The Midday News

22/07/13 -- The overnight market sees beans and meal continuing to add nearby premium. Why on earth was Aug 13 such a substantial discount to Jul 13 when the latter expired a little over a week ago?

Corn is 2-3 cents easier on the overnight Globex market, with new crop Dec 13 crucially back below the USD5/bu mark. Wheat is 1-2 cents firmer. Both London and Paris wheat are up a tad.

Poor old Paris rapeseed, what on earth are we going to do with that? Front month Aug 13 is down EUR5.75/tonne again this morning, to trade at EUR373.75/tonne. The contract closed at EUR439.50/tonne on the first trading day of June.

The news that Ensus has been sold to the Germans will sound promising for the wheat bulls. Let's wait and see what happens there. Will they open straight away, or will they prefer to sit tight and wait for cheap new crop corn to come along first? Indeed will they continue to use corn, or switch back to 100% wheat? Or could they even increase the percentage of corn used in the grist? Questions, questions. That's better than orders, orders, though I suppose.

Catching me eye over the weekend, and potentially something that may not be music to the bull's ears, was news that the Fed announced late Friday that they were going to review their decision (made in 2003) to allow investment banks to trade and hold physical commodities.

Ten years ago was the start of the beginning of the banks/funds love affair with commodities of course. As things stand right now there is no suggestion that the Fed might extend this possible U-turn on trading physical commodities into trading futures in commodities.

However, the first question to ask is "well, if they think that trading physical commodities is/might be causing the unprecedented volatility that we've seen in the markets since 2003, who's to say that they won't next turn their attention to futures trading as well?"

We might also want to ponder "might the banks/funds view this potential change of heart on trading the physicals as a time to get out/cut back on futures trading now, before it becomes compulsory and they all have to exit at the same time, with the inevitable consequences?"

It's very difficult to operate in a market where the rules at the start of the game are prone to get changed at half-time, and could be completely different again by the time the final whistle blows. (Unless of course if you are a Man Utd supporter- in which case this is perfectly normal).

Oil World say that global oilseed production in 2013/14 will increase 4.5% to 479.69 MMT. They have the world OSR crop down at 63.47 MMT, up 1.5%, with the EU-28 crop rising to 20.40 MMT, an increase of 5.1% on last year.

They estimate the world sunseed crop up 7.9% at 38.73 MMT, with production in Europe rising to 8.07 MMT, an increase of 17.1% versus last year.

The USDA attaché in Kazakhstan has cut his wheat production estimate there to 14.0 MMT versus 14.5 MMT from the USDA themselves, on drought in some parts and a lower planted area than originally expected.

The early Kazakh harvest is underway in the Almaty region, with very early yields said to be 2.5 MT/ha versus only 1.0 MT/ha a year ago.