The Morning Paper

11/06/12 -- "Spain bailout cheers markets" is the first headline to catch the eye this morning, with shares in Europe up around 2% in early trade. Crude is up more than a dollar/barrel, the euro is firmer and the dollar is weaker. Soybeans are 15-17 cents higher on the electronic market, wheat is 3-5 higher and corn up 4 to down 5 cents.

Surely I am not he only one thinking "well, we've seen this all before?" The Spanish government may have done a nifty sidestep by saying "it's not US that needs a bailout, it's out banks" but it's still "up to" a billion euros that has to be found from somewhere. The exact amount isn't known at this stage, and who is to say that it won't be higher? I mean, up until Friday the government had been publicly denying the need for any bailout at all.

The eurozone is now "up to" EUR100 billion poorer than it was on Friday, that's the way I see it. The eurozone has lent "up to" EUR100 billion to banks, which if they were private businesses would be in liquidation by now due to their irresponsible trading activities. That doesn't seem like something to rejoice at if you ask me, quite the opposite.

A wet weekend across the UK, France, Germany and Poland will be followed by a wet week across the UK, France, Germany and Poland. My weather guru who was last week forecasting a welcome return to drier, warmer and more settled conditions for the last third of the month os now sadly calling for the remainder of June to continue to be wet.

Is anyone starting to get 2008 déjà vu here, because I am. Rain makes grain, they say. Too much rain makes too much shitty grain, just as it did in 2008. I've a feeling that DON may be making an unwelcome return in 2012.

You will also of course likely remember that the UK finished up with a wheat crop in excess of 17 MMT for the first time ever in 2008, some of which was still being combined in October.

Could it be that the 2012 harvest sees bumper yields but a dearth of quality grain?

In other news China imported 5.28 MMT of soybeans in May, up 16% on May 2011 and 8% more than in April 2012. Their Jan/May imports stand at 23.43 MMT, a 20.7% increase on the same period in 2011.

Prices being around a dollar a bushel higher than twelve months ago clearly haven't put them off. The government there will attempt to auction off the same 600,000 MT of crappy four year old soybeans again this week that met with a tepid response last week.

Taking into account continued strong demand from China (eg Friday's purchase of 410,000 MT of US soybeans) and the lack of offers out of South America, soybeans are still the one with the most upside potential this summer to my mind.

Tonight's USDA crop condition ratings will be interesting. Last week the trade was expecting around 70% good/excellent in the first soybean ratings of 2012, but got only 65% in the top two categories.