An Excerpt from CRB'S Futures Market Service.
CORN
Corn prices are consolidating in the upper half of their 4-month-long $1 per bushel range. Bullish factors include (1) USDA’s Feb 9 cut in its 2012 global corn production estimate to 864.11 MMT along with a cut in its 2012 global ending stocks estimate to a 5-yr low of 125.35 MMT from a Jan estimate of 128.14 and the hike in its 2012 U.S. corn export estimate to 1.7 billion bu. from last month’s estimate of 1.65 billion.,(2) tight supplies after the USDA’s Feb 9 cut in its 2012 U.S corn ending stocks estimate to 801 million bu. from last month’s estimate of 846 million, which cut the U.S. stocks/use ratio down to a 16-yr low of 6.3%, and (3) record U.S. ethanol production of 963,000 barrels a day in the week ending Dec 30. Bearish factors include (1) USDA projections for U.S. farmers to plant corn on 94 mln acres this year, up +2.3% y/y and the most corn acres planted since 1944, (2) corn harvest pressures after researcher Celeres reported that corn farmers in Brazil harvested 10.2% of this year's corn crop as of Feb 10, up from 6.6% a year ago, and (3) the +8.2% y/y increase in the 2011 China corn harvest to a record 192 MMT, which may reduce Chinese demand for U.S. corn.
Weekly Corn Exports (week ended Feb 9): 686 MT; 2011/12 (Sep-Aug) cumulative exports +0.4% y/y.
Fundamental Outlook—Short-term Bullish—Corn prices are correcting higher as the USDA cut its global production and U.S. and global ending stocks estimates. Record U.S. ethanol output and tight global supplies are also supportive. Further gains may be limited on the prospects for increased corn plantings this year. The corn 2011-12 stocks/use ratios are very tight with the US at a 16-year low 6.3% and the world at 14.4%.
SOYBEANS
Soybean prices accelerated to a 4-month high. Bullish factors include (1) Oil World’s cut in its 2011/12 soybean production forecast for South America to 122.8 MMT from its Jan estimate of 128.2 MMT along with its prediction that China may increase its soybean imports to a record 23.6 MMT in the 5 months thru Feb on stockpiling as a cushion in case of export supply disruptions later this year, (2) USDA’s Feb 9 cut in its 2012 global soybean production estimate to a 3-yr low of 251.47 MMT and the cut in its 2012 global ending stocks estimate to 60.28 MMT, and (3) concern that drought may further reduce Brazil’s and Argentina’s soybean crops, the second and third-biggest in the world. Bearish factors include (1) USDA’s Feb 9 cut in it 2012 China soybean import forecast to 55.5 MMT from a Jan estimate of 56.5 MMT, (2) USDA’s Jan 12 hike in its 2011 U.S. soybean production estimate to 3.056 billion bu. along with the hike in its 2012 U.S. ending stocks estimate to a 5-yr high of 275 million bu., and (3) reduced Chinese soybean demand with China's 2011 soybean imports down 3.9% to 52.64 MMT, the first annual decline in 7 yrs.
Weekly US soybean exports (week ended Feb 9): 1,002.1 MT; 2011/12 (Sep-Aug) cumulative exports -24.0% y/y.
Fundamental Outlook—Short-term Bullish—Soybean prices continue to rally on supply concerns after USDA cut it global soybean production and ending stocks estimates due to the South American drought. Another supportive factor is the tight U.S. 2011-12 stocks/use ratio of 9.1%. Global soybean supplies are adequate with the 2011-12 world stocks/use ratio near average at 23.4%.
WHEAT
Wheat prices slipped to a 3-week low as they consolidate moderately below last month’s 4-3/4 month high. Bearish factors include (1) USDA’s Feb 9 hike in its 2012 global wheat production estimate to a record 692.88 MMT and the hike in its 2012 global ending stocks estimate to a record of 213.1 MMT, (2) the action by Australia, set to be the world's second-biggest wheat exporter, to hike its 2012 wheat harvest forecast to a record 29.5 MMT, up +5.7% y/y and its wheat export estimate for the year ending Sep 30 to a record 22.3 MMT, up +20% y/y, and (3) the statement from Russia's Grain Producers' Union that Russia may not need to limit grain exports at all this year because stockpiles are enough to meet domestic demand. Bullish factors include (1) USDA’s Feb 9 cut in its 2012 U.S. wheat ending stocks estimate to 845 mln bu. as it raised its U.S. wheat export estimate to 975 mln bu. and (2) concern that drought conditions in the winter-wheat growing areas of the U.S will reduce yields after the USDA’s drought monitor shows conditions from central Kansas southward range from "abnormally dry" to "exceptional" drought.
Weekly US wheat exports (week ended Feb 9): 479.1 MT; cumulative 2011/12 (June-May) all-wheat exports: -16% y/y.
Fundamental Outlook—Near-Term Neutral—Wheat prices retreated after the USDA raised its global wheat production and ending stocks estimates to a record. Record output in Australia and continued Russian exports are also pressuring prices. Losses may be limited though, on drought concerns in the U.S. Great Plains. The wheat 2011-12 supply situation is ample with the stocks-to-use ratios at 39.5% for the US and at 31.3% globally.
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