Lunchtime News

11/12/12 -- Well we've all been waiting on the USDA and their numbers were a bit of a mixed bag, but for once didn't contain a major shock.

US soybean 2012/13 ending stocks were cut to 130 million bushels, in line with trade ideas and very tight. That should be supportive to the market going forward, considering the USDA's reputation for caution.

The number is in reality probably still too high as it came courtesy of an increase in the domestic crush (you will recall that the US had already surpassed the USDA's soyoil export target for the entire 2012/13 season, so a crush increase was always on the cards).

They resisted the temptation to raise US soybean exports however, despite that fact that 78% of the anticipated 1.345 billion bushels of foreign sales is already on the books.

Both Brazilian and Argy soybean production potential was left unchanged from last month at 81.0 MMT and 55.0 MMT respectively.

As we know caution is their watchword, so they only cut Argy corn output by 0.5 MMT to 27.5 MMT, contrary to trade expectations for a 2 MMT reduction to 26.0 MMT. Braz corn production was left unchanged at 70.0 MMT.

Chinese corn output was raised a surprising 8 MMT to a record 208 MMT.

US corn ending stocks weren't raised as the market expected, they left them unchanged at 647 million bushels. Demand from the ethanol sector was left the same as last month at 4.5 billion bushels, which is fair enough. US corn exports were also left unchanged at 1.15 billion bushels, which looks increasingly optimistic with each week of shitty export sales that passes.

Wheat got a bearish surprise with world production seen rising from 651.4 MMT last month to 655.1 MMT this time round. Ending stocks were increased accordingly from 174.2 MMT to 177.0 MMT. The trade was expecting a decrease to 173.4 MMT.

Australia's wheat crop was raised from 21.0 MMT to 22.0 MMT, in line with ABARES recent forecast. Argentina's production was left unchanged at 11.5 MMT, contrary to local forecasts of a crop closer to 10.0 MMT.

In other news the USDA have today separately announced a 115,000 MT soybean sale to China for 2012/13 delivery. Already that adds to the notion that 130 million bushels of ending stocks is too high.