Rain is falling in a broader area than previously forecasted in Argentina’s Corn Belt. The driest areas of Cordoba and Santa Fe are receiving ¼” to 1 1/2” rains but temperatures remain very hot and more importantly, extended forecasts appear just as hot. Noted in today’s weather updates, average daytime temps are as much as 15 F higher than the last drought in 2008. Average nighttime highs remain in the 80’s F. Traders are pricing in ideas of crops getting past the point of too little, too late to revive or claw back yields.
Click here to view drought charts.
Until a pattern change in weather is detected in the longer range maps, the bottom line is a very severe moisture deficit remains for the growing season, more so for Argentine growing regions and to a lesser degree, Brazil. Extended forecasts remain dry for Southern Brazil as well, but not before rains (up to 2-4” in some spots) move through from now until the end of the weekend.
Thursday’s crop production and Dec 1 stocks report estimates are included in today’s Daily Grain Plan. As most traders have taken to the idea the corn crop will continue to get smaller while soybean yield estimates are flat to December’s 43.7 bu/acre. If corn production numbers don’t fall in line or beat the street number of 146.4 bu/acre, we could be disappointed in trade action if the
USDA decides the crop is not as small.
Considering futures prices have increased 70 cents for corn and $1.22 for soybeans on the latest rally, the idea we trade lots higher will require a large revision downward in 2011 production numbers and or smaller Dec 1 stock numbers, suggesting we have seen the lowest demand numbers for feed and exports.
Looking at corn demand numbers for the 1st quarter, we can expect stronger ethanol numbers based on big weekly demand over the past 6 weeks. Exports are weak and deserve to be adjusted lower but weather in S. America will probably keep the
USDA from adjusting exports at this point. This leaves feed/ residual numbers to analyze. With slightly larger animal numbers versus last year (Cattle on feed up 5%, hogs up 1.5% but broilers were down 6%), we might expect feed numbers have found a bottom and could be held flat or revised upward if the
USDA takes a positive note on U.S. economic outlooks.
FCStone Research
Ukraine’s Farm Minister estimated the country’s 2012 grain harvest at 44-46 million tonnes this morning, down from a record 56.4 MMT in 2011; wheat production was seen at 12 MMT this year, down from 22.4 MMT in 2011. UkrAgroConsult had pegged the new harvest at 44.7 MMT earlier this week, with wheat at 14.5 MMT. The Ag Min reported 80% of wheat area as sprouted by the end of Dec, down from 93% on the same date last year, with 66% of those sprouted crops in good/satisfactory condition and 34% marked as poor.
