December 14, 2010

 

Global grain prices decrease on USDA forecasts

 

 

World grain prices eased after the USDA raised global forecasts for wheat and corn supplies, especially in the US.

 

On December 13, Paris wheat eased from a two-year high, and its Chicago peer lost 1.7%, after the USDA boosted its forecast for world grain inventories at the close of 2010-11 by 4.2 million tonnes to 176.7 million tonnes.

 

The stocks revision included a 230,000-tonne, or 10 million-bushel, upgrade to the estimate for American wheat inventories, instead of the nine million-bushel cut forecast by analysts.

 

For corn, the USDA edged its world stocks estimate 840,000 tonnes higher, including a 130,000-tonne, or five million-bushel, increase in America's supplies.

Analysts had expected a 21 milion-bushel cut to the US figure.

 

Macquarie saw the estimates as "neutral to bearish" for grain prices, but questioned why the USDA appeared to have made no adjustments to account for record ethanol production, which consumes nearly 40% of the American crop.

 

It also disagreed with a cut to estimates for American exports of hard red winter wheat, as it should be this variety that sees the bulk of the renewed buying interest in US grain.

 

The USDA attributed its lift in the world wheat stocks estimate to bigger crops in countries including Brazil, Canada, Ukraine and Australia.

 

The nudge up in the global corn stocks estimate reflected better hopes for crop in the EU and, in particular, India, where the extended monsoon increased late-season soil moisture for the summer crop, bringing production one million tonnes higher than previously expected.

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