Morning Comments:

Some more upside in corn as US money flowed back from gold to the grains. Gold lost over $40/oz as the US stock market advanced.

The USDA left corn acres unchanged at what some believe is a ridiculously high 92.3ma, maybe they'll change it to a more realistic number when they remove the ethanol blenders credit completely to help buffer the sudden decline that will create. But they did amend the average yield estimate to 153bu/ac, that's a little below the average trade guess prior to the report hence the nice move higher in corn futures last night. This was somewhat countered by adjustments in beginning stocks and US consumptions but by the time you get to the bottom line there was still a reduction in the stocks to use ratio, with corn now sitting at only 5.4% in the US.

The US soybean stocks to use ratio was also adjusted lower resulting in a nice rally in oilseed futures, including canola at Paris and Winnipeg.

Wheat was not as bullish in the report with an increase of 0.3% in the US StoU ratio. A closer look at the grade breakdown in wheat shows a reduction in durum, now pegged at 1.55mt, this will leave them with about 1/3 of the ending stocks they started the season with. Spring wheat was also cut aggressively with total production now estimated to be down almost 790kt to 12.92mt on last months numbers. With slight increases in HRW and SWW the spring wheat loss accounts for the entire adjustment lower in US wheat production in this report. All in all the report supports lower wheat prices in general as world ending stocks were increased again but with lower milling wheat output we should see strong grade spreads for APH and DR1 in 2011. Support was mainly spill over from the row crops.

Looks for a solid day with gains in feed grains mainly.

Weather:

Southerly air flow should gradually turn to the east as the weekend progresses. Tomorrow a weak upper level low over central QLD will create a trough line that extends into NNSW but this is not expected to create any storms. On shore airflow Monday may produce some coastal showers east of the ranges. Rain Wednesday, 20 - 30mm in the Riverina with falls of 10 - 15mm possibly to the LPP.

By Lunchtime:

Sorghum is up nicely on the back of the move in US corn futures. This change has been dissapointing so we may be starting to see some dry weather premium creeping into the Newcastle and Brisbane track zones too.

Sorghum is trading in volume at $237 Newcastle less the upcountry site deduction while delivered Newcastle bids have jumped to $245 this morning, Tamworth delivery is also possible at $222 for sorghum.

New crop wheat bids have stabilized as traders look at increasing world stocks and competition from the Black Sea.

New crop durum was up a few on bullish USDA data, we just need Canada to show their hand now and we should be able to get a good feel from demand and grade spreads leading into harvest. New crop wheat basis is strong, and so well it should be but it is only reflecting a small weather premium, most of the hieght has been generated by the stronger AUD.

As I write the dollar is still in the low 1.03s while e session corn at Chicago is slightly higher and wheat is flat. ASX milling wheat is untraded with a $271 / $265.50 bid / offer.

Over the last few days the bulk of the business on the ASX appears to be getting done very late in the session. Bid sheet to follow later in the day.