January 10, 2013

Aiding Chicago corn and soy futures recover some of their losses, Brazil has slightly raised its official estimate for its grain harvest.

Conab, the official crop bureau, lifted by 210,000 tonnes to 180.41 million tonnes its forecast for the Brazilian grains harvest in 2012-13.

The figure included an estimate of 82.7 million tonnes for the soy harvest, up only a fraction from last month's 82.6 million-tonne forecast.

On corn, Conab raised its harvest estimate by 290,000 tonnes to 72.2 million tonnes.

The small upgrades contrast with a significant improvement in market sentiment towards Brazil's harvest prospects, seen as being boosted by favourable weather, in contrast with the dryness suffered in many southern areas last year.

However, Conab, which made a small upgrade to its estimate for grain sowings, highlighted that "the normalisation of rains and good climatic conditions are fundamental to the maintenance of crop development".

The initial market reaction was to cut losses in Chicago corn futures by some US$0.02 a bushel to US$6.86 a bushel at 11:40 UK time (05:40 Chicago time), for the March contract.

Soy futures rebounded to positive territory, standing 0.1% higher at US$13.87 a bushel.

The Conab data kick of a wave of agricultural commodity statistics, bringing Chinese trade data for December and an update on Malaysian palm oil inventories.

Friday (Jan 4) sees the USDA unveil its own world crop supply and demand estimates, along with US inventory and winter wheat seeding statistics. The USDA currently foresees the Brazilian soy crop at 81.0 million tonnes, and the corn harvest at 70.0 million tonnes. However, its attaché in Brasilia last week raised to 83 million tonnes his forecast for soy production.