I'm visiting our 5m home office this week, so a warm hello from Sheffield, England. And a do mean warm in the temperature sense too - it's about 50 F/10 C - which is much warmer than the wind, freezing rain and snow that I left in Chicago on Saturday.

As we've entered 2013, bearish fundamentals continue to plague the US grain markets. Last week's export sale cancellation of 315,000 tonnes of soybean by China pushed the market lower and kept it there on fears that there will be more cancellations to come.

The disappointing export demand continued with net weekly corn export sales coming in at 49,100 tonnes, down from 104,300 last week. Sales of at least 464,000 tonnes are needed each week to reach USDA's forecast.

The US ethanol production report was considered bearish by most with production for the week ending December 28th coming in at 807,000 barrels per day, down 3.2 per cent vs. last week.

Total ethanol production for last week was 5.7 million barrels. Corn used in last week's production is estimated at 84.7 million bushels, down from 87.6 last week. Corn use needs to average 86.7 million bushels per week to meet this crop year's USDA estimate of 4.5 billion bushels.

Egypt pulling out of the world market for wheat purchases has also pressured the futures.

It looks like Brazil is the one to benefit from the slowing US exports. Brazil has bumped Argentina out as the world's second largest exporter of corn, according to a report by consultancy Informa Economics FNP. Brazil had a record production of corn last year and exported a record high of almost 20 million tonnes, double the foreign sales of 2011, thanks to a good international demand following drought in the US.

The consultancy noted that the decline in corn production in the United States, the main global exporter, and low inventories in Argentina, created a vacuum in the external market benefiting Brazil. FNP also emphasized that "the increase in the exchange rate also helped competitiveness of the product originating in Brazil." For more on this story, click here.

Coming up this week, the real focus will be the USDA final crop production numbers for 2012 and supply and demand estimates, to be released Friday at 11:00 am Central Standard Time.

Have a great week!