The Lunchtime News

Posted by Nogger - a legend in his own mind at 14:08 | Categorized as

07/06/12 -- The electronic grains are higher, led by soybeans, with front month Jul 12 20 cents firmer and now back up above the USD14/bu mark - it hasn't closed above that level in the last eleven sessions.

Corn is around 5-7 cents higher in sympathy, with wheat getting dragged reluctantly 2-4 cents firmer. NYMEX crude is up more than a dollar, with a bit of "risk-on" in the air.

That could all change at the drop of a hat, with the Greek elections now only ten days away.

Before that we have the USDA's June WASDE report next Tuesday, with the trade expecting a reduction in corn and soybean output for Argentina, although we may get a rise in corn, or even both, for Brazil.

The trade is also expecting a further tightening in 2011/12 and 2012/13 US soybean ending stocks.

Today's USDA weekly export sales report was pretty uninspiring, giving us wheat export sales of just 165,700 MMT for the first week of the 2012/13 marketing campaign versus expectations of 400-500 TMT. A total of 1.3 MMT  in sales were carried over from the 2011/2012 marketing year.

Corn sales were a bit lower than the 450-750 TMT expected at a combined 399 TMT. China was in there, but only taking 18,600 MT of the old crop and cancelling 15,000 MT of the new crop.

Soybean sales were also disappointing at a combined 495 TMT versus expectations of 600-850 TMT.

Speaking at the IGC conference in London the USDA's chief economist Joseph Glauber said that record US corn production this year would see prices fall significantly as stocks rebound and demand from the ethanol sector remains flat.

Assorted reports out of Russia suggest that their 2012/13 grain crop could be anywhere from 84-94 MMT. Some still talk of dryness being a cause for concern, yet others now suggest that too much rain is taking the sine off quality! Exports in 2012/13 are likely to be in the region of 22-23 MMT versus 27 MMT this season, according to most.

There seems to be whiff of optimism about that there may be some more QE in the wind from the US and EU. Fed Chairman Ben Bernanke is speaking to Congress about the outlook for the US economy around now.

China has surprised, but pleased, the market with its first interest rate cut since 2008.

The dollar is weaker today, adding support to the grains sector.