The Morning Vibe - It's All Looking Bearish

05/09/13 -- My conviction that we are heading into seasonal harvest lows remains intact. Soybeans appear to have had their shot at posting a pre-harvest jitters rally on Tuesday. I just can't buy into the Allendale 39.0 bu/acre yield estimate released yesterday, not with good/excellent crop conditions at 54% versus 30% a year ago. As mentioned earlier this number was based on a farmer-led survey, if you get my drift.

Sure, trim a bit off the final production numbers and yields, but lower than last year? Really?

The FAO this morning say that world food prices fell for the fourth consecutive month in August to hit their lowest level since June 2012. Fancy that coinciding with funds pulling out of agri-commodities too, the cynics might observe.

The FOA's Agricultural Market Information System (AMIS) have this morning released some revised crop estimates of their own, and they all look pretty bearish - well, very bearish actually - predicting a record world wheat, corn and soybean crop in 2013/14.

The now forecast the global wheat crop in 2013/14 at a record 710 MMT versus their previous estimate of 704 MMT and the USDA's current 705 MMT. That's a cool 50 MMT more than last year, an increase of 7.6%.

The rise is due to "an improved outlook in the EU and the CIS as well as more favourable prospects in Australia, Argentina and Canada," they say. Ending stocks (for 2013/14) are forecast "to rebound by some 8%, with most of the increase concentrated in the EU, China and CIS countries" to 170 MMT, they add.

They've also added 11 MMT to their previous forecast for the world corn crop in 2013/14, pegging production at a record 983 MMT, up 108 MMT or 12.3% vs 2012/13 and way higher than the USDA's current 957 TMT estimate.

The rise is due to "larger crops officially reported in Argentina and improved outlook for the EU and Ukraine," they say.

Corn ending stocks for 2013/14 are "put 30% above their low opening level, with most of the increase occurring in the US where inventories may rise by 27 MMT, or 146%," they add

In their first forecast for world 2013/14 soybean production they predict a crop of an all-time high 284 MMT, up 18 MMT or 6.8% on last year and 2 MMT more than the USDA's current figure.

"Stocks (ending 2013/14) are forecast to rebound strongly in 2013/14, notably in the United States, Argentina and Brazil," they say.

Big prices clearly equal big plantings.

MDA CropCast have today trimmed their US 2013 corn production forecast to 13.467 billion bushels (still comfortably a record crop mind), down 74 million on last week due to dryness. However, crop growth is finishing up and moisture needs are therefore declining, they note.

They've cut 34 million bushels off their US 2013 soybean production estimate to 3.006 billion bushels, not much higher than Allendale. I don't believe them either.

They've also trimmed 300 TMT off the global wheat crop due to dryness in eastern parts of Australia where they now predict a 2013/14 wheat crop of 22.44 MMT.

South Korea's Nofi are tendering for 140 TMT of optional origin corn for Feb shipment, along with 60 TMT of optional origin feed wheat for December.

Japan have bought 116,350 TMT of US/Canadian milling wheat in their regular weekly tender.

French grain exports via the leading port of Rouen were up 24% this week to 171,390 MT. That total includes 39,500 MT of malting barley for China, along with 78,750 MT of soft wheat heading to Algeria and 3,300 MT of the same coming to the UK.

Russia's grain harvest has now reached 63.3 MMT off 58% of the combinable crop area. Wheat accounts for 40.5 MMT of that off only 58.7% of plan, with yields averaging 2.75 MT/ha, up 42% versus last year. Is anybody else starting to get the feeling that reports of early season "trouble ahead" for the Russian wheat crop were a con? The USDA's 54 MMT crop estimate may ultimately turn out to be on the low side.

Ukraine's Ag Ministry say that they expect a winter crop area of 8.2 million hectares, up 2.4% on last year. Winter OSR plantings are already half done at 461k ha, they add.