The Morning Vibe: Another False Dawn?

08/06/12 -- Yesterday's hoped for potential QEIII package failed to live up to the hype, with Federal Reserve Chairman Ben Bernanke speaking to Congress about the outlook for the US economy giving no indication that further monetary easing was on the cards.

That follows the ECB's failure to cut interest rates and/or announce some form of further stimulus measures of it's own earlier in the week. So all the market has to cling to this week is a quarter percent interest rate cut from China.

That clearly isn't enough for the market. NYMEX crude is down more than USD2/barrel this morning, with the overnight grains seeing soybeans around 20 cents lower, wheat down 10 cents and corn falling 6-8 cents.

The dollar is higher on the Bernanke news, adding further pressure to the grains sector this morning. Meanwhile we have the not insignificant matter of the Greek elections now little more than a week away.

Meanwhile Fitch have slashed three notches off Spain's credit rating and signalled it could make further cuts as European debt woes resurface once again.

The promised rain for Western Australia has started to arrive with 5-25mm falling in the past 24 hours and a further 15-25mm on the cards Sunday/Monday. Even so a Reuters survey yesterday pegged 2012/13 wheat production at only 25 MMT, 1 MMT lower than the official government and USDA estimates.

The Suffolk Show today has been cancelled I gather from Twitter. UK farmers will really be cursing this heavy rain that's falling (and now wind too) that they'd have given their eye teeth for a few months ago, but there could be a return to warmer, drier and more settled weather 10 days or so from now according to my weather sources. France and Germany have picked up plenty of moisture in the last 24 hours too, which ultimately should prove beneficial.

Brussels issued 135 TMT of soft wheat export licences this past week, bringing the marketing year to date total to 12.2 MMT, 31.5% down on last year's 17.8 MMT. Given the consistent weakness of the euro that's a pretty poor performance.