The Morning Vibe

30/11/12 -- The overnight grains are lower, and Europe has followed suit in what looks like pre-weekend, month-end related consolidation.

Brussels issued 438 TMT of soft wheat export licenses this week, taking the marketing year-to-date total to 7.3 MMT, up more than 12% on this time a year ago. Cumulative barley export licenses are up 28% at 2.5 MMT. Tellingly, year-to-date corn import licenses have more than doubled - up 125% to 3.6 MMT.

The IGC yesterday said "the rapeseed/canola market remains very tight, with (world) output projected at a four-year low."

Also of interest from the IGC were comments that wheat outflows from the Black Sea have "defied expectations (which) has limited price upside from weather-related worries for 2012/13 crops currently being harvested in the southern hemisphere, and conditions for the recently planted winter wheat in the north."

Cheap early season wheat coming out of the Black Sea hasn't defied my expectations. If it were to continue to come onto the market in the second half of 2012/13 then it would. The fact that EU-27 exports are 12% up in the face of this competition, when production here is 5% down probably tells you everything you need to know.

In a little peek into 2013/14, the IGC forecast the world wheat area for next year's harvest to increase 2%, including at 3.2% increase in the EU-27. They didn't put any production numbers out for next year, although they did note that "conditions for parts of the US crop are a concern."

The Indian government have agreed to release a further 2.5 MMT of their surplus wheat stocks onto the market, bringing the total amount approved for sale to 4.5 MMT to date, which is less than the 6-7 MMT that the market is expecting.

The Ukraine grain harvest is now 98% done at 45.6 MMT in bunker weight with yields averaging 3.14 MT/ha, down 16% on last year. The corn harvest is 95% complete at 19.25 MMT.

South Korea has bought 75,800 MT of Australian wheat overnight.