Chicago Leaps Despite USDA Data Being Mixed

Corn: Dec 12 Corn closed at USD7.73 1/4, up 36 1/2 cents; Mar 13 Corn closed at USD7.73 1/4, up 35 1/2 cents. Funds were given credit for being net buyers of around 25,000 corn contracts on the day. The USDA placed corn yields at 122 bpa, 0.7 bpa below the average trade estimate. Despite that, an increase in planted area helped keep production virtually unchanged from last month at 10.7 billion bushels, 108 million above the average trade guess. World production was lowered 2 MMT, most of that coming from another downgrade for Europe. The bullish surprise came from US ending stocks cut 114 million bushels from last month to 619 million, 26 million below the average trade estimate, giving the tightest stocks to usage ratio in almost 40 years. World ending stocks came in at the lower end of trade estimates at 117.3 MMT - of which 60 MMT is said to be in China. Tomorrow's weekly export sales report will be interesting, with the trade expecting corn sales of 300-425 TMT. Last week's fairly modest sales of 326,900 MT were in fact the highest in 20 weeks.
Wheat: Dec 12 CBOT Wheat closed at USD8.86, up 16 1/4 cents; Dec 12 KCBT Wheat closed at USD9.18, up 20 1/2 cents; Dec 12 MGEX Wheat closed at USD9.46 3/4, up 13 cents. Fund buying in CBOT wheat was estimated at around 5,000 contracts on the day. The USDA lowered the world wheat crop 5.7 MMT from last month to 653 MMT, more than 6% down on last year. US exports were dropped 1 MMT to 31.5 MMT. Despite a drop of 1 MMT in production from last month, Russia's export potential was raised 1 MMT to 9 MMT. India's new found emergence as a global wheat exporter saw it's foreign sales projected 1 MMT higher than last month at 6 MMT, making it the world's eight largest wheat seller in 2012/13. Support for wheat futures came from the tight domestic corn situation in the US, fostering ideas that wheat feeding may end up much more prevalent than normal this year. The Buenos Aires Cereals Exchange estimated Argentina’s wheat crop at 10.12 MMT versus 13.2 MMT in 2011/12. The USDA has them down to produce 11.5 MMT this year. As well as cuts for Australian and Canadian wheat, barley output in both countries was also downgraded. Trade estimates for tomorrow's weekly export sales report are 300-500 TMT.