Market Perspective – January 2013

Unlike last year the weather in South America is favorable for great crop production. The markets have been softening all week with no bullish news. Brazil & Argentina are EXPORTERS of grain, the more crop they have the more they have to EXPORT.

USDA comes out with their Annual Crop Production Report Friday, Jan 11. The last few years there has been a limit move one way or the other on corn on this report, many are forecasting a repeat limit move they’re just not sure whether it’s up or down. Informa came out today with their forecast on the USDA report, the South American crop and the 2013 US acres; they are relevant as they are followed with a near equal audience to the USDA in the past few years.

 Informa estimates today.

  • 2012 U.S. corn crop at 10.801 billion bushels, corn-crop yield at 123.3 bushels an acre; the Dec USDA pegged it at 10.725 billion bushels at 122.3bpa.

 

  • 2012 U.S. soybean crop at 3.036 billion bushels, soy-crop yield at 40.1 bushels an acre; the Dec USDA pegged it at 2.971 billion bushels at 39.3bpa

 

  • Corn Production in Brazil at 66.2Million tonnes vs last yrs USDA 57.4MMT, Argentina 27 Million Tonnes vs last yrs USDA 25.2MMT; IF they are correct that’s 10.6MMT or 417 Million Bushels more than a yr ago for the big two South American players.

 

  • Soy Production Brazil 81.4MMT vs last yrs USDA 75.30MMT, Argentina 58.4MMT vs last yrs 49MMT. IF they are correct that’s 15.5MMT or 570 Million Bushels more than a yr ago for the big two South American players. Keep in mind the US carryouts are running around 150-250 million bushels the past few years.

 

  • 2013 US Corn Acres 99 Million, 2013 US Soy Acres 78.96 Million

 

All of these factors are not favorable to prices in Chicago on corn and soys; however no one predicted the drought of 2012 and the record high prices it brought. The best summation of what we are seeing today is “bearish” towards new crop values.