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30 November 2012 11:05:03|

IGC cuts world wheat production as US dryness forecasted


Soycomplex
Jan 13 Soybeans closed at USD14.48, up 1 3/4 cents; Mar 13 Soybeans closed at USD14.41, up 6 cents; Jan 13 Soybean Meal closed at USD435.80, up USD3.10; Jan 13 Soybean Oil closed at 50.12, down 26 points.
Weekly export sales of only 319,100 MT versus expectations of 500-750 TMT took the shine off an attempted soybean rally. Even so this was for a holiday shortened week, as too were once again impressive weekly shipments of 1.354 MMT - the ninth week in a row exports have been over 1 MMT. Total commitments have now reached 75% of the USDA export projections for the current marketing year which only began in September.
Wet weather continues to disrupt Argentine plantings, where only 37% of soybeans were in the ground by Nov 22, according to the Buenos Aires Cereals Exchange. Normally plantings should be well past halfway by now. Early spring rainfall was 2-3 times normal in September and October, according to Martell Crop Projections. "The greater worry is worsening drought in South Brazil. Parana and Rio Grande do Sul both experienced very dry conditions over the past 30 days. Parana drought is more concerning, since the dry conditions have prevailed for several months, interrupted only by increased rain in October. The moisture deficiency is now 60 to 125 millimetres (2.4–5 inches) in the western and southern growing areas, and 30-35% of normal. This is a one month moisture deficit," they add. Funds were said to have been net buyers of around 2,000 soybean contracts on the day.
Corn
Dec 12 Corn closed at USD7.51 1/2, down 8 3/4 cents; Mar 13 Corn closed at USD7.58 3/4, down 5 1/4 cents.
Fund selling was placed at a net 5,000 lots on the day. Weekly export sales of 236,100 MT for the 2012/13 marketing year and 27,400 MT for 2013/14 fell short of trade aspirations of 400-650 TMT. Once again this falls well short of the 426,000 MT/week needed to hit the USDA's projected total sales for 2012/13.
If US corn exports are going to fail to hit the USDA's current season target, there are signs that domestic demand from the ethanol sector is also going to fall short of USDA projections. US ethanol production fell to a five week low for the week ended Nov 23, the Energy Dept said yesterday. Almost half the week's corn exports of 368,800 MT were destined for Japan, which appears to corroborate talk of them switching away from Brazil due to congestion however. Japan also took around half of this week's sales. Argentine corn is 59% planted as of Nov 22, according to the Buenos Aires Cereals Exchange. This is around 10 points behind normal. Ukraine’s 2013 corn area is estimated at 5.0 million hectares versus 4.5 MH in 2012.
Wheat
Dec 12 CBOT Wheat closed at USD8.69 1/4, down 6 3/4 cents; Dec 12 KCBT Wheat closed at USD9.17 1/4, down 1 cent; Dec 12 MGEX Wheat closed at USD9.31 1/4, down 7 1/2 cents.
Weekly export sales of 279,300 MT were uninspiring compared to the 300-500 TMT expected and last week's 635,400 MT. So too were weekly shipments of only 228,600 MT. Maybe the widely expected switch in world demand to US origin wheat hasn't begun just yet? Algeria bought 375 TMT of optional origin wheat at USD374.50 C&F, which is said to be well below US offered levels. Concerns remain over the US winter wheat crop.
"The new forecast is very dry in the US Great Plains. Virtually no rain is anticipated over the next 5 days as a warm ridge of high pressure takes control of the Central United States. The 6-10 day rainfall forecast points to persistent dryness in hard red winter wheat. However, northern spring wheat area may receive useful rain and snow," said Martell Crop Projections. The IGC cut it's world wheat production forecast for 2012/13 by 1 MMT to 654 MMT, pegging ending stocks at 173 MMT - a 23 MMT decline on 2011/12.

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