Morning Markets

25/07/11 -- Morning has broken, except it doesn't look too much like this from my Irish hotel window, there's a strong hint that it's about to start lashing it down. No changes there then. Lots of the barley looks ready to go on the journey down from Dublin airport yesterday, they're just waiting for a dry window to get cracking it seems.

The overnight Globex markets are all lower, with wheat down around 8c, corn around 10c lower and beans 12-15c weaker. Weekend rains were apparently better and a little more widespread than had been expected.

China may import 4 MMT of corn in the 2011/12 crop year, and has possibly already bought 3 MMT of that, according to Rabobank. Given that 4 MMT is less than a half percent of global production and only a quarter of what neighbouring Japan imports it shouldn't really be a game changer.

What could be is the potential removal of the ethanol blender's tax credit still sitting on President Obama's desk. The USD6 billion saving that this could bring makes it an interesting carrot to dangle with US politicians still at loggerheads over the raising of the US debt ceiling.

Lack of progress in weekend talks to resolve that issue means that policymakers there missed their own self-imposed deadline to have the problem sorted before Asian markets opened this morning. That seems to be encouraging some money to be taken off the table.

Moody's have said that the planned Greek debt swap would constitute a default and have cut the nation's credit rating again to Ca, two away from the D word.

Clearly neither Europe's or America's debt problems have gone away over the weekend.

Meanwhile Russia is letting the rest of the world fret over heat in the US and rains stalling the harvest in the EU and cracking on. It's exported 1.3 MMT of grains in the first three weeks of July, an increase of 160% on the same period in 2010.

Kazakhstan can't wait to get in on the action itself, forecasting a grain harvest of 15 MMT, 23% up on last year. Harvesting has now begun in the south where early yields are reported to be well above average.

Rains continue to hamper progress in Ukraine, although the wheat harvest is well past halfway. "We're going to have more feed wheat to sell than you can shake a shitty stick at," said one local analyst.