The summer drought in the US and other parts of the world have us closely watching global grain supplies. Today, let's take a look at what's happening with current crops and grain supplies around the globe.

Southern Brazil, which accounts for 35 per cent of total Brazilian production, continues to see dry weather, while wet conditions in Argentina cause concern. Although southern Brazil could see a turn-around as rain is expected this week.

Brazil's 2012 soybean crop has been revised up to 67.7Mt from 66.8Mt. This is slightly bearish to the market due to the extra 800kt available for exports.

The Buenos Aires Grain Exchange put Argentina's soybean planting at 36.6 per cent complete, 9.7 percentage points under year-ago figures. Dry weather early this week is expected to help Argentine farmers get their beans in the ground before the rain returns.

The last three months of rain and flooding are expected to reduce Argentina's wheat crop for the 2012/13 season. Wheat production is now seen at 11.1Mt down from 11.5Mt. Reports indicate poor quality with more rain in the forecast at the end of the week.

Australia's wheat production may fall below 20 million tonnes during the 2012/13 season due to a dry spell across Western Australia (WA), reported Reuters. WA produces at least one-third of Australia's total wheat crop. Analysts estimate WA's wheat output at 5.5 million tonnes and 6.9 million tonnes this year, much lower than last year's record crop of 11.73 million tonnes.

Russia's carryover stocks could take a hit this year as grain exports are expected to reach as high as 15.5Mt this season, which is significantly higher than its official exportable surplus of 10Mt. Carry-over stocks are now expected at 6Mt compared with 19.4Mt last year.

Ukrainian grain traders are slowing milling wheat exports, says the Ministry. To-date, Ukraine has exported 5.2Mt out of an agreed limit of 5.5Mt. The limit was put in place to prevent domestic price increases.

India's expected bumper harvest has pushed prices lower, dropping 6.5 per cent lower than the record price on 17 Nov as the demand for wheat products slowed with the end of their festival season.

The US hard red winter wheat crop is still a big concern. Forecasts for a dry biased weather pattern are expected for the next two weeks. Virtually no rain or snow will fall in western crop areas and the few rain showers that occur in the east will be insignificant.

US corn export sales were larger than expected last week. Limited grain for feed in the EU is fuelling corn imports. US wheat exports were strong with 635Kt of net-sales, the highest since early August, as EU and Black Sea origins become less competitive.

As for China, the HSBC China Manufacturing Purchasing Managers Index, known as PMI, showed a reading of 50.4 in November, according to Rich Nelson, chief strategist with Allendale, Inc. The reading was up from October's 49.5. Not only was this higher than the previous month but a reading over 50.0 is seen as economic growth. This is the first time in 13 months of a positive number.

Demand remains strong with China buying 14 per cent more US soybeans, year-on-year, since 1 September.

Have a great week!