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Morning Outlook

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Overnight Highlights

* Overnight trade has corn -3/4, soybeans -5, wheat -1-4, crude +.40, dollar -.30, gold +10.0 and the Dow +290.

* Brazilian rain and sharply lower global equity markets pressuring grains this morning.

* China equities nearly 7 percent lower following disappointing economic info out today.

* USDA will release final crop production numbers, supply and demand, winter wheat seedings and quarterly grain stocks on Tuesday January 12th.

* Commitment of Traders as of Dec 29th will be out this afternoon.

* Thursday funds sold 3,000 soybeans, 1,500 corn and were even wheat.

Commodity Weather Group Forecast

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In South America, weekend thundershowers scattered across much of central/northwest Brazil but were heaviest in parts of southwest Mato Grosso, central/northeast Mato Grosso do Sul, northern/western Sao Paulo, southeast/west-central Minas Gerais, and far southwest Goias. Frequent rain occurs for much of the next two weeks in drier northern corn/soy areas (20% of the belt) and ease stress, with pockets of excess rain even possible in Goias. Recent flood concerns in far southern Brazil (10% of corn/soy) and adjacent sections of Uruguay/Paraguay avoided much of the weekend rain and also largely stay on the drier side this week (particularly Rio Grande do Sul). However, notable rains return by the weekend and into the 6 to 10 day. Guidance suggests that rains will begin to ease in northern Brazil and shift focus back to the far south in late January, which will be needed to limit early soy harvest delays in the Center-West. However, this would keep wetness concerns in place for RGDS and nearby areas, and fungicide applications will remain important to control soy rust concerns. Argentina received notable weekend rain in the west and far north, including locally around 6″ in parts of eastern Cordoba. While rains do not appear particularly active over the next two weeks for the region as a whole, western areas will remain favored, and this could cause ongoing wet pockets in Cordoba (15% of corn/soy). Any drier pockets to the east will remain very patchy.

In the U.S., weekend rain (.25 to 1.5″) was confined to the Southeast. Dry weather in the Midwest/
Delta helped to keep levee breeches isolated. Showers return to Midwest/Delta wheat in the
latter half of the week. Light amounts will limit flood potential but also keep fields excessively
wet. Dry weather returns for the 6 to 10 day and allow more drying. Cold air arrives in the 6 to 10
day, but winterkill threats are currently limited tothe northwest quarter of the Midwest wheat.

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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