Lunchtime News

28/06/12 -- The electronic grains currently see beans 4-6 cents higher, corn up 2-3 cents and wheat 6 cents easier. Crude is up half a dollar.

London wheat is GBP1.00-1.50/tonne lower, Paris wheat is EUR1.50-2.00/tonne easier.

The EU leaders summit gets underway today in Brussels. Not many are expecting an awful lot new apart from the usual shallow promises and hot air. Italian borrowing costs are up again, and there are rumours around that PM Super Mario Monti may be about to resign.

It's hot and dry in the US still, with many now likening the current situation to the summer of 1988. It's nothing like 1988, Bros were top of the charts for a kick off and now they are probably working in MacDonalds or something.

I do recall 1988 as it happens, the US drought was nightly news on UK television, with graphic images of livestock farmers taking flame throwers to cacti to burn off the spikes so that their animals would have something to eat.

I also recall soya in the UK going from around GBP140/tonne to something like GBP260/tonne in a relatively short space of time. Luckily for me the boss, in his retirement year and wanting to go out with a bang, was bullish on soya and was long all the way up. By the height of the summer we were going to be on massive Christmas bonuses, Porches, the lot. By Christmas soya was back to GBP140/tonne, and all we got was a hundred quid and a box of Quality Street.

Hence the reason for posting the chart below. Now I'm not saying that soya will be fifty or sixty quid down by Christmas, but the odds that it might be at some point within the next 8 months or so are perhaps greater than you would currently think.

It may also be worth considering that as recently as February the UK media were saying that 2012 was shaping up to be the driest year since 1976, and it hasn't stopped raining since!

Russia's IKAR have today reduced their grain production estimate there this season from 88.4 MMT to 84.5 MMT, around 10 MMT down on last year and half a million below the Ministry's revised forecast earlier in the week.

Wheat production will amount to 48.5 MMT this year, compared to the Ministry's 46-49 MMT estimate and versus 56.2 MMT last year. Grain exports will total 17.5 MMT, compared to the Ministry's 16-18 MMT and an estimated 27 MMT in 2011/12, they add.

USDA weekly export sales for both old and new crop where applicable (vs expected): soybeans 793,100 MT (500-700 TMT); corn 292,800 MT (300-500 TMT); wheat 324,500 MT (450-650 TMT).

Soybean sales strong again, corn sales disappoint again. High prices for the latter seem to be performing some kind of rationing at least.

China took 115,900 MT of the old crop beans and 285,000 MT of the new crop. The USDA have also announced the sale of 110,000 MT of new crop soybeans to "unknown" this afternoon.

The Chinese Ministry say that June soybean imports will probably total 6.79 MMT, that's up 58% on last June, according to my records.

Latest weather news just in from Martell Crop Projections:

"The heat dome in the United States is expected to weaken the next 48-72 hours under attack from “ridge-rider” showers. From .50 to 1.25 inch of rainfall is expected in a band from Nebraska to northern Ohio, including Iowa, northern Illinois and northern Indiana. The 5-day cumulative rainfall forecast is wetter showing 2-inch amounts, again along the northern rim of high pressure in the Upper Midwest."

However: "Very hot weather is forecast for July 1-5 with a strengthening dome of high pressure. Maximum temperatures are expected to increase 9-15 F above normal.The Climate Prediction Center 6-10 day outlook is threatening with a hot forecast in the July 3-7 period. However, it shows 'normal' rain in the northern Midwest and Great Lakes, which would be similar to the weather conditions expected in the next few days."