Morning News

29/04/13 -- The overnight grains are firmer, led by corn up 12-14 cents, with wheat 7-8 cents firmer and soybeans 2-3 cents higher. Weather forecasts in the US look colder and wetter for the week ahead, especially in the May 1-5 timeframe. Corn is obviously viewed as the one to least benefit from that. The USDA will report tonight on US corn planting progress with the trade expecting 8-10% of the crop to be in the ground, up only modestly from 4% as of last Sunday night, and versus around 30% normally.

The pound is up to 2 1/2 month highs against the US dollar, continuing to derive support from last week's better than expected 0.3% growth in the first quarter of 2013. We're above 1.55 versus the USD for the first time since mid-February and close to 1.19 against the euro - a level not visited since mid-January.

The EU Commission have cut their forecast for EU-28 barley production this year by 800 TMT from last month to 55.2 MMT, although that's still an increase of 2.4% on last year. They've also trimmed their soft wheat production estimate here by 100 TMT to 129.7 MMT (up 5.2% on 2012). They've left both their OSR and corn estimates unchanged at 21.0 MMT (up 8.8%) and 65.3 MMT (up 17.9%) respectively.

There's talk that last year's Russian wheat production may have been higher than market estimates, which may allow them to re-enter the export market sooner than was originally anticipated. They are a cagey lot though, as we all know. Their weekly intervention offerings are supposed top be about to be reduced in size, which suggests that government-owned stocks are running out. Domestic wheat prices are however lower on the week, according to SovEcon.

Second crop corn in Brazil's Mato Grosso is entering into the grain filling phase in good condition, says Michael Cordonnier. Rains have been better than normal for this time of year, and only one or two more good rainfall events are needed to assure good yields, he adds.

It was reported Friday by the Rosario Grain Exchange that Argentine farmers have only sold 26% of their new crop soybeans, as opposed to 46% this time a year ago. Given the weak peso (Oil World reported last week that the unofficial peso exchange rate versus the US dollar reached a new record of AR$8.86, over 70% above the official exchange rate), add on - or rather knock off - a 35% export tax, and factor in domestic inflation unofficially running at 30%, and it's easy to see that selling beans for export in US dollars is not a hugely financially rewarding experience for Argentine growers.

Argentine soybean exports for the remainder of the year may therefore be more of a steady stream than a deluge, although with a monster Brazilian crop already on the market this may not influence prices too much. You could in fact make out a case that surplus South American supplies could weigh on the market for a longer period than usual, which would be bearish in the long run if they still have plenty of beans to sell once the US harvest kicks off.