Nogger's Blog

29/06/12 -- The early vibe is positive, a deal of sorts has been thrashed out by EU leaders overnight. The market is reacting with predictable and "we've seen it all before, but it's got to be better than nothing" optimism. Crude is USD1.70/barrel higher, and the grains are mostly higher too - led by soybeans which are 15-17 cents or so firmer.

The gist of the Euro deal seems to be this: Ailing EU banks will now be able to  borrow from the bailout fund directly to shore up their finances. That means that the governments of the countries involved won't have to agree to budget-cutting austerity measures in order to obtain the necessary finance before passing it on. It won't be them that is borrowing the money, it's their banks.

The other key change seems to be that governments requiring direct financial assistance themselves will be given easier terms of compliance, with fewer strings attached than the loans that have already been dished out to Greece, Ireland and Portugal. In addition the ESM won't get preferential status on these loans, the theory being that this clause has hitherto held back private investors from buying government debt.

It seems that, as in the football, it's Spain and Italy who are doing most of the smiling this morning.

So, the deal makes it easier for those already up to their necks in debt to borrow more money, at lower rates, and on easier terms than before. It also sets the stage for those that have already borrowed to want to swap the restrictive loans they've recently taken out for the new shiny "pay us back when you feel like it" ones.

Hardly sounds like a long-term debt solution to me, more a way of creating more bad loans that can't - or won't - be repaid. As you might expect though, the prospect of more cheap quick-fix money sloshing it's way into the system sees the French and German stock markets up around 2.5% this morning, with the FTSE100 up a more restrained 1% or so.

So now, we sit and wait for the USDA who are out at 13.30 London time this afternoon.

There seems to be a bit of rain around on the US radar overnight centred on southern and western Nebraska and into western Iowa. These are the top and third top US corn producing states. Iowa also grows the most soybeans.

These rains are expected to move east, centring over Iowa tomorrow before continuing on into Illinois and Ohio over the next 4-5 days. Drought busters they aren't though, generally offering only 0.25-0.50 inches, with a few places set to pick up better 1-2 inch amounts in the 4-7 day period.

The 8-15 day forecast offers better and more widespread coverage of an inch or so in many parts of the Midwest and up to 2 inches further south and east in states like Kentucky, Tennessee, Georgia and Alabama.

Whilst we are on the subject of weather, I haven't yet had chance to get out and have a good look at things round here yet. We managed to dodge the worst of yesterday's torrential rain and" hail the size of golf balls" that reportedly fell in some places.

The recent high winds have already given the crops, rapeseed in particular, a fair old battering.

Nov 12 London wheat has opened GBP1.25/tonne firmer in early trade. Where it closes tonight may have more to do with what the USDA say this afternoon and revised US weather forecasts than  what's going on out in the field, strange as it may seem.