Jonathan Lane, Trading Manager at Gleadell provides the latest insight into the global grain markets, which remain relatively elevated on weather fears.

The IGC sees global corn deficit in 2012/13 – production estimated at 880mln/t and demand projected to rise 13mln/t to 884mln/t. USDA report released last Friday provided few surprises and actually pegged US corn/soy stocks above expectations. However, this was short lived as buying interest was generated by continued crop concerns in South America and reports of additional corn purchase by China.

There are conflicting reports of the size of this year’s Chinese corn production and the levels of import needed. Local analysts continue to work with corn numbers lower than the USDA for Argentina and Brazil, leading analysts to believe US stocks will continue to tighten this year.

Wheat continues to be a follower of corn markets, although current weather conditions and tight French/UK supplies have supported markets. Record wheat stocks and the potential of another 675-680mln/t global crop don’t bode well for prices, however, crops are not yet made and there will be many weather scares between now and harvest. Tight US corn supply and demand will place greater emphasis upon the 2012/13 crop with the next key report, planting, due out on 30^th March. Short term corn/wheat values look supported but a bearish report may change market sentiment.

Summary

• Spanish farmers are seen sowing 0.9% more land to winter grains – suffering from driest winter on record.
• The Ukrainian government foresees no grain export limits in 2012/13 – with enough grain to meet domestic needs.
• ProAgro raises its forecast for Ukraine’s 2012 grain crop to 45.66mln/t, including 21.3mln/t of corn/14.3mln/t of wheat.
• The Ukrainian AgMin projects 2011/12 ending stocks of wheat at a record 7mln/t.
• Russia exports a record 21.5mln/t of grain as of March 1 (17.2mln t of wheat) – leaving approx 6-7mln/t to export.
• English/Welsh winter plantings rise 4.6% to 2.98mln hectares, with Scottish wheat area seen down 14%.
• Morocco’s cereal harvest may fall by half to around 4mln/t, down from 8.4mln/t produced last season.
• UK wheat exports slowed in January to 219tmt, bringing the season-to-date total to 1.8mln/t – leaving approx 700tmt surplus.
• French agency AgriMer trims 2011/12 French ending stocks to 2.4mln/t – non EU wheat exports projected at 8.8mln/t.
• Strategie Grain trims 1.6mln/t off its estimate for 2012/13 EU-27 soft wheat production (131.1mln/t) due to cold snap/Spanish drought.