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Morning Outlook

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Overnight Highlights

· Overnight trade has corn even, soybeans +2 ½, wheat -1, crude -.50, dollar -.17, gold -6.8 and the Dow -185.

· Brazil released its monthly crop report this morning. Soybean production raised to 102.5 mmt vs 102.0 mmt in Nov. Corn raised to 82.0 mmt vs 81.9 mmt.

· Yesterday’s weekly sales estimates put corn at 41 percent of the total USDA estimate vs the five year average for this date of 57 percent. Soybean year to date sales are now 74 percent of the USDA estimate vs the five year average for this date of 79 percent.

· Trade watching Congress to decide if biodiesel credits will move from blender to producer. Odds seem more against it now than just a few days ago.

· Source say the Dow Chemical and DuPont merger is close to being confirmed with the deal to close in the first half of ’16. The new company, Dow DuPont, would will be a $130 billion company – second only to BASF.

· Commitment of Traders report will be released this afternoon showing the reportable positions as of December 8th.

· Yesterday funds bought 8,000 corn, 1,000 soybeans and 3,000 wheat.

Commodity Weather Group Forecast

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In South America, showers scattered into areas that included Mato Grosso, southern Goias, central/southeast Minas Gerais, and central/northern Mato Grosso do Sul in the past day. Rains remain most notable from Parana into Rio Grande do Sul this month, keeping moisture surpluses in place for at least the southern 1/3 of corn/soy. Flooding risks are not severe, but pockets of excess moisture are possible in western RGDS. Soy rust risks will also remain elevated. While the showers to the north will remain more limited overall, regular rounds of scattered showers are expected to keep current stress (10% of summer corn and 15 to 20% of soy/rice) from expanding, and some reduction is even suggested by models in the 6 to 15 day. However, the shower chances this weekend and again early in the 6 to 10 day will need to be watched to ensure that rains do not falter in key central Mato Grosso soy areas, where a few spots have still missed rain in recent days. Moisture remains adequate to surplus for coffee/sugar. Other than a spotty shower in central Cordoba, Argentina was dry yesterday. However, showers from Saturday to Monday favor 2/3 of corn/soy, with multiple significant storm chances in the 6 to 15 day as well to provide plenty of moisture. Any drier wheat areas that develop to the south will be too late for notable concern.

In the U.S., rains (.10 to .75″) fell in about most of the Pacific Northwest wheat yesterday and remain active in the next ten days, enhancing soil moisture reserves for future growth. Showers develop in the Plains hard red wheat this weekend and spread across the Mid-west/Delta soft wheat areas on Sunday/Monday. Localized flooding is limited by dry weather recently and again after Monday. Showers return in the 11 to 15 day for Delta/E. Midwest wheat, with only minor wetness damage risks. Drier eastern Midwest/Plains wheat areas will benefit from in-creased moisture ahead of spring growth.

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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