- Looking forward to Friday’s USDA report it appears that most market players are expecting US soybean and corn crops to be revised upwards. It is probably fait to say that these expectations are already factored into markets, and no more so than in corn in recent weeks whilst soybeans have also seen lower prices since late December.If the USDA actually confirms the trade’s expectation it may not transpire into additional bearish price action. However, if we see an unexpected reduction in the soybean crop, the bullish upside could well surprise, although we would expect it to be of limited duration.
- The average trade estimate for the US 2013 corn yield is 161 bu/acre , above the last USDA figure of 160.4 bu/acre. Assuming acreage is unchanged we are looking g at an output in excess of 14.05 billion bu. For soybeans, the average trade estimate stands at 43.2 bu/acre giving a 3.27 billion bu crop. Dec 1 stock numbers are equally estimated at relatively high levels; corn at 10.77 billion bu and soybeans at 2.17 billion bu. If correct, the corn number will show growth, year on year, of almost 2.75 billion bu.
- Following the holiday break we have today received the update on Brussels’ wheat export certificates covering the last two weeks of 2013. True to the run of form so far this season, they did not disappoint. The two week total comes to 1.072 million mt, which takes the season total to just over 15.1 million mt. This is 4.4 (41.3%) million mt ahead of last year and points more strongly towards a full year figure in the 28 million mt ballpark. Higher consumption of both barley and maize (corn) in feed rations, displacing wheat and making it available to be exported, supports the large export volume theory.
- In other news it has been suggested that China is accepting some cargoes of corn and DDGs despite positive test results for the non-approved GM trait, MIR 162. The slide in US DDG prices, which reached as much as $30/ton, has seen some evidence of a reversal with prices clawing back some $10/ton.
- Looking forward we are awaiting Brazil’s CONAB estimates on both corn and soybean output, scheduled for release on Thursday. A soybean number of close to 90 million mt for Brazil (and over 55 million mt for Argentina) is widely expected. Corn output also looks good with continuation of non-threatening weather conditions.
- Our conclusions remain unchanged.