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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -1/4, soybeans -2, wheat -1, crude -.90, dollar +.20, gold -8.9 and the Dow -38.

* Argentine President Macri announced he is eliminating the corn and wheat export taxes and reducing the soy tax 5 percent as anticipated. The market is still curious about what the approach will be on Peso devaluation. Aggressive Peso devaluation announcement would weigh on commodities as Argentine farmers could make lower export offers.

* US traders waiting to see if Congress can pass a bill that changes the Biodiesel credit from blenders to the producer. Odds 50/50 at best.

* Friday’s Commitment of Traders report with options as of Dec 8th shows Managed Money with net short corn of 64,746 (a reduction in net short of 13,394), net short soybean of 11,115 (a significant reduction in net short of 23,653) and still a large net short wheat position of 70,980 (a small reduction in net short by 6,344).

* Asian buyers look to be moving wheat origins from Canada and the US to Australia as their cargo prices have come down for early ’16 delivery.

* An EU crop monitoring agency stated that winter crops in EU countries haven’t gained winter hardiness yet because of warm weather and are susceptible to cold snaps.

* Last trade date for December ag futures today.

* NOPA November crush report out tomorrow.

* Friday funds sold 7,000 corn, 7,000 soybeans and 3,000 wheat.

Commodity Weather Group Forecast

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In South America, weekend showers in Brazil favored parts of Tocantins and points north of Mato Grosso in addition to central/southeast Minas Gerais, southwest Goias, eastern/far southern Mato Grosso do Sul, western Parana, and central/southwest Rio Grande do Sul. Showers favor southern Brazil through much of the next two weeks, keeping moisture supplies surplus and possibly leading to a few pockets of flooding in western RGDS. However, the main impact will be to keep rust risks elevated for the southern 1/3 of soy, requiring fungicide applications. While the weekend activity did offer some relief to the driest fields in far northern Brazil, limited activity this week will leave the northern 1/3 of soy and 15 to 20% of corn/rice in need of 6 to 15 day rain to limit stress. Models show good agreement on an upturn in rain next week for the region for all but the Northeast. Moisture will remain adequate for most coffee/sugar areas in the balance of December, although the northeast
1/4 of the coffee belt will need to be watched. Abundant weekend rains in Argentina favored central/northeast Cordoba, much of Santa Fe, northern Entre Rios, and central/northwest Buenos Aires. Additional rains on Thursday will also benefit a large area (particularly corn/soy), but a break in the 6 to 10 day then allows drying to avert any notable wetness concerns.

In the U.S., rains (.25 to 1.5″, locally 4.5″) fell in wheat areas of the western 1/2 of the Midwest, all of the Delta, and all but the northwest corner of the Plains in the past 2 days, with snow (2 to 9″) in the southwest Plains. Light rains benefit eastern Midwest wheat today. Drier weather during the rest of the week then eases wetness in KS/MO. 6 to 15 day rains concentrate in Delta/Midwest soft wheat. Excess wetness is likely to redevelop, with greatest damage risks in the Delta. There are no winterkill threats for Plains/Midwest wheat, but the crop is not fully hardened and needs to avoid sharp cold blasts.

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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