The Morning Vibe

30/09/11 -- A few things worth noting this morning. Firstly, now that the domestic harvest is just about over, a quick look at yesterday's more or less final yield numbers from the HGCA.

OSR is the big stand-out for me, with yields averaging 3.7-3.8 MT/ha we've certainly brought in a record crop, the only question now is how big exactly? That depends on who's acreage number you use. The HGCA themselves have a planted area figure of 696,000 ha, the USDA say 700,000 ha and Coceral reckon 720,000 ha.

Using the lowest area & yield figures we get final production of 2.58 MMT. Using the upper end of the scale we have output at 2.74 MMT. Which ever way you look at it that's a monster crop and thrashes last season's record production by around 15-22% leaving it crying in the corner like a whipped cur.

Wheat and barley output also look like they have come in ahead of expectations with a wheat crop of around 15.2 MMT and barley output in the region of 5.2 MMT.

Another thing of note, whilst it was of no great surprise to anybody really to see the Egypt wheat order go to Russia and Kazakhstan. What is worth noting though is that the prices paid were around USD11.00/tonne lower than last week's winning tenders. Also of note is that last week's prices paid were USD16.00/tonne cheaper than the previous week.

And guess what? The prices paid two weeks ago were USD12.00/tonne lower than those paid three weeks ago. That adds up to a USD39.00/tonne, the equivalent of GBP25.00/tonne, drop of the trousers in the space of just three weeks.

Do you know what that means? That means each wheat cargo sold to Egypt yesterday is worth USD2.34 million LESS than what they were paying at the beginning of the month. Nice work Nomani, think how many camels you can get for that.

French wheat incidentally was priced out to the tune of USD20.00/tonne. No surprises therefore that 13 weeks into the current marketing campaign Brussels have only issued EU soft wheat export licences for 3.48 MMT, 45% down on where we were this time last year.

Kazakhstan's grain harvest meanwhile now stands at 21.3 MMT off 82% of the planned area, leaving them on target to potentially beat the Ministry's recently revised crop estimate of 25 MMT - more than double what they turned out last year.

Now I am reading that Australia may squeeze through unnoticed on the rails and produce a record 27 MMT wheat crop of it's own this year, after beneficial September rains have boosted prospects in the eastern states. We already knew I think that WA was in for bumper production, but now their koala cuddling compatriots in the east look like getting in on the act. Link

On the global macro economic front European stocks are down this morning despite yesterday's news that the German parliament voted "ja" to expand the bolster the European Financial Stability Facility (EFSF) bailout fund to EUR440 billion.

Greece are first up to the counter for a slice of that with inspectors in Athens right now to see if they are doing what they should be doing to get the next EUR8 billion tranche of bailout cash.

German Chancellor Angela Merkel recently said that she would do "whatever it takes" to save the euro. She now appears to mean "whatever it takes up to the value of EUR440 billion." The problem is Italy's debt alone is four times the size of that.

Oh dear, there may be (more) trouble ahead...