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Morning Outlook



Overnight Highlights

* Overnight trade has corn -2, soybeans -4, wheat -2, crude -.90, dollar -.45, gold +8.2 and the Dow -370.

* Chinese stocks tripped the ‘circuit breaker’ again spreading weakness to global equity markets.

* Brent crude and WTI have both taken out their 2008 low, now trading at 2004 levels on record global supply levels and demand concerns.

* Weekly exports out this morning.

* In currencies; Argentine peso is weaker today – around 13.87 – fueling additional Argentine farmer selling ahead of the Brazilian harvest. China devalued the yuan 0.5 percent – the largest single day move since August. Russian ruble is back trading at its lows.

* Talk that China bought another couple cargoes of US soybeans off the PNW.

* South American weather continues to bring relief to northern Brazil while South Africa continues to reel from their drought, snow on deck for Ukraine/Russia.

* Wednesday funds bought 7,000 soybeans, 2,000 wheat and were even corn.

Commodity Weather Group Forecast

In South America, showers scattered across much of Brazil in the past day but favored parts of central Mato Grosso, southwest Goias, northern Mato Grosso do Sul, far western Minas Gerais, central Bahia, and Tocantins. Frequent rains in northern areas will continue to ease late corn/soy stress through mid-month. Very early Center-West soy harvest will initially slow but improves late in the month, as the wettest weather shifts south. This will allow wetness concerns to potentially redevelop in Rio Grande do Sul corn/soy/rice, after a relatively quieter short-term pattern. Fungicide requirements will remain elevated to control soy rust in the southern 1/3 of the belt with the return of a wetter pattern. Coffee/sugar areas will pick up extensive rain next week, offering additional needed relief in Robusta coffee areas. Argentina saw showers limited to southwest Cordoba and points to the west in the past day. While scattered showers briefly extend to the east from late Monday into Wednesday, the bulk of rain otherwise remains limited to the far western belt until a major rain event arrives early in the 11 to 15 day. Surplus moisture may linger in southern Cordoba (20% of corn/soy), with a few dry patches possible near the Santa Fe/Entre Rios border (10% of corn/soy). However, the rain event will otherwise aid corn/soy growth, and only minor late wheat harvest delays are expected. Highs intermittently rise into the low to mid 90s next week but should not cause any major concerns.

In the U.S., showers (.10 to .65″) in the past day were confined to the southeast third of the Plains
and western fringes of the Delta wheat. Showers expand across the Midwest/Delta over the next
three days. The rains should only temporarily slow the dry down of excessively wet wheat fields, as
mainly dry weather returns for the 6 to 15 day. Little has changed with the colder pattern in the
next 2 weeks, posing only minor winterkill risks in the northwest fringes of 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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