The Morning Rant

09/05/13 -- The overnight market is mixed with corn 3-4 cents easier, wheat generally down 1-2 cents and soybeans around 1-2 cents firmer.

Interesting point, last night's close on Aug 13 Paris rapeseed, down EUR5.25/tonne to EUR424.00/tonne was the lowest close for a front month in almost 18 months. You have to go all the way back to December 2011 to find a lower finish than that.

Meanwhile May 13 London wheat closing at GBP190.50/tonne was the lowest close for a front month since the early days of last August (when optimism was still quite high that we'd end up with a decent crop). Back across the Channel again, Jun 13 Paris corn closed at EUR214.75/tonne last night, a close at EUR214.00/tonne would have been the lowest for a front month since last June.

Does that tell us that these prices are cheap, or that the market is working lower? In the case of corn and wheat at least, my money would be on the latter.

Lanworth yesterday upped it's forecast for Brazilian corn production to 78 MMT, which is 4 MMT above where the USDA currently stand. Beneficial April rains have boosted the chances for a bumper second corn crop it would seem. The USDA could follow suit on Friday.

Whatever your view on corn production potential in the US this year it's a nailed on certainty that the USDA are going to be pencilling in a large leap in output versus 2012 on Friday too (like up 30% large).

They're also giving us their first official estimates for production around the world in the season that lies ahead, and the USDA are generally bullish about crop prospects until a disaster hits them in the face, and it's too early for that just yet.

Unless you fancy predicting that it isn't going to rain in Russia or Ukraine between now and harvest time, or that we are in for either the wettest, dullest summer on record in the US, or that instead the weather will do a complete U-turn and we will have a repeat of the 2012 drought then things look like they're going lower to me.

Who was it said "I don't do predictions Brian, but this game's got nil-nil written all over it," or something like that?

Friday's USDA report has a much greater chance of being bearish than bullish in my humble opinion.