Early Thoughts

14/12/10 -- UkrAgroConsult say that winter grain plantings in Ukraine total 8.2 million hectares, down almost 5% on last season, following a sharp reduction in barley sowings.

The wheat area is down by less than one percent at 6.65 million hectares, whilst the winter barley area has fallen by almost a quarter to 1.22 million hectares, they say.

Crop conditions are better than last season with 54% of the winter grain crop rated good and 38% satisfactory.

Ukraine's export restrictions are now starting to bite with only 476,200 MT of grains exported during November, down by two thirds from October's 1.38 MMT. For the marketing year to date they have exported 2.2 MMT of wheat, down 62% from the 2009/10 season.

The harvest outlook is improving Down Under, with temperatures warming up and some of the heaviest rains fading away. Adelaide is set to get 33C highs today, with temperatures in Melbourne topping out at around 29C.

Quality wheat premiums are rising rapidly whilst lower grades have reportedly seen prices fall by A$25/tonne in a week.

The market remains somewhat nervous over Chinese demand, despite the government there not raising interest rates over the weekend. Doing that would probably accelerate further capital inflows, something that the government there clearly see as even worse than spiralling inflation.

Crop conditions in Argentina seem to have bucked up a little over the past few days, although earlier maturing corn could do with more rain.

"The generous December rainfall is beneficial, to be sure, but the subsoil drought means showers must continue. Corn planted in mid October would be pollinating right after Christmas. This is a period when corn development is peaking, requiring very heavy rainfall and nutrients for a productive yield. The 3 weeks leading up to pollination also is a period of very rapid corn growth and high moisture needs, during which time ears are enlarging. Thus corn needs abundant rainfall throughout December for the best chances at a profitable yield," say Martell Crop Projections.

London and Paris wheat have opened with little change this morning, mostly a tad lower.