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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -3/4, soybeans +1, wheat -1, crude -.80, dollar -.08, gold -2.0 and the Dow -90.

* Markets mixed to weaker on cooperative South American weather and soft energy markets.

* Cordonnier raised his estimate for Brazil 15/16 corn production to 83.2 mln mt, up 2 mln from his previous week estimate. He increased Brazil 15/16 soy production to 98 mln mt, up 1 mln from last week. He left Argentine soy and corn production unchanged.

* Bloomberg reports that Syngenta is nearing a $43 bln deal to be bought by ChemChina.

* USDA reported December soy meal stocks at 270,421 mt vs 342,962 mt in November.

* Corn and soybeans continue to consolidate, looking for direction as spring nears.

Commodity Weather Group Forecast

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In South America, mostly dry conditions prevailed in Argentina yesterday, with a rain chance late Thursday into Saturday initially favoring western areas but eventually spreading across most of the corn/soy to start next week. While stress is currently focused on the driest sections of central Cordoba, central/northeast Buenos Aires, and a few spots in southern Santa Fe (20% of corn/soy), much of central/southeast Argentina needs the rain to prevent an expansion in stress. The timely moisture should help to limit impacts to yield potential due to the current dryness, particularly given an ongoing lack of notable heat. Brazil picked up only patchy showers in northern Rio Grande do Sul, Santa Catarina, western Parana, southeast/far western Mato Grosso do Sul, western Mato Grosso, northern Bahia, and northern Tocantins in the past day. Rains will remain south-focused this week, helping to further improve late soy/summer corn growth in RGDS. Occasional rain delays will occur to early soy harvest in Parana/Sao Paulo during the next ten days, as well as port delays. However, the wettest weather shifts back to the Northeast in the 11 to 15 day, with follow-up relief for coffee/sugar areas as well. The northeast 10% of corn/soy was very wet last month, but the current two-week break will limit damage risks. Center-West soy harvest will slow in the 11 to 15 day but should not encounter serious delays. Rains are expected to shift back southward in late February.

In the U.S., rain (.25 to 1″) favored OK and central/eastern KS in the past day, with snow (2 to 6″)
in eastern CO/southwest NE/northwest KS. 4 to 12″ snow totals continue in NE/northern KS/
northwest IA/southern MN today and stress livestock, with rains across much of Midwest/Delta
wheat. Drier conditions dominate the 6 to 10 day, keeping wetness concerns for wheat minimal.
While some models pose a Midwest winterkill threat in the 6 to 10 day, most remain milder.

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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