Salient to Investors:

Grain demand is robust and global stockpiles are tightening – USDA data shows world corn and soybean stockpiles as a percentage of consumption may drop to a 37-year low after dry weather in the US, South America and Europe.

Hussein Allidina at Morgan Stanley said wheat prices will be supported as livestock farmers substitute more of the grain in feed for high-cost corn. Allidina said inventories are the tightest they’ve been in his lifetime, and there’s no spare capacity.

Sudakshina Unnikrishnan at Barclays expects CBOT soybean prices to rally to $18 a bushel.

David Sheppard at Gleadell Agriculture said the markets will rebound as we’re in the calm before the storm with world grain markets – Russia and Ukraine are running out of exportable surpluses, France is selling quite aggressively into recent tenders.

Roger Baker at CHS said Russia is unlikely to ship much grain after the end of 2012 because prices are climbing. Corn has the highest potential for gains, while wheat prices will likely only follow moves in corn.

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