In addition, continued wet weather in Argentina has traders expecting flooding and excess moisture during the planting season to 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.
Last week, analysts at FCStone do Brasil shaved 2 per cent 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 raised its projection for Brazil’s 2012/13 soybean crop to 81.4 MMT, from 81.25 previously.
For corn, demand side news remains relatively quiet with little stimulus seen from US export business. Corn prices did get some support last Wednesday from the EIA, which showed weekly ethanol production 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 continue to be supported by crop problems in Argentina.
Flooding and excessive 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.
The Buenos Aires Grains Exchange said that Argentina's wheat harvest has advanced to 36.2 per cent complete, up 10.5 points from a week ago, and only just behind the 39.5 per cent of a year ago. Their production estimate is at 10.1 MMT, significantly lower than USDA's 11.5 MMT.
