The Morning Vibe

02/08/11 -- Soybeans are higher on the overnights after the USDA dropped good/excellent ratings two points to 60%, six points below last year. Corn is a tad lower after they surprisingly left good/excellent unchanged at 62%. Wheat is higher after spring wheat conditions fell four points in the top two categories to 70%.

Second guessing the USDA is never easy, but I'm starting to get a feeling in the old water that they are gearing up for another corn surprise next week. If it's a bearish one then the weight of fund length could lead to a major correction to the downside.

For wheat they should raise production estimates in Russia, and Ukraine too. They should certainly also raise their EU-27 output number as well. Export potential from the FSU is significantly greater than they predicted last month, so that should increase along with a probable reduction in US wheat exports.

The Ukraine Ministry say that the country has harvested 30 MMT of grains so far, including 20.5 MMT of wheat and 8.5 MMT of barley. Last month's USDA estimates only had total wheat production there coming on at 18 MMT and barley at 7.5 MMT.

Argentine farmers are seen planting less soybeans and more corn and wheat this year, according to local analysts there. Growers there are expected to sow 4.6-4.7 million hectares of wheat for 2011/12, up from 4.4 million last year, and a similar area of corn, up from 4.3 million in 2010. Soybean plantings are seen falling from 18.7 million hectares to around 18.3-18.5 million.

The UK looks like being awash with rapeseed this year, with Gleadell quoted in this article on Agrimony.com as saying that "the crop now looked like hitting 2.6m tonnes, some 20% above last year's harvest."

That's half a million tonnes more than the USDA said last month (are you spotting the trend yet?), a 24% difference. I personally wouldn't be surprised to see the crop finally come in around the bin-busting 2.75 MMT region, a figure inconceivable three months or so ago.