THE USDA January WASDE was bearish for the grains and oilseed complex with pre-report expectations of
tightening in the corn balance sheet not borne out.
Market expectations of a cut to the US corn balance sheet on lower yields went unrealised as the USDA raised yields. Soybean and corn readings in the quarterly grain stocks report were also above market expectations.
The latest update from Rabobank reported that cuts to soybean and corn production in South America were predictably conservative, with a 5.5 million tonne
reduction for 2011/12 and no reduction in Brazilian corn.
According to Rabobank, significant further reductions in
production in the region can be expected with likely drought impacts double those currently realised by the USDA.
Following this report Rabobank said it see prices coming under pressure from current levels and further deterioration in coming days.
Rabobank said it expects the market to stabilise somewhat following this selloff with higher than average prices still needed to encourage US plantings in the spring and with consumer demand supported by lower input costs.
The January WASDE was bearish for corn with US corn ending stocks relatively unchanged at 848 million bushels,
bearish compared to trade estimates of an 87 million bushel cut to 756 million bushels.
Trade expectations of a yield cut to 146.2 bushels per acre for the 2011/12 marketing year were disappointed as the USDA raised yields from 146.7 bushels per acre to 147.2 bushels per acre.
Exports were raised by 50 million bushels, offsetting the rise in yields. Looking ahead, low SRW acreage in many states supports forecasts of record acreage in 2012/13 as farmers forgo SRW or double cropping with soybeans in favour of corn in the 2012/13 season. Rabobank forecasts 93.5 million acres of corn to be planted in 2012/13, a 1.6 million acre increase on 2011/12.
The January WASDE was bearish for wheat, with the USDA tweaking the US balance sheet and increasing
global supply forecasts. US wheat exports were increased 25 million bushels to 950 million bushels for the
2011/12 marketing year, while total US domestic usage was decreased 16 million bushels.
This left projected ending stocks 8 million bushels lower at 870 million bushels.
Seeding of US winter wheat was up 3% on the same period in 2011; the USDA is reporting planted wheat
acreage at 41.947 million acres.
This is the second straight rise following the 2010/11 season’s record low of 37.335 million acres. HRW sowing increased 6% to 30.1 million acres. SRW plantings were down 2% to 8.37 million acres as farmers look to capitalise on improved corn genetics and pricing.
Of particular note was the drop in Ohio wheat plantings to 580 thousand acres from 880 thousand acres as the soil in parts of the state remained too wet for successful sowing.
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