Jonathan Lane, trading manager at Gleadell Grain Merchants, gives insight into the global grain market following the release of the latest USDA forecasts, which revealed lower than predicted projections for some major crops.   

The planting survey issued by the USDA last Friday projected corn acreage higher, but soybeans and wheat (spring) below market expectations. Corn acreage, at 95.9mln acres, would be the highest since 1937, although analysts believe that the recent price move in favour of soybeans may lead to a switching of up to 1mln acres from corn to soybeans.

Quarterly stocks reports also surprised the trade, as previous bearish reports were replaced by a bullish report. Stocks of corn and wheat were lower than trade expectations, pointing to stronger domestic use and, therefore, a tighter balance sheet. The USDA will factor these reductions into the supply and demand reports, due to be released Tuesday 10^th April.

In summary, with lower US stocks and crop estimates still declining for South American corn and soybeans, these should keep the old crop future positions underpinned. New crop prospects remain favourable in the US with winter wheat crop ratings improving, and higher than expected corn acreage/production that should alleviate supply issues for 2012/13.

In the EU, recent rains - which should relieve thirsty crops - will help to pressure prices, although in parts of France and Spain, more moisture is required to ease damage concerns. With the US corn planting campaign due to ‘ramp-up’ in the next few weeks, weather will play an increasing importance on future price movement, as any potential ‘crop threatening’ issues will entice strong buying interest.

Summary

• IGC sees record 2012/13 global corn crop, stocks up – global wheat stocks viewed as comfortable despite small drop.
• USDA planting survey reveals 2012 US corn acreage at 95.9mln acres, the highest since 1937.
• Russian AgMin expects to end season with closing stocks of 18mln t of grain after exports and 2mln t of intervention sales.
• Kazakhstan’s grain exports reported at 7.8mln a/o April 1^st, export potential of 15mln t in the marketing year.
• Coceral projects 2% fall in EU-27 2012/13 soft wheat production to 126.76mln t – affected by frost damage.
• USDA March 1^st stocks report estimates lower than expected corn and wheat stocks – perceived tightening of balance sheet.
• Morocco’s 2012 cereal crop may fall to as low as 3mln t due to the effects of drought, against last season’s 8.4mln t.
• Saudi Arabian 2012 wheat output seen down 9% to 1mln t – 2012/13 wheat imports expected at 2.5mln t due to increased demand.
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