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Morning Outlook

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Overnight Highlights

* Overnight trade has corn even, soybeans +4, wheat -1, crude -.36, dollar -.40, gold +5.5 and the Dow -80.

* Grains mixed in light trade overnight following yesterday’s fund short covering rally. Argentine markets and Brazilian weather on the trade radar.

* Pressure in energy continues with crude oil posting new lows overnight.

* China’s Commerce Ministry officially accepted a petition from Chinese producers seeking anti-dumping duties on DDG imports from the US.

* European Commission lowered its estimate for 15/16 corn production to 56.6 mmt vs previous estimate of 57.5 mmt and last year’s crop of 77.9 mmt.

* Cash soymeal still a weak tone with talk of trade $1 to $2 below cash offers. Board crush margins continues to weaken.

* USDA monthly Cattle on Feed report out this afternoon. Avg estimates: On-Feed 101 percent, Placements 95.8 percent, Marketings 102.7 percent.

* Thursday funds bought 12,000 soybeans, 5,500 corn and were even wheat.

Commodity Weather Group Forecast

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In South America, rains were most notable in far southern Rio Grande do Sul in Brazil, with only very spotty activity to the north. Rains expand in the south during the weekend and scatter into central/northwest areas (averaging around 1″ or slightly better) early next week. Most of the rain event is now captured in the 1 to 5 day for Mato Grosso, with another opportunity in the 11 to 15 day. Our forecast maintains low confidence and is a compromise in the near-term between the drier GFS and wetter Euro solutions, but parts of central Mato Grosso may still see insufficient rain totals to prevent some yield loss. Combined with dry spots to the north/east, this could threaten reductions for up to 1/4 of Brazil soy and 15 to 20% of corn/rice. Southeast Mato Grosso and points south are likely to remain stable. Frequent rains will focus primarily on RGDS and southern Parana over the next two weeks, keeping a moisture surplus in place. The moisture will aid corn/soy growth but will keep fungicide applications important to control soy rust. Coffee/sugar will be mostly stable except for the northeast 1/4 of coffee. Argentina picked up rains in mainly northern Entre Rios/central Santa Fe yesterday and sees extensive 6 to 15 day rains. While Entre Rios/southern Cordoba will have some wet spots, the rains are largely welcome for corn/soy.

In the U.S., rains (.25 to 1.5″) covered the Southeast yesterday. Showers linger in the Southeast today. The weekend is still dry. Most showers in the first half of next week in the Delta/Midwest/Southeast wheat areas are only light to moderate, keeping wetness threats minimal. A much stronger storm comes across the Plains late in the 6 to 10 day and expands across the Midwest and Delta through the first half of the 11 to 15 day. The risk of localized standing water will be focused on the southwest Midwest/northern Delta, while the moisture benefits Southern Plains and eastern Midwest wheat.

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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