- Today we have a plethora of varying news, suggestions that Brazilian dock workers are to strike, weather items and guestimates of what might or might not be planted in the US this coming season.
- Soy complex and corn markets are a touch lower and wheat is just in the green. Last night’s commentary on Brazil’s import requirement appears to be confirmed, with suggestions that the tariff exempted grain is (unsurprisingly) likely to originate in US or Canada, and an indication that the exemption could extend from yesterdays 1 million mt to 2 million mt depending upon Argentina’s final crop outturn. The current USDA forecast for Argentine wheat output is 11 million mt, which compares with 2011/12 at 15.5 million mt. It is our belief that 2012/13 outturn will be below the USDA number, possibly as low as 9 million mt, which will present an issue for Brazil as far as available import tonnage is concerned.
- In terms of looking forward, private forecaster Lanworth suggested that US corn production could reach a record 14.5 billion bu in the coming year with yield reaching 163.1 bu/acre on average, if the weather plays ball. They added that recent weather anomalies, warmer summer temperatures in particular, threatened yield levels. Their first estimate of 2013 output left yield below “potential” at 155.6 bu/acre, well above last year’s 123.4 level, but behind trend. Their belief that planted acres will reach near record levels, and crop potential will be elevated despite the risks presented by dry and warm conditions leaves a degree of uncertainty over final season ending stock levels.
- The firm continued their latest projections, issued today, and cut Argentine soybean output to 51.6 million mt from 53.1 million mt and corn output was also cut to 25.1 million mt from 25.6 million mt. Brazilian output was also cut, this time to 75.6 million mt on corn, a reduction on 200,000 mt, and soybeans to 80.3 million mt, a reduction of 600,000 mt. The reductions were blamed on dry conditions extending into February were a key component of their reduced forecast.
- Todays slight easing in markets on corn and soybeans is attributed to improved rain offerings in the forecast, a stark contrast to the preceding comments; perhaps illustrating the fickle and short term nature of markets right now!
- The US Congressional Budget Office released its estimates of US new crop supply and demand with corn acres at 97 million and yield at 161.5 bu/acre, suggesting output at 14.5 billion bu which would leave end stocks at 1.8 billion bu. Soybean acres were put at 77 million with yield at 43.5 bu/acre, output calculates at 3.3 billion bu and end stocks at 281 million bu. Wheat numbers yielded 2.2 billion bu output and 744 million bu as end stocks. The numbers were caveated with “subject to normal weather (whatever that is these days) and trend line yield”. Clearly we would not wish to trade these numbers today, but they give an indication of potential and what we may expect if variations from “norm” in terms of growing conditions should materialise.
- Clearly an interesting day in terms of what might happen in coming months! Perhaps more interesting will be to look back in a few months and see who got it right and who got it wrong!