The Morning Paper

14/06/12 -- Spain's borrowing costs have hit new euro-era highs, with yields on 10-year bonds rising to the widely regarded as unsustainable 7.0% mark from 6.72% yesterday after Moody's cut their credit rating by by three notches to only one above junk status, say the BBC this morning.

An Italian bond auction later may add to the European debt woes ahead of the Greek elections over the weekend.

Strategie Grains this morning have upped their EU-27 2012 soft wheat crop estimate by 1.5 MMT to 124.2 MMT citing "good to very good weather conditions" in western Europe.

Export potential was raised 2 MMT to 13.5 MMT, although that's still around 17% lower than this season. Even so 2012/13 wheat ending stocks were increased slightly due to the increased production and lower feed usage.

Durum wheat production potential was also raised by 0.3 MMT to 7.9 MMT, giving us an EU-27 all wheat crop of 132.1 MMT, which is 1.1 MMT more than the USDA projected on Tuesday.

Barley production is increased 0.5 MMT to 53.2 MMT and corn output is forecast 0.4 MMT higher to 66 MMT.

A day after issuing a surprisingly low wheat crop estimate for 2012/13, ABARES today say that "widespread rainfall was recorded across most of south west Western Australia this week, providing timely moisture for recently sown winter crops and pastures."

"Further rainfall is forecast across southern Australia in the coming week which should assist the growth of winter crops," they add.

The USDA attache in Moscow says that Russia will harvest 88 MMT of grains this year, around 6 MMT, or 6%, down on last year. That will include 54 MMT of wheat (the USDA said 53 MMT on Tuesday), 16 MMT of barley and 6.5 MMT of corn.

Russia's 2012/13 grain exports will fall to 19 MMT, including 16 MMT of wheat, he adds. That would be 5 MMT less than they are expected to export in 2011/12.

The world cereal production will rise 3.2% to a record 2.42 billion MT this year, according to the FAO. “The bulk of the increase is expected to originate from just one crop in one country - maize in the US," they say.

Nov 12 London wheat has opened GBP0.75/tonne lower in early trade.