We have a USDA World Ag Supply and Demand Estimates report due out tonight. There’s plenty of speculation and positioning in the futures market leading up to the report as usual. Analyst expect to see a reduction in both US corn and soybean carryout and US wheat stocks are generally expected to be stable. US exports have been good for all three. Last weeks US inspections for export were again solid, 1.334mt of corn, 1.042mt of soybeans and 536kt of wheat, the wheat number coming in well above a range of trade estimates taken before the report was released. Yet, here we are with lower futures at Chicago this morning. US wheat sales volume by week is following the usual season trends, but has constantly been higher than trade estimates most of the this season.

Wet weather continues to delay the Brazilian soybean harvest. At this time last year 23% of the soybean crop had been harvested, this year just 15%. The main concern here is not for soybeans but for the area of corn sown after the beans are harvested. Brazil’s second corn crop, sown into harvested bean country, is larger than there first of the season and makes up roughly 76% of total Brazilian corn production. Any delays to the second crop sowing window, which ideally closes as of the end of February, should continue to fuel speculation in US corn futures.
Overnight world sorghum values, once converted to AUD / tonne and compared to Friday’s conversions, were flat to slightly lower. Support in corn values traditionally leads to support in sorghum values. The current problem, according to the trade, is the reluctance of China to come to the plate, but we are seeing good demand from exporters out of both QLD and NSW ports. Trade sales volume is hard to determine though due to the lack of public information from that side of the S&D table, unlike production estimates that are very transparent.
The funds continue to build on a very long corn position, a hedge against US inflation, speculation on price or a simple punt to the max, time will tell. One would think that as long as corn continues to see support, wheat should at least get some spillover support. Paris milling wheat futures were +€2.00 overnight.