Brazilian harvests higher than expected

Soycomplex

Nov 12 Soybeans closed at $15.50, down 1 cent; Jan 13 Soybeans closed at $15.49 1/4, up 1 1/4 cents; Oct 12 Soybean Meal finished at USD478.10, down USD0.40; Oct 12 Soybean Oil closed at 50.82, up 34 points.

The US dollar was sharply higher on a gloomy outlook for the world economy. The IMF lowered its 2012 global growth forecast to 3.3% from a previous forecast of 3.5%. They also cut their outlook for 2013 to 3.6% versus a previous forecast of 3.9%. The news came amidst reports that the Chinese Central Bank was to pump USD42 billion into China’s banking system to boost its economy - the second such recent move.

Some would say it is bullish that they are willing to do so, some would say it's bearish that they are having to do so. CONAB estimated Brazilian soybean plantings around 5.5-6.0% higher this year, combined with hopes for a return to normal yields they pegged the 2012/13 crop at a record 80.1-82.8 MMT versus the USDA estimate of 81.0 MMT and an increase of 21-25% on 66.4 MMT in 2011/12.

Celeres said that Mato Grosso (the largest soybean producing state in Brazil) soyean planting is 5% complete, and that in Parana (the 2nd largest soybean state) it is 8% done. Both are broadly in line with normal for this time. The USDA put this year's US soybean harvest at 58% complete, at the low end of trade estimates although up sharply on 41% done a week ago and 40% normally. Now we all wait on Thursday's important USDA data.

Corn

Dec 12 Corn closed unchanged at USD7.42; Mar 13 Corn closed at USD7.42 1/4, up 1/4 cent.

As you can see it was a bit of a non event for corn too today, as the trade sits on it's hands ahead of Thursday's supply and demand numbers. The trade feels that these could have a bullish slant for corn, with lower US production and 2012/13 ending stocks than last month. It is noted that the difference between the lowest US production estimate and the largest is a hefty 32.5 MMT, so there would appear to be plenty of scope for the market to go either way on Thursday.

CONAB estimated Brazil’s 2012/13 corn crop at 71.9-73.2 MMT, higher than the USDA's estimate of 70.0 MMT and broadly in line with the record production of 2011/12. Despite the draw of soybeans, corn also offers South American farmers lucrative potential returns. Plantings in Argentina were forecast broadly unchanged by the Ministry there yesterday, early indications had been for an acreage reduction of up to 20%. Both will be keen exporters again in 2013 as soon as harvesting begins in February. In China "rains remain very limited cross most corn and soybean areas, which is allowing harvesting to progress very well," say MDA CropCast.

Wheat

Dec 12 CBOT Wheat closed at USD8.64 1/4, up 3 1/4 cents; Dec 12 KCBT Wheat finished at USD8.88 3/4, up 6 cents; Dec 12 MGEX Wheat closed at USD9.28, up 3 1/2 cents.

Various official Russian estimates place the grain crop there at 70-75 MMT, of which wheat is expected to account for 38-40 MMT. The government there have said that they will auction off around 1 MMT of state-owned grain intervention stocks between the end of the month and the end of the year - around 20% of their total holding, and twice the original volume stated. The FAO estimate Russia’s 2012/13 grain ending stocks at 6.9 MMT versus 12.4 MMT a year previously. In Ukraine grain harvesting is 85% complete, with production so far standing at 36.3 MMT. The Ministry estimate a final crop of 46.0-46.5 MMT versus 56.7 MMT in 2011. That looks optimistic.

UkrAgroConsult today lowered their forecast to 42.4 MMT from a previous estimate of 43.4 MMT. India said that it has exported 2.5 MMT of wheat since they lifted export ban in September, and that they have agreed to release another 5 MMT onto the market for both domestic consumption and export. The USDA said that 57% of the winter wheat crop there has now been planted, slightly below the normal pace. Emergence is a concern at 23% versus the five year average of 30%. "Snow increased across western NE, northwestern KS, and northeastern CO this past weekend, which will improve soil moisture slightly once it melts over the next few days," said MDA CropCast.