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Morning Outlook

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Overnight Highlights

* Overnight markets have corn +1/2, soybeans +1, wheat +2, crude oil +.05, dollar -.15, gold +3.0 and the Dow -15.
* Support overnight on short covering and bargain buying. The large fund short position is supporting wheat especially.
* Weekly export sales report will be out this morning.
* China has been active buyers of South American soybeans, purchasing 5 or 6 cargoes from Brazil and Argentina.
* Informa raised their estimate for Brazilian corn and soybean production and lowered their estimate for Argentine soybeans.

Commodity Weather Group Forecast

In South America, showers in Brazil favored central/eastern Mato Grosso, Goias, southwest Minas Gerais, northeast Mato Grosso do Sul, northeast Sao Paulo, Santa Catarina, and central/eastern Rio Grande do Sul in the past day. Timely rains will persist across drier northern safrinha crop areas over the next ten days, improving crop stands in the key Center-West region. Late soy/coffee development in the Northeast will see a beneficial expansions of showers but rains are likely to remain lacking for Bahia soybeans (5% national crop) and robusta coffee areas in Espirito Santo (nearly 25% of national crop). Showers become more scattered in the 11-15 day but only favor the far south in the 16 to 30 day. That should keep corn/soy harvest delays limited to Rio Grande do Sul and allow for favorable port loading conditions. Argentina was mostly dry yester-day. Showers over the next 10 days will remain limited allowing wetter northern areas to reduce excessive moisture aiding corn/soy development. Only eastern Buenos Aires (< 10% of national crop) could see rains keep wetness a concern. Notable showers return in the 11 to 15 day and are likely to continue into the 16 to 30 day which could hinder early harvest efforts. In the U.S., rain (.25 to 1″) fell in the north 1/2 of the Delta overnight. Light showers linger in the eastern Midwest/northeast Delta today. A potent storm develops Tuesday of next week in the Midwest/Delta soft red wheat belt and continues into Thursday. Much of the region will see beneficial build up of moisture reserves for accelerating spring growth but localized flooding is likely in the Delta. Plains shower potential remains limited to the northern and eastern quarters of the hard red wheat over the next 2 weeks. The area lacking moisture in the southwestern belt will expand from 1/4 of the belt currently to 1/3 of the wheat area during that time as above normal temperatures accelerate the drawdown of moisture supplies. 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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