Nogger's Blog

14/11/11 -- The overnight grains finished mixed with beans 8-10 cents firmer and the front end months flat to 2 cents higher on corn and wheat. Crude is weaker and the dollar firmer, which may add a bit of negative sentiment this afternoon.

Italy managed to auction off EUR3 billion of five year bonds, albeit at a 14-year high rate of 6.29 percent. The market will now be looking to see how Spain fares in it's auction of 10-year bonds on Thursday.

Strength in beans maybe came from the fact that they've fallen more substantially than wheat and corn of late. In the past month beans are down more than a dollar a bushel whereas wheat and corn are barely changed.

Another supportive factor is Cofco saying that China will have an import requirement for 58.5 MMT of beans in 2011/12, 2 MMT more than the USDA's current estimate. Some analysts think that 60-61 MMT might even be on the cards.

Less helpful however is news that the October NOPA soybean crush came in at 141.2 million bushels, up 30.9 million from September, but 3.8 million down on expectations of 145 million bushels. This was also down 7% on last year.

Vietnam has bought Indian corn, others in the region are buying Ukraine origin corn. Asia is also buying Australian feed wheat to replace US corn in the ration. Maybe we will therefore start to see US corn exports slip a little before too long?

US wheat exports meanwhile already are slipping as world stocks return to buoyant levels and there are other more willing sellers around the globe.

Following the recent news of UK wheat sales to the US, and their spectacular failure to even feature in any of the Egyptian wheat tenders over the past few months then there could be some further downside for US wheat and corn?

Reuters quote the Russian Hydrometcentre as saying "weather conditions are highly favourable and the state of winter crops (there) are very good."

Things don't look so rosy in Ukraine however where things have been much drier since winter grains were sown. Exports of this season's bumper grain crop are finally starting to pick up now that duties have been removed though and have now overtaken last season's levels by 8% at 5.5 MMT.

Corn harvesting in Ukraine is 83% done producing a crop of just over 18 MMT to date, suggesting final output of close to 22 MMT.

Early calls for this afternoon's CBOT session: corn and wheat flat to up 2 cents, soybeans 8-10 cents firmer. We may open a bit firmer but I'll go for wheat and corn to be red by the time we close tonight though.