The Morning Vibe

14/12/12 -- Guess what? This day in 2011 was the bottom of the soya market. Front month Jan 12 beans closed at USD11/bu a year ago, and never looked back until they got past USD17/bu, apart from a May dip that is. Meal had bottomed a few days earlier at USD275.50. Corn and wheat this time last year were both under USD6/bu, for interest.

Wouldn't it be nice to have a crystal ball and know where things are headed in 2013? There seem to be quite a few of the banks calling for the year's highs to be set in the first quarter, followed by a steady decline throughout the rest of the year, weather depending of course.

For once I have to say that I agree with them.

As ever, how high those highs are will depend on to what extent our old chums the funds fancy the grains sector in 2013. That one is a bit more difficult to predict unfortunately.

Soybean are back up this morning following yesterday's once again impressive weekly export sales and shipments. The USDA surely will be forced to up their forecast on US soybean sales next month, although via the marvels of creative accountancy will probably do so in conjunction with a hike in 2012 yields, thereby managing to keep ending stocks from falling any lower than the current 130 million bushels predicted.

Wheat is also 2-3 cents firmer in overnight trade. Export sales here were towards the upper end of trade estimates of 300-600 TMT at 518,600 MT for 2012/13 and of 54,900 MT for delivery in 2013/14.

It's far too early to say that this is the start of the much heralded switch in demand to US supplies, although it is interesting that Strategie Grains chose to say that there was "absolutely no room for EU wheat to attract any additional demand" in their press release yesterday.

Again, I have to say that I agree with them. EU exports have picked up at a quite alarming rate versus 2011/12 lately. As noted yesterday, at the start of November these were running only 6% up on last season and that figure is now close to 25% - a startling rise, especially when you consider that production is around 4% lower this year.

Argentina's wheat crop is clearly a bag of shite this year, to use a technical term, and the USDA's 11.5 MMT estimate released only on Tuesday is patently as closely linked to reality as Doctor Who's magic screwdriver. In fact somebody who shall be nameless emailed me to describe the USDA's attache in Argentina as "not the sharpest tool in the box". A tool for sure, just not a sharp one, it would seem.

As well as having a wheat crop of 10 MMT at best, it appears that quality as well as quantity has also taken a hit, or rather a bath in this case, this year. It would therefore seem about as likely that Argentine will export 7.5 MMT of wheat this season as Kylie and Dannii inviting me round to their house for an alcohol-fueled game of "strip twister" over the festive period.

New crop northern hemisphere wheat suddenly looks a long, long, way away. Our mates Down Under will no doubt do what they can to keep Asia going with their kangaroo poo infested 20 MMT or whatever they've got. India, always looking for an opportunity, will also feature amongst the not so picky buyers. Bangladesh have bought 50 TMT of what will probably be Indian wheat overnight in fact.

If you're a bit more discerning though, readily available decent quality wheat could be pretty hard to find in Q1 of 2013.