Lunchtime News

24/05/12 -- The overnight grains are higher with beans up around 18-20 cents, wheat up 7-9 cents and corn 2-4 cents firmer. Crude oil is around a dollar higher.

The USDA's weekly export sales report came in at a combined 953,700 MT for soybeans, a bit below the expected sales of 1.0-1.25 MMT. Once again though it is noticeable that the vast majority of these sales were for old crop (800,100 MT) keeping nearby supplies very tight. China bought more than half of the old crop (436,800 MT) and most of the new crop (118,000 MT).

Corn sales at 482,000 MT were less than half of what was anticipated (1.0-1.3 MMT) although China was a featured buyer of both - largely on switched from sales to unknown. Wheat sales were a combined 827,000 MT of almost all new crop, above expectations for sales of 350-550,000 MT.

The IGC have cut their estimate for world 2012/13 wheat production by 5 MMT to 671 MMT, and lowered their projected ending stocks for next season by a hefty 15 MMT to 191 MMT. Even so that's still a plentiful number being the equivalent of more than three months worth of consumption.

The cut in wheat production was due as "adverse conditions lowered harvest expectations in the EU, Russia and Morocco," they said. Earlier this week the FAO said of Morocco: "Prospects for the 2012 winter wheat and coarse grain crops, about to be harvested, are poor. In November, timely but significantly above average precipitation delayed planting activities into December and January. Subsequently, rainfall levels dropped rapidly to minimal amounts from December until early March. In addition, the unusually low temperatures in early and mid-February affected standing crops. Despite a resumption of rainfall in April, much of the yield potential had already been lost as the typical reproductive period of March, especially for wheat, has passed."

Conversely corn production is increased by the IGC, up 13 MMT from last month to 913 MMT, a 5.4% increase on last year and an all time record high. Corn ending stocks are also raised by 6 MMT to 141 MMT.

"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.

Early wheat harvesting is underway in southern Kansas, with yields said to a a bit disappointing so far.