USDA has released its latest quarterly grain stocks update and is seeing important reductions in grain stock-to-use ratios. These reductions are expected to continue impacting prices and trade; however, as they were anticipated by most major traders, they should not increase price volatility in the coming weeks.

World maize production has declined sharply for 2012 due to poor crop prospects following the recent US drought. As a result of this reduction, total maize utilization for 2012-2013 is also expected to decline below 2011-2012 levels, due largely to a reduction in industrial use in favor of cheaper grains. High global maize prices are expected to depress imports and drive down global trade in 2012-2013.

While these reductions in crop prospects and stocks have resulted in high prices, most major traders have taken this information into consideration. Thus, the volatility in the commodities markets that has been seen in recent weeks should become calmer in the coming days.

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