Early Thoughts From The Costa

Morning all, the mercury has already pushed above 80 this morning here, with daytime temperatures regularly hitting 95-96 in the shade this past week. That's a largely alien scenario to the American Midwest this summer which was seen unseasonably cool conditions, with several states reporting their coldest July on record.

That leaves US crops well behind schedule in terms of development. As I asked on here a few weeks ago: how non-threatening really is non-threatening weather.

According to a report released Friday by the US CPC (Climate Prediction Centre) August will continue to be be colder than normal for the Central and Eastern Corn Belt. Precipitation during the same period will be above normal, they say.

Meanwhile contrary to some educated sources, China keep coming back to buy US beans with a vengance, corn export sales are holding well above a million most weeks and even wheat sales have now started to pick up.

I've read many times that a cool US summer is not necessarily a precursor for an early frost, but the market doesn't seem to fancy betting on that at the moment.

Several reports are suggesting that the CPC have got it wrong and that August will see much warmer temperatures return to the Midwest a week from now.

With beans thirty up on the overnights it looks like the market is concentrating on more immediate factors like tonight's USDA crop progress report.

Other outside factors seem to be coming into play too. Crude is up, the dollar is down, a little bit of risk appetite is back in vogue, Barclays announce £3bn in profits for the first six months of 2009.