Morning Markets

20/07/11 -- The overnight Globex markets are firmer, albeit off earlier highs with wheat up 8-10c, corn 4-5c higher and beans gaining 6-7c. Interestingly Europe isn't following suit for once opening mostly a tad lower.

Russia isn't following the American markets either with wheat prices there continuing to fall.

In Ukraine the harvest is ongoing, with wheat yields highly variable from 2.8 MT/ha in the south south east to as high as 7 MT/ha in the west, according to my agronomist chum over there Mike Lee.

The Ukraine Ministry say that 15.6 MMT of grains have been harvested so far of which 10.6 MMT is wheat with yields averaging 3.14 MT/ha, an increase of almost 17% on last year. Barley yields are up 15%. Rapeseed yields are down 4%, they add.

I imagine that it won't be very long before Egypt tenders for wheat again with the intention of playing Russia off against the newly welcomed back into the fold Ukraine. We could easily see Black Sea wheat nudging USD50/tonne cheaper than US/EU origin grain by then.

China's apparent move to start importing corn in meaningful volumes may only provide a short-lived window of opportunity for America, with Argentina eager to continue to mend relations between the two nations by striking a trade deal with the world's largest corn consumer outside of the US.

The Argie Ag Minister says that the country will harvest 30 MMT of corn in 2012, an increase of more than a third, and will be looking to export 18-20 MMT of the stuff next season.

If the weather plays ball then there's little doubt that the Argies will have little trouble undercutting the US, just as Russia are now doing on wheat into Egypt.

An interesting day lies ahead for the euro tomorrow as European leaders meet to once again try and thrash out another Greek bailout. Feisty (and no doubt hairy armpitted) German chancellor Angela Merkel however is already quoted as saying that there won't be "just one spectacular event which solves everything".

Seven of nine members of the Bank of England's Monetary Policy Committee voted to leave interest rates on hold here, according to the minutes of their last meeting released this morning.

That suggests that an interest rate rise isn't likely any time soon. Only one member voted for further QE.