The Morning Rant

31/10/11 -- Back from a week away to find that nothing much has changed. The long-awaited summit of EU leaders hasn't altered things very much at all from my perspective. It appears to be just another smoke and mirrors job to me.

The gist of it seems to be this: let's say we're going to do x, y and z, it doesn't matter if we are or even can do x, y and z as long as the market believes that we can. Confidence is restored meaning that we don't actually have to do very much at all (as long as nobody notices).

They say that EUR440 million bailout fund, of which around two thirds is already committed, is to be increased to EUR1 trillion. What they don't say though where the extra money is coming from, or indeed if it really exists short of firing up the printing presses.

They did agree however that private bondholders should lose 50% on their Greek debt. Will that be the end of it or just the start though? Some pundits think that at the end of the day a 90% write-down will be needed on Greek debt. And what happens to Portuguese, Irish, Spanish and Italian debt now that this precedent has been set?

Thursday/Friday's brief period of europhoria as I now call it already seems to be over with the markets a sea of red this morning.

Ukraine made it's first wheat sales to Egypt since 2008 over the weekend with GASC taking two cargoes for January shipment priced around USD10/tonne cheaper than Russian wheat. What they will make of the quality when it gets there is anybody's guess, but as it won't be arriving this side of the New Year that surely means that other sales will be made in the meantime.

Rain is slowing early harvesting attempts in Western Australia. That may hit quality there, although yield potential is said to be "outstanding" by many. Most market pundits are forecasting a wheat crop a little under last year's levels at 25-26 MMT, although I've got a sneaky feeling that they might beat last season's record 26.3 MMT myself.

Nov11 Paris rapeseed goes off the board today, making the new front month Feb12 from tomorrow. Feb12 was a hefty EUR26.50/tonne discount to Nov11 at Friday's close.