The Morning Line

16/06/11 -- The overnight markets are mostly lower at 9.00am London time, with only wheat managing to display a little bit of green. Soybeans, which managed to keep their heads above water in last night's CBOT session, appear to have succumbed to the pressure that the rest of the complex was under and are 10-12c lower. Corn remains under pressure, particularly in front-month July where there is still a large spec long, down 6c. Wheat is mixed a cent or to lower to a cent higher.

Despite the recent demise of corn, it is still a premium to CBOT wheat nearby. There are now some fairly widespread reports of some ethanol plants taking downtime rather than operate with corn at these levels.

US ethanol production fell 35,000 bpd to 880,000 pbd last week, using 92.4 million bushels of corn to do so. To meet the USDA's current estimate of 5 billion bushels going into ethanol manufacture in the current marketing year that total should be 104.2 million.

The USDA's weekly export sales report is out this afternoon. Trade estimates for corn are 700,000 to 1,200,000 MT (old and new crop combined, including the recent sale of almost 550,000 MT of new crop to Mexico). Soybean sales are only expected in the 100-200 TMT region, with wheat at 400-800 TMT.

French analysts Strategie Grains have this morning cut their EU-27 soft wheat production estimate by 6 MMT from last month to 125.6 MMT, now 1 MMT lower than last year. They've correspondingly cut export projections for 2011/12 by 4 MMT from last month to 12.9 MMT, 6 MMT below what they expect in 210/11.

Barley production is seen down 2 MMT from last month to 52.2 MMT and the corn crop reduced 100,000 MT to 59.0 MMT.

It will be interesting to see how European markets react to that news today, if at all.

On the weather front at home we've got a band of rain, heavy in places, clearing southern counties of England around lunchtime before more rain comes in from the west to cover much of the country by Friday afternoon and into Saturday.

Anecdotal reports from many parts of the UK suggest that the wheat crop isn't looking as bad as feared after some decent rains finally arrived a month or so ago.

EU-27 rapeseed output will fall to a four year low of 18.9 MMT this year, according to Oil World.