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Export Sales Update
Corn: 272k sold, trade guess 100k-300k
Soybeans: 1,319k sold, trade guess 600k-850k
Wheat: 573k sold, trade guess 350k-550k

Grain futures were mixed overnight with wheat posting positive gains while corn was off slightly. Soybeans were mostly unchanged in the overnight session.

EU private analysts raised their outlook for 2013 corn and wheat production thanks to higher acreage and expectations of improved yields. For wheat they expect a 9% increase in production from 2012, while corn production is expected to climb 16%.

Corn continues to struggle with fairly weak demand. Wednesday’s EIA ethanol report showed weekly production off 1.3% from the previous week and off 12.2% from the same week last year.  USDA has pegged ethanol for corn to use to be off 10% for the marketing year. 

In the export market, lack of business has and signs of US prices being too high has pushed Gulf corn basis levels down 7 cents a bushel since the start of the week while soybean basis is off 4 cents.

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Corn continued to sink lower in the overnight session hitting a 3-week low at $7.32 on March futures. Wheat also was down 4 cents in the night session while soybeans were up 1 cent.

Weak export demand and expectations of higher ending stocks in USDA’s Supply and Demand Report Tuesday morning has corn suffering a 2-cent loss in the last three trading sessions.

Over the weekend, South Korea, the 4^th biggest U.S. corn market, announced a tender to buy corn but excluded US origin based on high prices.  Analysts’ average expectation is for USDA’s report on Tuesday to show a 25 mb increase in ending stocks than was last forecast in November of 647 mb. Grain Hedge analysts are expecting a higher stock estimate of 100 mb on the basis of dismal exports and subpar ethanol production so far this marketing year.

In wheat, there were some limited sales of US origin wheat over the weekend to Saudi Arabia  and South Korea, but in an Iraqi tender Australia and Romania garnered that business. News from Argentina indicates they will likely see 25% lower wheat exports this year as flooding has cut their production and crop quality.

Soybean prices met selling pressure at the end of last week at key resistance of $14.96 Weather in Brazil shows a favorable outlook for beneficial moisture in the next 5 days , while rain-soaked Argentina is expected to see showers and thunderstorms early in the week delaying planting, but drier weather returns for the remainder of the week.  USDA’s Supply and Demand report on Tuesday should show a sizable drop in US ending stocks with exceptionally strong export demand in the first part of the marketing year.  

 Soybean prices rallied overnight as lingering concerns on South America’s crop conditions and circulating rumors of Chinese export interest helped lift nearby futures to a one-month high. Soybeans were up 9 cents a bushel, while corn and wheat prices were up 3 cents in overnight trade.

Analysts at FCStone do Brasil shaved 2 percent 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. Traders  noted that Chinese buyers were looking for US soybeans out of the PNW market on Tuesday, but no confirmed business has been reported yet. Overheard resistance at $14.68 basis the January contract continues and the next key level of support is $14.35.  

While corn moved higher overnight prices seem range bound waiting for a clearer direction. Tight domestic supplies continue to prop up prices, but demand woes keep a bearish mood over the market. Tuesday’s news of Taiwan buying a 60,000 ton corn shipment from Brazil was further proof that the US is having trouble capturing any significant business at these price levels. Overheard resistance at $7.67 basis the March contract continues and the next key level of support is $7.47  

In wheat the market firmed overnight after 4 days of lower closes. The U.S. Plains are expected to remain dry through this week with some precipitation expected in eastern Colorado, Kansas, Oklahoma and Texas during the weekend. Overheard resistance at $8.76 basis the March contract continues and the next key level of support is $8.45.