• The USDA has today released its weekly export figures as detailed below:

Wheat: 257,400 mt, which is above estimates of minus 150,000-plus 50,000 mt.
Corn: 372,600 mt, which is below estimates of 600,000-800,000 mt.
Soybeans: 224,600 mt, which is within estimates of 100,000-300,000 mt.
Soybean Meal: 67,200 mt, which is below estimates of 75,000-150,000 mt.
Soybean Oil: 7,300 mt which is within estimates of zero-10,000 mt.

• Brussels has issued weekly wheat export certificates totalling 517,906 mt, which brings the season total to 30,147,068 mt. The season to date total is now 2.997 million mt (11.04%) ahead of last year. As we said last night, the USDA’s latest export total stands at 34.5 million mt and with seven export weeks of the season to go this means an average weekly pace of 621,847 mt. We think this is something of a tall order!

• Mid-afternoon and the Chicago grain markets are running higher, “Why particularly given a non-bullish report on Tuesday?” Good question, and the answer may, in part, lie in some US$ weakness as US retail sales data is described as sluggish. Added to the fund net short position (as we have frequently mentioned) this gives the market an opportunity to push higher on relatively minor bullish input. We would suggest that higher prices will see limited following but funds may seek to take profits, as today’s action suggests.

• Wheat fundamentals continue to lean bearish with what is reported to be favourable moisture for the dry areas of the N Plains, indeed some are suggesting that the timeliness and volume of precipitation are “near-perfect” for the 87% planted spring wheat crop (well above the 10 year average of 33%). We would expect to see spring wheat acres increase and with current weather this may well lead to yield improvement which will add to overall output. As US export demand seems incapable of gathering support, the picture cannot be painted as bullish at this time.

• In corn we may be witnessing a “recovery bounce” in prices, but unless a weather issue develops we believe upside to be limited. The bears failed to push through the post-USDA lows and this has given heat to the bulls – for now. US Farmers will view upside in prices as manna from heaven as it appears any are holding long physical old crop stocks, and an upswing in prices may offer some relief but farmer selling will ultimately cap prices. Technically we are looking at a “double bottom” formation, which could be seen as supportive and the 20 day moving average could also offer some support.

• In soybeans the avian influenza outbreak in the US is not helping the demand story with the weaker US$ countering price weakness to some extent. Cash basis and sluggish US meal trade may well provide a trigger for traders to look for lower prices.