A Greek Earn And Other Stuff

06/02/12 -- The answer to the old Morecambe and Wise joke of "What's a Greek Urn" is not "about ten bob a week" but actually just under EUR12,000/year in 2010, according to Eurostat.

It's not surprising then that the average Stavros on the street is resisting the proposed 25% reduction in the minimum wage and tougher public sector spending and job cuts.

Crude is down more than a dollar on worries that a deal is never going to be struck with it's private bondholders, yet the grain market seems strangely resilient to the chance of a Greek-led European meltdown.

It's frequently at times like this that the USDA take it upon themselves to throw a spanner in the works. So what, I wonder, are they going to come up with this time?

Lower soybean and corn production in South America are surely a given? Last month they gave us bean output of 50.5 MMT in Argentina and 74.0 MMT in Brazil. Trade estimates elsewhere are now centred around 48 MMT and 71-72 MMT respectively.

For corn they gave us 26.0 MMT in Argentina and 61.0 MMT in Brazil. The trade reckons more like 21-22 MMT and 58-59 MMT respectively.

What they may come up with for wheat is being given less consideration. It is possible that they could increase world production, and therefore ending stocks, courtesy of Russia upping their official grain crop estimate on Friday. Anything but a very modest increase in world carryout from last month's 210 MMT estimate would probably therefore beat the 1999/2000 all-time high of 210.335 MMT.

Yet, despite the potential for record stocks, wheat prices are on the rise.

It is of course also entirely possible that they may reduce wheat ending stocks by virtue of increased consumption due to falling corn production in South America.

US wheat exports may also get lowered as shipments consistently fall behind the level needed to hit 25 MMT in 2011/12. US soybean exports are running well behind last year's levels so there is potential for those to take a cut too, thereby increasing US stocks at the end of the season.

Like a Christmas Day episode of EastEnders you can sense that something dramatic is going to happen on Thursday, but you can never be sure who is going to get stiffed under the arches.

On the day of last month's report corn closed down the daily 40 cent limit plus a further 12 cents the next day after the USDA increased 2011 yields (when a reduction was expected) thereby raising US ending stocks by around 100 million bushels to 846 million.