Use the Right Plywood.

Did you know that plywood is not all the same? To pick the right sheet of plywood for your job, check how it is graded before you buy.
Plywood sheets are designated by a pair of letters, which are the grades of each face, with the first being the exposed-face. If intended for exterior use, there will also be a third letter designation: X. The grades range from A, the highest, to D, the lowest. For example, A is smooth and paintable, where D has knots and knotholes to 21/2 inches in width across grain and 1/2 inch larger within specified limits. Some of the more common grade combinations include AC and CD.
Plywood sheets are also rated for durability when exposed to moisture. The “X” ratings include “Exterior”, which are designed for areas that are permanently exposed to moisture or weather; “Exposure 1″, designed for long periods of weather exposure before being protected; and “Exposure 2″, for protected construction areas where they will be exposed only to moderate moisture or weather conditions.