Gregor Heard
THE oilseed complex was the major talking point among the grain trade following the release of last week’s US Department of Agriculture World Agricultural Supply and Demand Estimate (WASDE) report.
Further cuts to the South American soybean crop have analysts predicting a very tight oilseeds supply and demand sheet, with soybeans suffering the biggest year-on-year decline on record in terms of production.
Forward prices for Australian new season canola are now at around $520 a tonne port.
In Canada, the forward price is up to C$586/t, the highest since September.
Combined with the flat news for wheat in the WASDE report, the news is likely to act as a further incentive for a big canola plant in Australia.
Rabobank’s crop forecast for the 2012-13 season is factoring this in, predicting a crop down on last year, but still well above the drought-impacted ten year average.
Analysts at Rabo said given the substantial moisture profile at present across the east coast, Australian grain production may be set for another bumper crop in 2012-13 with wheat production forecast to reach 24.7 million tonnes, down 13 per cent from 2011-12 but still 19pc higher than the ten-year average.
However, there is an intriguing situation emerging in the grains sector, with questions beginning to be asked about Chinese corn stocks.
The official numbers paint a rosy picture, with China saying its 2011 crop was a record 191.75mt, 8.1pc bigger than 2010, and a 17pc increase over 2009.
Bryce Knorr of American grains analyst Farm Futures, said even in terms of China, this was a remarkable rate of growth.
“Until recently, traders could only accept the number, even though they grumbled in doing so, but now there are more murmurings are emerging about the Chinese crop being up to 20mt smaller than official estimates,” he said.
Mr Knorr said the speculation was not being hosed down by big movements in Chinese corn futures, which have traded near all-time highs recently.
In terms of wheat, the WASDE report projected a fall in ending stocks, but cuts were not as big as the market had expected, and still remain near record levels.
US production remains unchanged and stocks are 26pc larger than in 2009-10, and expected to increase further in 2012-13, providing a negative influence on prices.
Outside the WASDE report, Mr Knorr noted the large wheat consuming nation of Morocco, in northern Africa, was likely to have a strong import program this year, following a dry period throughout the critical grain fill period of its cropping season.
Mr Knorr said domestic wheat consumption in Morocco is close to 9mt in 2011-12, with imports contributing 3mt to this.
If domestic wheat production falls 3mt year on year this season then Morocco’s import requirements would jump to 5mt in 2012-13 and still leave Morocco with very low ending stocks at June 2013.
Stock & Land
Source: http://www.stockandland.com
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