Nogger's Blog

21/06/12 -- Grains are doing a fairly good job of attempting to ignore bearish outside influences this morning. OK, they are in negative territory, but not by that much all things considered.

First off we have market disappointment that yesterday's Ben Bernanke speech didn't deliver more QE to stimulate growth, merely an extension of their so-called Operation Twist.

Then this morning we have news that China's factory sector has contracted for the eighth month in a row.

Neither of those pieces of news have done crude oil any good, with Brent falling to an 18-month low this morning and WTI crude dipping below USD80/barrel for the first time since September 2011.

Back to the fundamentals, we have the USDA out later today with the weekly export sales report, with corn sales expected to come in around 450,000-650,000MT, soybean sales at 700-950 TMT and wheat sales at 300,000-500,000MT.

You will recall that last week's corn sales were very poor at only 92,100 MT of old crop - a marketing-year low - and 77,700 MT of new crop.

Brazil is expecting a record corn crop of its own this season, and theirs is on the market now with local reports suggesting a really good second crop is on the cards, with yields approaching those of the first crop.

It is noteworthy that China this week announced that it is lowering photosanitary requirements for Brazilian and Argentine corn imports.

Brazil has however already sold a lot of soybeans for shipment across the summer that will keep ports very busy, potentially limiting logistics for exporting large volumes of corn. Reuters today report "more than 250" vessels waiting to load grains, fertiliser, sugar etc at the major ports of Santos and Paranagua.

Going forward Ukraine is already shaping up to be an aggressive seller of new crop corn and will likely drop it's price accordingly until it can find buyers willing to take a risk on its quality and the inevitable winter shipping disruptions.

The Ukraine Deputy Minister of Agrarian Policy says that the country will harvest 48-49 MMT of grains this year, which combined with carryover stocks of 12 MMT leaves them with plentiful supplies to accommodate their own needs and still export a hefty 27 MMT in 2012/13.

Widespread rain across the UK again today will be adding to quality concerns for wheat and worries for some of the taller rapeseed crops around.

China's Ministry of Commerce says that May soybean imports were up 16% on a year ago at 5.28 MMT. They also say that they are to drop an anti-dumping claim against the US concerning DDGS exports. That could pave the way for they buying more DDGS and being less corn reliant possibly?

Rosstat say that June 1st Russian grain stocks in the hands of agricultural, harvesting and processing organizations were 16.8 MMT, almost 12% lower than a year ago when their export ban was still in place. Wheat accounted for 7.8 MMT of the total, around 25% less than a year ago.