Morning News
06/09/12 -- The overnight electronic market is mixed with beans extended declines from the record highs posted Tuesday, currently 5-10 cents weaker. Corn is 3-4 cents higher and wheat up 10-12 cents. Wheat appears to be staging a little correction after four straight days of declines, and nine drops in ten.
There seems to be a feeling that a line has been drawn under declining US soybean yields, with FCStone yesterday surprisingly upping their forecast by half a bushel/acre to 36.7 bpa, 0.6 bpa higher than the USDA currently project.
For corn though, they came in at 121.4 bpa, which is 3 bpa lower than the USDA's August estimate. Other forecasts are lower still, around the 117-119 bpa mark. There is also a feeling that the USDA are still too high on their harvested acres estimate.
Linn Group yesterday reportedly estimated the US corn crop below 10 billion bushels at 9.954 billion on a yield of 119.9 bpa, which would suggest a harvested area of around 83 million acres. The USDA is currently using an estimate of 87.36 million acres, almost 4.5 million higher than Linn Group.
For wheat the market is switching it's attention to Argentina and Australia, who accounted for 23.1% of world wheat exports in 2011/12, despite only having 6.4% of the world's production.
Both of those countries have seen a lower wheat area for 2012/13 due to a switch into other crops and/or unfavourable weather conditions at planting time. Heavy August rains completely wiped out Argentina's accumulated rainfall deficit, although parts of Australia, particularly Western Australia state, are still too dry.
Their combined wheat output in 2012/13 is seen falling 7 MMT, or 5.6% of global wheat production, with their exports down 7.5 MMT cutting their share of the world market to 20.1%.
The market is also watching conditions on the US Plains. "Kansas field moisture has improved with increasing showers the past couple of weeks though conditions are still very dry. As of September 2, topsoil moisture was 47% very short, 27% short and 26% adequate," say Martell Crop Projections.
"Kansas wheat planting typically begins in mid September, reaching 25% complete September 22, 55% by October 4 and 75% October 12. Rainfall needs to increase to fully replenish field moisture following a hot, dry summer," they say.
Luckily, it appears that that is exactly what they are going to get: "The 5-day forecast looks wet in the southern Plains. The 0.50 – 3 inches of rain predicted would be ideal for fall wheat planting in Oklahoma, southern Kansas and West Texas. Besides more rain, the new forecast is also cooler in the US heartland and more favourable for conserving field moisture," they add. There's a copy of their 5-day rainfall forecast map: here
Egypt are testing the water, issuing wheat tenders last night for Oct 21-31 and Nov 1-10 delivery. Will Russian wheat win the lion's share again? Will they feel comfortable offering November? And if they do, will Egypt feel OK about buying it? The results should answer a few questions.
