Grains were relatively subdued overnight with prices off slightly from the strong close on Tuesday.
On Tuesday, beans were up thanks to a lower South American production forecast by private firm Informa. They cut the Argentina crop estimate to 54 MMT, off from 57 MMT in their previous forecast, and trimmed the Brazil crop to 88.8 MMT from 88.9 MMT previously. Bean oil continues to be leading the complex higher as shortfall in veg oil supplies keep prices on the offensive.
For corn, Informa pegged Brazil’s 2013 corn production at 65.45 MMT, 1.1 million less than their previous forecast. Corn continues to find strength from export business and ongoing concerns about tensions in Ukraine. Although an imminent military conflict seems unlikely, the market continues to be edge with a great deal of uncertainty about how this will play out. For now, grain flows continue as normal from the Black Sea region. In the US, basis levels continue to be pressured with each move higher in the futures market. On Tuesday, spot bids as well as new-crop bids saw basis levels weaken as farmers continue to do some selling on the recent rally. Rumors are supporting corn that the Environmental Protection Agency is poised to release revised estimates for the US ethanol mandate, still indicating a cut in the level which needs to be blended into gasoline, but not to the originally proposed range of 12.7-13.2bn gallons.
In wheat, the drought in the US Plains has given prices more strength. On Monday, state crop condition reports from Texas to Nebraska showed declining winter wheat conditions as compared to the previous month. Overnight, there was a bit of tender activity with Lebanon tendering for 25,000 MT of optional origin milling wheat and Tunisia's state grains agency issued a tender to buy 92,000 MT of optional-origin milling wheat. On Tuesday, Algeria's state grains agency OAIC bought between 300,000 and 350,000 MT of milling wheat in a tender but did not release origin details.