• Today Egyptian tender held little in the way of surprise with the US collecting all the prizes! 180,000 mt SRW (soft red wheat) and 110,000 mt HRW (hard red wheat) with no Black Sea offers made. Syria picked up 100,000 mt Black Sea wheat which was assumed to be of Romanian origin. Activity ahead of the forthcoming Christmas and New Year holiday period is brisk, particularly at these prices, and many, ourselves included, believe we could well be facing different circumstances when we return.

• The shine was taken off the tender news when Informa Economics (private analysts) reported their 2013 acreage forecasts as follows:

Corn 99.026 million acres, up from 97.7 million acres previously.
Soybeans 78.962 million acres, down from 80.1 million acres previously.
Wheat 42.198 million acres, down from 42.5 million acres previously.

• The market reacted in particular to the enlarged corn acreage which left CBOT corn futures trading at a five month low and wheat prices tagged along for the ride having earlier gained on the Egyptian tender. The corn acreage, if sown, will be the largest in over 76 years and, weather permitting, would produce significant gains in output over this years out-turn. If “trend line” yields are reached on the enlarged acreage we could well be looking at output rising to somewhere in the region of 14.5 billion bu, which is around 30% above this year.

• The decline in corn price on the news triggered technical selling as chart support gave way and funds pitched in to fuel the decline, in the final 15 minutes before Wednesday’s close front month soybeans are down $0.28, corn $0.13 and wheat $0.05.

• The hopes for a 30% plus recovery in Russian grain output may well prove misplaced according to their AgMin today. They estimated their winter grain output at 36.8 million mt on a slightly reduced acreage. However, SovEcon (consultants) suggested that the estimate might prove optimistic and indicated that cold conditions were already beginning to kill some crops, the regions affected included the Volga Valley, southern Rostov and Voronezh. Ukraine’s Agritel added that despite reasonable snow cover in some areas there was cause for concern due to poor early crop development caused by dry conditions.

• Russia is in need of a good season and harvest following the poor out-turn in 2012. SovEcon put Russian wheat stocks 40% down yoy at 15.2 million mt (compared to 25.4 million mt).

• Once again we see a fundamental situation developing which is at odds with price development. The return to markets after the holiday period will be most interesting!