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Top exporters of grains (hyperlinks lead to USDA maps for grain regions)

Rank Corn Soybeans Wheat

1 United States United States China

2 China Brazil India

3 Brazil Argentina United States

4 Mexico China Russia

5 Argentina India Australia

Joseph D’Aleo, Co-Chief Meteorologist WeatherBell Analytic’s The Trader’s Edge TM

Sunday December 4, 2011

Rains continue in Argentina and Central Brazil boosting winter grains and establishment of summer grains. Dryness in southern Brazil, and localized in the Parana River Valley of central Argentina are the exceptions. We expect rains to increase these areas week 2. Brazil looks to surpass United States in bean production for the first time ever. Pockets of dryness though are likely with La Nina in Brazil and redeveloping in Argentina as we move more in the summer. China and Ukraine corn crops were new records. In the United States though, the excesses of the spring and summer have taken a toll on the grains. South Africa has been too dry with rains the next two weeks limited to the eastern maize triangle (especially the east).

Australian weather has been favorable and a record crop and export is expected. Australia and a large crop in EU/Russia/Ukraine are counted on to offset some of the US shortfalls. Winter grain planting is concluding in the Northern Hemisphere. In Russia, snowcover and cold has pushed the winter wheat to dormancy. Lack of protective snowcover and cold will aggravate winterkill in the Ukraine and Belarus where summer dryness has hampered wheat establishment. Excellent rains in North Africa, and Middle East have enabled establishment of winter grains. In the US HRWW areas of the southern plains, fall rains helped establish winter wheat. The return of La Nina is not promising for long term drought relief in the upcoming winter although the La Nina is weaker than last year’s near record event.

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ARGENTINA and BRAZIL Argentina Corn, Beans, Winter Wheat , Brazil Corn, Beans, Winter Wheat

Corn area is expected to increase for both the summer and winter season corn crops in Brazil due to high prices as summer crop planting begins. Brazil’s total corn production for 2011/12 is forecast at 61.0 million tons up 3.5 million or 6 percent from last year, a drought year. Planting continues for the summer or first-season crop in southern Brazil.

Recent warm temperatures and good rainfall have also allowed planting to start in Rio Grande do Sul however dryness since October has reduced soil moisture and rains will be needed to ensure current crop yield potential. Planting of corn for the winter or second-season safrinha crop in central Brazil will begin in mid-January 2012, with area forecast at 250,000-500,000 hectares above last year’s record of 5.86 million.

Brazilian farmers continue to turn more and more to safrinha corn production to replace the traditional full season corn production. Over the last ten years, the percentage of the Brazilian corn crop produced as the safrinha has increased from 15% of the total Brazilian corn crop in 1999 to 38% of the total in 2009.

In central Brazil (Mato Grosso and Goias), nearly all the corn today is grown as a second crop following soybeans. The safrinha corn crop in Parana is planted in the northern part of the state. Parana is the largest corn producing state.

Soybean production was forecast at 73.5 down from 75.5 million tons. The pessimism was based on delayed start of the rainy season. However the rains have been widespread the last month and last week, especially in the central areas. Again that region got the most rain the last week.

The next two weeks does show increased rainfall in the south.

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The next 7 days will see colder than normal temperatures for Brazil and Argentina. Most areas were colder than normal in the three winter months, something not seen since the 1960s. Periods of cold likely nipped some of the winter wheat, safrinha corn, cane and coffee in Parana and winter wheat in Argentina. October freezing temperatures in the southern parts of Argentina delayed some corn planting.

The USDA forecasts Argentine wheat production for 2011/12 at 14.5 million tons, up 12 percent from last month but down 10 percent from last year. Area is estimated at 5 million hectares, up 9 percent from both last month and last year. Yield is forecast at 2.9 tons per hectare, up 3 percent from last month but down 17 percent from last year. Timely rainfall during the late grain-fill stage reversed earlier persistent dryness and boosted yields for the Argentine wheat crop. Within Buenos Aires Province, wheat condition is mixed. In Bahía Blanca, Chacabuco, Pehuajó, and Pergamino delegations, some spraying of fungicides was required in order to limit leaf disease on small grains. In Bragado, Lincoln, Tres Arroyos and in Veinticinco de Mayo, crop condition is good. In Cordoba Province, the wheat harvest has proceeded rapidly with crop condition generally good, although recent rain has slowed harvesting in some areas.

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In La Pampa, the wheat condition is mixed due to earlier dryness around Santa Rosa; however, the wheat in the delegation of General Pico appears excellent. In Santa Fe, most of the wheat is yielding well and harvest is proceeding around rain showers that came at the end of November. The wheat in San Luis is in very good condition and yields are coming in well above average for the area. Harvest has been disrupted some in the province of Chaco due to scattered showers in late November and early December, but crop condition is good. In the Northern regions of Argentina, there are some areas reporting low yields around Salta, Jujuy and Tucumán but in Catamarca yields look to be about average. While yields are a bit low this year in Santiago del Estero, the grain gluten content is high, indicative of the earlier dry conditions during crop flowering.

For Brazilian winter wheat, Parana is the leading state, followed by Rio Grande do Sul. Between the two states, they account for about 92% of Brazil’s winter wheat production. Parana has seen adequate to abundant soil moisture for winter wheat and now for new crops but Rio Grande do Sul has had deficits develop. However as shown above, models suggest welcome rains arrive especially week 2.

Widespread, locally heavy showers developed in October throughout dry central Argentina, improving conditions for winter wheat development and planting of summer grains and oilseeds during recent dry windows. As shown above, rains fall in most growing areas the next two weeks in Argentina and central Brazil.

According to Argentina’s Ministry of Agriculture, corn planting was 74 percent complete, respectively, as of December 1. Soybeans were 66 percent planted, 6 points ahead of last year’s pace. In addition, winter wheat was 30 percent planted, 5 points ahead of last year. The soybean planting in the 2011/12 season is 98% complete in Brazil. The work pace is ahead of the same period last year, when 96% of the area had been sown, and is also above the average for the period, of 94%. The data are part of the survey by Safras & Mercado until December 9. In the week earlier, the figure was at 93%. The highlight is the end of the planting in Mato Grosso do Sul, Mato Grosso, Paraná, and São Paulo. ==============================================================

SOYBEAN PLANTING PROGRESS – BRAZIL - IN % FROM EXPECTED AREA -

--------------------------------------------------------------

State 2011 2011 2010 Normal

Dec 9 Dec 2 Dec 9 Average(x)

RS 96 88 88 83

PR 100 99 100 99

MT 100 99 100 100

MS 100 100 100 99

GO 99 97 99 95

SP 100 100 100 94

MG 94 80 86 87

BA 88 78 88 85

SC 97 90 90 83

Other 75 60 90 87

BRAZIL(*) 98 93 96 94

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South American soybean production is forecast at 142.645 million tons in the 2011/12 season, up 5% from 2010/11’s level of 135.822 million tons. The number is part of the estimate released by Safras & Mercado, which also points to a 2% growth in the area to be reaped, which would involve 48.892 million hectares. The report points to a 1% rise in Brazilian production at 75.347 million tons. Argentine production is estimated at 54.15 million tons, 10% higher. Paraguay should reap 8.903 million, up 6%. Bolivian production I s estimated at 2.445 million tons, up 5% from the season earlier. Uruguay should raised production by 17%, with 1.8 million tons. Dryness in Brazil and eastern Argentina, Uruguay and eastern Paraguay is to be expected according to the Weatherbell analogs.

USDA projections for Brazilian soy output in 2011/12 show it may pass US production levels for the first time, helped by "nearly ideal" planting conditions, which have lifted prospects for the South American country's harvest.

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.AUSTRALIA Growing Areas: Winter Wheat

USDA Australia production for 2011/12 is raised 2.3 million tons in line with the latest government estimate. Another year of adequate to abundant precipitation across the country’s southern and eastern growing areas and a recovery in production in Western Australia pushes production to a record 28.3 million tons.

Winter grains are mature in most all locations and further rains are delaying winter wheat harvest in the east although adding soil moisture for vegetative summer grains

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Look for cooler temperatures this week – west and east.

NORTH AND SOUTH AFRICA AND MIDDLE EAST Growing areas: Middle East Winter Wheat, South Africa Corn

The winter crops in Iran, Iraq, and southeastern Turkey are entering the winter under vastly improved circumstances compared to last year, when an exceptionally dry autumn led to poor crop establishment. It is drier than normal in western Turkey. Winter grains are mainly dormant in Turkey.

An early excellent start to the winter wet season in North Africa has benefited winter grains which are dependent on seasonal rains. Rains have delayed fieldwork in some areas.

In South Africa, warm and dry conditions facilitated fieldwork but limited soil moisture for germination and establishment. Rains usually arrive in time for December planting. Showers have been intermittent. Rains the next two weeks will be heaviest east. It will be too dry west.

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UNITED STATES Growing areas: Winter wheat

The growing season saw serous drought in the southern Plains and southeast and pockets of dryness in parts of central Corn Belt and developing later in the north central. See wet Ohio and northwest Plains.

CORN Global corn production for 2011/12 is projected at a new record high of 867.5 million tons,

despite a 3.5-million-ton decline year-to-year in the United States. Foreign corn production is

expected to be up 43.4 million tons from 2010/11. China 2011/12 production is raised 7.3

million tons this month based on the recently released estimate from the National Bureau of

Statistics. Slightly higher area and a 3 percent increase in yields from the previous forecast boost

this year’s crop to a record 191.8 million tons. This year’s yield estimate is up 3 percent (3

bushels per acre) from the previous record in 2008/09 and up 9 percent (8 bushels per acre)

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from the recent low in 2009/10. Weather was generally favorable for this year’s crop; record

yields were reported despite summer conditions in the northeast growing areas that were

somewhat warmer and drier than in 2008/09. Corn production is also raised 1.0 million tons for

EU-27 and 0.7 million tons for Canada based on the latest government reports.

Price movements

Warmer and drier weather in Ohio aided in late harvest but it still lags last year and long term.

Prices moved down almost 20% since late August peak with a fall again last week. Normal

seasonal pattern has selling during harvest with late year rebound.

SOYBEANS

Global soybean production is projected at 259.2 million tons, up 0.3 million. Increased

production for Canada and India is only partly offset by a lower projection for China.

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The typical seasonal sell off came late this year. Prices stand about 24% down from their early September peak.

WHEAT

Global wheat supplies for 2011/12 are projected 9.3 million tons higher with larger beginning stocks in Australia and Argentina and a 5.7-million-ton increase in foreign production. Beginning stocks for Australia are raised for 2011/12 with a 1.9-million-ton increase in 2010/11 production based on recently released data from the Australian Bureau of Statistics. Argentina beginning stocks for 2010/11 and 2011/12 are raised with revisions to 2009/10 and 2010/11production based on the latest indications of available supplies and usage.

Global wheat production for 2011/12 is projected at a record 689.0 million tons, up 37.4 million from 2010/11, and 3.5 million higher than the previous record in 2009/10.. Production for Canada is raised 1.1 million tons based on the latest estimate from Statistics Canada. Production is raised 0.9 million tons for China based on the recently released estimate from China’s National Bureau of Statistics. Other 2011/12 production changes this month are smaller and mostly offsetting.

Global wheat consumption for 2011/12 is raised 3.4 million tons on higher expected foreign wheat feeding. In addition to the countries mentioned above, wheat feeding is also increased for Australia, China, Kazakhstan, and Ukraine. Global ending stocks are projected 5.9 million tons higher with the largest increases in Argentina, the United States, Canada, Australia, Ukraine, and China. At the projected 208.5 million tons, global wheat stocks would be the largest in 12 years.

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Wheat fell back last week and remains over 40% off February peak. Wheat usually bounces into the planting season.

Market tends to decline early in year under pressure from producer selling, spring wheat planting, and expectations for new-crop harvest May-July. Second low often comes in August, coinciding with harvest of spring wheat, before post-harvest rally into year end.

With the western trough the swarth of heavy rains and snows extends from easternmost portions of the southern Plains northeast. Longer term the climate models and analogs are not as encouraging, although conditions are improving over last year’s super La MNina dryness.

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CHINA: Wheat, Corn, Beans

On December 2, China’s National Bureau of Statistics (NBS) announced that total grain production in 2011 had reached a record 571.2 million tons, up 24.7 million from last year and marking the eighth consecutive year of increasing production. This estimate is significantly higher than the government’s preliminary total grain estimate, which was in the 550- to 560- million-ton range.

According to NBS, the summer grain crop (primarily winter wheat) increased by an estimated 3.12 million tons this year, while the early rice crop increased by 1.43 million or 4.5 percent. Autumn grain (which includes single-crop rice, corn, beans, tubers, late rice, and other grains) increased by an estimated 20.18 million tons in 2011. The NBS announcement also included specific area and production data for the 2011/12 corn, rice, and wheat crops, which USDA has adopted this month.

China Corn Output Reaches New Heights: The USDA estimates corn production for 2011/12 at 191.75 million tons, up 7.25 million or 4 percent from last month and up 14.5 million or 8 percent from last year. Area is estimated at 33.4 million hectares, up 0.2 million from last month and up 0.9 million or nearly three percent from last year. Almost all of this increased area was due to farmers in Northeast China shifting from soybeans to corn in response to high corn prices. The estimated yield of 5.74 tons per hectare is up 3 percent from last month and up 5 percent from last year. The yield is also above the 10-year trend. The revisions are based on official data from China’s National Bureau of Statistics. According to Chinese government officials and industry sources, China achieved its record corn yield in 2011/12 for a number of reasons, including timely and well-distributed rainfall in key production regions, favorable light and heat conditions, fewer than normal weather disasters, and an extended frost-free period at the end of the growing season in Northeast China.

China Soybeans Losing Ground to Corn: Soybean output in 2011/12 is estimated at 13.5 million tons, down 0.5 million or 4 percent from last month and down 11 percent from last year. The estimated area of 7.65 million hectares is down 7 percent from last month and down 10 percent

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from a year ago. In recent years, high production costs and low profits from soybeans, as well as rising prices for corn, have caused farmers to reduce soybean acreage in favor of corn. This shift has been especially pronounced in Heilongjiang, China’s most important soybean growing province. The estimated yield of 1.76 tons per hectare is essentially the same as last year but above the 5-year average. China’s production of soybeans has been stagnant since the 1990’s, while its demand for soybeans (used mainly for feed) has soared. To meet this demand, China has increased its soybean imports from less than 1 million tons in 1995/96 to more than 56 million tons in 2011/12. Imported soybeans now account for nearly 80 percent of China’s domestic consumption.

Showers continued in the North China Plains providing soil moisture for winter grains. Temperatures are falling to very low levels and the winter crops will be rapidly entering dormancy. Snowcover is mainly across the north and western wheat areas which raises the prospect of some winterkill in some areas when the coldest temperatures arrive.

EUROPE, RUSSIA and UKRAINE

Growing Areas: Germany Wheat , Poland Wheat ,France Wheat, UK Wheat, Russia Wheat , Ukraine Wheat, Ukraine Corn

The 2011/12 European Union (EU) corn crop is estimated at 63.9 million tons, compared to 62.9 million last month and 55.8 million last year. Yield is estimated at a record 7.27 tons per hectare (t/ha), compared to last year’s 6.98 t/ha and the five-year average of 6.58 t/ha. The European Union’s spring 2011 drought was reversed in early summer when widespread heavy rains covered much of western and central Europe in June and July. While these rains hampered and delayed the winter wheat harvest, they promoted vegetative growth in the corn plants, enabling the record yield. The rain was particularly beneficial in areas of central Europe like Romania, Bulgaria, and Hungary, where summer dryness develops more frequently than on the coast, and where much of the crop is not irrigated. The next two weeks will see showers in much of Europe. Recent rains boosted soil moisture for winter grains and recharge irrigation supplies in Spain and Italy. Rains and snows increase northwest week 1 with a major storms with heavier rains increasing southeast week 2.

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Snow continues to build in the FSU. Snow continues spotty in the Ukraine. Winter grains in Ukraine remained exposed to potential bitter cold, and concerns persist over the lack of autumn moisture for proper establishment prior to crops going dormant.

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Only 20% of Ukraine's winter grain crops will survive the winter, according to Tetiana

Adamenko, the head of the agrarian meteorology department at the Ukrainian Weather Center.

Large areas of the grain belt received only 15 - 45% of normal precipitation in the fall planting

season (map through December 10).

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INDIA AND PAKISTAN Growing Areas: India Wheat, India Corn, Pakistan Wheat, India Corn

The USDA forecasts India's 2011/12 soybean production at a record 11.0 million tons, up 0.4 million or 4 percent from last month and up 12 percent from last year. The area is forecast at 10.27 million hectares, unchanged from last month but up 10 percent from last year. The yield is forecast at 1.07 tons per hectare, up 4 percent from last month, and up 2 percent from last year. The 2011 monsoon rainfall was normal to above normal across the major soybean regions for most of the season, June to September. The majority of soybean growing areas of Madhya Pradesh and Maharashtra received adequate-to-excessive rainfall. There were a few isolated regions of drier-than-normal conditions in some areas including southern Rajasthan. The favorable rainfall conditions boosted planted area in many regions. September sowing progress reports indicated sown area at 10 million hectares compared to 9.32 for the corresponding period last year. Satellite imagery analysis indicated increased plantings and excellent crop conditions across Madhya Pradesh, Maharashtra and Karnataka. Harvest progressed very well and market arrivals significantly picked up in October and November compared to the same period last year. India's soybeans are grown exclusively during the kharif (southwest monsoon) season under rain fed conditions. The ideal sowing window is early to mid-June and typically commences with the arrival of the monsoon. Some farmers are able to provide supplemental irrigation, though this practice is limited by water reserves and equipment. The main producing states are Madhya Pradesh (53 percent), Maharashtra (34 percent), and Rajasthan (8 percent).