Macquarie Agri-View- Demand rationing required

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Macquarie Agri-View
Demand rationing required
Feature article
 The USDA’s January reports released today offered the markets another
glimpse into what can be best described as critically tight US and global corn
and soybean balances. The reports were slightly less bullish for the wheat
market but will still offer a supportive tone to prices.

USDA 12 January 2011 reports snapshot
 Corn: The USDA provided a starkly bullish set of reports for corn today.
Prices are likely to trade sharply higher throughout today’s session.
US production was decreased to 12.447b bu versus 12.540b bu
previously, with yields now pegged at 152.8bu/acre versus the
154.3bu/acre USDA estimate provided in November.
US corn for ethanol demand was increased by 100m bu to 4.9b bu, while
feed demand decreased an equivalent amount to 5.2b bu, leaving US
ending stocks at 745m bu versus 832b bu previously and Macquarie’s
pre-report estimate of 755m bu.
US 01 Dec 2010 quarterly stocks of 10.039b bu were reported 58m bu
below the average trade estimate.
Argentine corn production was decreased by 1.5mt to 23.5mt, a
contributing factor to the 3mt reduction in global corn stocks, which are
now pegged at 127mt for the 2010/11 season.
 Soybeans: The reports were also bullish soybeans, with a steeper-thanexpected
decrease in US soybean ending stocks versus market consensus.
US production decreased 46m bu to 3.329b bu, with yields now pegged
at 43.5bu/acre versus the USDA’s previous estimate of 43.9b bu
US crush demand was lowered 10m bu to 1.655b bu, contributing to an
ending stocks estimate of 140m bu, close to Macquarie’s pre-report
estimate of 148m bu, the third-tightest level on record since the late
1970s.
01 December 2010 quarterly soybean stocks of 2.277b bu came in 56m
bu lower than the average trade estimate.
Argentine soy production decreased 1.5mt to 50.5mt, leaving global
ending stocks at 58mt, down 1.5mt from the December estimates.
 Wheat: The reports were generally neutral for wheat.
US ending stocks were projected at 818m bu versus 858 previously and
Macquarie’s estimate of 830m bu, due to a 50m bu increase to projected
exports, which are now seen at 1.3b bu. Quarterly stocks of 1.927b bu
came in 10m bu below the average trade estimate.
The USDA decreased Australian wheat production (-0.5mt) and
Kazakhstan (-1.3mt); however, total global stocks increased 1.3mt due to
a decrease in projected global wheat consumption.