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Morning Outlook

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Overnight Highlights

* Overnight trade has corn even, soybeans +1, wheat +3, crude +1.20, dollar +.20, gold -10.0 and the Dow +145.
* Markets mixed with support in soybeans from firm soy oil and yesterday’s better-than-expected export sales.
* Year-to-date corn export sales equal 59 percent of the total USDA estimate vs the five year average for this date of 72 percent. Fortunately only about 13 percent of corn goes for export.
* Argentine peso traded 14.63:1 yesterday and is helping encourage aggressive farmer selling.
* The American Petroleum Institute announced it has sued the EPA over its Biofuel policy.
* Thursday funds bought 9,000 soybeans, were even corn and sold 4,000 wheat.
* CFTC commitment of traders report will be out this afternoon.

Commodity Weather Group Forecast

In South America, showers were locally heavy (3″+) in coffee/sugar areas yesterday, particularly near the Sao Paulo/Minas Gerais border. Showers also scattered through central Sao Paulo, northern Parana, southern Mato Grosso do Sul, southeast Goias, and far western Rio Grande do Sul. Rains this weekend and again at the middle of next week will support late soy growth in RGDS, and an active pattern in the next week aids nearly all coffee/sugar areas. Showers will cause minor interruptions to soy harvest/safrinha corn seeding in the Center-West through early next week and in Parana in the 11 to 15 day, but the pattern is far from a notably wet one. Occasional port loading delays will also occur but should also not be serious. Argentine showers were limited to parts of northwest Buenos Aires, northeast La Pampa, and far southwest Cordoba in the past day, but significant rain will occur in nearly all corn/soy areas from the combination of a storm in the next two days and another on Tuesday. Additional showers are expected in the 6 to 15 day, supporting very good yield potential with only isolated pockets of excess moisture despite locally heavy rainfall. Highs have been in the mid 80s to low 90s this week, but crop conditions are stable. While 16 to 30 day guidance remains wettest in southern Brazil/Argentina, there is still a fairly sizeable chance that models are missing a northward advance in showers early in the period given expected tropical forcing (MJO).

In the U.S., snow (1 to 2″) scattered across the southwest Midwest/northeast Delta yesterday.

Midwest wheat areas will be coldest this weekend, but only minor winterkill risks exist in northwest IL/

OH. Rains favor the Delta/Southeast early next week and again early in the 11 to 15 day, with

wetness threats confined to the eastern edge of Southeast wheat areas given limited recent rains

elsewhere. Light snow favors the Midwest on Sunday, but the rest of the month is fairly quiet.

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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