The Morning Rant

05/01/12 -- The shakeout continues for European grains today with front month Paris wheat down EUR4.25/tonne in early trade, now residing back below EUR200.00/tonne. London has opened with May 12 down GBP1.20/tonne and new crop Nov 12 down GBP1.75/tonne.

The market seems to be waking up to the fact that fundamentally South American weather doesn't really offer a great deal of support for wheat. Should the USDA increase 2011/12 ending stocks by 2 MMT next week then we'd be faced with the highest carryout in history.

As things stand they've already got world wheat production pegged at a record 689 MMT in 2011. Seeing as they are currently still using a Kazakhstan production estimate of only 21 MMT it is entirely possible that this could be increased further a week today.

Wheat consumption globally is currently also forecast at a record 680 MMT this year, although that makes 2011/12 the third season out of the past four that production outstrips demand.

Meanwhile the European debt crisis rumbles on with Greece hinting at a default and France this morning having to pay a higher yield on it's EUR8 billion bond auction than it did last month. The euro is down to a 15 month low against both the US dollar and sterling.

Jan 12 Paris malting barley and corn expire today, with Jan 12 Paris wheat going off the board next Tuesday.