Over the past week grain markets have seen much volatility, mainly moving higher on falling US crop ratings and declining Black Sea prospects. US corn ratings fell another 5% points to their lowest level since 1988, as drought conditions expand. With the likelihood of another yield cut by the USDA in August, US stocks will be historically low at the end of this season, igniting the ‘battle for acres’ debate for the 2013/14 planting season.
The bullish trend was sharply interrupted earlier this week as an improved weather outlook for the US led to heavy selling. The market’s reaction to the improved forecast anticipated that soybean condition would improve with rain, and that while storms will not boost corn prospects, they could stabilise the losses. In addition, mounting Spanish and Greek debt concerns sent the Euro to a 2-year low against the US$, raising further concerns over global economies and future commodity demand.
In summary, market fundamentals remain bullish, but like all bull markets they need continuously feeding. Any change of sentiment, in whatever form leaves the markets open to profit-taking, and the recent up’s and down’s we have witnessed this week are likely to continue.
USDA reports US wheat harvest 82% complete, 80% last week – SRW harvest complete with HRW harvest 93% complete.
Excess ethanol credits may dampen demand for corn – USDA may be overstating ethanol demand for 2012/13 by as much as 10%.
US corn sowings could hit 100mln acres next year as historically low stocks intensifies the ‘battle for acres’ for 2013/14.
The Russian ministry estimates 2012 grain crop at 80-85mln t – unchanged from previous estimate and above analysts views.
French wheat yields continue to beat forecasts with some estimating the crop at over 36 mln t.
USDA reports corn crop in good/excellent condition at 26% down 5% points on the week – rainfall is forecast which may reduce further losses although most pundits think that the damage done to date is irreversible.
US corn yield is estimated at a 10-year low as drought expands – average analyst estimate of 130.8bu/acre against current USDA projection of 146bu/acre.
Kazakhstan’s Ag Ministry cuts its grain crop forecast for 2012 to 12.8mln t – exports at 10mln t compared with 12.1mln t last season.
EU grain yield outlook hit by continued dry weather in southern and south east Europe – MARS lowers EU soft wheat yield to 5.57t/hectare.
Australia’s 2012/13 wheat crop projected at 25mln t by Rabobank, down from the record 29.5mln t last crop year.
Heat reduces corn prospects in Eastern Europe – Hungarian and Romanian crops damaged by dry weather – lower yields.