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Morning Outlook

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Overnight Highlights

* Overnight trade has corn +1, soybeans +1, wheat +1, crude -.53, dollar +.04, gold +4.2 and the Dow +118.

* Overnight market support coming from worries over dry areas in northern Brazil – especially in Mato Grosso.

* Domestic cash soy meal demand continues to be soft.

* Friday Commitment of Traders report as of Dec15 for Managed Money with options; Corn net short position of -39,106, off 25,640. Soybeans net short -29,519, off 18,404. Wheat net short -48,177, off 22,803.

* Bullish Cattle on Feed report on Friday. On Feed 102% vs 101% est, Placements 89% vs 95.8% est, Marketings 104% vs 103.7% est.

* With Friday’s passage of US spending bill that included repealing country of origin labeling laws, Canadian ag minister expects it will shortly resume pork and beef trade with the US.

* Hope in Brazil for scattered showers to provide relief in Mato Grasso.

* Friday funds bought 12,000 soybeans, 4,000 wheat and were even corn.

Commodity Weather Group Forecast

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In South America, weekend rains scattered across much of Brazil, favoring southern Mato Grosso do Sul, northwest Rio Grande do Sul, southwest/far northern Parana, and southern Sao Paulo but also covered patchy sections of Mato Grosso, central/western Goias, and western Minas Gerais. Scattered showers through the next two to three days are more extensive in Center-West Brazil than Friday’s outlook but could still leave stress for parts of central Mato Grosso, Bahia, eastern Goias, and northern Minas Gerais (up to 20% of corn/soy/rice). The 11 to 15 day has trended wetter on all guidance since Friday due to some enhanced support from the tropical Pacific for thundershowers and would narrow concerns. Southern Brazil remains very active over the next ten days, maintaining surplus moisture for RGDS and Parana and possibly causing some pockets of excess moisture. Fungicide applications will also remain important in the south to keep soy rust risks under control.
However, the focus for showers briefly shifts north in the 11 to 15 day. Weekend showers were very limited in Argentina but scatter across better than 1/2 of the corn/soy/wheat tomorrow. Follow-up systems in the 6 to 15 day will need to be watched for excess rainfall, but most areas will not be wet enough for significant concerns at this point.

In the U.S., rains (.10 to .50″, locally 1″) covered the western 2/3 of the Midwest wheat yesterday. Showers linger in the eastern Midwest and extend into the Delta today and again Wednesday and Friday. More substantial rains cross the Plains/Delta/Midwest wheat areas in the first half of next week, with flooding risks focused on MO/southern IL/AR. Heavy snow with that system is possible in the western Plains, benefiting wheat but stressing livestock. A drier 11 to 15 day will help ease standing water problems. Colder air will push Midwest/Plains wheat safely into dormancy, with minimal winterkill risks.

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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