Nogger's Blog

08/12/11 -- The overnight grains closed with beans a couple of cents lower, corn down 2-3 cents and wheat 4-6 cents easier. Crude is half a dollar firmer and ethanol prices are lower.

Reports coming out of the US suggest that ethanol producers margins have been cut sharply this week, even whilst the tax credit still in place.

Weekly ethanol production was a record at 954,000 barrels/day last week, with stocks rising to 17.9 million gallons as producers take one last bite of the tax credit cherry.

The USDA pegged weekly wheat export sales in line with expectations and corn & beans better than anticipated in this afternoon's report. China was a featured buyer of corn as well as taking their usual lion's share of the beans.

Wheat shipments were better than of late, but still nevertheless fell short of the pace needed to hit the USDA's export target for the eighth week in nine.

That adds more weight to the case for them trimming their projected 2011/12 US wheat sales from the existing 26 MMT target.

The FAO came out with a record world wheat crop projection of 694.8 MMT, 10 MMT above the previous all time high set in 2009 and 11.5 MMT more than the USDA said in November.

In amongst that was a Russian crop of 58 MMT (USDA - 56 MMT), a Kazakh crop of 24 MMT (USDA - 21 MMT) and an EU-27 wheat harvest of 139.2 MMT (USDA - 137.5 MMT).

Conab cut their forecast for Brazilian soybean production next year to 71.3 MMT from its November estimate of 73.0 MMT and lower than the record 75.3 MMT produced in the 2011.

The reduction is partly due to a shift to increased corn plantings. They now peg the Brazilian corn crop at 60.32 MMT compared to a range of 58.43 to 59.46 last month and 57.51 MMT in 2010-11.

The market remains nervous ahead of the conclusion to the EU leaders summit and ahead of the USDA's WASDE report tomorrow.

Early calls for this afternoon's CBOT session: corn flat to 2 cents lower, beans down 1-3 cents, wheat down 4-6 cents.