The Lunchtime News

20/06/12 -- The electronic market is a tad easier on wheat and corn in what seems to be a little bit of consolidation after the latter has just posted its biggest two-day gain in 20 months, according to Bloomberg.

Nothing much has changed though. US crop prospects don't look any different today than they did yesterday.

It is still only mid-June, and there is still time for things to take a turn for the better yet. However it should be noted that at 63% good/excellent, US corn is seven percentage points worse off than it was at this time a year ago. The USDA's current record yield estimate of 166bpa therefore looks way too ambitious at this juncture.

Ditto soybeans, where the crop is even worse when compared to 12 months ago, at 56% good/excellent versus 70% at this time in 2011. A second highest in history yield of 43.9 bpa therefore also looks questionable.

It is worth noting at this point that last season's final yields came in at just 147 bpa for corn and 41.5 bpa for soybeans. So despite crop conditions being worse than a year ago (and in the case of soybeans considerably worse), according to the USDA things will turn out alright in the end and we will have substantially better yields than in 2011.

Hurry up El Nino, that's all I can say.

Elsewhere, now that they are out of the Euro's, Ukraine's farmers have got around to finishing planting a record 4.6 million hectares of corn. That's an increase of 30% on last year and should stand them in good stead to come in with a second record corn harvest in succession.

The USDA currently predict a crop of 24 MMT for Ukraine this year, based on an average yield of 5.33 MT/ha. A repeat of last season's bumper 6.44 MT/ha yields would give them a crop of 29.6 MMT. No wonder then that new crop Black Sea corn offers are already undercutting wheat into Europe.

Bangladesh has bought 50,000 MT of wheat from awash with the stuff neighbour India. Reports that Indian traders can't make up their minds whether to ship the consignment or let it walk there of it's own accord have been hotly denied!

Walkies with the dog this morning took me past some very impressive looking wheat and barley crops, with yield potential looking very significantly better than this time last year. The USDA currently have the UK down to have a wheat crop of 15.6 MMT this year. I think that 16.2 MMT might be nearer the mark.

The Bank of England voted only 5-4 not to increase QE this month, the minutes of the MPC meeting released to day shows. That's a marked difference from a 8-1 split last month, and adds some credence that a further increase may be on the cards before too long.

The pound is nudging its best levels in almost a month against the dollar on the back of the usual "live for today because tomorrow we die" mentality.

Talking of which, Greece says that it is close to forming a three-party coalition government, which will not include the runners-up in Sunday's election, the anti-bailout radical left Syriza party.