar +.45, gold -1.9 and the Dow +10.

· Continued strength in the soy oil market overnight, but weaker in meal.

· Corn weaker on concerns over Argentine export offers after tax elimination later this week. Feb offers are about 10 cents below the US.

· Brazil analyst Safras Mercado lowered their estimate for Brazil 15/16 soy production to 100.4 mmt vs. their previous estimate of 100.5 mmt. They raised their corn production estimate to 89.3 mmt vs. the previous estimate of 88.6 mmt. Analysts expect the USDA to estimate it Wednesday at 99.9 mmt.

· AgRural analysts said overall Brazil soybean planting progress was at 88 percent of the expected crop, off from the long term average of 94 percent.

· French Farms Ministry announced another three cases of bird flu were found in the southwestern part of the country.

· Commitment of Traders report Friday showed that as of December 1, Managed Money was: Corn short 78,140 (off 21,668), Soybean short 34,768 (off 18,157), Wheat short 77,324 (up 29,971), Meal short 22,313 (off 1,953), Soy oil long 40,538 (up 19,003).

· Friday funds bought 7,000 corn, 7,000 soybeans, 3,000 wheat.

· USDA monthly US and world stocks report out Wednesday.

Commodity Weather Group Forecast

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In South America, weekend showers scattered across Brazil once again but were most notable in southern Mato Grosso, eastern Minas Gerais, northern Espirito Santo, far western Sao Paulo, Mato Grosso do Sul, and far northwest Rio Grande do Sul. Rains scatter into Center-West Brazil until mid-week and occur intermittently from late this week into the 6 to 15 day. While the rains will still not favor Mato Grosso, rainfall should remain sufficient to limit stress to the northern 10 to 15% of
Brazil corn/soy (mainly northern Mato Grosso, Bahia, and points north). Highs were in the mid 90s to near 100°F (35 to 38°C) on Friday in parts of the Center-West/Northeast and will be similar on drier days but will not be sustained enough to be a concern. Frequent rains in the rest of the belt will keep moisture well-supplied for corn/soy/coffee/sugarcane growth, but the surplus moisture in the southern 1/2 of the soy belt will keep rust risks elevated. Flooding concerns should remain isolated.
Argentina saw weekend showers limited to patchy western areas, with a similar pattern this week (wettest tomorrow). The biggest rain events are this weekend and again next Monday night/Tuesday. This will replenish moisture supplies for most areas, but central/southern Buenos Aires could see some building rain deficits (15% of corn and 1/3 of wheat).

In the U.S., the weekend was mainly dry, with .25″ amounts confined to southern IA and .25 to .75″ amounts in the Pacific Northwest. Showers remain focused on the Pacific Northwest this week, improving soil moisture. Rains finally return late in the weekend to Midwest/Delta wheat areas, with another event in the Delta/southeast Midwest in the 11 to 15 day. Wetness damage remains isolated due to drying this week, and rains then improve low soil moisture in the eastern Midwest. Late cotton/soy harvest in the Southeast remains favorable this week, making slowdowns next week of minimal impact.

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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