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Morning Outlook


Overnight Highlights

* Overnight has; corn -1/4, soybeans -1 ½, wheat -1, crude +.80, dollar even, gold -2.0 and the Dow +115.
* Lower grains overnight on some S.A. and US cash selling. Market will be watching if funds will continue to cover shorts.
* Chinese traders say govt is preparing to sell low quality corn out of its huge stocks to ethanol and starch producers. Volume and price have yet to be determined.
* Currency values and the rally in soybean futures encouraged Brazil and Argentine farmer selling. The Argentine peso was at 14.83 and the Brazil real at 4.05 yesterday.
* Yesterday funds bought 7,000 corn, 6,000 soybean and 3,500 wheat.
* USDA will release their monthly Cattle on Feed report Friday afternoon.

Commodity Weather Group Forecast

In South America, showers in Brazil were scattered across southwest Mato Grosso, northwest/far southeast Mato Grosso do Sul, southern Minas Gerais, Sao Paulo, northwest Parana, and northern Rio Grande do Sul in the past day. While rains also expand in southern Brazil in the 11 to 15 day, the most persistently wet conditions in the next two weeks are likely to focus on Center-South Brazil. This will slow port loading and cause some fieldwork delays in Parana/Sao Paulo/MGDS, but dam-aging rains are unlikely (particularly given the relatively quiet rainfall pattern recently). The moisture will also aid late coffee/ sugar growth, and moisture will remain adequate in RGDS as well to support late soy development. Center-West Brazil will encounter only minor and brief interruptions to soy harvest/safrinha corn seeding. Argentina picked up extensive rain (.50 to 2″) again in southern Cordoba, southern Santa Fe, Entre Rios, and northern Buenos Aires overnight. Additional rains by Thursday/Friday and again at the middle of next week will keep moisture well-supplied in nearly all areas for corn/soy growth, aiding yield potential. A few pockets of excess moisture are possible with the heaviest rain (most likely Entre Rios/Santa Fe), but a possible downturn in 11 to 15 day rainfall would keep these concerns very limited. The favorable moisture is also pre-venting any concern from temperatures that are fairly regularly rising into the low 90s.

In the U.S., rains (.25 to 1″) favored southern MO/ KY/northern TN/NC yesterday. Showers will be very limited until spreading across the Delta/ Southeast early next week, followed by more dry weather until rains late in the 11 to 15 day again focus on the Delta. Excessive wetness concerns for soft wheat are minimal. Southwest Plains hard wheat will need 16 to 30 day rains to verify to avoid early spring growth stress. There are no winterkill threats in the next 2 weeks.

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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