- With CBOT corn and wheat trading lower and soybeans either side of unchanged we have looked for the key drivers of direction, as usual, and exhibit a degree of surprise particularly at the decline in wheat. The Russian government seemingly approved the removal of their much discussed grain import duty, albeit effective from April, and only lasting until the end of June – a full three months! Unsurprisingly this has been construed negatively and markets dipped as a result in both Chicago, Paris and London.
- Soy complex gains have been tempered by Argentine crop stresses which are forecast to continue with the key issue being heat. Temperatures are forecast some 12℃ above average hindering development, added to this rainfall is pretty scarce in the forecast over the coming week to ten days. We reiterate our comments of some weeks ago when we suggested that the USDA’s forecast output (Jan ’13 report) for Argentinian corn and soybeans at 28 million mt and 54 million mt respectively appear high right now. Reuters pre USDA survey estimates would tend to agree with our view, the average corn estimate is 26.261 million mt and soybean estimate is 53.095 million mt.
- The decline in wheat prices was also aided and abetted by improved forecast rainfall prospects across key US producing states of Kansas and Oklahoma. A good soaking in the two top wheat producing states would go a long way to assist in relief of months long subsoil moisture deficit and aid the needy crop. Whether or not the forecasters are right will be borne out in the next week, but for sure the growers extremely keen for serious rainfall, and soon.
- Late news today alerted us to Brazil’s AgMin anticipating up to 1 million mt non Mercosur wheat in the April to July period (Membership of the bloc is Argentina, Brazil, Paraguay, Uruguay and Venezuela with associate status awarded to Chile, Colombia, Ecuador and Peru). This represents an additional pressure on global stocks at a time when they remain under pressure.