The Morning Vibe

20/10/11 -- It's all looking a bit sloppy this morning as France and Germany appear to be at odds over how to tackle the European debt crisis rather than all singing from the same song sheet.

Add to that the Ukraine President finally finding his pen and passing the bill to lift export duties on wheat and corn, which I think could be a very significant development indeed.

We've seen front month Paris wheat fall EUR63.25/tonne and London wheat by GBP49.10/tonne since Russia announced it's intention to lift it's export ban. Subsequently they've largely had the market pretty much to themselves with Ukraine's exporters sitting on their hands and shipping only around 4 MMT so far this season.

Not any longer. Whilst the revised Ministry forecast of grain exports totalling 27 MMT released yesterday looks optimistic, monthly shipments of around 2.5 MMT are achievable. With eight months of the marketing year remaining it's possible therefore that foreign sales could hit 24 MMT in 2011/12 - close to the all time record 24.7 MMT shipped out in 2008/09.

As we saw back then, price is a secondary consideration when you're hungry for dollars.

This afternoon's USDA weekly export sales report will be interesting. Not only have China failed to show up as a confirmed buyer of US soybeans this week, we now have rumours of them actually cancelling shipments, not booking them.

Meanwhile Strategie Grains have increased their forecast for this season's EU-27 corn crop to a record 63.4 MMT, well above the USDA's current estimate of 61 MMT. The French analysts also see 700,000 extra hectares going into EU grain plantings for the 2012 harvest, with half a million of that coming from set-aside land being brought back into production.