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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +2, soybeans +4, wheat +3-4, crude +.20, dollar -.47, gold +3.1 and the Dow +13.

* Markets supported this morning from weaker dollar, higher crude and positioning ahead of today’s USDA report.

* Trade estimates for today’s 11:00 CT USDA U.S. ending stocks: Corn 1.768 vs 1.760 in Nov, Soybeans 462 vs 465 in Nov, Wheat 918 vs 911 in Nov.

* USDA monthly 15/16 world stock estimates: Corn 212.1 mln mt vs 211.9 in Nov, Soybeans 82.6 mln mt vs 82.9 mln in Nov, Wheat 226.4 mln mt vs 227.3 in Nov.

* Ukraine Ag Minister revised winter wheat condition rating of 17 percent poor, down from 30 percent poor.

* Report out of China that they will start selling corn out of reserves ahead of their normal start date of April.

* Tuesday funds sold 6,000 soybeans, 1,000 wheat and bought 1,000 corn.

Commodity Weather Group Forecast

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In South America, thundershowers scattered into Mato Grosso, southern/eastern Goias, far southwest Bahia, central/northwest Minas Gerais, northern/far southwest Sao Paulo, and northwest Mato Grosso do Sul in the past day for Brazil, including a few spots in central Mato Grosso that had been short-changed thus far. However, the best rain potential in Mato Grosso remains in the first 1/2 of next week and again in the 11 to 15 day. Notable stress is currently limited to 10% of summer corn and 15 to 20% of soy/rice (primarily parts of northern Mato Grosso, Tocantins, Bahia, and points north), and the showers need to meet expectations early next week in central Mato Grosso to prevent an expansion of the dry area to 30% of soy. Rains elsewhere will remain quite active in support of summer crop growth, but the frequent rains in Parana and Rio Grande do Sul will keep rust risks elevated for soy in up to 1/3 of the belt. Argentina saw rains favor parts of central Cordoba, southern/far northern Santa Fe, and far southern Entre Rios in the past day. A similar event is likely this weekend, with broader coverage reaching most corn/soy areas at the middle of next week to keep crop conditions stable. Far southern wheat areas may still miss rain, but most areas are too far along for notable yield loss.

In the U.S., rains (.25 to 1.5″) fell in about 1/3 of Pacific Northwest wheat yesterday. Rains remain confined to the Pacific Northwest this week, improving soil moisture reserves for next spring. The storm slated for the Midwest/Delta wheat areas is mainly Sunday/Monday. Localized flooding is possible, but damage potential is minimized as fields are drying this week. The rains will improve moisture for the drier eastern Midwest. Late cotton/soy harvest and wheat seeding in the Southeast sees only minor delays from showers next week, allowing much of the fieldwork to push to completion.

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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