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Will the soybean ascent continue? - 11 December 2012

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Tuesday 11th December 2012.
Sarah Mikesell - TheCropSite Senior Editor

Sarah Mikesell
Senior Editor

Will the soybean ascent continue?

Holiday greetings from a much cooler Midwest USA than last week.

First off, we have something new on TheCropSite for you to check out - GrainTV. Every morning (US time), the GrainTV team tells you what news is driving the grain market and how it will impact the producer's bottom line. It's located on our homepage, just under the CME quotes.

News last week that China has bought 6 cargoes of US beans has given new life to soybean prices, lifting them above their 200-day moving average, according to sources at GeoGrain.

With all eyes still on South America, continued wet weather in Argentina has traders expecting flooding and excess moisture during the planting season will take its toll on Argentina's crop. Thursday morning, Brazil's government released their latest crop estimates, pegging their soybean crop at 82.6 MMT and the corn crop at 71.9 MMT. Both are higher than USDA's projection for Brazil, which are estimated to be 81 MMT and 70 MMT, respectively.

Analysts at FCStone do Brasil shaved 2 percent off their estimate for Brazil's 2012/13 soybean crop, pointing to dryness in the southern producing regions as a likely cause of lower yields. Informa also lowered its estimate for Argentina's 2012/13 soybean production to 58.4 MMT, from 59.5 a month ago, citing a reduction in expected plantings. But it bumped higher its forecast for Brazil's 2012/13 soybean crop to 81.4 MMT, from 81.25 previously.

For corn, Informa estimates Brazil's total corn production at 66.2 MMT, 600,000 MT less than last month's estimate. In November, USDA estimated 70 MMT of Brazilian corn production. As for the Argentina corn crop, Informa cut 1 MMT off its forecast of 27 MMT to account for plantings running at least a week behind the annual average.

According to GeoGrain, corn demand-side news is fairly quiet. Corn prices did get some support last week from reports showing weekly ethanol production was at its highest level since June. With continued poor crush margins for ethanol producers, it still seems likely that corn use for ethanol will fall short of USDA's current estimate of 4,500 mb for the year.

In the wheat market, Japan announced last week that it had bought nearly 140,000 tons of US wheat. Along with expectations of better export demand going forward, prices are supported by crop problems in Argentina.

Flooding and too much moisture during the harvest period have some analysts suggesting Argentina's crop will come in below 10 MMT, off from the 11 MMT crop that is currently projected. Excessive moisture also suggests potential issues in crop quality which could limit their wheat exports for food. .

Informa expects Argentina's wheat production to be 11.5 MMT, down 500,000 MT from last month. That's down 4.5 MMT from last year's crop, due to a 22 per cent drop in planted acres and lower yields.

Again, check out GrainTV on TheCropSite, by clicking here.

Have a great week!

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