Morning Musings

Believe it or not (I don't blame you if you don't, I can scarcely believe it myself and I was there) I was up before six this morning to check on the overnight market, at that time eCBOT wheat was around 8c firmer, adding to last night's impressive 45c gains.

We are currently around 21c firmer I see, where will it all end I wonder once European traders get to their desks this morning? The bulls certainly seem to have the bit between their teeth.

A higher opening in London and Paris again this morning looks like being on the cards despite Russian wheat winning yesterday's Egyptian and Jordanian tenders.

One un-named trading house is reported to have switched origins on two cargoes of wheat sold to South Korea from Ukraine to US, citing "supply-related issues".

Whether that means they can't physically buy it in Ukraine, or customs won't let them ship it is unclear. There have been reports of customs-related congestion in Ukraine as they prevaricate over the recently introduced testing criteria needed to clear wheat for export.

The wheat harvest in Ukraine is already winding down, with the Ministry saying 91% has been cut so far producing 16.67 MMT, implying a final crop of around 18.3 MMT, 12.4% down on last season.

Meanwhile a report in Russian newspaper Kommersant says that the government there will not be intervening in the domestic grain markets to cool rising prices by releasing state-owned stocks until the harvest is completed in October.

The La Nina weather phenomena continues to deprive Western Australian farmers of some much needed precipitation. The state normally accounts for around 40% of national production and half of all wheat exports. Rainfall since the official start of the growing season April 1 has been less than 40% of normal.

Conversely conditions are ideal in the east and potentially record production could come out of NSW and Victoria to at least partially offset losses in WA. However, here we also have the dormant threat of locusts later in the year. That would certainly add more fuel to the bullish fire if that develops into a serious threat later in the Ozzie spring.