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Morning Outlook

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Overnight Highlights

* Overnight markets have corn -1, soybeans -2, wheat -2, crude oil -.90, dollar +.27, gold +7.0 and the Dow -135.
* Grains lower on search for demand, farmer selling and lower crude oil. Chicago wheat into contract lows as Paris’ wheat futures are lower.
* USDA outlook conference starts tomorrow. Acreage estimates released Thursday, Balance sheets on Friday.
* Reuters poll of traders estimates corn acres at 89.6 mln vs last year at 87.9, soybeans at 83.3 mln acres vs 82.6 last year.
* Monday is first notice day for March grain contracts.
* Yesterday Funds reportedly sold 16,000 corn, 13,000 soybeans and 7,000 wheat.
* Heavy rains continue in central Brazil, slowing harvest and loading ships. Port delays for loading are now around 50 days.

Commodity Weather Group Forecast

In South America, thundershowers scattered across central/far southeast Mato Grosso, far southwest Goias, southwest Minas Gerais, Sao Paulo, northern/central Mato Grosso do Sul, northern/far southwest Parana, and far northwest Rio Grande do Sul in the past day. Rains will remain quite active through MGDS/Parana/Sao Paulo through the next two weeks, slowing fieldwork and port loading. While a few spots could see excessive rainfall, the rain totals thus far seem to be coming

up a bit shy of model expectations, and major concerns are unlikely. The rains will aid late coffee/sugar growth for now, with the main sugarcane harvest period still one to two months away. Rains are still expected to gradually expand into recently drier northern parts of the safrinha corn belt in the 6 to 15 day, which will be needed to ease building rain deficits this month. However, confidence is still limited, as forecast support remains mixed in the guidance. Argentina picked up a few showers in northeast La Pampa, central/northern Cordoba, and Santiago del Estero, but the main rain event remains late Thursday/ Friday and favors parts of northern Cordoba, central Santa Fe, and Entre Rios. This will add to recent wetness concerns in these areas, but a more limited rain pattern for the balance of the 15-day period should then allow concerns to ease and limit damage risks. Rains may rebuild a bit in the 16 to 30 day for Argentina, while Brazil showers begin to shift back southward.

In the U.S., rains (.25 to 1.25″, locally 2.25″) favored the southeast 1/4 of the S. Plains, Delta,

and southeast 1/4 of the Midwest in the past 24 hours. Rain/snow continues in the eastern Midwest,

improving moisture for wheat growth. Increased rain potential for the Midwest/eastern Plains in the 6 to 10 day and in the S. Plains/Delta in the 11 to 15 day should further aid wheat growth. Southeast CO/southwest KS could still get missed, which would hamper early wheat growth.

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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